Week of November 3 - 9
What we are enduring is no longer a national economic crisis. We are full swing in a global financial crisis that has affected at least 11 countries around the world. Brazil, China, Germany, Iceland, India, Japan, Russia, Saudi Arabia, South Africa and the United Kingdom are now all reporting economic declines and many experts agree that their woes are a direct result of the U.S. housing decline.
World leaders gathered in Washington on Friday to talk about what is needed to get the global economy back on track. Leaders from the Group of 20, which includes the United States, members of the European Union, China, Saudi Arabia and Brazil, agreed to the summit late last month at the height of the global financial crisis.
Our government continues to struggle with finding a solid, coherent plan to give necessary aid to the troubled credit and housing sectors. The administration is still working on the best way to deploy the remaining money in the $700 billion financial rescue plan passed last month. Treasury Secretary Henry Paulson said Wednesday that the government will no longer buy troubled mortgage backed securities—the original intent of the legislation—and will mainly focus on injecting money into the financial sector.
The stock market continues its frenetically sharp swings. This week brought further poor unemployment numbers, and then disappointing retail sales which were off, the resulting fear causing sell-offs, which ultimately attracted buyers taking advantage of lower stock prices. Sounds familiar, right? Each week for more than a month and a half, it’s been about the same story on Wall Street.
CAR’s chief economist Leslie Appleton-Young recently gave her 2009 housing forecast at the CAR statewide meetings in Long Beach. Here is the link to her video presentation, which I encourage to take the time to watch. It’s a little over 45 minutes, and very worthwhile. (http://www.car.org/newsstand/2009forecast/).
Specifically, Leslie shares how California compares to the rest of the country, noting that while our hardest hit areas decreased further and faster than the country as a whole, these areas are also rebounding at a much faster rate than the rest of the country. It is an important fact that consumers should be aware of.
She also shares the importance of local forecasting noting that it really is a mistake to paint the California real estate market with a broad brush. Markets like the Central Valley were hit much harder than the Bay Area yet are often lumped in to make sensational headlines for real estate stories. Our sales in the Bay Area, according to DataQuick, have increased 45% since 2007. Two things we know about this sharp rise in Bay Area sales is that they are largely fueled by REO’s, and that they are dramatically pushing median price down. The positive fact is that these homes are indeed selling, and at a fairly rapid rate. As we weed through the bank owned listings, inventory will begin to decline, which will eventually cause the price point to increase.
With this week’s economic update in tow, let’s take a look at our week in real estate:
East Bay—It seems we saw a little life breathed into our East Bay market this week. After a quiet week last week—when we were in the height of the economic rollercoaster—we started seeing some steady activity this week. Nothing to write home to mom about, but some steady activity just the same. Walnut Creek reports that sales are slow but REO properties remain active. Orinda reports that sales have cooled with the weather and that buyers remain very cautious. Pleasanton concurs noting that buyers have once again adopted the wait and see attitude. Livermore saw an anomaly this week with 50% of its new pending sales were normal sales (not REOs) and two of the sales exceeded $500,000. This was a major feat as 85% of its pending sales are below $500,000. Fremont is reporting steady traffic at open houses and increasing sales activity. Castro Valley noted a lot of activity, though prices are still dropping in Castro Valley and San Lorenzo. The good news is that deals—for the most part—that go into contract are staying in contract and closing.
Monterey County—Listing inventory remained steady and sales activity decreased, though this is typical and expected for this time of year. The luxury end is slower but homes priced at $1.5 million and above that are priced well and show well are moving.
North Bay—Listing inventory in Marin County is down. New REO listings that are coming on the market priced under what is generally perceived as “fair market value” are driving prices down in San Rafael, Novato and outlining areas. Southern Marin noted that the higher end market just might be waking up. The office represented both sides of two different Previews listings for a total of $11 million in one week. REO inventory in Santa Rosa is shrinking (also noted in Sebastopol) creating a bit of a seller’s market in that niche. We are seeing more pendings than new listings, which is a sign that price points could begin to strengthen in this market.
Peninsula—Buyers are taking a little time to see what will happen now that the election is over and are looking for some stability in the stock market to give them a level of comfort. Many FHA buyers are scrambling to fund and close before the end of the year. Our Half Moon Bay office is reporting that very few buyers visited open houses and fewer actually made offers this past week. Only 10 homes are sale pending on the entire coast. Of those, six are below and four above the $1 million price point. Our Menlo Park El Camino office is reporting that this week was better than last. Listing inventory continues to build and sales activity continues to be very slow out of our Menlo Park Santa Cruz Avenue office.
San Francisco— Open houses were well attended with a lot of buyers, and some who have been sitting on the fence for a while were writing offers this week. Our Van Ness office noted that while there are still sales happening, many buyers without an urgent need seem to just want to hover to wait and see which direction the market will go in the upcoming months.
Santa Cruz County—Inventory levels overall in the county continue to move downward while pendings have remained about the same week over week at 255 total single family residences in the county. Most of those are in South County—the area hardest hit by REOs—with currently 107 pendings and 50 in San Lorenzo Valley. The remainder are spread through the county with Seacliff Beach, Rio Del Mar, Seascape and La Selva Beach with the highest number at 24 pendings. Foreclosures continue to be at an all time high in the county—however we remain optimistic.
Silicon Valley—Morale remains high under challenging conditions. Properties under valued often receive multiple offers signaling that the buyers are still hanging around for the best values. Our Saratoga office experienced a slight increase in sales in the non-Previews market. Also, listing activity has slowed as expected given that we are approaching the end of the year.
South County—According to our Hollister office, REO listings are 49% of our active market in this region. Listing prices are still being reduced. We are still seeing multiple offers on well-priced REOs. Some are requiring pre-qualification with listing Agents’/bank’s preferred lenders. Our Morgan Hill office shares that the market continues to be a “Tale of Two Cities.” Though the number of REOs and short sale listings continue to increase, there are excellent opportunities for buyers. This is especially true in the South County. Homes that were once selling in the $600,000 range are now offered (and sold) for about half that price. Most buyers are seeing this as a great time to obtain a very nice home at very attractive prices.
The uncertainty in the financial markets is causing consumers to be cautious in all purchases, not just real estate. Today’s consumer is looking for some certainty that there is real value in what they are considering buying. Fully informed on the detailed local real estate market, and armed with a good solid loan approval, some buyers are stepping up - and in some cases getting into neighborhoods and homes they couldn’t afford in previous years. I met a young couple in one of our offices this week who were excited about their recently accepted offer on a home in San Francisco. They told me that after some negotiating on price throughout several counteroffers, they were quite pleased to have come to terms with the seller, and are really excited to become new first-time homeowners in about three weeks. Stories like this are happening every day throughout our Bay Area.
Have a great week!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Sunday, November 23, 2008
Weekly market Watch
Week of November 10-16, 2008
A number of real estate organizations released their third quarter and/or October statistical reports—revealing some very interesting and important trends in our market. Let’s take a look:
NAR Presents Four-Point Housing Stimulus Plan to Congress
Earlier this week, NAR representatives presented a four-point plan to help foster a housing recovery to support an economic rebound. The plan calls for eliminating the repayment of the first-time home buyer tax credit that was passed in the February stimulus bill and to expand the tax credit to include all home buyers.
The plan also recommends making the increased FHA and conventional loan limits permanent to stimulate home sales and stabilize prices. In addition, the plan urges that the Troubled Asset Relief Program be put back on track by targeting the funds for mortgage relief through a mortgage interest rate buy-down. Finally, the plan recommends finalizing legislation to prohibit banks from entering into the business of real estate brokerage and property management.
“The only way to overcome today’s economic turmoil is to motivate and encourage worried or cautious housing consumers to enter the marketplace,” said NAR President Charles McMillan. “Stabilizing the housing market will lead to a quicker and greater economic recovery. Our goal is to ensure there is a healthy market and sufficient capital to support mortgage lending to qualified borrowers.”
CAR Releases First Time Home Buyer Housing Affordability Index
CAR released its First Time Buyer Housing Affordability Index which showed that the percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago.
The organization also reported, “At $56,100, the minimum qualifying income was 44 percent lower than a year earlier when households needed $100,500 to qualify for a loan on an entry-level home. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.” We are already beginning to see the benefits of new affordability ratios in our outlying areas around San Francisco Bay where some homes can now be purchased in the $300’s. While it doesn’t seem like much help for San Francisco, most of San Mateo Co, and Southern Marin – that affordability factor is slowly making a difference. It will begin to nudge move-up buyers and sellers toward our median price in these counties, which remains more than double the median price of California homes. (new State median: $278,000 – new SF median: $699,000 )
DataQuick Releases October Sales Figures
“Bay Area homes sold at their fastest pace in 17 months in October as buyers favored more affordable inland areas where depreciations and foreclosures have hit hardest. As a result, the median sale price continued its steep, months-long decline, falling a record 40.6 percent, or $256,000, from a year ago,” reported DataQuick.
“A total of 7,613 new and resale houses and condos closed escrow in the nine-county Bay Area in October. That was up 4.7 percent from 7,271 in September, and up 38.8 percent from 5,486 in October 2007,” continued the report.
“The median price (Bay Area) paid for all new and resale houses and condos combined fell to $375,000 last month, down 6.3 percent from $400,000 in September and down a record 40.6 percent from $631,000 in October 2007.”
“Inland communities continued to fuel the bulk of the Bay Area's sales gains, attracting buyers searching for the biggest discounts.”
“Contra Costa, Napa, and Solano counties - where prices are down sharply and sales have risen the most - accounted for 36.4 percent of Bay Area sales in October.
Sales Volume
Median Price
All homes
Oct-07
Oct-08
%Chng
Oct-07
Oct-08
%Chng
Alameda
1098
1,544
40.60%
$570,000
$369,500
-35.20%
Contra Costa
1011
1,888
86.70%
$530,500
$285,000
-46.30%
Marin
216
220
1.90%
$875,000
$599,750
-31.50%
Napa
71
135
90.10%
$548,750
$400,000
-27.10%
Santa Clara
1,381
1,520
10.10%
$683,750
$477,000
-30.20%
San Francisco
526
414
-21.30%
$795,000
$699,000
-12.10%
San Mateo
512
530
3.50%
$775,000
$605,000
-21.90%
Solano
309
745
141.10%
$391,750
$240,000
-38.70%
Sonoma
362
617
70.40%
$473,000
$330,000
-30.20%
Bay Area
5,486
7,613
38.80%
$631,000
$375,000
-40.60%
Notice in the chart above, San Francisco County is the only one to register a drop in sales activity ’08 over ’07 – while it also has the smallest decline in median price. Contra Costa, Sonoma, and Napa Counties are off the charts with increased level of sales – at the same time showing some of the sharpest declines in price.
How do you spell R-E-O?
With overall Bay Area sales up nearly 39% in October, many people feel like right now, real estate may not be a bad place to park their money. Compare that to the volatility of the stock market, housing is looking like a pretty solid investment.
Keeping that in mind, let’s take a look at this week in real estate:
East Bay—Our Walnut Creek office is reporting that sales have slowed however open homes are still very well attended. People seem to want to buy but continue to be swayed back on the fence due to the negative reports on TV and in the paper. Our Oakland office had a busy week. Buyers seem to be getting contracts in order to get in under the wire on the loan limits which change at the end of the year. In fact, the office saw a huge surge in sales this week. REOs continue to flow in Fremont; there were 10 new ones this week. There is still a lot of activity for the low end priced homes from first time home buyers and investors.
Monterey County—No information provided.
North Bay—Activity (in Sonoma County) continues to be steady in the under $400,000 range. An estimated 2/3 of the properties that close are short sales and REOs. The last three months have been record breaking months in units, according to our Petaluma office. Santa Rosa notes that the below $550,000 market is very active but once you pass that price point it becomes very quiet. The luxury home market is quiet though we took one new listing this week in our Santa Rosa office. We also had an escrow that fell apart but new buyers were waiting in the wings and it took five counters to make the deal work. Phew! In a sign of the times, our San Rafael office saw a home that originally was listed at $460,000 go into auction with a starting bid of $16,000 in Novato. Inventory is decreasing at the same time that more buyers are writing offers which is a sign of good things to come for this market. As demand increases and inventory decreases, the balance between supply and demand will be on a more level playing field.
Peninsula—Listing inventory continues to build and sales activity continues to be very slow. Our Palo Alto office reports that the market has all but come to a halt. From entry level to the luxury market, it seems very quiet. Our Redwood City office agrees noting that the market continues to be very slow. Activity at open houses is less than usual and buyers seem to be adopting the “let’s wait and see what happens” attitude.
San Francisco—Our Lombard office reports that things are very quiet. One deal brought multiple offers after two price reductions on a nice family fixer. Our Noriega office had a similar story to share asking the question, “Did some turn off the tap?” Opens seem to be very slow and REO offers are down but our Market Street office has a different story to share noting that open houses are well attended with a lot of confident buyers. People who have been sitting on the fence for a while were actually writing offers this week. Our Van Ness office reports a slowing down in activity but larger sales still have reasonable activity considering the economic climate.
Santa Cruz County—No information provided.
Silicon Valley—Our Cupertino Stevens Creek office is reporting that closings are steady but openings and listings are slow. Our San Jose Willow Glen office is reporting that folks are sitting back and waiting, waiting and waiting. We have buyers and some offers are getting rejected. Our Saratoga office is reporting that the upper end is extremely slow. Buyers are being cautious given the negative economic news.
South County—In symbolic proof of the inland sales figures released by DataQuick, Gilroy reported that its market is still very active in the lower end. First time home buyers and investors are taking advantage of the discounts on bank owned properties. Our median price is down 37% YTD over 2007. However, our office units sold is up 59%. The lesson: lower prices = more sales. Morgan Hill concurs noting that REOs and short sales are the key to success in this business. Normal sales are few and far between—at least in the South Bay. At tour meetings—when a new listing is announced—it is very common for the listing Agent to emphasize that the listing is not short or an REO.
So while sales have been quiet this week, the positive news I am seeing in our industry reminds me just how great this business truly is. No other sector of our economy is getting as much positive attention and focus right now. California real estate is positioning itself in all the right areas for a much desired turnaround. Some regions in the state have been waiting nearly three years for this turnaround to begin. As we’ve noted before, real estate makes up 20% of the Gross Domestic Product in this country, and the national economic landscape cannot be greatly improved without fixing the housing sector. That puts us in a very good position because real estate will be gaining a great deal of attention over the next several months. Whether that attention comes in the way of more tax benefits, home ownership credits, subsidies or interest rate stabilization, the leaders of our country are focused and diligent on fixing the housing sector which is perfect news for our industry and our business.
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
A number of real estate organizations released their third quarter and/or October statistical reports—revealing some very interesting and important trends in our market. Let’s take a look:
NAR Presents Four-Point Housing Stimulus Plan to Congress
Earlier this week, NAR representatives presented a four-point plan to help foster a housing recovery to support an economic rebound. The plan calls for eliminating the repayment of the first-time home buyer tax credit that was passed in the February stimulus bill and to expand the tax credit to include all home buyers.
The plan also recommends making the increased FHA and conventional loan limits permanent to stimulate home sales and stabilize prices. In addition, the plan urges that the Troubled Asset Relief Program be put back on track by targeting the funds for mortgage relief through a mortgage interest rate buy-down. Finally, the plan recommends finalizing legislation to prohibit banks from entering into the business of real estate brokerage and property management.
“The only way to overcome today’s economic turmoil is to motivate and encourage worried or cautious housing consumers to enter the marketplace,” said NAR President Charles McMillan. “Stabilizing the housing market will lead to a quicker and greater economic recovery. Our goal is to ensure there is a healthy market and sufficient capital to support mortgage lending to qualified borrowers.”
CAR Releases First Time Home Buyer Housing Affordability Index
CAR released its First Time Buyer Housing Affordability Index which showed that the percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago.
The organization also reported, “At $56,100, the minimum qualifying income was 44 percent lower than a year earlier when households needed $100,500 to qualify for a loan on an entry-level home. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.” We are already beginning to see the benefits of new affordability ratios in our outlying areas around San Francisco Bay where some homes can now be purchased in the $300’s. While it doesn’t seem like much help for San Francisco, most of San Mateo Co, and Southern Marin – that affordability factor is slowly making a difference. It will begin to nudge move-up buyers and sellers toward our median price in these counties, which remains more than double the median price of California homes. (new State median: $278,000 – new SF median: $699,000 )
DataQuick Releases October Sales Figures
“Bay Area homes sold at their fastest pace in 17 months in October as buyers favored more affordable inland areas where depreciations and foreclosures have hit hardest. As a result, the median sale price continued its steep, months-long decline, falling a record 40.6 percent, or $256,000, from a year ago,” reported DataQuick.
“A total of 7,613 new and resale houses and condos closed escrow in the nine-county Bay Area in October. That was up 4.7 percent from 7,271 in September, and up 38.8 percent from 5,486 in October 2007,” continued the report.
“The median price (Bay Area) paid for all new and resale houses and condos combined fell to $375,000 last month, down 6.3 percent from $400,000 in September and down a record 40.6 percent from $631,000 in October 2007.”
“Inland communities continued to fuel the bulk of the Bay Area's sales gains, attracting buyers searching for the biggest discounts.”
“Contra Costa, Napa, and Solano counties - where prices are down sharply and sales have risen the most - accounted for 36.4 percent of Bay Area sales in October.
Sales Volume
Median Price
All homes
Oct-07
Oct-08
%Chng
Oct-07
Oct-08
%Chng
Alameda
1098
1,544
40.60%
$570,000
$369,500
-35.20%
Contra Costa
1011
1,888
86.70%
$530,500
$285,000
-46.30%
Marin
216
220
1.90%
$875,000
$599,750
-31.50%
Napa
71
135
90.10%
$548,750
$400,000
-27.10%
Santa Clara
1,381
1,520
10.10%
$683,750
$477,000
-30.20%
San Francisco
526
414
-21.30%
$795,000
$699,000
-12.10%
San Mateo
512
530
3.50%
$775,000
$605,000
-21.90%
Solano
309
745
141.10%
$391,750
$240,000
-38.70%
Sonoma
362
617
70.40%
$473,000
$330,000
-30.20%
Bay Area
5,486
7,613
38.80%
$631,000
$375,000
-40.60%
Notice in the chart above, San Francisco County is the only one to register a drop in sales activity ’08 over ’07 – while it also has the smallest decline in median price. Contra Costa, Sonoma, and Napa Counties are off the charts with increased level of sales – at the same time showing some of the sharpest declines in price.
How do you spell R-E-O?
With overall Bay Area sales up nearly 39% in October, many people feel like right now, real estate may not be a bad place to park their money. Compare that to the volatility of the stock market, housing is looking like a pretty solid investment.
Keeping that in mind, let’s take a look at this week in real estate:
East Bay—Our Walnut Creek office is reporting that sales have slowed however open homes are still very well attended. People seem to want to buy but continue to be swayed back on the fence due to the negative reports on TV and in the paper. Our Oakland office had a busy week. Buyers seem to be getting contracts in order to get in under the wire on the loan limits which change at the end of the year. In fact, the office saw a huge surge in sales this week. REOs continue to flow in Fremont; there were 10 new ones this week. There is still a lot of activity for the low end priced homes from first time home buyers and investors.
Monterey County—No information provided.
North Bay—Activity (in Sonoma County) continues to be steady in the under $400,000 range. An estimated 2/3 of the properties that close are short sales and REOs. The last three months have been record breaking months in units, according to our Petaluma office. Santa Rosa notes that the below $550,000 market is very active but once you pass that price point it becomes very quiet. The luxury home market is quiet though we took one new listing this week in our Santa Rosa office. We also had an escrow that fell apart but new buyers were waiting in the wings and it took five counters to make the deal work. Phew! In a sign of the times, our San Rafael office saw a home that originally was listed at $460,000 go into auction with a starting bid of $16,000 in Novato. Inventory is decreasing at the same time that more buyers are writing offers which is a sign of good things to come for this market. As demand increases and inventory decreases, the balance between supply and demand will be on a more level playing field.
Peninsula—Listing inventory continues to build and sales activity continues to be very slow. Our Palo Alto office reports that the market has all but come to a halt. From entry level to the luxury market, it seems very quiet. Our Redwood City office agrees noting that the market continues to be very slow. Activity at open houses is less than usual and buyers seem to be adopting the “let’s wait and see what happens” attitude.
San Francisco—Our Lombard office reports that things are very quiet. One deal brought multiple offers after two price reductions on a nice family fixer. Our Noriega office had a similar story to share asking the question, “Did some turn off the tap?” Opens seem to be very slow and REO offers are down but our Market Street office has a different story to share noting that open houses are well attended with a lot of confident buyers. People who have been sitting on the fence for a while were actually writing offers this week. Our Van Ness office reports a slowing down in activity but larger sales still have reasonable activity considering the economic climate.
Santa Cruz County—No information provided.
Silicon Valley—Our Cupertino Stevens Creek office is reporting that closings are steady but openings and listings are slow. Our San Jose Willow Glen office is reporting that folks are sitting back and waiting, waiting and waiting. We have buyers and some offers are getting rejected. Our Saratoga office is reporting that the upper end is extremely slow. Buyers are being cautious given the negative economic news.
South County—In symbolic proof of the inland sales figures released by DataQuick, Gilroy reported that its market is still very active in the lower end. First time home buyers and investors are taking advantage of the discounts on bank owned properties. Our median price is down 37% YTD over 2007. However, our office units sold is up 59%. The lesson: lower prices = more sales. Morgan Hill concurs noting that REOs and short sales are the key to success in this business. Normal sales are few and far between—at least in the South Bay. At tour meetings—when a new listing is announced—it is very common for the listing Agent to emphasize that the listing is not short or an REO.
So while sales have been quiet this week, the positive news I am seeing in our industry reminds me just how great this business truly is. No other sector of our economy is getting as much positive attention and focus right now. California real estate is positioning itself in all the right areas for a much desired turnaround. Some regions in the state have been waiting nearly three years for this turnaround to begin. As we’ve noted before, real estate makes up 20% of the Gross Domestic Product in this country, and the national economic landscape cannot be greatly improved without fixing the housing sector. That puts us in a very good position because real estate will be gaining a great deal of attention over the next several months. Whether that attention comes in the way of more tax benefits, home ownership credits, subsidies or interest rate stabilization, the leaders of our country are focused and diligent on fixing the housing sector which is perfect news for our industry and our business.
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
Week of October 27- Nov 2
Regardless of your political persuasion, this week’s election was one for the history books. After a long, defining, historical race to the White House, Senator Barack Obama defeated Senator John McCain, earning him the position of the 44th President of the United States. Just two years ago, with home prices in the US at an all-time high, it seemed the war in Iraq would be the single leading issue for both parties going into the campaigns. During the past 12 months, and particularly the last three, the #1 concern by far turned to that of the economy. CNNMoney ran a very good story, “How the Economy stole the Election” which chronicles the recent historic economic events that have touched every American, as well as every economy throughout the world. http://money.cnn.com/galleries/2008/news/0810/gallery.economy_election/index.html
On Wall Street, after a sharp rally through Election Day, stocks plunged sharply in the two sessions following Obama’s victory. The Dow had lost 929 points, its biggest two-day point loss ever. With growing unemployment figures released, and news of GM’s massive quarterly loss, Wall Street saw yet another rally on Friday as investors jumped in to pick up some bargains, and the Dow ended up 248 points. Although it was an historic election week for the US, watched by the entire world, the roller coaster pattern on Wall Street seemed just like any one of several recent volatile weeks. President-elect Obama has stated the economy is facing the "greatest economic challenge of our lifetime," and said he will take all necessary steps to confront the crisis. He said if a second stimulus package is not passed by the lame-duck Congress that it will be his first priority once he takes office on Jan. 20.
The weeks ahead will bring many debates on what kind of financial stimulus is needed where –how much, how fast. The good news is that some signs are appearing that we are taking steps in the right direction. The 3 month Libor lending rate has fallen to a four year low, which is critical to economic recovery. The Fed has injected another short term funding of $100 billion through their Commercial Paper Funding program to help businesses. Although credit isn’t flowing as quickly as hoped, these steps are necessary to get banks loaning to businesses and to consumers. Several gauges noted by Libor and Treasury bill rate-spreads show that credit confidence is finally on the rise.
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Incoming NAR President Charles McMillan concurs noting, “We’re in a good place. Realtors are excited by this historic election and stand ready to work with our new president and the new Congress on issues that are at the heart of the American dream of homeownership.” Here is what our offices are saying:
East Bay—After a few slow weeks, our Castro Valley office is reporting that it had a pick up in sales this week. We have a lot of buyers who seem enticed by the dipping of prices in San Lorenzo and Castro Valley. Our Berkeley office is sharing a similar story noting that sales picked up in the past week and some listings we have been waiting for finally arrived. The $700,000 to $900,000 market is active. Rumor has it, according to our on the ground experts, that things will pick up after the election, especially now that consumer confidence has been restored. Fremont is reporting that sales and listings are generally slow this time of year but possibly slower this year due to the economic downturn. Owner occupied sales are selling IF (and this is a big if) they are priced aggressively. You can’t test the waters in this market. You need to be priced aggressively from the beginning to ensure your home gains the exposure you need.
Monterey County—Even after a tumultuous month on Wall Street, we put 51 properties into escrow last month. Though it takes much longer, properties well-priced and well-located over $1.5 million are still selling. Sales activity is decreasing and our listing inventory remains steady. Agents are reporting slower attendance at open houses over the weekend, though I do believe that the seasonality has something to do with it.
North Bay—Our Greenbrae office is reporting that deals that fall out of contract then return quickly. Houses that have been on the market for over 100 days suddenly get two offers in one day. These are the sudden changes we felt over the last week. Buyers are waiting for the perfect moment and it seems now is the right time to place an offer. Some times it just takes buyers a while to get to the point of realizing that. Our San Rafael office notes that they are still seeing a mixed bag of properties listed in the marketplace that appear overpriced by a long shot. Having said that, sellers who price homes just under their competition in their surrounding area are seeing multiple offers and in some cases, causing a “feeding frenzy” for buyers who are driving the price over asking. There are so many buyers out there NOW is the time to write an offer, before they all come out at the same time.
Peninsula— Everyone last week seemed to be in waiting mode, until after the election. Sales are picking up, however, and we are seeing more multiple offers. The “off market” trend continues with sales in the high end. We are also beginning to see more offers with home contingencies and sellers are accepting them if they think the location and price is right. In terms of the local luxury market, Hillsborough currently has 63 active listings and five pending sales. That is about 20% more than typical inventory. Half Moon Bay saw a bit of a slower week—possibly due to the rain, the economy, the election—or better yet, a combination of the three. Inventory is up, sales are slow to ratify. The remainder of the Peninsula continues to see a slow down in sales activity—though buyer interest remains high. We are still seeing a lot of activity at open houses and in floor calls which is a good sign for the near future. The buyers that are in the market, as reported by our Redwood City-San Carlos office, who have good credit scores and large down payments aren’t shy about cutting deep into the list price, offending some sellers. Possibly the best news reported by our offices was that of our San Mateo office. Manager Chuck Cwieka shared that his office had its best weekend in six weeks—a sign of promise for our future.
San Francisco—Slow but steady. That seems to be the underlying theme for the City. Some Agents report increased activity at open houses while others saw a slowdown. A few transactions that seemed near death got a revival and will now close escrow –that’s a good sign. For the most part, higher end properties show little movement. Last week there were more than 100 properties available in San Francisco MLS at $3M and higher - more than we’ve seen in several years. Some buyers understand the scarcity of San Francisco property in its unique 49 square miles surrounded by water on three sides. Savvy investors with some cash for down payment are seeing the opportunity this current economic uncertainty brings.
Santa Cruz County—Inventory levels have dropped below 1,000 single family residences in the county. This represents about a 10% inventory decrease within the last four weeks. The market continues to be driven from the bottom up—with most pendings in South County. The under $500,000 market continues to attract many potential buyers who are out and looking hard at potential properties. Some are investors but many are first time home buyers. The luxury market is lagging both in closed sales and price point. Over two million is less than 2% of closed sales for the year and $1-2 million is about 11% of the closed sales. We closed two sales over $1 million in the past week.
Silicon Valley—Just as I said last week, though buyers are still cautious, things seem to be brighter in Silicon Valley. Many of our Agents are gearing up their business for the start of 2009. Buyers—though cautious—are out touring properties, visiting open houses and meeting with their Realtors. We seem to have a lot of buzz, though little of it has resulted in notable amounts of activity. I think much of that is due to the volatility in the stock market over the last several weeks and the lack of knowing who our next President would be. Now that one of the two is settled, I think we should see a return to stability and security in this region.
South County—Though REOs continue to gain the most interest, we are seeing an increase in market activity in the $500-$700K—but only on well-priced homes. Homes that are considered a value are gaining interest in this price point. Our Morgan Hill office reports that the Previews market in South County is a series of “contrasts.” We have one new home development with list prices of about $1.2 million that have continually slashed prices and offered buyer incentives. As a result, they sold several homes in the past week.
My message this week to everyone is let’s embrace this time of change. Whether you are a Republican, a Democrat or an Independent, we all need to join together in restoring our economy and move ahead with the bright prospects of our future just ahead. It is very possible that the worst of times has passed. And even with some challenging times ahead, real estate remains an important investment, not only financially, but personally as well. It is in times like these that we need to be reminded of and embrace the American dream of home ownership. We need to remind ourselves that owning a home is more than an investment—though it remains one of the best investments we will make in our lifetime. Our home is also where we raise our families, build traditions and create memories that will last a lifetime. And I can’t think of a better investment in our lives and our own well-being than that.
Have a great week and here’s to our future!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Regardless of your political persuasion, this week’s election was one for the history books. After a long, defining, historical race to the White House, Senator Barack Obama defeated Senator John McCain, earning him the position of the 44th President of the United States. Just two years ago, with home prices in the US at an all-time high, it seemed the war in Iraq would be the single leading issue for both parties going into the campaigns. During the past 12 months, and particularly the last three, the #1 concern by far turned to that of the economy. CNNMoney ran a very good story, “How the Economy stole the Election” which chronicles the recent historic economic events that have touched every American, as well as every economy throughout the world. http://money.cnn.com/galleries/2008/news/0810/gallery.economy_election/index.html
On Wall Street, after a sharp rally through Election Day, stocks plunged sharply in the two sessions following Obama’s victory. The Dow had lost 929 points, its biggest two-day point loss ever. With growing unemployment figures released, and news of GM’s massive quarterly loss, Wall Street saw yet another rally on Friday as investors jumped in to pick up some bargains, and the Dow ended up 248 points. Although it was an historic election week for the US, watched by the entire world, the roller coaster pattern on Wall Street seemed just like any one of several recent volatile weeks. President-elect Obama has stated the economy is facing the "greatest economic challenge of our lifetime," and said he will take all necessary steps to confront the crisis. He said if a second stimulus package is not passed by the lame-duck Congress that it will be his first priority once he takes office on Jan. 20.
The weeks ahead will bring many debates on what kind of financial stimulus is needed where –how much, how fast. The good news is that some signs are appearing that we are taking steps in the right direction. The 3 month Libor lending rate has fallen to a four year low, which is critical to economic recovery. The Fed has injected another short term funding of $100 billion through their Commercial Paper Funding program to help businesses. Although credit isn’t flowing as quickly as hoped, these steps are necessary to get banks loaning to businesses and to consumers. Several gauges noted by Libor and Treasury bill rate-spreads show that credit confidence is finally on the rise.
.
Incoming NAR President Charles McMillan concurs noting, “We’re in a good place. Realtors are excited by this historic election and stand ready to work with our new president and the new Congress on issues that are at the heart of the American dream of homeownership.” Here is what our offices are saying:
East Bay—After a few slow weeks, our Castro Valley office is reporting that it had a pick up in sales this week. We have a lot of buyers who seem enticed by the dipping of prices in San Lorenzo and Castro Valley. Our Berkeley office is sharing a similar story noting that sales picked up in the past week and some listings we have been waiting for finally arrived. The $700,000 to $900,000 market is active. Rumor has it, according to our on the ground experts, that things will pick up after the election, especially now that consumer confidence has been restored. Fremont is reporting that sales and listings are generally slow this time of year but possibly slower this year due to the economic downturn. Owner occupied sales are selling IF (and this is a big if) they are priced aggressively. You can’t test the waters in this market. You need to be priced aggressively from the beginning to ensure your home gains the exposure you need.
Monterey County—Even after a tumultuous month on Wall Street, we put 51 properties into escrow last month. Though it takes much longer, properties well-priced and well-located over $1.5 million are still selling. Sales activity is decreasing and our listing inventory remains steady. Agents are reporting slower attendance at open houses over the weekend, though I do believe that the seasonality has something to do with it.
North Bay—Our Greenbrae office is reporting that deals that fall out of contract then return quickly. Houses that have been on the market for over 100 days suddenly get two offers in one day. These are the sudden changes we felt over the last week. Buyers are waiting for the perfect moment and it seems now is the right time to place an offer. Some times it just takes buyers a while to get to the point of realizing that. Our San Rafael office notes that they are still seeing a mixed bag of properties listed in the marketplace that appear overpriced by a long shot. Having said that, sellers who price homes just under their competition in their surrounding area are seeing multiple offers and in some cases, causing a “feeding frenzy” for buyers who are driving the price over asking. There are so many buyers out there NOW is the time to write an offer, before they all come out at the same time.
Peninsula— Everyone last week seemed to be in waiting mode, until after the election. Sales are picking up, however, and we are seeing more multiple offers. The “off market” trend continues with sales in the high end. We are also beginning to see more offers with home contingencies and sellers are accepting them if they think the location and price is right. In terms of the local luxury market, Hillsborough currently has 63 active listings and five pending sales. That is about 20% more than typical inventory. Half Moon Bay saw a bit of a slower week—possibly due to the rain, the economy, the election—or better yet, a combination of the three. Inventory is up, sales are slow to ratify. The remainder of the Peninsula continues to see a slow down in sales activity—though buyer interest remains high. We are still seeing a lot of activity at open houses and in floor calls which is a good sign for the near future. The buyers that are in the market, as reported by our Redwood City-San Carlos office, who have good credit scores and large down payments aren’t shy about cutting deep into the list price, offending some sellers. Possibly the best news reported by our offices was that of our San Mateo office. Manager Chuck Cwieka shared that his office had its best weekend in six weeks—a sign of promise for our future.
San Francisco—Slow but steady. That seems to be the underlying theme for the City. Some Agents report increased activity at open houses while others saw a slowdown. A few transactions that seemed near death got a revival and will now close escrow –that’s a good sign. For the most part, higher end properties show little movement. Last week there were more than 100 properties available in San Francisco MLS at $3M and higher - more than we’ve seen in several years. Some buyers understand the scarcity of San Francisco property in its unique 49 square miles surrounded by water on three sides. Savvy investors with some cash for down payment are seeing the opportunity this current economic uncertainty brings.
Santa Cruz County—Inventory levels have dropped below 1,000 single family residences in the county. This represents about a 10% inventory decrease within the last four weeks. The market continues to be driven from the bottom up—with most pendings in South County. The under $500,000 market continues to attract many potential buyers who are out and looking hard at potential properties. Some are investors but many are first time home buyers. The luxury market is lagging both in closed sales and price point. Over two million is less than 2% of closed sales for the year and $1-2 million is about 11% of the closed sales. We closed two sales over $1 million in the past week.
Silicon Valley—Just as I said last week, though buyers are still cautious, things seem to be brighter in Silicon Valley. Many of our Agents are gearing up their business for the start of 2009. Buyers—though cautious—are out touring properties, visiting open houses and meeting with their Realtors. We seem to have a lot of buzz, though little of it has resulted in notable amounts of activity. I think much of that is due to the volatility in the stock market over the last several weeks and the lack of knowing who our next President would be. Now that one of the two is settled, I think we should see a return to stability and security in this region.
South County—Though REOs continue to gain the most interest, we are seeing an increase in market activity in the $500-$700K—but only on well-priced homes. Homes that are considered a value are gaining interest in this price point. Our Morgan Hill office reports that the Previews market in South County is a series of “contrasts.” We have one new home development with list prices of about $1.2 million that have continually slashed prices and offered buyer incentives. As a result, they sold several homes in the past week.
My message this week to everyone is let’s embrace this time of change. Whether you are a Republican, a Democrat or an Independent, we all need to join together in restoring our economy and move ahead with the bright prospects of our future just ahead. It is very possible that the worst of times has passed. And even with some challenging times ahead, real estate remains an important investment, not only financially, but personally as well. It is in times like these that we need to be reminded of and embrace the American dream of home ownership. We need to remind ourselves that owning a home is more than an investment—though it remains one of the best investments we will make in our lifetime. Our home is also where we raise our families, build traditions and create memories that will last a lifetime. And I can’t think of a better investment in our lives and our own well-being than that.
Have a great week and here’s to our future!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
Week of October 20-26
Today marks the end of a historically volatile month on Wall Street with some significant losses.And for the week -
I had all of my clever Halloween puns planned —“It was a Spooky Week on Wall Street”—or “The Market Takes Another Ghoulish Hit”—but alas, I am pleasantly surprised to say my puns were not necessary as things were definitely looking up for the market as the week progressed. For starters, the central bank cut the federal funds rate, a key bank lending rate, by half a percentage point to 1%, a low last seen in June 2004. The funds rate has not been lower since 1958 when Dwight Eisenhower was president.
Just one day later the government released the latest GDP report which showed that the economy shrank at a slower pace than expected in the third quarter (though, to keep things in perspective, it did endure its biggest decline in seven years).
And if all of this news wasn’t good enough, negotiators for the Treasury and Federal Deposit Insurance Corporation announced that they are nearing an agreement on a plan to have the government guarantee the mortgage of millions of distressed homeowners. The plan could cover as many as three million homeowners in danger of foreclosure. If this plan were to pass, it will help us deplete our bank-owned inventory and subsequently should help stabilize home prices nationwide.
As an aside, our parent company Realogy is doing its part to support the stimulation efforts by this week releasing a statement that proposed a short-tern government buy-down in mortgage rates to stimulate the housing market and accelerate broader economic recovery. In a statement released to media on Tuesday, Realogy called for a short-term government buy-down of mortgage rates of at least 4.5%, or lower, for a 30-year fixed rate mortgage (down from current rates of approximately 6.04%). This homebuyer incentive would apply to the purchase of all new and/or existing homes sold up to $1 million in price. Only time will tell if this solution is adopted but it is commendable to see our parent company working so hard on our behalf to stimulate the housing market.
Thursday, Wall Street reacted to the week’s good news with the Dow Jones Industrial Average gaining 190 points or 2.1%, The Standard & Poor’s 500 index rose 2.6% and the NASDAQ composite (COMP) gained 2.5%.
But is all of this enough to revive an economy hit by a long list of problems stemming from the most severe financial crisis in decades? It’s definitely a start.
Earlier this week Time Magazine reported that there is a sign that we are bottoming out noting “The rate of sales decline slowed in August, according to Case-Shiller, and in September existing home sales rose 5.5% nationally, which means buyers are finally being lured to the market by low prices.”
As you’ll recall, President Bush said prior to signing the Emergency Economic Stabilization Act of 2008 that all of the recovery plans in store would take time to work. And only time will tell whether or not these plans are successful. But we are starting to see some positive stories with some better than expected results which is a good sign for all of us.
Next week we’ll learn who our new President will be, which, historically speaking, should lessen some of the concerns and (hopefully) settle some of the unrest on Wall Street. Once investors know who will be running the government for (at least) the next four years, they’ll feel more apt to making longer-term investment decisions.
Now, let’s take a look at this week in real estate. My overall assessment is that after a slow couple of weeks due to the economic woes on Wall Street, Main Street’s real estate is looking brighter and buyer interest is increasing.
East Bay—Our Walnut Creek office reports that the REO market remains very active with listings in Antioch, Brentwood and other parts of East County receiving multiple offers. Open house activity was very good this past weekend with buyers more open to engaging in conversation regarding market conditions. In fact, the office also shares that the $1 million plus market is more active than it has been in a long time. Livermore is reporting that REOs continue to drive much of its business with 87% of new pending sales this week were REO sales with list prices from $47,500 to $310,000. The majority of the sales were located in the Central Valley. The upper end in Livermore is slow. We currently have 55 listings above the $1 million mark in Livermore. There have been three closed sales in the past 60 days and four pending sales with the last pending on September 19. Oakland shared some good news this week, however, noting that sales activity was increasing this week and that Agents felt that new buyers are coming into the market, based on open house activity. Our Danville office reported this week that nearly 1/3 of its sales this month are not REOs. That is wonderful news. If the percentage of “normal” sales increases, that is a very good sign for the real estate market turnaround.
Monterey County—No information provided.
North Bay—Our Sonoma County offices continue to report a lot of activity in the entry level market. Petaluma shares that Petaluma, Rohnert Park and Sonoma have very few properties coming on the market. There are typically double digit multiple offers in the $300,000 range. Santa Rosa concurs noting that the $500,000 range is very active though once you go above that it remains quiet. Neighboring Sebastopol continues to be driven by REOs though the office did note that it saw a substantial slowdown this week with more lookers than buyers at open houses. It is a real shame because there are some incredible opportunities in the wine country. Buyers—be aware! Marin County is a mixed bag. The more affluent neighborhoods of Southern Marin remain a bit quiet—though we did double-end a $2.5 million deal this week—but the more affordable markets of San Rafael and Novato are enjoying an increase of activity.
Peninsula—Last week’s better news on the sale of homes (thanks to DataQuick and NAR’s reports) led to a more positive turnout in open homes this weekend. One Millbrae home had over 35 groups through. It seems the price range between $800,000 to $1.2 million is most active in this market. Half Moon Bay has seen a seesaw in inventory (somewhat like the stock market) hitting a long-time high of 175 properties just a few weeks ago, then a drop to 140 properties and this week another jump back up to 165 current active listings. This represents an exceptional buying opportunity for homes near the bay or ocean. Our Redwood City-San Carlos office is sharing that it hasn’t seen many changes. Sellers are becoming a little more realistic and seem to be more apt to follow their Agent’s advice regarding pricing. We did have one sales this week where the buyers wanted to make sure they could take advantage of the jumbo loan amount before it changes.
San Francisco—Things seem to be a bit quiet in the City right now as buyers await the results of the issues on Wall Street. Buyers don’t seem to be willing to move forward, though they aren’t exactly abandoning their search for a home either. There is still a lot of activity at open houses but very few offers being written. Our hope is that this is a sign of good things to come as we enter the holiday months.
Santa Cruz County—Inventory levels have dropped considerably in the last three weeks—approximately 200 homes as we move into the winter/holiday season. The highest percentage of pendings remains in the south county area of Watsonville. Prices are continuing to move slightly downward although this is micro-geographic in different areas and neighborhoods. The office listed a bank owned property in the Seabright beach area and the open houses were extremely well attended both Saturday and Sunday. There were eight offers on the property; it sold for 10% over asking price. There are some great buys in Santa Cruz County!
Silicon Valley—Though buyers are still cautious, things seem to be brighter in Silicon Valley. Our Cupertino Stevens Creek reports “Sales continue to improve with good news looming in the media.” Our San Jose Main office concurs noting “Our immediate market continues to be brisk. Excellent open house traffic reported this weekend. Entry level homes and REO properties continue to receive the greatest attention and most reported sales are in the $350,000 to $550,000 range.” The upper-end has definitely taken a hit and the consensus is that it is slow all the way around in this niche. Our Almaden office reported that a buyer was about to pull out of one transaction this week unless the seller dropped his price from $2.2 million to $1.975. The seller reluctantly agreed. Definitely a sign of the times.
South County—The South County market continues to be driven by REOs The luxury market is South County is very slow with properties over $1 million seeing the following statistics:
Morgan Hill (100 listed, 9 pending)
Gilroy (53 listed, 5 pending)
San Martin (24 listed, 1 pending)
Overall, it was a better week for the Bay Area and momentum continues to build after a rough September and majority of October. Our market continues to be challenged by some buyers who are waiting to see what the market is going to do. Buyers should be reminded of the fact that waiting could cost them plenty in terms of higher prices, lower inventory and higher interest rates. It’s just a matter of time before we move from a buyer’s market to a more normalized exchange between buyers and sellers and we need to educate our buyers now that if they don’t act, they will reduce their purchasing power and may lose out on a bigger and better home!
The doorbell is ringing - I think we have Trick or Treaters. Happy Halloween, and have a great week!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Today marks the end of a historically volatile month on Wall Street with some significant losses.And for the week -
I had all of my clever Halloween puns planned —“It was a Spooky Week on Wall Street”—or “The Market Takes Another Ghoulish Hit”—but alas, I am pleasantly surprised to say my puns were not necessary as things were definitely looking up for the market as the week progressed. For starters, the central bank cut the federal funds rate, a key bank lending rate, by half a percentage point to 1%, a low last seen in June 2004. The funds rate has not been lower since 1958 when Dwight Eisenhower was president.
Just one day later the government released the latest GDP report which showed that the economy shrank at a slower pace than expected in the third quarter (though, to keep things in perspective, it did endure its biggest decline in seven years).
And if all of this news wasn’t good enough, negotiators for the Treasury and Federal Deposit Insurance Corporation announced that they are nearing an agreement on a plan to have the government guarantee the mortgage of millions of distressed homeowners. The plan could cover as many as three million homeowners in danger of foreclosure. If this plan were to pass, it will help us deplete our bank-owned inventory and subsequently should help stabilize home prices nationwide.
As an aside, our parent company Realogy is doing its part to support the stimulation efforts by this week releasing a statement that proposed a short-tern government buy-down in mortgage rates to stimulate the housing market and accelerate broader economic recovery. In a statement released to media on Tuesday, Realogy called for a short-term government buy-down of mortgage rates of at least 4.5%, or lower, for a 30-year fixed rate mortgage (down from current rates of approximately 6.04%). This homebuyer incentive would apply to the purchase of all new and/or existing homes sold up to $1 million in price. Only time will tell if this solution is adopted but it is commendable to see our parent company working so hard on our behalf to stimulate the housing market.
Thursday, Wall Street reacted to the week’s good news with the Dow Jones Industrial Average gaining 190 points or 2.1%, The Standard & Poor’s 500 index rose 2.6% and the NASDAQ composite (COMP) gained 2.5%.
But is all of this enough to revive an economy hit by a long list of problems stemming from the most severe financial crisis in decades? It’s definitely a start.
Earlier this week Time Magazine reported that there is a sign that we are bottoming out noting “The rate of sales decline slowed in August, according to Case-Shiller, and in September existing home sales rose 5.5% nationally, which means buyers are finally being lured to the market by low prices.”
As you’ll recall, President Bush said prior to signing the Emergency Economic Stabilization Act of 2008 that all of the recovery plans in store would take time to work. And only time will tell whether or not these plans are successful. But we are starting to see some positive stories with some better than expected results which is a good sign for all of us.
Next week we’ll learn who our new President will be, which, historically speaking, should lessen some of the concerns and (hopefully) settle some of the unrest on Wall Street. Once investors know who will be running the government for (at least) the next four years, they’ll feel more apt to making longer-term investment decisions.
Now, let’s take a look at this week in real estate. My overall assessment is that after a slow couple of weeks due to the economic woes on Wall Street, Main Street’s real estate is looking brighter and buyer interest is increasing.
East Bay—Our Walnut Creek office reports that the REO market remains very active with listings in Antioch, Brentwood and other parts of East County receiving multiple offers. Open house activity was very good this past weekend with buyers more open to engaging in conversation regarding market conditions. In fact, the office also shares that the $1 million plus market is more active than it has been in a long time. Livermore is reporting that REOs continue to drive much of its business with 87% of new pending sales this week were REO sales with list prices from $47,500 to $310,000. The majority of the sales were located in the Central Valley. The upper end in Livermore is slow. We currently have 55 listings above the $1 million mark in Livermore. There have been three closed sales in the past 60 days and four pending sales with the last pending on September 19. Oakland shared some good news this week, however, noting that sales activity was increasing this week and that Agents felt that new buyers are coming into the market, based on open house activity. Our Danville office reported this week that nearly 1/3 of its sales this month are not REOs. That is wonderful news. If the percentage of “normal” sales increases, that is a very good sign for the real estate market turnaround.
Monterey County—No information provided.
North Bay—Our Sonoma County offices continue to report a lot of activity in the entry level market. Petaluma shares that Petaluma, Rohnert Park and Sonoma have very few properties coming on the market. There are typically double digit multiple offers in the $300,000 range. Santa Rosa concurs noting that the $500,000 range is very active though once you go above that it remains quiet. Neighboring Sebastopol continues to be driven by REOs though the office did note that it saw a substantial slowdown this week with more lookers than buyers at open houses. It is a real shame because there are some incredible opportunities in the wine country. Buyers—be aware! Marin County is a mixed bag. The more affluent neighborhoods of Southern Marin remain a bit quiet—though we did double-end a $2.5 million deal this week—but the more affordable markets of San Rafael and Novato are enjoying an increase of activity.
Peninsula—Last week’s better news on the sale of homes (thanks to DataQuick and NAR’s reports) led to a more positive turnout in open homes this weekend. One Millbrae home had over 35 groups through. It seems the price range between $800,000 to $1.2 million is most active in this market. Half Moon Bay has seen a seesaw in inventory (somewhat like the stock market) hitting a long-time high of 175 properties just a few weeks ago, then a drop to 140 properties and this week another jump back up to 165 current active listings. This represents an exceptional buying opportunity for homes near the bay or ocean. Our Redwood City-San Carlos office is sharing that it hasn’t seen many changes. Sellers are becoming a little more realistic and seem to be more apt to follow their Agent’s advice regarding pricing. We did have one sales this week where the buyers wanted to make sure they could take advantage of the jumbo loan amount before it changes.
San Francisco—Things seem to be a bit quiet in the City right now as buyers await the results of the issues on Wall Street. Buyers don’t seem to be willing to move forward, though they aren’t exactly abandoning their search for a home either. There is still a lot of activity at open houses but very few offers being written. Our hope is that this is a sign of good things to come as we enter the holiday months.
Santa Cruz County—Inventory levels have dropped considerably in the last three weeks—approximately 200 homes as we move into the winter/holiday season. The highest percentage of pendings remains in the south county area of Watsonville. Prices are continuing to move slightly downward although this is micro-geographic in different areas and neighborhoods. The office listed a bank owned property in the Seabright beach area and the open houses were extremely well attended both Saturday and Sunday. There were eight offers on the property; it sold for 10% over asking price. There are some great buys in Santa Cruz County!
Silicon Valley—Though buyers are still cautious, things seem to be brighter in Silicon Valley. Our Cupertino Stevens Creek reports “Sales continue to improve with good news looming in the media.” Our San Jose Main office concurs noting “Our immediate market continues to be brisk. Excellent open house traffic reported this weekend. Entry level homes and REO properties continue to receive the greatest attention and most reported sales are in the $350,000 to $550,000 range.” The upper-end has definitely taken a hit and the consensus is that it is slow all the way around in this niche. Our Almaden office reported that a buyer was about to pull out of one transaction this week unless the seller dropped his price from $2.2 million to $1.975. The seller reluctantly agreed. Definitely a sign of the times.
South County—The South County market continues to be driven by REOs The luxury market is South County is very slow with properties over $1 million seeing the following statistics:
Morgan Hill (100 listed, 9 pending)
Gilroy (53 listed, 5 pending)
San Martin (24 listed, 1 pending)
Overall, it was a better week for the Bay Area and momentum continues to build after a rough September and majority of October. Our market continues to be challenged by some buyers who are waiting to see what the market is going to do. Buyers should be reminded of the fact that waiting could cost them plenty in terms of higher prices, lower inventory and higher interest rates. It’s just a matter of time before we move from a buyer’s market to a more normalized exchange between buyers and sellers and we need to educate our buyers now that if they don’t act, they will reduce their purchasing power and may lose out on a bigger and better home!
The doorbell is ringing - I think we have Trick or Treaters. Happy Halloween, and have a great week!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
Home Sales Are Up…But Can Someone Please Tell the Stock Market? Week of Oct 13-19
It was an interesting week in news. More specifically, it was a great week in news for real estate activity—but in its third consecutive week of volatility, the stock market did little to support the cause.
Let’s start with the good news. NAR released its Pending Home Sales Index—a forward-looking indicator based on contracts signed in August—noting pending homes “jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July - 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4.”
Days later, DataQuick News reported “Bay Area home sales soared last month above the record-low levels of a year ago, marking the largest gain in over six years. The median sale price did the opposite, diving to $400,000 - 40 percent below its summer 2007 peak - as more sales shifted to lower-cost inland markets laden with foreclosures…Last month's 45 percent year-over-year sales gain was the highest for any month since April 2002, when sales shot up 49 percent.”
Both the prices and sales from NAR and DataQuick’s reports reflect the dominance of foreclosure sales, which according to Data Quick accounted for 42% of all homes that traded hands in Contra Costa, Napa, Sonoma and Solano counties. Of course not all markets are being hit as heavily by foreclosures. San Francisco remains the lowest Bay Area county with just 9.5% of homes sold in foreclosure. Second was Marin at 14.9%.
What the heavy foreclosure sales figures are telling us, however, is most important. The dramatic increase in sales suggests that more investors are deciding that prices have fallen to bargain levels and they are now getting into the market. Historically speaking, it is investors who determine where the bottom is. When they think prices have reached a point where they can potentially buy low, wait a bit and in a few years turn a profit, they’ll swoop in. We’re starting to see this now and that is welcome news to many.
Of course housing recovery as a whole is dependent on the course of the overall economy which had less than stellar news this week. By Thursday, the Dow rallied back after two days of declines—including a loss of 500 points on Wednesday—but the NASDAQ slipped to its lowest point in more than five years.
The volatility on Wall Street is causing concern for many of our local consumers. We have a lot of buyers and sellers who are watching their portfolios each day and are concerned about taking action in purchasing a home until the volatility subsides. In more than one instance we’ve seen a buyer back out of a contract in fear of what may happen—even if they were having no problem with obtaining the loan.
And while I think we all understand the reasoning and the concern, what I do remind consumers of is the fact that we are in one of the best buyer’s markets of our generation. Despite the turmoil in credit markets, home mortgages are available, and at very attractive interest rates. Couple that with the fact that the majority of the communities around San Francisco are amazingly resilient in economic downturns. That’s true because we have very limited land, and we are in one of the most desirable locations in the world. It’s why we are still seeing some multiple offers each week.
Let’s take a look at this week in real estate:
East Bay—With 37.9% of home sales in Alameda County being foreclosures, and 58.7% in Contra Costa County, it is no secret that the East Bay real estate market is being driven by the bank owned market. This week we get the feeling that a lot of people are dizzy from Wall Street’s rollercoaster as we saw fewer walk-ins and fewer floor calls. Castro Valley saw a slower week with listing inventory starting to pick up. Prices are stable although we are beginning to see some price drops in the mid-ranged properties ($500-700K) in Castro Valley. Fremont shared that the REO market is still hot and that we’re starting to see the Fall slow down which is typical for this time of year.
Monterey County—No information reported this week.
North Bay—In Sonoma County, the last two weeks, according to our Petaluma office, listing inventory has come to a literal stand still. Sales activity is good but we are having challenges with stock market funds affecting escrows. Santa Rosa concurs noting that we are very active under $500,000 with multiple offers common. The Santa Rosa office also reported success in the high-end this week with two of their high-end properties going into escrow this week. In Marin County our Greenbrae Manager points out, “For every Agent who tells me things are slow, another is fielding multiple offers or participating in a highly contested bid. Sales continue to happen though not at the same pace as spring.” Nearby San Rafael notes that it continues to see more cash buyers. One property listed under market value in a good location had 12 offers on it and went into contract $200,000 over asking.
Peninsula—Another week of mixed stories. Some sellers are taking their properties off the market because the market won’t bear what they want to realize in the sale. Smart buyers who have cash are making some very good buys. We had one Burlingame condo sell for $100,000 under asking to an all cash buyer. In Half Moon Bay, more sales than usual were ratified over this busy weekend and one even had two offers, selling over its listed price of $1,350,000. We also had two cash deals in excess of $1,500,000 supporting the fact that high-end cash customers recognize good value and have confidence in today’s real estate market. Palo Alto office reports that activity at open houses in surrounding areas is relatively slow, while Palo Alto itself—with its lack of inventory—is still strong with higher activity.
San Francisco- Open houses appear to be filled with real buyers but they are slower to write offers and are being very selective about the properties that they are willing to write on. Our Noriega office had one fixer upper in Sunset that had 10 offers. The listing went well over $459,000. The same office was involved in three other multiple offer situations this week. The heavier activity this week has definitely been in the lower price points.
Santa Cruz County—No information reported this week.
Silicon Valley—Silicon Valley changes from week to week and from neighborhood to neighborhood. This week our Cupertino office is reporting that although sales are treading steady, new listings that are coming on to the market are slow. Buyers continue to come through in waves looking for the under valued deal. We are seeing increased buyer activity and stronger sales, mostly in the REO price range. We are also seeing increased traffic at open houses. Entry level homes seem to get the best traffic. Overall I’d say that things are slowing down quite a bit but buyers are out there. They’re just looking for the best deals and then they act.
On a final note, I’ll share with you a comment released by NAR this week— regarding projections for 2009. NAR Chief Economist Lawrence Yun “expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.” You can be certain that once the national economy begins a turnaround, our San Francisco Bay Area will be one of the first regions in the nation to get firm on housing prices, and begin the upward climb of appreciation as it does in every cycle.
Have a great week-
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
It was an interesting week in news. More specifically, it was a great week in news for real estate activity—but in its third consecutive week of volatility, the stock market did little to support the cause.
Let’s start with the good news. NAR released its Pending Home Sales Index—a forward-looking indicator based on contracts signed in August—noting pending homes “jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July - 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4.”
Days later, DataQuick News reported “Bay Area home sales soared last month above the record-low levels of a year ago, marking the largest gain in over six years. The median sale price did the opposite, diving to $400,000 - 40 percent below its summer 2007 peak - as more sales shifted to lower-cost inland markets laden with foreclosures…Last month's 45 percent year-over-year sales gain was the highest for any month since April 2002, when sales shot up 49 percent.”
Both the prices and sales from NAR and DataQuick’s reports reflect the dominance of foreclosure sales, which according to Data Quick accounted for 42% of all homes that traded hands in Contra Costa, Napa, Sonoma and Solano counties. Of course not all markets are being hit as heavily by foreclosures. San Francisco remains the lowest Bay Area county with just 9.5% of homes sold in foreclosure. Second was Marin at 14.9%.
What the heavy foreclosure sales figures are telling us, however, is most important. The dramatic increase in sales suggests that more investors are deciding that prices have fallen to bargain levels and they are now getting into the market. Historically speaking, it is investors who determine where the bottom is. When they think prices have reached a point where they can potentially buy low, wait a bit and in a few years turn a profit, they’ll swoop in. We’re starting to see this now and that is welcome news to many.
Of course housing recovery as a whole is dependent on the course of the overall economy which had less than stellar news this week. By Thursday, the Dow rallied back after two days of declines—including a loss of 500 points on Wednesday—but the NASDAQ slipped to its lowest point in more than five years.
The volatility on Wall Street is causing concern for many of our local consumers. We have a lot of buyers and sellers who are watching their portfolios each day and are concerned about taking action in purchasing a home until the volatility subsides. In more than one instance we’ve seen a buyer back out of a contract in fear of what may happen—even if they were having no problem with obtaining the loan.
And while I think we all understand the reasoning and the concern, what I do remind consumers of is the fact that we are in one of the best buyer’s markets of our generation. Despite the turmoil in credit markets, home mortgages are available, and at very attractive interest rates. Couple that with the fact that the majority of the communities around San Francisco are amazingly resilient in economic downturns. That’s true because we have very limited land, and we are in one of the most desirable locations in the world. It’s why we are still seeing some multiple offers each week.
Let’s take a look at this week in real estate:
East Bay—With 37.9% of home sales in Alameda County being foreclosures, and 58.7% in Contra Costa County, it is no secret that the East Bay real estate market is being driven by the bank owned market. This week we get the feeling that a lot of people are dizzy from Wall Street’s rollercoaster as we saw fewer walk-ins and fewer floor calls. Castro Valley saw a slower week with listing inventory starting to pick up. Prices are stable although we are beginning to see some price drops in the mid-ranged properties ($500-700K) in Castro Valley. Fremont shared that the REO market is still hot and that we’re starting to see the Fall slow down which is typical for this time of year.
Monterey County—No information reported this week.
North Bay—In Sonoma County, the last two weeks, according to our Petaluma office, listing inventory has come to a literal stand still. Sales activity is good but we are having challenges with stock market funds affecting escrows. Santa Rosa concurs noting that we are very active under $500,000 with multiple offers common. The Santa Rosa office also reported success in the high-end this week with two of their high-end properties going into escrow this week. In Marin County our Greenbrae Manager points out, “For every Agent who tells me things are slow, another is fielding multiple offers or participating in a highly contested bid. Sales continue to happen though not at the same pace as spring.” Nearby San Rafael notes that it continues to see more cash buyers. One property listed under market value in a good location had 12 offers on it and went into contract $200,000 over asking.
Peninsula—Another week of mixed stories. Some sellers are taking their properties off the market because the market won’t bear what they want to realize in the sale. Smart buyers who have cash are making some very good buys. We had one Burlingame condo sell for $100,000 under asking to an all cash buyer. In Half Moon Bay, more sales than usual were ratified over this busy weekend and one even had two offers, selling over its listed price of $1,350,000. We also had two cash deals in excess of $1,500,000 supporting the fact that high-end cash customers recognize good value and have confidence in today’s real estate market. Palo Alto office reports that activity at open houses in surrounding areas is relatively slow, while Palo Alto itself—with its lack of inventory—is still strong with higher activity.
San Francisco- Open houses appear to be filled with real buyers but they are slower to write offers and are being very selective about the properties that they are willing to write on. Our Noriega office had one fixer upper in Sunset that had 10 offers. The listing went well over $459,000. The same office was involved in three other multiple offer situations this week. The heavier activity this week has definitely been in the lower price points.
Santa Cruz County—No information reported this week.
Silicon Valley—Silicon Valley changes from week to week and from neighborhood to neighborhood. This week our Cupertino office is reporting that although sales are treading steady, new listings that are coming on to the market are slow. Buyers continue to come through in waves looking for the under valued deal. We are seeing increased buyer activity and stronger sales, mostly in the REO price range. We are also seeing increased traffic at open houses. Entry level homes seem to get the best traffic. Overall I’d say that things are slowing down quite a bit but buyers are out there. They’re just looking for the best deals and then they act.
On a final note, I’ll share with you a comment released by NAR this week— regarding projections for 2009. NAR Chief Economist Lawrence Yun “expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.” You can be certain that once the national economy begins a turnaround, our San Francisco Bay Area will be one of the first regions in the nation to get firm on housing prices, and begin the upward climb of appreciation as it does in every cycle.
Have a great week-
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
Mr. Toad’s Wild Ride on Wall Street Week of October 6, 2008
It was a week of decisive action by the U.S. government as it worked to fix the problems affecting Wall Street and the ever expanding global economic unrest. Earlier this week, President Bush announced a historic and reworked financial-rescue plan, confirming that the U.S. will take equity stakes in nine banks (among them Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, to name a few), backstop virtually all non-interest-bearing bank accounts and guarantee most new loans between banks. The White House plan marks the first such deep government intervention in markets since the Great Depression.
The plan found support among economists and experts. “This is finally the comprehensive and detailed plan that the market has been looking for,” said Jaret Seiberg, financial institution analyst for the Stanford Group. “It addresses the biggest problems that banks face, which is a capital crunch, and it attempts to fix the short term debt markets, plus it reduces the risk of liquidity runs on banks. That’s a pretty powerful first punch.”
In layman’s terms, this plan means that the government will now own a stake in several private U.S. companies—something that has many Americans rightfully concerned—though for now provides a stable backing in an effort to increase the availability of financing for consumers and businesses. Without this backing, consumer and business spending was shrinking which ultimately leads to businesses cutting jobs or worse yet, closing their doors. In theory, this plan will allow for restoration of more normal market functioning, and reinvigorate the financial markets. But as evidenced by the week on Wall Street, this apparently will take a little time.
One day after the White House announced the plan, the Dow tumbled to its second worst session ever on a point basis. The slide of 7.9% was the Dow’s 9th worst ever. In fact, according to CNNMoney, the decline wiped out $1.1 trillion in market value on the Dow Jones Wilshire 5000, the broadest measure of the stock market.
Thursday, however, things seemed to get brighter as Wall Street rallied, finding positive momentum as the lowest oil prices in more than a year gave investors a reason to scoop up shares battered in the recent market sell-off. The Dow Jones surged 401 points late in the day leaving many to wonder if the market was finally taking a u-turn. Friday was yet another rollercoaster ride, another day like nine other days in October where the Dow has ricocheted in a range greater than 5% throughout the day’s trading. On Friday the Dow ended down 1.4% amidst a sell-off just prior to the closing bell. A quote I read in the WSJ Friday from a mutual fund firm CEO says it in a nutshell: “If you don’t like the (stock) price, just wait five minutes.”
.
So what has this week’s rollercoaster ride on Wall Street meant for our local housing market? I am pleased to report that some offices are having near-normal new pending sales activity. They higher-end communities seem to be the most lethargic during the wild Wall Street ride, as you’d expect. The Santa Rosa office, with the most REO’s in our region, has hit 98% of their October projected open units prior to Oct 15th. Let’s take a look…
East Bay—The Berkeley office is again reporting low inventory in Albany, Berkeley, Kensington and El Cerrito which consistently have less than two months supply. Other nearby markets are experiencing a heavy influx of bank-owned sales with the office reporting 70% of its sales this month have been REOs. Danville’s REO surge from last week may have been an anomaly as sales slowed dramatically this week. The high-end is also seeing dramatic lulls with inventory in Alamo at 13 months and in Blackhawk and 14 months. Fremont continues to see some sales highs thanks to the large number of REOs. Pleasanton and Orinda saw very little change this week, both noting that buyers are cautious, most glued to their televisions and the latest news on Wall Street. Agents continue to guide their clients and educating them on the opportunities available in today’s market and doing what they can to get their buyers into their new homes buy the holidays.
Monterey County—Listing inventory and sales activity have been steady. We had two REOs this week—both with multiple offers. For the luxury market, we have 22 properties pending in the MLS above $1.5 million on the Monterey Peninsula. Of those, 14 properties are below $2.5 million and eight are $2.5 to $6.8 million.
North Bay—The Greenbrae office is reporting decreasing listing inventory and decreasing sales activity though they did have a Larkspur listing that was a major fixer upper that was listed in the high sevens and had 22 offers. It went for over $1 million. The San Rafael office noted that it listed a Novato house this week for $359,000—a price unheard of for Marin County. Even with these types of values, some buyers are leery to commit. Sonoma County continues to see increased activity in the bank-owned arena though Santa Rosa saw an increase in activity in the $900,000 to $1 million market this week (a market that has been asleep at the wheel for much of the year).
Peninsula—Half Moon Bay witnessed the results of Wall Street’s volatility this week as two buyers canceled contracts out of fear that their reserves were disappearing. Woodside is reporting that there are a lot of great deals right now with the high-end quiet, and some sellers are motivated. A $2.7M off-market sale in Menlo Park, plus several sales in Burlingame with multiple offers over $1M, all cash, reminds us that Buyers are out there for the right deals. The rest of the Peninsula seems to be seeing a lot of interested buyers who are entering the market, though waiting to see what comes of the economy. Perhaps they are measuring the market so they are prepared to jump in and buy at the first sign that consumer confidence is rising.
San Francisco—San Francisco saw a similar week to that of the Peninsula with buyers waiting to see what comes of Wall Street and the government’s new plan. The Market Street office also saw two deals fall through as buyers feared what was happening with the economy, although neither were having issues with securing funding. While we’ve noted that a few transactions have cancelled, it’s equally important to note that more than 27 new escrows were opened in our San Francisco offices during this volatile Wall Street week.
Santa Cruz County—Listing inventory is steady and sales activity seems to be decreasing. Overall YTD through September, units are down in Santa Cruz County 12-15% from 2007. Over 20% of the sales in the county have occurred in the Watsonville area (south county) and 87% are under $1 million. The upper end of the market has been pretty slow this year. In the county, YTD through September, there have been 20 sales over $2 million representing 1.8% of the closed inventory. The lower-end, like most regions, continues to drive the market. Lending continues to be an obstacle with strict guidelines, less money to loan and unyielding appraisals.
Silicon Valley—There are two types of buyers out there right now—those who see this as an opportune time and are acting on it and those who have adopted the wait and see philosophy and are afraid to act. For the most part, our Silicon Valley offices are reporting that buyer interest has slowed with floor calls and open house activity decreasing. However, our San Jose Main office disagrees noting that buyer activity at open houses this week actually increased. The market that seems to be fairing the best is the entry level and continued success lies in the bank-owned arena where REO properties continue to generate multiple offers. There are two types of clients who are seeing success in today’s market (the rest languish so clients of all regions take note):
Buyers who see real estate as a long-term investment and this market, in particular, as an opportunity and are acting on it
Sellers who price their home right, stage it and are motivated
South County—With all of the drama on Wall Street, things have slowed quite a bit. Activity has slowed with the exception of the bank-owned market where well-priced REOs are often selling quickly, with multiple offers. The luxury market in South County seems to be languishing with the exception of bank-owned properties. An Agent in the Morgan Hill office just sold a home that was listed earlier this year for $1.1 million—the final purchase price was $750,000 (as a short sale).
There is our market in a nutshell. Overall, things seem to be steady. Bank owned properties continue to drive much of our activity. The higher end properties are more sensitive to pricing than they have been in several years. But make no bones about it, homes are selling today, and not a week goes by without several reports of multiple offers. I am thankful that we have the very best in the business guiding our customers with great strategies and outstanding professionalism.
Until next week - Make it a great one!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
It was a week of decisive action by the U.S. government as it worked to fix the problems affecting Wall Street and the ever expanding global economic unrest. Earlier this week, President Bush announced a historic and reworked financial-rescue plan, confirming that the U.S. will take equity stakes in nine banks (among them Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, to name a few), backstop virtually all non-interest-bearing bank accounts and guarantee most new loans between banks. The White House plan marks the first such deep government intervention in markets since the Great Depression.
The plan found support among economists and experts. “This is finally the comprehensive and detailed plan that the market has been looking for,” said Jaret Seiberg, financial institution analyst for the Stanford Group. “It addresses the biggest problems that banks face, which is a capital crunch, and it attempts to fix the short term debt markets, plus it reduces the risk of liquidity runs on banks. That’s a pretty powerful first punch.”
In layman’s terms, this plan means that the government will now own a stake in several private U.S. companies—something that has many Americans rightfully concerned—though for now provides a stable backing in an effort to increase the availability of financing for consumers and businesses. Without this backing, consumer and business spending was shrinking which ultimately leads to businesses cutting jobs or worse yet, closing their doors. In theory, this plan will allow for restoration of more normal market functioning, and reinvigorate the financial markets. But as evidenced by the week on Wall Street, this apparently will take a little time.
One day after the White House announced the plan, the Dow tumbled to its second worst session ever on a point basis. The slide of 7.9% was the Dow’s 9th worst ever. In fact, according to CNNMoney, the decline wiped out $1.1 trillion in market value on the Dow Jones Wilshire 5000, the broadest measure of the stock market.
Thursday, however, things seemed to get brighter as Wall Street rallied, finding positive momentum as the lowest oil prices in more than a year gave investors a reason to scoop up shares battered in the recent market sell-off. The Dow Jones surged 401 points late in the day leaving many to wonder if the market was finally taking a u-turn. Friday was yet another rollercoaster ride, another day like nine other days in October where the Dow has ricocheted in a range greater than 5% throughout the day’s trading. On Friday the Dow ended down 1.4% amidst a sell-off just prior to the closing bell. A quote I read in the WSJ Friday from a mutual fund firm CEO says it in a nutshell: “If you don’t like the (stock) price, just wait five minutes.”
.
So what has this week’s rollercoaster ride on Wall Street meant for our local housing market? I am pleased to report that some offices are having near-normal new pending sales activity. They higher-end communities seem to be the most lethargic during the wild Wall Street ride, as you’d expect. The Santa Rosa office, with the most REO’s in our region, has hit 98% of their October projected open units prior to Oct 15th. Let’s take a look…
East Bay—The Berkeley office is again reporting low inventory in Albany, Berkeley, Kensington and El Cerrito which consistently have less than two months supply. Other nearby markets are experiencing a heavy influx of bank-owned sales with the office reporting 70% of its sales this month have been REOs. Danville’s REO surge from last week may have been an anomaly as sales slowed dramatically this week. The high-end is also seeing dramatic lulls with inventory in Alamo at 13 months and in Blackhawk and 14 months. Fremont continues to see some sales highs thanks to the large number of REOs. Pleasanton and Orinda saw very little change this week, both noting that buyers are cautious, most glued to their televisions and the latest news on Wall Street. Agents continue to guide their clients and educating them on the opportunities available in today’s market and doing what they can to get their buyers into their new homes buy the holidays.
Monterey County—Listing inventory and sales activity have been steady. We had two REOs this week—both with multiple offers. For the luxury market, we have 22 properties pending in the MLS above $1.5 million on the Monterey Peninsula. Of those, 14 properties are below $2.5 million and eight are $2.5 to $6.8 million.
North Bay—The Greenbrae office is reporting decreasing listing inventory and decreasing sales activity though they did have a Larkspur listing that was a major fixer upper that was listed in the high sevens and had 22 offers. It went for over $1 million. The San Rafael office noted that it listed a Novato house this week for $359,000—a price unheard of for Marin County. Even with these types of values, some buyers are leery to commit. Sonoma County continues to see increased activity in the bank-owned arena though Santa Rosa saw an increase in activity in the $900,000 to $1 million market this week (a market that has been asleep at the wheel for much of the year).
Peninsula—Half Moon Bay witnessed the results of Wall Street’s volatility this week as two buyers canceled contracts out of fear that their reserves were disappearing. Woodside is reporting that there are a lot of great deals right now with the high-end quiet, and some sellers are motivated. A $2.7M off-market sale in Menlo Park, plus several sales in Burlingame with multiple offers over $1M, all cash, reminds us that Buyers are out there for the right deals. The rest of the Peninsula seems to be seeing a lot of interested buyers who are entering the market, though waiting to see what comes of the economy. Perhaps they are measuring the market so they are prepared to jump in and buy at the first sign that consumer confidence is rising.
San Francisco—San Francisco saw a similar week to that of the Peninsula with buyers waiting to see what comes of Wall Street and the government’s new plan. The Market Street office also saw two deals fall through as buyers feared what was happening with the economy, although neither were having issues with securing funding. While we’ve noted that a few transactions have cancelled, it’s equally important to note that more than 27 new escrows were opened in our San Francisco offices during this volatile Wall Street week.
Santa Cruz County—Listing inventory is steady and sales activity seems to be decreasing. Overall YTD through September, units are down in Santa Cruz County 12-15% from 2007. Over 20% of the sales in the county have occurred in the Watsonville area (south county) and 87% are under $1 million. The upper end of the market has been pretty slow this year. In the county, YTD through September, there have been 20 sales over $2 million representing 1.8% of the closed inventory. The lower-end, like most regions, continues to drive the market. Lending continues to be an obstacle with strict guidelines, less money to loan and unyielding appraisals.
Silicon Valley—There are two types of buyers out there right now—those who see this as an opportune time and are acting on it and those who have adopted the wait and see philosophy and are afraid to act. For the most part, our Silicon Valley offices are reporting that buyer interest has slowed with floor calls and open house activity decreasing. However, our San Jose Main office disagrees noting that buyer activity at open houses this week actually increased. The market that seems to be fairing the best is the entry level and continued success lies in the bank-owned arena where REO properties continue to generate multiple offers. There are two types of clients who are seeing success in today’s market (the rest languish so clients of all regions take note):
Buyers who see real estate as a long-term investment and this market, in particular, as an opportunity and are acting on it
Sellers who price their home right, stage it and are motivated
South County—With all of the drama on Wall Street, things have slowed quite a bit. Activity has slowed with the exception of the bank-owned market where well-priced REOs are often selling quickly, with multiple offers. The luxury market in South County seems to be languishing with the exception of bank-owned properties. An Agent in the Morgan Hill office just sold a home that was listed earlier this year for $1.1 million—the final purchase price was $750,000 (as a short sale).
There is our market in a nutshell. Overall, things seem to be steady. Bank owned properties continue to drive much of our activity. The higher end properties are more sensitive to pricing than they have been in several years. But make no bones about it, homes are selling today, and not a week goes by without several reports of multiple offers. I am thankful that we have the very best in the business guiding our customers with great strategies and outstanding professionalism.
Until next week - Make it a great one!
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
A Second Week of Financial Unrest
Where do we go from here?
Does it feel like the movie Groundhog Day? Following the second straight week of economic unrest, watching coverage from the trading floors on Wall Street resembled an endless video loop, replaying the same performance day after day. The U.S. stock market endured its worst five-day performance since 1932 on fears of a severe economic downturn. Two days later (on Thursday), stocks plunged in the final hour of trading, sending the Dow Jones industrial average down more than 675 points or more than 7% to its lowest level in five years. In response to this news, overnight stocks plunged in Europe and Asia, as well. Most notably, Japan’s Nikkei fell more than 10 percent Friday.
We’re all affected by this, whether or not we have 401k’s and stock portfolios suffering large losses. The business owner who may be completely detached from the stock market personally, and fortunate enough to not be in need of a commercial loan to make payroll, is still affected by his or her customers who are experiencing actual losses. Many consumers were afraid to open their third quarter 401K statements as they arrived this week in the mail. Others are making countless calls to their financial advisors in hopes of a miracle or a quick fix to stop the decline. Still others are choosing to ignore it with the “ignorance is bliss” philosophy. The bottom line is, we’re all in this together.
What I am thankful for is that I am not hearing very many instances of our customers who are qualified for loans by today’s standards not being able to get loans. I am meeting very regularly with our Princeton Capital president Rob Reid over the subject, and we just aren’t seeing situations where loans are being pulled or denied unreasonably at the last minute. I have heard from some agents that they’ve dealt with a lender that had a buyer qualified for 25% down, and then changed the requirement to 30%. This is by far the exception rather than the rule. To date, most loans opened in the past 30 days are funding as they were packaged. Naturally, jumbo loan resources are fewer today, but there is enough money out there at very reasonable rates to satisfy the current demand.
Last week’s passing of the Emergency Economic Stabilization Act of 2008 should help to alleviate some strain as one of the goals of the act is to unfreeze the credit markets to encourage intra-bank lending. Once we start to see this, banks should begin to lessen their stringent requirements and consumers should be able to once again see more resources for mortgages, auto, and school loans.
Historically speaking, during times of economic crisis consumers tend to invest their money in tangible assets, like real estate. We expect that this may be the case in the months ahead as consumers look to buy homes for all of the lifestyle reasons that prompt people to buy (i.e. marriage, births, divorce, deaths, retirement, job relocation, etc.) but also with a consideration of the historic long-term appreciation that makes homeownership a valuable investment over time.
Earlier this week, Bloomberg.com reported, “Rates are low enough that some consumers stung by losses in their portfolios may want to pull the trigger on a purchase or refinance if they can lower their payments.”
Indicative of this fact, the article went on to report, “A nationwide survey of consumer credit rates showed 30-year fixed rate mortgages averaged 5.8 percent yesterday, according to Bankrate.com. Rates were 6.26 percent on August 29 and also July 31, in the same survey. Home-loan applications rose 2.2 percent last week, according to the Mortgage Bankers Association and purchases were at a six-year low the previous week.”
We certainly are in a time of uncertainty. But while many sit glued to CNN and others fret over their investment portfolios, the housing market continues to labor on in the Bay Area. Because the beautiful thing about real estate is that it’s not just an investment—though it may be one of the most important investments a consumer will make in his/her lifetime. Your home is where you raise your family and plant your roots. It’s where you hang your hat and make memories to last a lifetime.
You can’t live in your stock portfolio - which is why some people will always need to buy or sell a home, regardless of the state of the national economy. Here’s what was going on in our local markets:
East Bay—A very mixed bag in the East Bay this week. Castro Valley—a market which has been successful in sales for most of the year thanks to bank-owned properties—seems to finally have slowed down a bit as its REO inventory decreases. Berkeley seems to be feeling the hit of the economic freeze as buyers seem to be hesitant to make offers. Oakland concurs noting that “Buyers are on the fence about price. We are seeing offers coming 10% below the asking price and not coming together.” This is an important fact for sellers to think about as they are pricing their homes in today’s market. Affluent San Ramon Valley is starting to see an increase in REO activity. While just six to nine months ago, REOs were the exception to the rule, today only two of the office’s new sales are not REOs. Fremont seems to be a bright spot reporting, “Even in light of the recent economic news, listings and sales are still active. The REO market is very active. Buyers previewing at open houses are surprisingly active.” Livermore is seeing quite a bit of activity in the REO market noting that five of seven pending sales this week were REO. The upper-end of Livermore is stagnant.
Monterey County—Buyers were very hesitant this week in light of the economic turmoil. We had fewer opened escrows last week than we usually do.
North Bay—Greenbrae is reporting that “confusion and uncertainty has led to a paralysis in the market, though lenders are still lending and there are still great deals to be had.” Nearby San Rafael notes that there was a slowdown this week in open house activity and Southern Marin concurs noting that it had no new sales for the week as buyers remained cautious. Sonoma County seems to be feeling the strain as well though Santa Rosa did note a bright spot: the $500,000 to $1 million range—which has been sleeping for a good part of ’08—seems to have awakened over the last three weeks. Though three weeks does not define a trend, it is a sign of good things to come as we need the move-up buyers to be moving in order for the upper-end to pick-up.
Peninsula—Overall optimism is high along the Peninsula right now. We had two very competitive multiple offers out of our Burlingame office this week which have yet to be ratified. While at the same time, we had a few nervous buyers back out of an offer and then attempt to renegotiate on the same deal. Half Moon Bay saw open house activity pick-up this week thanks to the LPGA tournament and a few high end deals that continue to be negotiated. Our Menlo Park Santa Cruz Avenue office is reporting that things are slow though the office is quick to note that “savvy buyers are taking advantage of the great opportunities.”
San Francisco—Agents are finding that some of their buyers are holding tight right now waiting to see what is going to happen with the economy before they are willing to write an offer. In a sign of good things to come, open houses were well attended in some areas. City buyers are just waiting for that perfect opportunity to swoop down on the best deals. Sellers take note: the buyers are out there so if you price your home competitively from the beginning, you should be able to attract some interest.
Santa Cruz County—No information provided.
Silicon Valley—People are concerned. There’s no question. Buyers and sellers alike seem to be in a wait and see mode. Buyers want to see what is going to come of the market over the next several weeks and most sellers are only selling if they really need to put their homes on the market. The bright spot? Some buyers are seeing the opportunities available in today’s market despite what is going on in Wall Street. Bank-owned properties also continue to drive many of our outlying markets and we do continue to see multiple offers on such properties. Our San Jose Almaden office is reporting that we are having trouble with financial commitment from some lenders. Agents are now trying to get financing contingency to remain in effect until the loans are funded.
South County—The local market continues to be dominated by bank-owned properties. Prices continue to drop but buyer interest is very high as interest rates are good and prices become increasingly attractive. Moderately priced homes are selling fairly quickly—if they are priced right and show well. Activity with higher-end homes has slowed as there are not many “move-up” buyers. Lending continues to be a challenge. Buyers who once could get into a home with just 10-% down are now required to have 20% to 30%.
As you can see, overall the housing market for the week was a bit of a mixed bag. Areas that have a high REO rate continue to see quick sales. More affluent regions seem to be feeling the wait and see philosophy. And for most, the ability to get a mortgage seems to be more of a psychological challenge rather than an actual one, at least at the moment.
I agree with many of my colleagues that Q4 could be the best opportunity in a long time to purchase real estate. Buyers should understand that the best time to buy is when others are not.
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Where do we go from here?
Does it feel like the movie Groundhog Day? Following the second straight week of economic unrest, watching coverage from the trading floors on Wall Street resembled an endless video loop, replaying the same performance day after day. The U.S. stock market endured its worst five-day performance since 1932 on fears of a severe economic downturn. Two days later (on Thursday), stocks plunged in the final hour of trading, sending the Dow Jones industrial average down more than 675 points or more than 7% to its lowest level in five years. In response to this news, overnight stocks plunged in Europe and Asia, as well. Most notably, Japan’s Nikkei fell more than 10 percent Friday.
We’re all affected by this, whether or not we have 401k’s and stock portfolios suffering large losses. The business owner who may be completely detached from the stock market personally, and fortunate enough to not be in need of a commercial loan to make payroll, is still affected by his or her customers who are experiencing actual losses. Many consumers were afraid to open their third quarter 401K statements as they arrived this week in the mail. Others are making countless calls to their financial advisors in hopes of a miracle or a quick fix to stop the decline. Still others are choosing to ignore it with the “ignorance is bliss” philosophy. The bottom line is, we’re all in this together.
What I am thankful for is that I am not hearing very many instances of our customers who are qualified for loans by today’s standards not being able to get loans. I am meeting very regularly with our Princeton Capital president Rob Reid over the subject, and we just aren’t seeing situations where loans are being pulled or denied unreasonably at the last minute. I have heard from some agents that they’ve dealt with a lender that had a buyer qualified for 25% down, and then changed the requirement to 30%. This is by far the exception rather than the rule. To date, most loans opened in the past 30 days are funding as they were packaged. Naturally, jumbo loan resources are fewer today, but there is enough money out there at very reasonable rates to satisfy the current demand.
Last week’s passing of the Emergency Economic Stabilization Act of 2008 should help to alleviate some strain as one of the goals of the act is to unfreeze the credit markets to encourage intra-bank lending. Once we start to see this, banks should begin to lessen their stringent requirements and consumers should be able to once again see more resources for mortgages, auto, and school loans.
Historically speaking, during times of economic crisis consumers tend to invest their money in tangible assets, like real estate. We expect that this may be the case in the months ahead as consumers look to buy homes for all of the lifestyle reasons that prompt people to buy (i.e. marriage, births, divorce, deaths, retirement, job relocation, etc.) but also with a consideration of the historic long-term appreciation that makes homeownership a valuable investment over time.
Earlier this week, Bloomberg.com reported, “Rates are low enough that some consumers stung by losses in their portfolios may want to pull the trigger on a purchase or refinance if they can lower their payments.”
Indicative of this fact, the article went on to report, “A nationwide survey of consumer credit rates showed 30-year fixed rate mortgages averaged 5.8 percent yesterday, according to Bankrate.com. Rates were 6.26 percent on August 29 and also July 31, in the same survey. Home-loan applications rose 2.2 percent last week, according to the Mortgage Bankers Association and purchases were at a six-year low the previous week.”
We certainly are in a time of uncertainty. But while many sit glued to CNN and others fret over their investment portfolios, the housing market continues to labor on in the Bay Area. Because the beautiful thing about real estate is that it’s not just an investment—though it may be one of the most important investments a consumer will make in his/her lifetime. Your home is where you raise your family and plant your roots. It’s where you hang your hat and make memories to last a lifetime.
You can’t live in your stock portfolio - which is why some people will always need to buy or sell a home, regardless of the state of the national economy. Here’s what was going on in our local markets:
East Bay—A very mixed bag in the East Bay this week. Castro Valley—a market which has been successful in sales for most of the year thanks to bank-owned properties—seems to finally have slowed down a bit as its REO inventory decreases. Berkeley seems to be feeling the hit of the economic freeze as buyers seem to be hesitant to make offers. Oakland concurs noting that “Buyers are on the fence about price. We are seeing offers coming 10% below the asking price and not coming together.” This is an important fact for sellers to think about as they are pricing their homes in today’s market. Affluent San Ramon Valley is starting to see an increase in REO activity. While just six to nine months ago, REOs were the exception to the rule, today only two of the office’s new sales are not REOs. Fremont seems to be a bright spot reporting, “Even in light of the recent economic news, listings and sales are still active. The REO market is very active. Buyers previewing at open houses are surprisingly active.” Livermore is seeing quite a bit of activity in the REO market noting that five of seven pending sales this week were REO. The upper-end of Livermore is stagnant.
Monterey County—Buyers were very hesitant this week in light of the economic turmoil. We had fewer opened escrows last week than we usually do.
North Bay—Greenbrae is reporting that “confusion and uncertainty has led to a paralysis in the market, though lenders are still lending and there are still great deals to be had.” Nearby San Rafael notes that there was a slowdown this week in open house activity and Southern Marin concurs noting that it had no new sales for the week as buyers remained cautious. Sonoma County seems to be feeling the strain as well though Santa Rosa did note a bright spot: the $500,000 to $1 million range—which has been sleeping for a good part of ’08—seems to have awakened over the last three weeks. Though three weeks does not define a trend, it is a sign of good things to come as we need the move-up buyers to be moving in order for the upper-end to pick-up.
Peninsula—Overall optimism is high along the Peninsula right now. We had two very competitive multiple offers out of our Burlingame office this week which have yet to be ratified. While at the same time, we had a few nervous buyers back out of an offer and then attempt to renegotiate on the same deal. Half Moon Bay saw open house activity pick-up this week thanks to the LPGA tournament and a few high end deals that continue to be negotiated. Our Menlo Park Santa Cruz Avenue office is reporting that things are slow though the office is quick to note that “savvy buyers are taking advantage of the great opportunities.”
San Francisco—Agents are finding that some of their buyers are holding tight right now waiting to see what is going to happen with the economy before they are willing to write an offer. In a sign of good things to come, open houses were well attended in some areas. City buyers are just waiting for that perfect opportunity to swoop down on the best deals. Sellers take note: the buyers are out there so if you price your home competitively from the beginning, you should be able to attract some interest.
Santa Cruz County—No information provided.
Silicon Valley—People are concerned. There’s no question. Buyers and sellers alike seem to be in a wait and see mode. Buyers want to see what is going to come of the market over the next several weeks and most sellers are only selling if they really need to put their homes on the market. The bright spot? Some buyers are seeing the opportunities available in today’s market despite what is going on in Wall Street. Bank-owned properties also continue to drive many of our outlying markets and we do continue to see multiple offers on such properties. Our San Jose Almaden office is reporting that we are having trouble with financial commitment from some lenders. Agents are now trying to get financing contingency to remain in effect until the loans are funded.
South County—The local market continues to be dominated by bank-owned properties. Prices continue to drop but buyer interest is very high as interest rates are good and prices become increasingly attractive. Moderately priced homes are selling fairly quickly—if they are priced right and show well. Activity with higher-end homes has slowed as there are not many “move-up” buyers. Lending continues to be a challenge. Buyers who once could get into a home with just 10-% down are now required to have 20% to 30%.
As you can see, overall the housing market for the week was a bit of a mixed bag. Areas that have a high REO rate continue to see quick sales. More affluent regions seem to be feeling the wait and see philosophy. And for most, the ability to get a mortgage seems to be more of a psychological challenge rather than an actual one, at least at the moment.
I agree with many of my colleagues that Q4 could be the best opportunity in a long time to purchase real estate. Buyers should understand that the best time to buy is when others are not.
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
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