Weekly Market Watch

Weekly Market Watch
July 20-July 26

Good news this week for home buyers and sellers. On July 30, 2008, the President signed the Housing Economic Recovery Act of 2008 into legislation. The legislation will go a long way in helping to stabilize the housing market and will make the dream of home ownership more attainable for many Americans.

So what does the government intend to accomplish through this new legislation? The Housing Economic Recovery Act of 2008 seeks to:

Add stability to the market by supporting Fannie Mae and Freddie Mac.
Help first-time homebuyers with increased loan limits.
Provides a $7,500 tax credit that is effectively a no-interest loan that is payable over 15 years ($500/year) after the credit is received on the homeowners’ first-year tax return.

The most immediate benefit of this bill is that the temporary increases in conforming and FHA loan limits that were part of the Economic Stimulus Plan, signed earlier this year, were made permanent. For us in the Bay Area –the loan limit piece of the legislation is somewhat bittersweet. The temporary loan limit put in place earlier this year for most of our region was a maximum $729,000, up dramatically from the low $400’s. So while the new $625,500 is permanent, we’ve lost over $100,000 toward purchase price which is greatly needed in our mid-range. I’ve talked with leadership at Princeton Capital, and they are coming up with some good alternatives with creating products on their banking side, as well as new relationships on the broker side in order to help more of our local Buyers.
To view a complete look at the provisions of the bill, click here: http://www.realtor.org/gapublic.nsf/pages/hr_3221_key_provisions

Now, let’s move on to our weekly market recap. This week:

East Bay: We are seeing REOs in Oakland and West Contra Costa County, many of which are getting two to three offers. In our higher-end East Bay markets, we’re feeling a shortage of inventory. To give you an idea of how the Berkeley-area market is fairing there are 2.7 months supply of homes in Berkeley, 1.7 months in Albany and 3.2 months in El Cerrito. Inventory in Danville-San Ramon area dropped significantly this past week and new pending sales rose dramatically. We haven’t seen that happen during a July (traditionally a slow vacation month) for some time in recent memory.
Monterey County: Steady but slow seems to be the current pace.
North Bay: This week one agent pointed out that it is taking longer for buyers to find their own perception of value with such confusing market signals. Some who may appear picky, may simply be confused. Good opportunity to use Market Trends and drill down on neighborhood-specific statistics for some of these buyers. Sonoma County continues at a pretty feverish pace in the entry level market thanks to REOs. All three offices report that we are seeing multiple offers in this niche but once you rise above the $500,000 to $600,000 market, properties often languish. In Marin, we are seeing a bit of a traditional summer slowdown, vacations taking their toll. If we had more well-priced upper end homes, we could sell them. In the past few weeks the Greenbrae office closed on a Belvedere home at over $6.4M, and another San Anselmo home at $4M. This price range seems to be selling within 60 days, or totally off-market, quickly and quietly.
Peninsula: Opens were slower this week (again, not surprisingly, as this is a traditional summer slowdown period as clients go on vacation) with the exception of Foster City and Redwood Shores which were both very busy. Menlo Park remains a mixed bag with lots of multiple offers. Some multiples don’t even hit the list price while others go way over. Palo Alto inventory remains very low with LOTS of activity at opens. I heard from one of our MP agents whose clients missed out on multiple offers for an Atherton teardown over $4M – a significant overbid lost to an even greater one. The Burlingame office had a nice week of closing a handful of properties between $1.5M and $2.5M.
San Francisco: Vacations continue to take their toll on the City. Things have simply slowed because clients aren’t in town. Come late August and September things will certainly bounce back. In fact, even during the summer doldrums, our San Francisco offices had 10 multiple offers this week. And our Market Street office seems to be immune to the summer slowdown noting “the conference rooms were busy in the evenings with agents writing offers” and some back-up Buyers moving into first position. TRI/Van Ness noticed that the lower end seemed a bit slower, as they continue to put together several transactions per week in the $2.5 to $6M range.
Santa Cruz County: The luxury market continues to drag. However, and sellers, please take note, prices in the introductory and move-up markets that are priced 5-10% below the last sale in the area are getting attention. Watsonville continues to be very active with bank owned sales in the market and there continues to be pent-up demand.
South County: The annual Gilroy Garlic Festival really slowed things down for this market. However, now that the festival is over, sales continue to trend up, especially in the lower-priced REO and entry-level properties. Many of the REO properties continue to enjoy multiple offers. Hollister noted that the only sales that they saw this week were REOs, a sign of the times in this market. This is a good lesson for sellers in this market. If you need to sell, you need to be competitive with the REOs.
Silicon Valley: Buyers are stepping up for the homes that are well presented and well priced. In fact, this isn’t a bad lesson for every market to embrace. Overall, the Silicon Valley market is moving pretty smoothly. Interestingly enough, in Los Altos, the market that seems to be slowest is the condo/townhome market. Los Gatos shares that the old adage of homes that are priced right and show well and those buyers/sellers who can work through and be patient through the negotiations are moving and finding success in today’s market. San Jose Almaden concurs noting that the market remains fairly steady and well-cared for properties that are priced correctly often sell fast.