Weekly Market Watch
September 15-21
If you were like me, you came home from work Wednesday evening, started to cook dinner, turned on the television, and listened as President Bush announced that “we’re in the midst of a serious financial crisis, and the federal government is responding with decisive action.” He went on to describe his plan to use $700 billion in taxpayer money to help solve the problem, sparking several days of heated congressional arguments, a flurry of economic predictions and lots of media coverage. And, if you are like me, you have been left wondering how all of this will affect you, your family, your clients and consequently your business.
In his speech, the President reminded us that much of the trouble in the financial market was sparked by mortgage lenders approving loans to borrowers who shouldn’t have qualified. They used the money to buy houses they couldn’t afford and eventually defaulted on their homes. This is nothing we don’t already know but it reminded the public, including potential buyers, which domino caused the rest to fall.
For months, you’ve no doubt encountered buyers who have been content sitting on the sidelines waiting for prices to fall. The recent economic developments only reinforce the fact that they should wait to buy, right? Wrong! The real estate market continues to improve and it’s important, probably now more than ever, for you to educate buyers on why this is a good time to get into the market.
For much of northern California, homes are at their lowest prices in years. There is a large amount of inventory out there (and I can honestly say now –finally a bit more inventory in our higher-end /heavily sought-after communities, too) and buyers have a plethora of well-maintained and affordable homes to choose from. First time buyers and investors are taking advantage of REO and short sale properties, and current home owners are finding the possibility of moving up in the market within their reach. It’s not often that buyers are able to get the exact home they want that is also in their price range, but this is definitely a likely possibility right now.
One of the strongest factors buyers have in their favor is current mortgage interest rates. For the past several weeks, rates for 30-year fixed-rate loans have been falling to levels we haven’t seen in four or five years. Lenders are currently hovering around 6 percent, and some even below that. As our national Coldwell Banker CEO Jim Gillespie addressed in an interview with CNN this week, “consumers have been subjected to a barrage of information. Once they grasp what has happened, they’ll understand that mortgage interest rates are still near historic lows, that they have a lot of homes to choose from, and that price corrections have improved affordability.”
It’s no secret that lenders have become more stringent on their loan qualifications, but buyers with good credit and at least 20 percent for a down payment should not have much difficulty getting approved for a loan. (and don’t forget about FHA with roughly 97% financing available in the areas where home prices support it). The proposed bailout plan is designed to pump more money into banks and lenders which will then be able to lend more liberally, making it easier for buyers to qualify for loans. That could lead buyers to feel more confident in their loan qualifications and contact you to start looking to buy. And next, what generally follows when more people are buying and borrowing and the economic picture gets brighter? Of course – interest rates are generally pushed up to curb possibility of inflation.
We may be in a “wait-and-see” mode when it comes to the financial market, but it’s the housing market we are all directly concerned with. Let’s take a look at this week in real estate:
East Bay—Busy, busy, busy were the open houses in the East Bay. The Danville office reports sales picking up for properties that aren’t bank owned. The same is the case in Fremont, though REOs are still scorching there. At an open house in Livermore, the Agent wrote an offer on the spot. The Oakland-Piedmont office says that buyers nervous about the financial market, are offering less than asking price in multiple-offer situations. Nerves were also to blame for two offers canceled at the Berkeley office. But overall, our East Bay offices report that buyers are still out there looking. Desirable listings are getting lots of visitors. Buyers are on the move to find the right homes and the market remains active.
Monterey County—This seems to be an area where buyers are really taking a step back to consider the financial market before moving forward. Several buyers there were considering making offers, but have put things on hold for now. There have also been a few requests from buyers already in escrow to reduce prices from what was already agreed to in the purchase contract. But overall, things remain steady and 14 offers were ratified.
North Bay—It’s not a surprise that the Greenbrae office reports that buyers fear not being able to get a loan, paying too much for property, or trying to come to terms with a loss of equity. But the San Rafael office reports that a home in Petaluma they listed for $319,000, had eight offers and sold over asking price just two days after it was listed in MLS—a sign that smart buyers know a good opportunity when they see it. Our Santa Rosa office reports that the market below $500,000 has increased in activity, almost doubling the open escrows for the week. Activity is also increasing over the $1.5 million range in Southern Marin. Our Mill Valley office has put three of their listings between $1.5M and $2.6M into contract this past week. The Sebastopol office says “cash is king” when it comes to REOs, as all accepted cash offers were not the highest. And though inventory has slowed in the Petaluma office, open escrows continue to be strong.
Peninsula—The key words on the Peninsula are “reasonably priced.” That’s what the Burlingame office attributed to a house in Hillsborough selling in 24 hours, and the Half Moon Bay office says one of their listings had two offers after the seller reduced the asking price. The Redwood City/San Carlos office reports having more inventory coming on the market—all more realistically priced. Though buyers there are taking their time, once they find the right property they move quickly. Open houses were busy in Palo Alto and Menlo Park, where the El Camino office reports contingent sales becoming more common.
San Francisco—Lenders seem to be causing some hiccups for some transactions in the City by the Bay. The Lombard office says that most deals are being sold very close to asking price and about one deal a week has numerous offers and sells over asking. But skittish lenders are causing more 11th hour problems and appraisals are becoming more of an issue. The Noriega office also reports new obstacles when it comes to loans. Overall, inventory is growing in the City, and the Market Street office says it is seeing great attendance at open houses for well priced listings.
Santa Cruz County—Inventory levels are starting to drop slightly in the county and our offices report sales in July and August have exceeded those of 2007. Much of those have been REOs, with about half the sales under the $500,000 price point. But, one Agent sold his $5 million listing to a cash buyer and closed in 21 days, and has other cash buyers making offers in the $3 million-plus market.
Silicon Valley—This area continues to be a little bit of a mixed bag. The Cupertino De Anza office is reporting an increase in pending properties, which are mostly in the low-end or under-priced. Those are the only kind of deals the San Jose Almaden office says buyers are willing to pull the trigger on. But an open house in Sunnyvale has had an excess of 175 people on recent weekend openings, and open houses and floor calls are still keeping the San Jose Willow Glen office busy. REOs are still the hot ticket, but non-bank owned properties are also selling well.
South County—REOs are still in demand in South County, especially in Salinas, Watsonville and Hollister. Activity on that front is booming and the Hollister office reports multiple offers on many bank owned properties.
It’s true that what happens on Wall Street affects Main Street, and in our case Oak Lane and Maple Drive. But we all know real estate is one of the best investments one can make. I have to say that this past week I was really pleased to see 11 of our listings over $2M go into contract within our immediate region of the Peninsula, San Francisco, and North Bay. And of these - as you would expect – the listings over $3M were located in Menlo Park, Woodside, Hillsboro, and San Francisco, but a very welcome addition to this week’s high-end pending sales was a Santa Rosa listing at $3.9M! Even Donald Trump told Larry King this week, “it's an unbelievable time to buy a house…go out and make a deal!”
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
tel 415.437.4505
Tuesday, September 30, 2008
Weekly Market Watch
September 8-14
It’s been referred to as “Nightmare on Wall Street.” In the past two weeks, the government took over Fannie Mae and Freddie Mac, Lehman Brothers filed for bankruptcy and Merrill Lynch sold itself to Bank of America. If that weren’t enough, the Federal Reserve announced late Tuesday night that it was loaning $85 billion to American International Group (AIG).
Our nation’s financial system is in the midst of a massive shakeup, caused largely in part by this decade’s housing correction. The housing correction has occurred largely because speculative investors as well as marginal borrowers were purchasing homes with unreal loans as fast as production builders could complete them. If you are living or working in an area that hasn’t had land available for substantial housing development in years, then you haven’t seen much of this in your local market. The higher-end communities around San Francisco that have showed the most resiliency to price declines have had extremely low levels of new home construction for decades. But overall, between 2002 and 2006, household borrowing grew at an average annual rate of 11%, far outpacing overall economic growth. Borrowing by financial institutions grew by a 10% annualized rate. Now many of those borrowers can’t pay back the loans, a problem that is exacerbated by the decline in housing prices in a majority of markets. They need to reduce their dependence on borrowed money, a painful and drawn-out process that can choke off credit and economic growth.
According to the Wall Street Journal this week, “At least three things need to happen to bring the deleveraging process to an end, and they're hard to do at once. Financial institutions and others need to fess up to their mistakes by selling or writing down the value of distressed assets they bought with borrowed money. They need to pay off debt. Finally, they need to rebuild their capital cushions, which have been eroded by losses on those distressed assets.”
Only time will tell how and when this shakeup will correct itself. The recent figures released by DataQuick (http://www.dqnews.com/News/California/Bay-Area/RRBay080918.aspx) this week are a hopeful sign, despite the negative news they unveil. Among the highlights:
“The pace of Bay Area home sales reversed its July uptick and dropped again last month, marking a return to the long-running waiting game that many potential buyers and sellers have been playing for more than a year.”
“A total of 7,232 new and resale houses and condos were sold in the nine-county Bay Area in August. That was down 4.7 percent from 7,586 in July, and down 0.9 percent from 7,299 in August 2007, according to San Diego-based MDA DataQuick.”
“Last month's sales total was the second-lowest for an August, behind 6,688 sales in August 1992, in MDA DataQuick's statistics, which go back to 1988. An "average" August had 10,031 sales, while the peak August in 2004 had 13,940.”
“At the county level, foreclosure sales ranged from 8.6 percent of resales in San Francisco to 61.3 percent in Solano County. In the Bay Area's other seven counties, August foreclosure sales were as follows: Contra Costa, 54.4 percent; Marin, 13.5 percent; Napa, 39 percent; Santa Clara, 24.7 percent; San Mateo, 16.6 percent; Sonoma, 41.6 percent.”
“The median price paid for all new and resale houses and condos sold in the Bay Area last month was $447,000, down 4.9 percent from $470,000 in July and down a record 31.8 percent from $655,000 in August 2007, according to MDA DataQuick.”
“Last month's median stood at the lowest point since January 2004, when it was $440,000. The median peaked at $665,000 in June, July and August of 2007.”
Waiting for the bright spot? Keep reading. There’s no question, the result of foreclosures have drastically hindered our median sales price in many of our markets. And for those sellers who are not under duress and are just looking to sell, they are forced to lower their prices dramatically just to compete.
But we knew that the housing correction posed the biggest risk to our economy and that our economy and our markets would not recover until the bulk of the housing correction was behind us. The good news is that we are in the midst of depleting much of our distressed inventory. With stats like 61.3% of sales in Solano County being foreclosure sales, 54.4% in Contra Costa and 41.6% in Sonoma County, we are starting to push through that negatively impacted inventory. And once we do, we will start to see a market rebound. No, it won’t happen overnight. But as it does, we will see first a leveling off and then, ultimately, a positive increase in market conditions.
So what has all of this week’s news done for our market? Honestly, people are concerned. I think we all are. This week’s news did nothing for consumer confidence which is why it is important that we remind our clients of the benefits of investing in real estate. Real estate is a strong, long-term investment and as long as our consumers keep that in mind, they may prevail in today’s market. Couple that with the fact that inventory levels are higher, interest rates are low, the conforming loan limits have increased and prices have decreased substantially in many markets, we have one of the best buyers markets in decades. So buyers, if you’re considering buying, now may be the time!
So with this valuable insight in tow, let’s take a look at this week in real estate:
East Bay—Berkeley continues to struggle with low inventory in some of its core markets including Berkeley, Albany, Kensington and El Cerrito. Just to give you an idea, we had a mob scene at a new Berkeley listing the other day despite the fact that it was a 60-step walk-up to the door and there were two football games playing and a street fair down the street. Castro Valley remains a hot spot for the first time home buyer with the market sizzling in the $275,000 to $350,000 range. Fremont is reporting that REOs continue to drive much of its market and Livermore noted that of the seven new pending sales this week, five were REOs and four of those five were at or below $215,000—these are prices we haven’t seen in years, folks. Lamorinda, which hasn’t been quite as affected by REOs is reporting that the market remains steady, though Agents who have had trouble putting deals together due to financing issues, are finally starting to see success—a good sign (hopefully) of things to come.
Monterey County—The market remained steady this week and we had a total of 17 ratified offers.
North Bay—Marin County, according to our Greenbrae office, seemed to be impacted by the news on Wall Street. Buyers in this market were a bit skittish this week as they watched the news unfold on the nightly news. Having said that, Agents were still quite busy with activity and searches so we’ll wait to see if those housing searches translate into ratified sales over the next several weeks. Our San Rafael office is noting that some condos in San Rafael are listed at an all time low of $125,000 and Novato is seeing an increase in activity in the $400,000-500,000 price point. Our Southern Marin office reported a well-priced waterfront Larkspur listing had four offers in the first weekend. Sonoma County sales continue to thrive thanks to REOs. Petaluma reported this week that four out of the six multiple-offer sales had 10 or more multiple offers. Santa Rosa reports that the under $500,000 market is moving quickly with anything above (typically) sitting.
Peninsula—News on the coast is bright! Our Half Moon Bay office reported that listings are up 40% this week, the largest increase in listings in several years. Overall the Peninsula seems to be enjoying a pick-up in the market this week, largely due to an increase in new inventory. Menlo Park Santa Cruz Avenue is reporting that new listings hit last week and more are to come; buyers, however, seem to be playing the wait and see game. Our Redwood City/San Carlos office reported that buyers are looking but aren’t quite ready to commit.
San Francisco—Lots of new inventory in the City! The well priced listings are going quickly—some with multiple offers—as evidenced by our Market Street office’s news that all but one property this week received three or more offers. Our Lombard office noted that San Francisco is at a good inventory balance right now which creates a positive environment for both buyers and sellers. The Van Ness office is reporting that things are picking up (as expected after the Labor Day holiday) in all price ranges.
Santa Cruz County—No information provided this week.
Silicon Valley—Things are looking pretty bright for Silicon Valley real estate. Cupertino DeAnza notes that “things are picking up and there is a lot of optimism at the sales meeting.” Los Altos First Street reports that buyers are still lining up for a few select properties. We had one very nicely redone and staged Cupertino townhome listed at $588,000. The listing had 14 offers and sold in the mid $600,000s. Los Altos San Antonio reports that we are seeing more floor time activity including a walk-in that translated into a $3 million listing and a floor call on a $1.5 million listing. While the news throughout Silicon Valley seems to be good, San Jose Almaden did report that the Wall Street news was ruffling quite a few feathers and was causing concern for some. We’ll have to watch as this plays out over the next few weeks and I would once again caution would be buyers that despite the economic hardships that our nation is enduring right now, real estate remains one of the strongest investments that you can put your dollar towards.
South County—The market seems to be relatively stable, driven largely by REOs. We saw a limited number of multiple offers this week, almost all were on REO properties.
Okay, so in looking at it, yes, the nation’s economic news did nothing for our wallets this week. Some are still sobbing over their investment portfolios. But as you can see, real estate has remained pretty stable in the face of the negative news on Wall Street. Real estate values don't ever reset to zero like you are seeing in some of the equities markets right now. There is only so much desirable land in our metropolitan areas, and as a result, real estate has always been more resilient than most other financial investments. Overall it appears buyers are starting to get the idea that it may just be time to get into the housing market and sitting on the sidelines may cost them plenty—in terms of higher prices, higher interest rates and less inventory.
Have a great week!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
It’s been referred to as “Nightmare on Wall Street.” In the past two weeks, the government took over Fannie Mae and Freddie Mac, Lehman Brothers filed for bankruptcy and Merrill Lynch sold itself to Bank of America. If that weren’t enough, the Federal Reserve announced late Tuesday night that it was loaning $85 billion to American International Group (AIG).
Our nation’s financial system is in the midst of a massive shakeup, caused largely in part by this decade’s housing correction. The housing correction has occurred largely because speculative investors as well as marginal borrowers were purchasing homes with unreal loans as fast as production builders could complete them. If you are living or working in an area that hasn’t had land available for substantial housing development in years, then you haven’t seen much of this in your local market. The higher-end communities around San Francisco that have showed the most resiliency to price declines have had extremely low levels of new home construction for decades. But overall, between 2002 and 2006, household borrowing grew at an average annual rate of 11%, far outpacing overall economic growth. Borrowing by financial institutions grew by a 10% annualized rate. Now many of those borrowers can’t pay back the loans, a problem that is exacerbated by the decline in housing prices in a majority of markets. They need to reduce their dependence on borrowed money, a painful and drawn-out process that can choke off credit and economic growth.
According to the Wall Street Journal this week, “At least three things need to happen to bring the deleveraging process to an end, and they're hard to do at once. Financial institutions and others need to fess up to their mistakes by selling or writing down the value of distressed assets they bought with borrowed money. They need to pay off debt. Finally, they need to rebuild their capital cushions, which have been eroded by losses on those distressed assets.”
Only time will tell how and when this shakeup will correct itself. The recent figures released by DataQuick (http://www.dqnews.com/News/California/Bay-Area/RRBay080918.aspx) this week are a hopeful sign, despite the negative news they unveil. Among the highlights:
“The pace of Bay Area home sales reversed its July uptick and dropped again last month, marking a return to the long-running waiting game that many potential buyers and sellers have been playing for more than a year.”
“A total of 7,232 new and resale houses and condos were sold in the nine-county Bay Area in August. That was down 4.7 percent from 7,586 in July, and down 0.9 percent from 7,299 in August 2007, according to San Diego-based MDA DataQuick.”
“Last month's sales total was the second-lowest for an August, behind 6,688 sales in August 1992, in MDA DataQuick's statistics, which go back to 1988. An "average" August had 10,031 sales, while the peak August in 2004 had 13,940.”
“At the county level, foreclosure sales ranged from 8.6 percent of resales in San Francisco to 61.3 percent in Solano County. In the Bay Area's other seven counties, August foreclosure sales were as follows: Contra Costa, 54.4 percent; Marin, 13.5 percent; Napa, 39 percent; Santa Clara, 24.7 percent; San Mateo, 16.6 percent; Sonoma, 41.6 percent.”
“The median price paid for all new and resale houses and condos sold in the Bay Area last month was $447,000, down 4.9 percent from $470,000 in July and down a record 31.8 percent from $655,000 in August 2007, according to MDA DataQuick.”
“Last month's median stood at the lowest point since January 2004, when it was $440,000. The median peaked at $665,000 in June, July and August of 2007.”
Waiting for the bright spot? Keep reading. There’s no question, the result of foreclosures have drastically hindered our median sales price in many of our markets. And for those sellers who are not under duress and are just looking to sell, they are forced to lower their prices dramatically just to compete.
But we knew that the housing correction posed the biggest risk to our economy and that our economy and our markets would not recover until the bulk of the housing correction was behind us. The good news is that we are in the midst of depleting much of our distressed inventory. With stats like 61.3% of sales in Solano County being foreclosure sales, 54.4% in Contra Costa and 41.6% in Sonoma County, we are starting to push through that negatively impacted inventory. And once we do, we will start to see a market rebound. No, it won’t happen overnight. But as it does, we will see first a leveling off and then, ultimately, a positive increase in market conditions.
So what has all of this week’s news done for our market? Honestly, people are concerned. I think we all are. This week’s news did nothing for consumer confidence which is why it is important that we remind our clients of the benefits of investing in real estate. Real estate is a strong, long-term investment and as long as our consumers keep that in mind, they may prevail in today’s market. Couple that with the fact that inventory levels are higher, interest rates are low, the conforming loan limits have increased and prices have decreased substantially in many markets, we have one of the best buyers markets in decades. So buyers, if you’re considering buying, now may be the time!
So with this valuable insight in tow, let’s take a look at this week in real estate:
East Bay—Berkeley continues to struggle with low inventory in some of its core markets including Berkeley, Albany, Kensington and El Cerrito. Just to give you an idea, we had a mob scene at a new Berkeley listing the other day despite the fact that it was a 60-step walk-up to the door and there were two football games playing and a street fair down the street. Castro Valley remains a hot spot for the first time home buyer with the market sizzling in the $275,000 to $350,000 range. Fremont is reporting that REOs continue to drive much of its market and Livermore noted that of the seven new pending sales this week, five were REOs and four of those five were at or below $215,000—these are prices we haven’t seen in years, folks. Lamorinda, which hasn’t been quite as affected by REOs is reporting that the market remains steady, though Agents who have had trouble putting deals together due to financing issues, are finally starting to see success—a good sign (hopefully) of things to come.
Monterey County—The market remained steady this week and we had a total of 17 ratified offers.
North Bay—Marin County, according to our Greenbrae office, seemed to be impacted by the news on Wall Street. Buyers in this market were a bit skittish this week as they watched the news unfold on the nightly news. Having said that, Agents were still quite busy with activity and searches so we’ll wait to see if those housing searches translate into ratified sales over the next several weeks. Our San Rafael office is noting that some condos in San Rafael are listed at an all time low of $125,000 and Novato is seeing an increase in activity in the $400,000-500,000 price point. Our Southern Marin office reported a well-priced waterfront Larkspur listing had four offers in the first weekend. Sonoma County sales continue to thrive thanks to REOs. Petaluma reported this week that four out of the six multiple-offer sales had 10 or more multiple offers. Santa Rosa reports that the under $500,000 market is moving quickly with anything above (typically) sitting.
Peninsula—News on the coast is bright! Our Half Moon Bay office reported that listings are up 40% this week, the largest increase in listings in several years. Overall the Peninsula seems to be enjoying a pick-up in the market this week, largely due to an increase in new inventory. Menlo Park Santa Cruz Avenue is reporting that new listings hit last week and more are to come; buyers, however, seem to be playing the wait and see game. Our Redwood City/San Carlos office reported that buyers are looking but aren’t quite ready to commit.
San Francisco—Lots of new inventory in the City! The well priced listings are going quickly—some with multiple offers—as evidenced by our Market Street office’s news that all but one property this week received three or more offers. Our Lombard office noted that San Francisco is at a good inventory balance right now which creates a positive environment for both buyers and sellers. The Van Ness office is reporting that things are picking up (as expected after the Labor Day holiday) in all price ranges.
Santa Cruz County—No information provided this week.
Silicon Valley—Things are looking pretty bright for Silicon Valley real estate. Cupertino DeAnza notes that “things are picking up and there is a lot of optimism at the sales meeting.” Los Altos First Street reports that buyers are still lining up for a few select properties. We had one very nicely redone and staged Cupertino townhome listed at $588,000. The listing had 14 offers and sold in the mid $600,000s. Los Altos San Antonio reports that we are seeing more floor time activity including a walk-in that translated into a $3 million listing and a floor call on a $1.5 million listing. While the news throughout Silicon Valley seems to be good, San Jose Almaden did report that the Wall Street news was ruffling quite a few feathers and was causing concern for some. We’ll have to watch as this plays out over the next few weeks and I would once again caution would be buyers that despite the economic hardships that our nation is enduring right now, real estate remains one of the strongest investments that you can put your dollar towards.
South County—The market seems to be relatively stable, driven largely by REOs. We saw a limited number of multiple offers this week, almost all were on REO properties.
Okay, so in looking at it, yes, the nation’s economic news did nothing for our wallets this week. Some are still sobbing over their investment portfolios. But as you can see, real estate has remained pretty stable in the face of the negative news on Wall Street. Real estate values don't ever reset to zero like you are seeing in some of the equities markets right now. There is only so much desirable land in our metropolitan areas, and as a result, real estate has always been more resilient than most other financial investments. Overall it appears buyers are starting to get the idea that it may just be time to get into the housing market and sitting on the sidelines may cost them plenty—in terms of higher prices, higher interest rates and less inventory.
Have a great week!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
September 1-7, 2008
Earlier this week, Federal officials unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.
As CNN pointed out, “The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington’s most dramatic attempt yet to shore up the nation’s housing market, which is suffering from record foreclosures and falling prices.”
Under this new plan, the government is stepping in to stabilize the mortgage market by taking conservatorship of the two entities. Essentially, the government will temporarily run Fannie Mae and Freddie Mac until they are on stronger footing.
So what does it mean for consumers? I see this is a positive step for our industry, one that should have a positive impact on consumers. The ultimate goals are to help stabilize the mortgage market, improve mortgage rates in the near term, improve consumer confidence and possibly spur some new housing demand.
NAR President Richard F. Gaylord responded to the news with this statement, “I commend Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen.
“NAR believes that the announced plan will help restore confidence in the secondary mortgage market. We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. This demonstrates that the government is clearly committed to keeping the flow of capital uninterrupted, which is crucial to the housing sector and the economy.”
Soon after the takeover was announced, Wall Street rebounded and interest rates dropped. Take a look at these excerpts from Tuesday’s USA Today article (http://www.usatoday.com/money/economy/housing/2008-09-08-fannie-freddie-effects_N.htm?loc=interstitialskip) entitled Mortgage rates drop; investors applaud Freddie, Fannie rescue:
“Wall Street staged its biggest rally in a month Monday as stock investors bet that the government's move to seize and backstop the USA's two largest mortgage finance companies will help stabilize the housing market, thaw credit markets and boost the ailing economy.”
“The Dow Jones industrial average jumped 289.78 points, or 2.6%, to 11,510.74. But common shares of Fannie and Freddie were essentially wiped out, since common-stock shareholders are last in line in any claims.”
“Average rates on 30-year fixed-rate mortgages, which have hovered well above 6% for months, plunged from 6.5% Friday to near 6% Monday, says Bankrate.com, according to national overnight averages. And most analysts expect the government's takeover of Fannie and Freddie to extend that decline, at least in the short term.
“In part, that's because in taking control of the two companies, the U.S. Treasury will buy mortgage-backed securities, thereby driving their prices up and mortgage yields down. The takeover should also shore up confidence in Fannie and Freddie and the mortgages they own or guarantee.”
I truly believe that the government rescue of Fannie Mae and Freddie Mac is a good thing for our industry and a great thing for interest rates and consumer confidence. It will be interesting to watch it unfold over the next several weeks.
With this week’s good news in tow, let’s take a look at this week in real estate:
East Bay—It seems the after Labor Day spike is working its magic in the East Bay these days. Castro Valley is reporting that open houses are well-attended and that buyers are coming out of the woodwork. Danville also has its fair share of good news noting that inventory is decreasing for the second week in a row and they are now down to a 4.4 month supply. Fremont is feeling the benefits of the REO market with a lot of activity in the entry level. Buyers seem to have a lot of interest in REOs and the potential bargains they hope to gain. Oakland is pleased to be seeing some good, quality listings on the market after a several-week slump in good inventory. I think we all anticipate that September and October will bring a much needed spike in sales to the East Bay.
Monterey County—We’ve been seeing an increase of new escrows in the last few weeks, in price ranges across the board.
North Bay—We are seeing spotty activity with well-staged, well-priced homes winning the prize of a sale. In Marin, under $800,000 is looking good, $800,000 to $1.4 million is quiet, $2 million range is slower and $3 million plus is solid. If we had more upper end listings, we’d sell them! Our San Rafael office is reporting that we are seeing a lot of activity in the entry level in Novato and San Rafael. Multiple offers are back and 80% of the San Rafael office’s deals this week are REO and/or short sales. The Marin Association of Realtors this week reported an incredible 57% increase in homes under contract from August 08 to August 07. A great sign of good things to come! For neighboring Sonoma County, action remains brisk below $500,000 with REOs commonplace throughout the entire county.
Peninsula—Our Half Moon Bay friends are singing the tune of new listings. Traditionally they have just about 110 listings on the market on the coast. Currently they have 148 which means better, more quality choices for buyers. The high-end market of the Peninsula seems to be moving well. Menlo Park is reporting that they had both a $3 million and a $5 million sale this week. Palo Alto continues to be plagued by lower inventory but is noting that though the inventory is low, buyers are looking for the right property that is priced well. Unless a home is priced well and shows well, even in a market that has limited inventory, it will sit. Buyers want value no matter what market you’re in. Our Redwood City office saw the first signs of the Freddie Mac and Fannie Mae takeover noting, “Slow week though buyers who were on the fence are now deciding to purchase with the government takeover of Fannie Mae and Freddie Mac.”
San Francisco—Our anticipated post Labor Day serge is coming to fruition in the City! We had a total of nine multiple offers amongst our five San Francisco offices this week. Our Market Street office noted, “Of the three multiple offers we had, one property had not even reached the open market. We had 10 new listings come on the market this week ranging from a condo at $499,000 to units at just under $3 million.” Our Lombard office saw a big post Labor Day week, too, noting that one sale was pre-emptive for 15% over in the $2 million range. The Van Ness and Noriega offices have yet to see the post Labor Day bounce but are confident they, too, will soon feel it. Van Ness continues to report success in the upper-end.
Santa Cruz County—Most of the sales activity continues to be in the entry level market. REO sales are largely in South County and scattered throughout other areas in the remainder of the county. All of this is having an impact on prices. There are some great deals in Santa Cruz County right now. The upper end of the market continues to lag with a surplus of inventory and few sales.
Silicon Valley—As our Cupertino office points out, “Lots of enthusiasm! Let’s hope it translates into transactions!” We’re definitely seeing increased buyer interest right now. Pendings are up 121% over this time last year and inventory is down. But buyers are still cautious and slow to make offers. Our Los Altos San Antonio office points out that “Activity was way up from last week. Buyers seem to be out in full force at our open homes.” Our Saratoga office concurs, despite what they thought was going to be a slow week. “Although sales have been decreasing,” said Saratoga Manager Pat McKeany, “we experienced a spike in sales yesterday with nine being processed. Hopefully this is a sign of improvement. Additionally we had 10 offers on a well-priced Saratoga home.”
South County—Continued to be driven by REOs, sales in the South County market have been steady over the last week. In many cases, REOs continue to generate a lot of buyer interest and often result in multiple offers. Sellers in this market seem to be getting the idea and we are starting to see some welcome price adjustments.
I know I said it last week, but now that Labor Day is over and everyone is back from vacation, I think we’re going to see a spike in sales. Couple that with some new-found stability in Fannie Mae, Freddie Mac, and we’re in a pretty solid situation heading into fall.
Have a great week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
tel 415.437.4505
Earlier this week, Federal officials unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.
As CNN pointed out, “The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington’s most dramatic attempt yet to shore up the nation’s housing market, which is suffering from record foreclosures and falling prices.”
Under this new plan, the government is stepping in to stabilize the mortgage market by taking conservatorship of the two entities. Essentially, the government will temporarily run Fannie Mae and Freddie Mac until they are on stronger footing.
So what does it mean for consumers? I see this is a positive step for our industry, one that should have a positive impact on consumers. The ultimate goals are to help stabilize the mortgage market, improve mortgage rates in the near term, improve consumer confidence and possibly spur some new housing demand.
NAR President Richard F. Gaylord responded to the news with this statement, “I commend Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen.
“NAR believes that the announced plan will help restore confidence in the secondary mortgage market. We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. This demonstrates that the government is clearly committed to keeping the flow of capital uninterrupted, which is crucial to the housing sector and the economy.”
Soon after the takeover was announced, Wall Street rebounded and interest rates dropped. Take a look at these excerpts from Tuesday’s USA Today article (http://www.usatoday.com/money/economy/housing/2008-09-08-fannie-freddie-effects_N.htm?loc=interstitialskip) entitled Mortgage rates drop; investors applaud Freddie, Fannie rescue:
“Wall Street staged its biggest rally in a month Monday as stock investors bet that the government's move to seize and backstop the USA's two largest mortgage finance companies will help stabilize the housing market, thaw credit markets and boost the ailing economy.”
“The Dow Jones industrial average jumped 289.78 points, or 2.6%, to 11,510.74. But common shares of Fannie and Freddie were essentially wiped out, since common-stock shareholders are last in line in any claims.”
“Average rates on 30-year fixed-rate mortgages, which have hovered well above 6% for months, plunged from 6.5% Friday to near 6% Monday, says Bankrate.com, according to national overnight averages. And most analysts expect the government's takeover of Fannie and Freddie to extend that decline, at least in the short term.
“In part, that's because in taking control of the two companies, the U.S. Treasury will buy mortgage-backed securities, thereby driving their prices up and mortgage yields down. The takeover should also shore up confidence in Fannie and Freddie and the mortgages they own or guarantee.”
I truly believe that the government rescue of Fannie Mae and Freddie Mac is a good thing for our industry and a great thing for interest rates and consumer confidence. It will be interesting to watch it unfold over the next several weeks.
With this week’s good news in tow, let’s take a look at this week in real estate:
East Bay—It seems the after Labor Day spike is working its magic in the East Bay these days. Castro Valley is reporting that open houses are well-attended and that buyers are coming out of the woodwork. Danville also has its fair share of good news noting that inventory is decreasing for the second week in a row and they are now down to a 4.4 month supply. Fremont is feeling the benefits of the REO market with a lot of activity in the entry level. Buyers seem to have a lot of interest in REOs and the potential bargains they hope to gain. Oakland is pleased to be seeing some good, quality listings on the market after a several-week slump in good inventory. I think we all anticipate that September and October will bring a much needed spike in sales to the East Bay.
Monterey County—We’ve been seeing an increase of new escrows in the last few weeks, in price ranges across the board.
North Bay—We are seeing spotty activity with well-staged, well-priced homes winning the prize of a sale. In Marin, under $800,000 is looking good, $800,000 to $1.4 million is quiet, $2 million range is slower and $3 million plus is solid. If we had more upper end listings, we’d sell them! Our San Rafael office is reporting that we are seeing a lot of activity in the entry level in Novato and San Rafael. Multiple offers are back and 80% of the San Rafael office’s deals this week are REO and/or short sales. The Marin Association of Realtors this week reported an incredible 57% increase in homes under contract from August 08 to August 07. A great sign of good things to come! For neighboring Sonoma County, action remains brisk below $500,000 with REOs commonplace throughout the entire county.
Peninsula—Our Half Moon Bay friends are singing the tune of new listings. Traditionally they have just about 110 listings on the market on the coast. Currently they have 148 which means better, more quality choices for buyers. The high-end market of the Peninsula seems to be moving well. Menlo Park is reporting that they had both a $3 million and a $5 million sale this week. Palo Alto continues to be plagued by lower inventory but is noting that though the inventory is low, buyers are looking for the right property that is priced well. Unless a home is priced well and shows well, even in a market that has limited inventory, it will sit. Buyers want value no matter what market you’re in. Our Redwood City office saw the first signs of the Freddie Mac and Fannie Mae takeover noting, “Slow week though buyers who were on the fence are now deciding to purchase with the government takeover of Fannie Mae and Freddie Mac.”
San Francisco—Our anticipated post Labor Day serge is coming to fruition in the City! We had a total of nine multiple offers amongst our five San Francisco offices this week. Our Market Street office noted, “Of the three multiple offers we had, one property had not even reached the open market. We had 10 new listings come on the market this week ranging from a condo at $499,000 to units at just under $3 million.” Our Lombard office saw a big post Labor Day week, too, noting that one sale was pre-emptive for 15% over in the $2 million range. The Van Ness and Noriega offices have yet to see the post Labor Day bounce but are confident they, too, will soon feel it. Van Ness continues to report success in the upper-end.
Santa Cruz County—Most of the sales activity continues to be in the entry level market. REO sales are largely in South County and scattered throughout other areas in the remainder of the county. All of this is having an impact on prices. There are some great deals in Santa Cruz County right now. The upper end of the market continues to lag with a surplus of inventory and few sales.
Silicon Valley—As our Cupertino office points out, “Lots of enthusiasm! Let’s hope it translates into transactions!” We’re definitely seeing increased buyer interest right now. Pendings are up 121% over this time last year and inventory is down. But buyers are still cautious and slow to make offers. Our Los Altos San Antonio office points out that “Activity was way up from last week. Buyers seem to be out in full force at our open homes.” Our Saratoga office concurs, despite what they thought was going to be a slow week. “Although sales have been decreasing,” said Saratoga Manager Pat McKeany, “we experienced a spike in sales yesterday with nine being processed. Hopefully this is a sign of improvement. Additionally we had 10 offers on a well-priced Saratoga home.”
South County—Continued to be driven by REOs, sales in the South County market have been steady over the last week. In many cases, REOs continue to generate a lot of buyer interest and often result in multiple offers. Sellers in this market seem to be getting the idea and we are starting to see some welcome price adjustments.
I know I said it last week, but now that Labor Day is over and everyone is back from vacation, I think we’re going to see a spike in sales. Couple that with some new-found stability in Fannie Mae, Freddie Mac, and we’re in a pretty solid situation heading into fall.
Have a great week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
tel 415.437.4505
Monday, September 8, 2008
Weekly Market Watch
Weekly Market Watch
August 24-30, 2008
Labor Day is behind us. Kids are back in school, the last of the summer vacations concluded. Now that the traditionally slow July and August months are past, we do anticipate that sales will begin to pick up in September and October. This is typically the time of year in which serious buyers begin to take action—hoping to get into their new home before the holidays.
And now that clients, and our Agents for that matter, have returned from their vacations and are homeward bound, we should see a pretty decent pick-up in sales activity. Of course, only time will tell but if history is any indicator, we are anticipating a more robust September than we saw in July and August. From what I have heard stopping by offices this week, there is already a decent increase in quality listings coming to the market over the next several weeks.
Overall, the Bay Area housing market is running pretty steady as we head into fall. Certainly there are pockets in which sales activity is thriving thanks to REOs. And in certain markets like San Francisco, the North Bay and parts of the Peninsula, we are seeing a lot of activity in the upper end. But for the most part, generally speaking, the market is moving steady—erring on the side of status quo for a buyer’s market.
Homes are selling. But again, as I’ve said in past editions of Weekly Market Watch, only those homes that are priced right, show well, are in a good location and are seen as a “value” to buyers in this market, are moving in a timely manner. Others tend to sit.
Buyers are perusing. Yes, perusing seems the most appropriate choice of words. In talking with many of our Agents, it is apparent that we’ve successfully driven the message home that this is one of the best buyer’s markets in more than a decade to buy and the good news is that many buyers are starting to get their feet wet through increased open house activity, increased floor calls and even an increase in pendings—with Santa Clara County last week reporting that pending sales were up 121% this week, year over year. Those wet feet, however, haven’t resulted in closed sales quite yet and only time will tell if they do.
So while we wait to see what becomes of the wet feet, let’s take a look at this week in real estate:
· East Bay—Still a lot of activity based on REOs. Short sales are finally starting to get approvals which will help to decrease some of our standing inventory. Lamorinda is reporting that it is “hot, hot, hot!” In fact, the office noted that listings aren’t lasting long and most are seeing multiple offers. Of course this is one of the few Bay Area markets that hasn’t felt the effects of REOs and short sales. Our Walnut Creek office is noting that some REOs in Antioch are receiving 10+ offers, with the accepted offer 10-15% over the asking price.
· Monterey County—This largely second home market enjoyed the benefits of the three day weekend as potential buyers came to Monterey in droves, particularly in Carmel. A number of offers were written over the weekend and we are holding twice as many deposit checks than usual so things definitely seem to be picking up. We put a $3.5 million and a $4.5 million listing into escrow this week.
· North Bay—Our Southern Marin office is noting that activity is picking up with more listings coming on the market. This week, in fact, our Southern Marin office introduced five new Previews listings to the market and put one Previews listing ($2.7 million) in escrow that had been on the market for 400 days. Things are looking up! Sonoma County is still seeing a lot of lower-end, REO activity. One REO out of our Sebastopol office this week received 27 offers.
· Peninsula—Our Half Moon Bay office is reporting that even with the Labor Day weekend, things are still moving briskly. We had 18 homes open over the three day weekend on the coast and Agents reported a lot of serious and motivated buyers. Palo Alto is still feeling the effects of low—painfully low—inventory. But the good news is that they expect that even in the next few days to get some good, quality inventory brought it to spur some more buyer interest.
· San Francisco—Our Lakeside Manager said it best, “We are waiting for the market to heat up. Multiple offers are a result of proper pricing, not market conditions.” This is a good lesson for sellers that if you price your home properly and competitively, you may be able to generate some good, solid interest from buyers. Overall, coming off the Labor Day weekend, things have been pretty quiet in the City. We’re awaiting some exciting new inventory to come on the market in the next two weeks which will move us back into a more normal market for the City.
· Santa Cruz County—No information this week.
· Silicon Valley—I think we are all going to be glad when everyone is back in school and work, Silicon Valley especially. Certain areas of Silicon Valley are dealing with the challenge of a lack of quality inventory which is driving would-be buyers back on to the fence. There just aren’t enough quality listings to attract buyers to the market. The good news is that many of our Agents have spent their August preparing their clients’ listings for sale and we expect some good inventory to come on the market over the next few weeks. This should help to stimulate things for our Silicon Valley clients as right now, things are pretty quiet.
· South County—The REO market and lower priced homes continue to drive our South County market. We continue to see multiple offers on REOs and short sales.
Now that the Labor Day holiday is over, we have a lot to look forward to. The dog days of summer are behind us and now we can move forward to the more robust Fall selling season. Buyers, start your engines! Sellers, get ready to negotiate, be reasonable and prepared, and don’t forget to remain competitive.
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
August 24-30, 2008
Labor Day is behind us. Kids are back in school, the last of the summer vacations concluded. Now that the traditionally slow July and August months are past, we do anticipate that sales will begin to pick up in September and October. This is typically the time of year in which serious buyers begin to take action—hoping to get into their new home before the holidays.
And now that clients, and our Agents for that matter, have returned from their vacations and are homeward bound, we should see a pretty decent pick-up in sales activity. Of course, only time will tell but if history is any indicator, we are anticipating a more robust September than we saw in July and August. From what I have heard stopping by offices this week, there is already a decent increase in quality listings coming to the market over the next several weeks.
Overall, the Bay Area housing market is running pretty steady as we head into fall. Certainly there are pockets in which sales activity is thriving thanks to REOs. And in certain markets like San Francisco, the North Bay and parts of the Peninsula, we are seeing a lot of activity in the upper end. But for the most part, generally speaking, the market is moving steady—erring on the side of status quo for a buyer’s market.
Homes are selling. But again, as I’ve said in past editions of Weekly Market Watch, only those homes that are priced right, show well, are in a good location and are seen as a “value” to buyers in this market, are moving in a timely manner. Others tend to sit.
Buyers are perusing. Yes, perusing seems the most appropriate choice of words. In talking with many of our Agents, it is apparent that we’ve successfully driven the message home that this is one of the best buyer’s markets in more than a decade to buy and the good news is that many buyers are starting to get their feet wet through increased open house activity, increased floor calls and even an increase in pendings—with Santa Clara County last week reporting that pending sales were up 121% this week, year over year. Those wet feet, however, haven’t resulted in closed sales quite yet and only time will tell if they do.
So while we wait to see what becomes of the wet feet, let’s take a look at this week in real estate:
· East Bay—Still a lot of activity based on REOs. Short sales are finally starting to get approvals which will help to decrease some of our standing inventory. Lamorinda is reporting that it is “hot, hot, hot!” In fact, the office noted that listings aren’t lasting long and most are seeing multiple offers. Of course this is one of the few Bay Area markets that hasn’t felt the effects of REOs and short sales. Our Walnut Creek office is noting that some REOs in Antioch are receiving 10+ offers, with the accepted offer 10-15% over the asking price.
· Monterey County—This largely second home market enjoyed the benefits of the three day weekend as potential buyers came to Monterey in droves, particularly in Carmel. A number of offers were written over the weekend and we are holding twice as many deposit checks than usual so things definitely seem to be picking up. We put a $3.5 million and a $4.5 million listing into escrow this week.
· North Bay—Our Southern Marin office is noting that activity is picking up with more listings coming on the market. This week, in fact, our Southern Marin office introduced five new Previews listings to the market and put one Previews listing ($2.7 million) in escrow that had been on the market for 400 days. Things are looking up! Sonoma County is still seeing a lot of lower-end, REO activity. One REO out of our Sebastopol office this week received 27 offers.
· Peninsula—Our Half Moon Bay office is reporting that even with the Labor Day weekend, things are still moving briskly. We had 18 homes open over the three day weekend on the coast and Agents reported a lot of serious and motivated buyers. Palo Alto is still feeling the effects of low—painfully low—inventory. But the good news is that they expect that even in the next few days to get some good, quality inventory brought it to spur some more buyer interest.
· San Francisco—Our Lakeside Manager said it best, “We are waiting for the market to heat up. Multiple offers are a result of proper pricing, not market conditions.” This is a good lesson for sellers that if you price your home properly and competitively, you may be able to generate some good, solid interest from buyers. Overall, coming off the Labor Day weekend, things have been pretty quiet in the City. We’re awaiting some exciting new inventory to come on the market in the next two weeks which will move us back into a more normal market for the City.
· Santa Cruz County—No information this week.
· Silicon Valley—I think we are all going to be glad when everyone is back in school and work, Silicon Valley especially. Certain areas of Silicon Valley are dealing with the challenge of a lack of quality inventory which is driving would-be buyers back on to the fence. There just aren’t enough quality listings to attract buyers to the market. The good news is that many of our Agents have spent their August preparing their clients’ listings for sale and we expect some good inventory to come on the market over the next few weeks. This should help to stimulate things for our Silicon Valley clients as right now, things are pretty quiet.
· South County—The REO market and lower priced homes continue to drive our South County market. We continue to see multiple offers on REOs and short sales.
Now that the Labor Day holiday is over, we have a lot to look forward to. The dog days of summer are behind us and now we can move forward to the more robust Fall selling season. Buyers, start your engines! Sellers, get ready to negotiate, be reasonable and prepared, and don’t forget to remain competitive.
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
Weekly Market Watch
August 11-17
Finally, we’re starting to see some positive news from the media. For weeks we’ve been remarking on the fact that REOs have been an adrenaline boost for much of the Bay Area housing market. Well, this week, the media finally jumped on board with headlines like “Prices fall, California home sales surge” and “Bay Area home sales show life” thanks to the release of DataQuick’s July report (http://www.dqnews.com/News/California/Bay-Area/RRBay080819.aspx) which noted “July sales were the highest for any month since June 2007 and marked the first annual sales gain for any month since January 2005.”
Of course, this boost is undoubtedly the result of foreclosures which made up 33% of all Bay Area resales. That was up from 29.9% in June and up from 4.2% from July 2007. According to DataQuick’s report, “Foreclosure resales ranged from 4.6% of the resale market in San Francisco to 65.9% in Solano County. In Solano and Contra Costa counties, where deeply discounted foreclosures are most common, 11 zip codes posted sales of exiting houses that were at least twice as high as in July 2007.”
So while all of the foreclosures are a good boost for sales, they certainly are dragging down our median. According to DataQuick, the median sales price dropped $47,000 or 3.1 percent lower than June and a 29.3 percent drop from the peak median home sale price of $665,000, reached a year ago.
Here is a graph supplied by DataQuick which provides more detail:
Sales Volume
Median Price
All homes
Jul-07
Jul-08
%Chng
Jul-07
Jul-08
%Chng
Alameda
1,577
1,428
-9.4%
$605,000
$440,000
-27.30%
Contra Costa
1,328
1,730
30.3%
$599,000
$350,000
-41.60%
Marin
306
277
-9.5%
$887,500
$770,000
-13.20%
Napa
85
125
47.1%
$614,500
$440,000
-28.40%
Santa Clara
1,910
1,660
-13.1%
$700,000
$585,500
-16.40%
San Francisco
564
609
8.0%
$799,000
$749,000
-6.3%
San Mateo
728
648
-11.0%
$800,000
$670,000
-16.30%
Solano
408
592
45.1%
$415,000
$275,000
-33.70%
Sonoma
517
517
0.0%
$520,000
$362,500
-30.30%
Bay Area
7,423
7,586
2.2%
$665,000
$470,000
-29.30%
So who is buying these foreclosures? Is it first time home buyers? A surge of investors? For the most part we are seeing a combination of both, but largely we are seeing a lot of first time home buyers entering the market looking for their first opportunity to own a slice of the Golden State. Many of these people were priced out of the market for years—during the housing boom of the earlier part of this decade—and are now finally able to take advantage of purchasing their first home at a discounted rate, historically speaking, of course.
Foreclosures. Lower medians. It sounds bad, doesn’t it? But in all honesty, this is all part of the economic cycle. As much as we (home owners) all would’ve liked, our economy couldn’t maintain the double digital increases we saw in home prices in 2004 and 2005 without seeing a shift. If we had continued with an increase of that magnitude, we would have completely eliminated the first time home buyer market which ultimately would have been detrimental to our economy. We need first time home buyers to help drive our market. They create that domino effect that ultimately affects all housing price points.
While the news seems mixed, keep in mind that we need this to regain our strength in the market. Is this a trend? Is the market turning around? It’s a little too soon to say officially but as we continue to burn off these foreclosures and buyers and sellers get off the sidelines, we’ll get a much better understanding of where our market is headed.
Until then, the news is bright and the media finally has something new to report which is good news for all of us. So now, let’s take a look at our local markets for the week:
East Bay—Castro Valley’s micromarket is continuing to experience a frenzy of buyer driven activity. We are noticing an influx of buyers who want to relocate from the Tracy area into the Bay Area and they are happy to take advantage of the opportunity to get closer to their Bay Area jobs. Berkeley is telling a similar story, with a new addition—properties going up for auction. In fact, we have two REOs going to auction and one of our Agents recently represented a buyer who was successful at an auction in Berkeley. Berkeley, Albany and Kensington still have less than two months supply. Interestingly, San Pablo in West Contra Costa is showing much less inventory than three months ago. The REO sales have really picked up since May and have decreased the supply by half in some communities. The remainder of the market seems mixed with REOs moving briskly and other resales remaining a bit quiet during this traditional August slowdown.
Monterey County—Units are up year-to-date on the Monterey Peninsula, but that is mostly in the lower-priced Seaside and Marina, not in the higher-priced areas like Carmel and Pebble Beach. We had two multiple offers this week, both on REOs.
North Bay—Now that many schools in the North Bay are back in session, we’re starting to see a real estate surge. It seems our vacationing clients and Agents, for that matter, are back to work. In fact, Petaluma is reporting that 85% of the offers that were written were in multiple offer situations and the majority of them were under $500,000. In Sebastopol, multiple offers were prominent in the under $400,000 mark and over the $1.2 million mark. But where is the move-up market? Seems to be in a bit of a lull. In San Rafael, our average days on market has dropped compared to last August, although the average sales price is down. In Novato, you can purchase a townhome for under $300,000—something we haven’t seen in years. Welcome home first time home buyers! The more affluent Southern Marin seems to remain in the midst of the traditional August slowdown though I’m sure that will lift over the coming days and weeks.
Peninsula—The Peninsula is one of three markets that has been hardly affected by REOs and short sales. In fact, on a loan-by-loan basis, mortgages were least likely to go into default in San Francisco, Marin and San Mateo counties—an historic norm. Burlingame is reporting good news this week, noting that more buyers are deciding that now is the time to make offers. And the best is yet to come as many of our sellers are preparing for some exciting fall inventory. We’re looking forward to introducing those to the marketplace. The Half Moon Bay coast remains slow though they are quick to report that open house activity is strong and buyer negotiations are serious so hopefully that is a sign of good things to come for our coastal neighbors. In Menlo Park, open house activity is good, particularly in the low to mid $2 million range. This is good news as we need good inventory as buyers are preparing to buy. We can feel it! Palo Alto continues its fourth week of low inventories. Almost all properties that are priced well go into multiple offers in this hot market.
San Francisco—With San Francisco having the lowest foreclosure rate in the Bay Area (just 4.6% of sales were in foreclosure last month), the City continues a pretty steady pace. Our high end market, which isn’t as affected by the variations in mortgage rates, the hardening economic times and other influences, seems to be fairing quite well. The entry and mid-level markets are a mixed bag and hard to judge. Open house activity is strong. But sales are slower, though, again, certainly expected for this time of year. Having said that, our Noriega office this week reported that one Sunset home received nine offers and went $70,000 over asking. Again, it’s hard to judge just what will generate the buyer interest in today’s City market.
Santa Cruz County—Open house activity is steady and buyers continue to check out the market and watch prices. It appears in some instances that continuing to lower the price on listings will not necessarily generate an offer if the property has been on the market for a while. The best strategy for sellers—and this goes for all regions, not just Santa Cruz—is to price the property strategically when it is put on the market and attempt a multiple offer situation or at minimum, increased buyer interest.
Silicon Valley—It depends on which part of Silicon Valley and which price point we are talking. Some areas like Cupertino, Los Gatos and Los Altos are reporting that the summer doldrums are taking their toll on the market, though they expect a decent bump once school is in session beginning next week. The majority of the activity is to no one’s surprise, REOs and short sales. REOs and properties that are perceived as a value are selling briskly so those sellers who are looking to sell should consider what they are going up against and price their homes accordingly. One of the bright spots in this market is the fact that we continue to see a lot of buyer interest and activity. Our floor calls are up in the offices. Open house activity is increasing. And pendings are even reportedly up in Saratoga, a community that hasn’t been as hard hit by the REO boom.
South County—This market is still driven by REOs. We continue to see multiple offers on many REOs and we’re pleased to report that several short sales are getting approved. Listing inventory has steadily decreased in Gilroy as have the days on market. Both good signs for a market rebound.
School will soon be back in session which means vacations and the summer doldrums will soon be over. Historically speaking, we typically see a bump in the housing market during September so we may expect that over the next few weeks, especially in light of the increased buyer interest we are seeing.
My best advice? Stay on course. Savvy buyers may want to take advantage of the opportunities that are available to them in today’s market because these may not come around again for another decade (or more). Sellers, it can be a tough market but keep it in perspective. We saw years of double digit appreciation and while that has slowed, our market has remained relatively stable through this housing correction.
The future is bright for Northern California real estate. We’re seeing it each and every day with new, eager buyers entering the marketplace and inventories beginning to show signs of decrease. Couple that with the fact that the media may be finally coming on board, things couldn’t be looking better.
Have a great week!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
August 11-17
Finally, we’re starting to see some positive news from the media. For weeks we’ve been remarking on the fact that REOs have been an adrenaline boost for much of the Bay Area housing market. Well, this week, the media finally jumped on board with headlines like “Prices fall, California home sales surge” and “Bay Area home sales show life” thanks to the release of DataQuick’s July report (http://www.dqnews.com/News/California/Bay-Area/RRBay080819.aspx) which noted “July sales were the highest for any month since June 2007 and marked the first annual sales gain for any month since January 2005.”
Of course, this boost is undoubtedly the result of foreclosures which made up 33% of all Bay Area resales. That was up from 29.9% in June and up from 4.2% from July 2007. According to DataQuick’s report, “Foreclosure resales ranged from 4.6% of the resale market in San Francisco to 65.9% in Solano County. In Solano and Contra Costa counties, where deeply discounted foreclosures are most common, 11 zip codes posted sales of exiting houses that were at least twice as high as in July 2007.”
So while all of the foreclosures are a good boost for sales, they certainly are dragging down our median. According to DataQuick, the median sales price dropped $47,000 or 3.1 percent lower than June and a 29.3 percent drop from the peak median home sale price of $665,000, reached a year ago.
Here is a graph supplied by DataQuick which provides more detail:
Sales Volume
Median Price
All homes
Jul-07
Jul-08
%Chng
Jul-07
Jul-08
%Chng
Alameda
1,577
1,428
-9.4%
$605,000
$440,000
-27.30%
Contra Costa
1,328
1,730
30.3%
$599,000
$350,000
-41.60%
Marin
306
277
-9.5%
$887,500
$770,000
-13.20%
Napa
85
125
47.1%
$614,500
$440,000
-28.40%
Santa Clara
1,910
1,660
-13.1%
$700,000
$585,500
-16.40%
San Francisco
564
609
8.0%
$799,000
$749,000
-6.3%
San Mateo
728
648
-11.0%
$800,000
$670,000
-16.30%
Solano
408
592
45.1%
$415,000
$275,000
-33.70%
Sonoma
517
517
0.0%
$520,000
$362,500
-30.30%
Bay Area
7,423
7,586
2.2%
$665,000
$470,000
-29.30%
So who is buying these foreclosures? Is it first time home buyers? A surge of investors? For the most part we are seeing a combination of both, but largely we are seeing a lot of first time home buyers entering the market looking for their first opportunity to own a slice of the Golden State. Many of these people were priced out of the market for years—during the housing boom of the earlier part of this decade—and are now finally able to take advantage of purchasing their first home at a discounted rate, historically speaking, of course.
Foreclosures. Lower medians. It sounds bad, doesn’t it? But in all honesty, this is all part of the economic cycle. As much as we (home owners) all would’ve liked, our economy couldn’t maintain the double digital increases we saw in home prices in 2004 and 2005 without seeing a shift. If we had continued with an increase of that magnitude, we would have completely eliminated the first time home buyer market which ultimately would have been detrimental to our economy. We need first time home buyers to help drive our market. They create that domino effect that ultimately affects all housing price points.
While the news seems mixed, keep in mind that we need this to regain our strength in the market. Is this a trend? Is the market turning around? It’s a little too soon to say officially but as we continue to burn off these foreclosures and buyers and sellers get off the sidelines, we’ll get a much better understanding of where our market is headed.
Until then, the news is bright and the media finally has something new to report which is good news for all of us. So now, let’s take a look at our local markets for the week:
East Bay—Castro Valley’s micromarket is continuing to experience a frenzy of buyer driven activity. We are noticing an influx of buyers who want to relocate from the Tracy area into the Bay Area and they are happy to take advantage of the opportunity to get closer to their Bay Area jobs. Berkeley is telling a similar story, with a new addition—properties going up for auction. In fact, we have two REOs going to auction and one of our Agents recently represented a buyer who was successful at an auction in Berkeley. Berkeley, Albany and Kensington still have less than two months supply. Interestingly, San Pablo in West Contra Costa is showing much less inventory than three months ago. The REO sales have really picked up since May and have decreased the supply by half in some communities. The remainder of the market seems mixed with REOs moving briskly and other resales remaining a bit quiet during this traditional August slowdown.
Monterey County—Units are up year-to-date on the Monterey Peninsula, but that is mostly in the lower-priced Seaside and Marina, not in the higher-priced areas like Carmel and Pebble Beach. We had two multiple offers this week, both on REOs.
North Bay—Now that many schools in the North Bay are back in session, we’re starting to see a real estate surge. It seems our vacationing clients and Agents, for that matter, are back to work. In fact, Petaluma is reporting that 85% of the offers that were written were in multiple offer situations and the majority of them were under $500,000. In Sebastopol, multiple offers were prominent in the under $400,000 mark and over the $1.2 million mark. But where is the move-up market? Seems to be in a bit of a lull. In San Rafael, our average days on market has dropped compared to last August, although the average sales price is down. In Novato, you can purchase a townhome for under $300,000—something we haven’t seen in years. Welcome home first time home buyers! The more affluent Southern Marin seems to remain in the midst of the traditional August slowdown though I’m sure that will lift over the coming days and weeks.
Peninsula—The Peninsula is one of three markets that has been hardly affected by REOs and short sales. In fact, on a loan-by-loan basis, mortgages were least likely to go into default in San Francisco, Marin and San Mateo counties—an historic norm. Burlingame is reporting good news this week, noting that more buyers are deciding that now is the time to make offers. And the best is yet to come as many of our sellers are preparing for some exciting fall inventory. We’re looking forward to introducing those to the marketplace. The Half Moon Bay coast remains slow though they are quick to report that open house activity is strong and buyer negotiations are serious so hopefully that is a sign of good things to come for our coastal neighbors. In Menlo Park, open house activity is good, particularly in the low to mid $2 million range. This is good news as we need good inventory as buyers are preparing to buy. We can feel it! Palo Alto continues its fourth week of low inventories. Almost all properties that are priced well go into multiple offers in this hot market.
San Francisco—With San Francisco having the lowest foreclosure rate in the Bay Area (just 4.6% of sales were in foreclosure last month), the City continues a pretty steady pace. Our high end market, which isn’t as affected by the variations in mortgage rates, the hardening economic times and other influences, seems to be fairing quite well. The entry and mid-level markets are a mixed bag and hard to judge. Open house activity is strong. But sales are slower, though, again, certainly expected for this time of year. Having said that, our Noriega office this week reported that one Sunset home received nine offers and went $70,000 over asking. Again, it’s hard to judge just what will generate the buyer interest in today’s City market.
Santa Cruz County—Open house activity is steady and buyers continue to check out the market and watch prices. It appears in some instances that continuing to lower the price on listings will not necessarily generate an offer if the property has been on the market for a while. The best strategy for sellers—and this goes for all regions, not just Santa Cruz—is to price the property strategically when it is put on the market and attempt a multiple offer situation or at minimum, increased buyer interest.
Silicon Valley—It depends on which part of Silicon Valley and which price point we are talking. Some areas like Cupertino, Los Gatos and Los Altos are reporting that the summer doldrums are taking their toll on the market, though they expect a decent bump once school is in session beginning next week. The majority of the activity is to no one’s surprise, REOs and short sales. REOs and properties that are perceived as a value are selling briskly so those sellers who are looking to sell should consider what they are going up against and price their homes accordingly. One of the bright spots in this market is the fact that we continue to see a lot of buyer interest and activity. Our floor calls are up in the offices. Open house activity is increasing. And pendings are even reportedly up in Saratoga, a community that hasn’t been as hard hit by the REO boom.
South County—This market is still driven by REOs. We continue to see multiple offers on many REOs and we’re pleased to report that several short sales are getting approved. Listing inventory has steadily decreased in Gilroy as have the days on market. Both good signs for a market rebound.
School will soon be back in session which means vacations and the summer doldrums will soon be over. Historically speaking, we typically see a bump in the housing market during September so we may expect that over the next few weeks, especially in light of the increased buyer interest we are seeing.
My best advice? Stay on course. Savvy buyers may want to take advantage of the opportunities that are available to them in today’s market because these may not come around again for another decade (or more). Sellers, it can be a tough market but keep it in perspective. We saw years of double digit appreciation and while that has slowed, our market has remained relatively stable through this housing correction.
The future is bright for Northern California real estate. We’re seeing it each and every day with new, eager buyers entering the marketplace and inventories beginning to show signs of decrease. Couple that with the fact that the media may be finally coming on board, things couldn’t be looking better.
Have a great week!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
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