Weekly Market Watch

In continued display that the President-elect will hit the ground running when he takes office in just four days, Obama met with Congress on Tuesday to ensure he’ll have more than a trillion dollars at his disposal within weeks of his inauguration to begin rebuilding our ailing economy. Just two days later (on Thursday), the President-elect secured access to the second half of the $700 billion financial rescue package after the Senate voted 52-42 against a measure that would have blocked the funds’ release—many members of the Senate felt the Bush administration wasted the first half and were concerned that the Obama administration may do the same.

Obama says he hopes to have the ability to tap into a portion of that money within days of becoming President. His plans with the money as well as a stimulus package he hopes to see lawmakers approve, shortly, include:

Creating more than three million jobs, many of them in construction and manufacturing
A focus on helping homeowners avoid foreclosures
Stimulate housing investment
Provide needed liquidity to commercial mortgage markets to ensure that financing is available
Work to make student loans and car loans more available
Ensuring the funds do not go to unreasonable exec salaries and bonuses
Requirement of continued reports on earning, repayments and lending practices from institutions that receive bailout funds

The incoming administration will be taking on the challenge of responsible spending of the Troubled Asset Relief Program (TARP) funds and has pledged to commit some $50 billion to $100 billion to address foreclosures. This is a challenge of immense proportions. Which homeowners will see some level of relief? What will be the qualifier? For how long can foreclosures currently in process be stalled? Will there be an across-the-board interest rate reduction for all homeowners to get a fresh start with their current mortgages? If attractive refi rates are made available, how will loan-to-value ratios be dealt with? Currently many homes across the US have loan balances greater than what a bank appraisal would assign for value today. These are just a few of the many questions that have to be answered before workable policies can be put in place.

The good news is that help is on the way for many. Positive steps are in motion. Obviously an economic turnaround will not happen immediately. We’ve got a long road ahead and depending on what forecast you are reading, some say we’ll start seeing a turnaround in mid-2009 and others say we may not see it until 2010. Our San Francisco Bay Area Buyer activity at the entry level is quite strong, and that’s the first step to housing recovery. Let’s take a look:


East Bay—Sales activity is increasing in the Berkeley area with the office noting the market remains stronger than surrounding areas and it feels like its only going to get stronger. We had three multiple offers this week and eight ratified offers. Our Danville office notes that the market is very quiet and seems to be in a holding pattern until after the inauguration. Fremont notes that in spite of the recent economic news, recent sales and listings have actually increased. The REO market is still generating multiple offers. Standard home owner sales are steady, but only for those properties that are priced correctly. Livermore notes that there is a lot of energy in the office and a lot of properties being shown to buyers. We are still seeing multiple offers on properties priced at $450,000 and below. Our Oakland/Piedmont office notes that we are starting off a little slow but that we expect to pick up momentum with the new listings coming in. All six of our sales this week were under $750,000. Orinda notes that January is surprisingly heating up. Properties are selling before they hit the MLS. Our Walnut Creek office notes that open house activity was good this weekend. The number of phone calls coming into the office from potential buyers has also increased. We are seeing more short sale and REO listings coming on in the central part of Contra Costa County, not just East County.
Marin County—The new year brought new attitude to higher-end real estate in Marin. We are experiencing a surge in open house activity with one home in San Anselmo seeing 120 people in just a few hours. The same story holds true in Fairfax, Larkspur, Tiburon and Stinson Beach. Our Southern Marin offices note that one of our Agents just co-listed a Tiburon property for $24,900,000. We also have two pending sales for close to $2 million. Our San Rafael office notes that there has been a steady increase in activity since the first of the year in San Rafael and Novato. Multiple offers are common on the entry level homes/condos. In Sonoma County, our Petaluma office notes that activity is picking up and the spring market may come early this year. Open houses across the prices ranges had very strong traffic. Our Sebastopol office concurs noting that we’re seeing a lot of buyer interest and this will translate into contracts shortly.
Monterey County—Sales activity in Monterey County is relatively stable right now though our Sales Associates seem to be writing lots of offers. We had 16 new escrows last week, in prices ranging from $200,000 to the multi-millions.
Peninsula—Our Burlingame office notes that Agents are out showing property and getting buyers pre-approved. Many sales are at the lower end while move-up buyers are hanging back a bit and waiting to get a “deal.” Our Half Moon Bay office notes that open houses are busy and several offers have been written and presented. There is definitely an improved attitude among buyers who are desperately seeking good reasons to make offers now. Mortgage funds are more available and rates are low, so buyers are beginning to act. Our Palo Alto office reports that activity is very slow. Those buyers that are at open houses are more optimistic, but not ready to commit at this point. Our San Mateo office notes that we had one multiple in Burlingame that received nine offers. Inventory isn’t up much for this time of year so we’re beginning to wonder if supply and demand are coming back into equilibrium.
San Francisco—Our Lakeside and Noriega offices agree that activity hasn’t picked up substantially since the holidays. On the flip side, our Market Street office reports that Agents are still remarking about the great traffic at their open houses over the weekend. They believe real buyers are showing up but they are just holding off on pulling the trigger. Our Van Ness office notes that we are seeing better activity in the last 10 days in all price ranges.
Santa Cruz County—January seems to be starting out slow in general. There were a few new sales for the month although we are closing quite a few from November to December. Open houses have been well attended the last two weeks. Our Agents are fairly optimistic about 2009.
Silicon Valley—According to our Cupertino Stevens Creek office, the first week of 2009 showed an increase in listings and sale pending transactions. It’s hard to know if this is the start of a trend or just coming off the cooler holiday months. This of course will be a market we’ll continue to watch over the days and weeks ahead. Our San Jose Almaden office notes that buyers are beginning to pick up and activity at open houses is improving. This market continues to be driven by REOs and short sales. .
South County—Our Hollister office is reporting that REO inventory is decreasing and short sale listings are on the rise. Our Morgan Hill office notes that open houses are well attended. There seems to be a lot of interest and potential buyers are realizing that there has never been a better time to buy.

Depending on the community and available inventory – there are some good pockets of Buyer activity. As I travel through our offices, I continually hear how critical pricing is for Sellers. Not a week goes by that I don’t hear of a well-priced home in great condition selling within a few weeks, while it’s competitor down the street sits with no activity. With incredible interest rates available and an upswing in Buyer activity, new listings need to stand out immediately, or run the risk of joining the unsold inventory.
Until next week-
Rick

Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage