New Legislative Action…Steps toward Restoring Consumer Confidence
It was a week full of stories and reports, both from the cynics and proponents of the American Recovery and Reinvestment Act of 2009. The $780 billion package was signed into law on February 17 and truly is the largest, most unprecedented recovery act in history.
The provisions of the bill were changing even up until hours before the House and Senate voted on the bill, but the final provisions were recently posted to NAR’s website. Click here to access the details and learn more about the housing elements that were included: http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home?lid=ronav0019
Also announced this week was Obama’s $75 billion foreclosure prevention plan. The multi-pronged plan calls for modifying loans for borrowers both at risk or already in default and for allowing certain homeowners with little or no home equity to refinance into more affordable loans through interest-rate reductions.
Click here to read the details of the prevention plan: http://www.realtor.org/RMODaily.nsf/pages/News2009021901
Obama’s administration said Wednesday that this prevention plan will help up to nine million people avoid foreclosure, by providing government funds to provide incentives to borrowers, loan servicers and mortgage investors to modify loans to more affordable monthly payments.
I know many are wondering if this new program will help them. Official guidelines of the plan won’t be unveiled until March 4, at which time we will focus our March Reality Check on the details of the plan and how consumers may take advantage of it. In the meantime, I did find this article on CNN.com which may help in educating yourself: http://money.cnn.com/2009/02/18/real_estate/Obama_foreclosure_plan/index.htm?postversion=2009021911
I realize this is a highly debatable topic right now - but what is not debatable is the fact that in order to fix this housing crisis, we must reduce foreclosures. Just take a look at this week’s DataQuick release which showcased a further dip in prices due to distressed home sales: http://www.dqnews.com/News/California/Bay-Area/RRBay090219.aspx. Real estate represents 20% of the gross domestic product in this country. An important element in fixing 1/5 of this country’s GDP is to curb falling home prices. This prevention program should help many stay in their homes, and in doing so, can help stabilize falling prices in areas hit hard by foreclosures.
When consumers feel more comfortable with their home’s value, and as job security returns, they will return to more normal spending habits. They’ll begin to make home improvements. They’ll begin to feel more confident in their future and that consumer confidence will begin to trickle into all areas of our economy. From home improvements to car purchases to vacations—and the jobs and associated spending that these create. What we know is, when consumers feel confident, they spend.
For many this thought conjures up negative emotions from the recent past—people living far beyond their means, banking on large levels of home appreciation. Fortunately this plan and that of the American Recovery and Reinvestment Act of 2009 provide stipulations that we hope will stop history from repeating itself. Couple that with the fact that lenders have become far more conservative in their lending practices, we should finally be on a sustainable path.
Now, let’s take a look at this week in real estate:
East Bay—Berkeley reports that there continues to be lots of buyers out there are some are writing offers. Some are still trying to feel out the stimulus bill, to see if there are enough perks in it for them, to assuage their fears of further price reductions. Consumer confidence is a big issue. If buyer’s jobs are secure, they will write offers. If they fear layoffs, they are hesitating to write. Some are waiting for the magical 4% loans. They will probably be waiting a long time for that product—if it ever happens. Danville shares that more than half of this week’s new sales were neither REO nor short sales. It appears that more sellers are getting realistic about sales prices. The Livermore office reports it had two walk-ins over the weekend and the majority of our new pending sales are short sales. The low end market is where the action is happening. One of the new pendings was at $750,000 while the remaining six pendings were $385,000 and below. Walnut Creek reports inventory is very low. We have fewer REOs coming on the market. Sales seem to be consistent.
Monterey County—Activity seems to be improving somewhat. We are seeing more floor calls. We have a lot of offers being written and we had a high number of new escrows with 18 last week.
North Bay—Greenbrae shares that no matter what or where you price a home, buyers want a deal so we are telling our sellers to expect some bargaining and not to be surprised with low ball offers. We saw sporadic attendance over the rainy three day weekend at open houses. Some did quite well while others didn’t with no real pattern. Southern Marin shares that even on the holiday weekend, we saw some good activity. One Agent in our office represented a buyer in a multiple offer situation on a home in Fairfax in the $900,000 range. Listings in the A+ neighborhoods are getting offers immediately as evidenced by a $1.4 million in Sycamore Park. Open houses got some buyers kicking tires, even in the pouring rain. Petaluma shares that inventory in Rohnert Park is dwindling. New inventory is coming on slow. One REO property listed for $219,000 had 25 offers. In East Petaluma, in the $325,000 to $400,000 range, multiple offers are the rule rather than the exception. Sebastopol reports it is seeing multiple offers on short sales and REOs. We saw less activity at open homes over the weekend, probably due to weather. We had two accepted offers on properties in the $600s, after they reduced it from the $700s.
Peninsula—Burlingame shares that we saw an increase in sales and offers being written this week. Hopefully this is an indication of changes in buyer thinking and confidence. Our office prevailed in a five offer multiple in San Mateo which sold over asking. The Menlo Park El Camino office shares that we had slow sales but buyers migrate to the “discounted” properties; hence 50% of our sales were multiple offers. Open houses are robust, however, most buyers are still waiting for a sign that their investment will not evaporate in the coming months. The office also notes that 70% of our inventory is still overpriced. Sellers are slow to come to the reality that no amount of marketing on any property will prop up prices above fundamentally justified levels. Palo Alto reports a relatively slow week. Activity at open houses varies from just a few folks to a couple dozen groups. Activity has been good, but mostly lower end and foreclosures in outlying areas. San Mateo shares that active listings are up13% over 2008. Pending sales are down only 2% from 2008. Solds are down about 29%. New inventory was very light today, putting emphasis on the good properties. Woodside reports that for the first time in all recorded months, there were 0 closed sales in the town of Woodside and Atherton and only one in Portola Valley per the MLS for the month of January. Sales in these towns are generally based on desire not need. The declining prices of the unsold inventory tell the tale—that and the number of cancelled or withdrawn listings. So far this month, we’ve had one sale in Atherton (28% off list price), one sale in Woodside (22% of list price) and one sale in Portola Valley (20% off list price).
San Francisco—Lakeside reports that the weekend traffic was slow because of the rain and the fact that a lot of the homes on the market have been out there awhile. By Wednesday, three Agents in the office were in contract. The Market Street office shares open house attendance was all over the map. It went from one person coming through to 30 people going through a TIC on Steiner during the height of the rain. In the last couple of days, Agent’s offers are being ratified as buyers and sellers are becoming more realistic about this market. Lombard shares that there was more activity this past week. Weather reduced open traffic. There were still lots of fence sitters, but we saw good value on a condo and a serious price reduction on an apartment building brought multiple offers. Strong down payments are becoming the norm.
Santa Cruz County—The market slowed down in February as compared with November, December and January. Open house activity continues to be fairly good and well attended depending on area and price of the home. The REO properties especially in south county seem to be slowing down in terms of number of units although the new properties continue to pull multiple offers. The under $300,000 mark, first time buyers or investors with cash are buying up the properties.
Silicon Valley—The Cupertino DeAnza office reports that we are getting some very nice listings. We hope this will translate into sales. The Los Altos First Street office notes that buyers are coming to open houses and openly commenting that they are waiting and trying to “time the market” for the upswing. At least they are generally feeling that we will have an upswing soon. Our San Jose Almaden office reports 40 groups through an REO open house that was trashed with no power and no plumbing. An offer was written by the Agent and accepted. To give you an idea, currently 70% of the Blossom Valley market is distressed sales. We are seeing 20% in Almaden and 25% in Cambrian. Almaden is the third slowest market (15% pending) behind Saratoga and Los Gatos in number of sales. The low end still appears to be the driving force right now. The San Jose Will Glen office reports that things have slowed up a bit. Again, open houses are busy and the floor calls keep coming in. Several Agents are working with buyers.
South County—Our Morgan Hill office reports that it seems that this week’s news—as it relates to real estate—has had a positive effect on potential buyers. The fact that the President has signed the stimulus bill coupled with the recent foreclosure prevention plan, has given a psychological boost to buyers, sellers and Agents. In South County, prices continue their downward spiral—but to the benefit of buyers who are seeing try bargains. Agents are reporting great attendance at open houses with buyers showing genuine interest. “Lookie Loos” and “Bottom Feeders” are out—serious potential buyers are in!
Of course only time will tell if all of this legislative action will work and we’ll only know if it does when we are able to reflect on it a year, two or even three down the road. But the fact is we’ve been in a holding pattern for far too long. Most people in the Bay Area are affected in one of two ways – many have incurred real loss of money, equity, home or job – and others have been somewhat emotionally paralyzed by the economy, and are choosing to hunker down, not spend, and the result on the economy is the same. The recent passage of these two very important housing initiatives—which include (among other things) the $8,000 first time home buyer credit and the increase in conforming loan limits—should help stimulate the entry level of our markets and push some activity upward into the mid-range.
Until next week,
Have a great one,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Monday, February 23, 2009
Weekly Market Update
It Passed! Now What?
A compromise on the Economic Stimulus Package has been reached. The new price tag: $787 billion. That’s below both the $820 billion House-passed version and the $838 billion Senate-passed version.
Just like with anything in life, the final package is all about compromise. Real estate advocates from NAR and Realogy President Richard Smith lobbied well on our behalf but in the end only a portion of the requests we had of lawmakers were made part of the final Economic Stimulus Package.
I am encouraged that lawmakers have now reached an agreement and we can finally move forward with some direct action.
The goal of the highly controversial Economic Stimulus Package is to create or save some 3.5 million jobs while helping to rebuild our nation’s economy which has been in a recession since December 2007. Although, at the writing of this piece, the details of the legislation had not been finalized we do anticipate a number of important housing provisions, including (as reported by NAR):
“Homebuyer Tax Credit – an $8,000 tax credit that will be available for qualified purchase of a principal residence by a first time homebuyer between January 1, 2009 and December 1, 2009. The credit does not require repayment. Individuals who purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit, as well. Click here for a chart with details on the first-time home buyer tax credit: http://www.realtor.org/wps/wcm/connect/b32db1004d05f6338052c5fd73e5610f/government_affairs_tax_credit_chart_021308.pdf?MOD=AJPERES&CACHEID=b32db1004d05f6338052c5fd73e5610f
FHA, Fannie and Freddie Loan Limits – Revised loan limits for FHA, Freddie Mac, and Fannie Mae. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the HUD Secretary.
Foreclosure Mitigation & Neighborhood Stabilization – Funding for states and local communities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized.”
In addition to these new elements, NAR continues to work with the Department of Treasury to implement a mortgage buy-down program. The details on that will surface over the next several weeks.
To view all of the housing provisions, click here: http://www.realtor.org/government_affairs/gapublic/uae_hr1_additional_provisions
So what’s next? President Obama is pushing to get quick approval of the emergency package so he can sign it into law before the end of this three-day holiday weekend.
Once it is signed into action, Washington is eager to get the funds into the local state governments and ultimately the local economies so they begin to directly affect Main Street. Consider reading this article from CNN with more details on the package itself: http://money.cnn.com/2009/02/13/news/economy/stimulus_individuals/index.htm?postversion=2009021308
There’s no question, it will take several weeks—and more likely several months—before we begin to see some patterns or trends and for this package to have any impact on our economy. But I am gratified that the government recognized the importance of passing the Economic Stimulus Package. The health of the nation’s housing market is critical to the financial well being of every household in the country and that, of course, is front and center right here at home. I believe the legislation will help to stabilize the housing market, at a time when our country needs it most.
With this news in tow, let’s take a look at this week in real estate:
East Bay—Berkeley reports that buyers are definitely out there looking. Our floor time and walk-in traffic have been great. Two of our Berkeley Previews properties just went pending another listing in the $800s also went pending. Castro Valley reports that well priced, well-maintained properties are being snatched up in our local market due to decreases in inventory. We had a well-priced Castro Valley home that saw multiple offers that went pending (over asking, within five days of listing). Another clean, well-priced home in the San Lorenzo/Hayward area went back on the market and had three offers within two days. Having said that, prices continue to dip. Castro Valley pricing remains super competitive, with entry level properties hovering between $350,000 and $400,000. Danville reports that the upper end is showing signs of life. Four of our last eight sales were above $800,000 and were not REOs. Open houses also continue to be well attended in this market. Tri Valley Update: Since the first week in January 2009, Livermore active listings have decreased about 6% and total pending sales are up over 8%. Pleasanton active listings have increased 23% and total pending sales are up 20%. The active listings in Dublin have remained steady and the total pending sales are up almost 10%. Walnut Creek reports good open house attendance. First time buyers and investors are out there and actually making offers on listings. The entry level priced homes are selling.
Monterey County—The activity level seems to be picking up somewhat. Agents are busy writing offers though getting a meeting of the minds between buyers and sellers is taking more counters and more time.
North Bay—Our Greenbrae office reports that a home in Fairfax listed at $1.7 million had more than 183 people through its Saturday and Sunday open houses this past week. One REO property came on the market at 8 p.m. and had two offers by noon the next day. One Greenbrae home listed at $1 million was in contract before the Sunday open – less than two days after listing. Southern Marin notes that while sales are still soft, open houses were heavily attended on Sunday with many seemingly real buyers. A $2.5 million property in Mill Valley had almost 20 parties and that was the third open house. In Sonoma County, Petaluma office reports a flurry of open house activity with 30-40 groups in numerous properties. Buyers are our in full force and Agents are bringing their buyers to open houses. We are continually seeing multiple offers in lower price ranges.
Peninsula—Half Moon Bay notes that Agents are more enthused this week as the phones are ringing and floor activity is on the rise. Purchase contracts are being written but are too low at this time for sellers to understand the offer is probably market value. Menlo Park Santa Cruz reports that buyers are circling but are slow to react. Sellers are listening to the advice of their Agents and are starting to price their homes competitively to get them sold. We did have a sale this week in Woodside that was over $3 million which is helping to breathe some life into the upper end. Palo Alto is noting an interesting trend. Activity at open houses varies from open home to open home and from price point to price point. We see 100 folks show up at a townhouse in Mountain View and maybe just two or three at a condo in Palo Alto. Our Woodside office noted one $3.5 million listing had three offers. Two others over a million also had multiple offers. The lesson: buyers will buy a property that is at the right price—ones that are “discounted” to today’s market prices.
San Francisco—SF Lakeside reports that lower price point properties are getting more offers written, and that many of these offers are lower than list price. Their higher end listings in St. Francis Wood, Noe Valley and Clarendon Heights are getting showing appointments, but not getting offers. Lombard notes a lot of fence sitters, price reductions and low offers. But the well-presented, well-priced homes are getting the contracts. Sales over $1.5 million are still rare. New construction is taking the biggest hit. The Market Street office notes that open house attendance was brisk. Buyers have stepped back a bit waiting for the results of the stimulus package and how it will affect them.
Santa Cruz County—No information reported this week.
Silicon Valley—It was a slow week. Correction. A really slow week. Our Cupertino De Anza office write, “The only thing that matters right now is a cheap price.” Well of course that is debatable and is certainly dependent on the market—and the house for that matter—but what I would agree with is that buyers are looking for value right now. They are looking for value and only act when they see it. Los Gatos reported a number of short sales which is why our short sale seminars this week were so appreciated. San Jose Main is telling a bit of a different story noting that buyer activity is increasing. Open house traffic is up dramatically from the past weekend, especially with homes priced at $300,000 to $500,000. We are seeing increased sales activity and interest this past week, according to SJ Main. San Jose Willow Glen reports that open houses have quite a bit of traffic and floor calls are picking up slightly. Several Agents are working with buyers at this time so our hope is that it is just a matter of time until this interest turns into closed contracts.
We will learn the details of the new Stimulus Package in the next several days, and as it relates to home purchases and tax credits, we can remain optimistic that we’re moving in the right direction.
Raising the conforming loan limit by $100,000 - back to its 2008 max, and some tax rebate incentives for first time home buyers will help us work through existing inventories. As an example – San Francisco currently has about 6 months supply of inventory in single family homes – similar to what it was this time last year. Conversely, San Francisco condo inventory is currently at about 16 months supply, more than twice that of pricier single family homes, and substantially more inventory for condos over same period last year. One could conclude that the higher end of the market is suffering from both the lack of well-priced new listing activity as well as from desired buyer activity. If the incentives are successful in getting more first-time buyers in the game, movement will eventually be felt all the way up - as homeowners seize the opportunity to move up.
Make it a great week-
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
A compromise on the Economic Stimulus Package has been reached. The new price tag: $787 billion. That’s below both the $820 billion House-passed version and the $838 billion Senate-passed version.
Just like with anything in life, the final package is all about compromise. Real estate advocates from NAR and Realogy President Richard Smith lobbied well on our behalf but in the end only a portion of the requests we had of lawmakers were made part of the final Economic Stimulus Package.
I am encouraged that lawmakers have now reached an agreement and we can finally move forward with some direct action.
The goal of the highly controversial Economic Stimulus Package is to create or save some 3.5 million jobs while helping to rebuild our nation’s economy which has been in a recession since December 2007. Although, at the writing of this piece, the details of the legislation had not been finalized we do anticipate a number of important housing provisions, including (as reported by NAR):
“Homebuyer Tax Credit – an $8,000 tax credit that will be available for qualified purchase of a principal residence by a first time homebuyer between January 1, 2009 and December 1, 2009. The credit does not require repayment. Individuals who purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit, as well. Click here for a chart with details on the first-time home buyer tax credit: http://www.realtor.org/wps/wcm/connect/b32db1004d05f6338052c5fd73e5610f/government_affairs_tax_credit_chart_021308.pdf?MOD=AJPERES&CACHEID=b32db1004d05f6338052c5fd73e5610f
FHA, Fannie and Freddie Loan Limits – Revised loan limits for FHA, Freddie Mac, and Fannie Mae. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the HUD Secretary.
Foreclosure Mitigation & Neighborhood Stabilization – Funding for states and local communities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized.”
In addition to these new elements, NAR continues to work with the Department of Treasury to implement a mortgage buy-down program. The details on that will surface over the next several weeks.
To view all of the housing provisions, click here: http://www.realtor.org/government_affairs/gapublic/uae_hr1_additional_provisions
So what’s next? President Obama is pushing to get quick approval of the emergency package so he can sign it into law before the end of this three-day holiday weekend.
Once it is signed into action, Washington is eager to get the funds into the local state governments and ultimately the local economies so they begin to directly affect Main Street. Consider reading this article from CNN with more details on the package itself: http://money.cnn.com/2009/02/13/news/economy/stimulus_individuals/index.htm?postversion=2009021308
There’s no question, it will take several weeks—and more likely several months—before we begin to see some patterns or trends and for this package to have any impact on our economy. But I am gratified that the government recognized the importance of passing the Economic Stimulus Package. The health of the nation’s housing market is critical to the financial well being of every household in the country and that, of course, is front and center right here at home. I believe the legislation will help to stabilize the housing market, at a time when our country needs it most.
With this news in tow, let’s take a look at this week in real estate:
East Bay—Berkeley reports that buyers are definitely out there looking. Our floor time and walk-in traffic have been great. Two of our Berkeley Previews properties just went pending another listing in the $800s also went pending. Castro Valley reports that well priced, well-maintained properties are being snatched up in our local market due to decreases in inventory. We had a well-priced Castro Valley home that saw multiple offers that went pending (over asking, within five days of listing). Another clean, well-priced home in the San Lorenzo/Hayward area went back on the market and had three offers within two days. Having said that, prices continue to dip. Castro Valley pricing remains super competitive, with entry level properties hovering between $350,000 and $400,000. Danville reports that the upper end is showing signs of life. Four of our last eight sales were above $800,000 and were not REOs. Open houses also continue to be well attended in this market. Tri Valley Update: Since the first week in January 2009, Livermore active listings have decreased about 6% and total pending sales are up over 8%. Pleasanton active listings have increased 23% and total pending sales are up 20%. The active listings in Dublin have remained steady and the total pending sales are up almost 10%. Walnut Creek reports good open house attendance. First time buyers and investors are out there and actually making offers on listings. The entry level priced homes are selling.
Monterey County—The activity level seems to be picking up somewhat. Agents are busy writing offers though getting a meeting of the minds between buyers and sellers is taking more counters and more time.
North Bay—Our Greenbrae office reports that a home in Fairfax listed at $1.7 million had more than 183 people through its Saturday and Sunday open houses this past week. One REO property came on the market at 8 p.m. and had two offers by noon the next day. One Greenbrae home listed at $1 million was in contract before the Sunday open – less than two days after listing. Southern Marin notes that while sales are still soft, open houses were heavily attended on Sunday with many seemingly real buyers. A $2.5 million property in Mill Valley had almost 20 parties and that was the third open house. In Sonoma County, Petaluma office reports a flurry of open house activity with 30-40 groups in numerous properties. Buyers are our in full force and Agents are bringing their buyers to open houses. We are continually seeing multiple offers in lower price ranges.
Peninsula—Half Moon Bay notes that Agents are more enthused this week as the phones are ringing and floor activity is on the rise. Purchase contracts are being written but are too low at this time for sellers to understand the offer is probably market value. Menlo Park Santa Cruz reports that buyers are circling but are slow to react. Sellers are listening to the advice of their Agents and are starting to price their homes competitively to get them sold. We did have a sale this week in Woodside that was over $3 million which is helping to breathe some life into the upper end. Palo Alto is noting an interesting trend. Activity at open houses varies from open home to open home and from price point to price point. We see 100 folks show up at a townhouse in Mountain View and maybe just two or three at a condo in Palo Alto. Our Woodside office noted one $3.5 million listing had three offers. Two others over a million also had multiple offers. The lesson: buyers will buy a property that is at the right price—ones that are “discounted” to today’s market prices.
San Francisco—SF Lakeside reports that lower price point properties are getting more offers written, and that many of these offers are lower than list price. Their higher end listings in St. Francis Wood, Noe Valley and Clarendon Heights are getting showing appointments, but not getting offers. Lombard notes a lot of fence sitters, price reductions and low offers. But the well-presented, well-priced homes are getting the contracts. Sales over $1.5 million are still rare. New construction is taking the biggest hit. The Market Street office notes that open house attendance was brisk. Buyers have stepped back a bit waiting for the results of the stimulus package and how it will affect them.
Santa Cruz County—No information reported this week.
Silicon Valley—It was a slow week. Correction. A really slow week. Our Cupertino De Anza office write, “The only thing that matters right now is a cheap price.” Well of course that is debatable and is certainly dependent on the market—and the house for that matter—but what I would agree with is that buyers are looking for value right now. They are looking for value and only act when they see it. Los Gatos reported a number of short sales which is why our short sale seminars this week were so appreciated. San Jose Main is telling a bit of a different story noting that buyer activity is increasing. Open house traffic is up dramatically from the past weekend, especially with homes priced at $300,000 to $500,000. We are seeing increased sales activity and interest this past week, according to SJ Main. San Jose Willow Glen reports that open houses have quite a bit of traffic and floor calls are picking up slightly. Several Agents are working with buyers at this time so our hope is that it is just a matter of time until this interest turns into closed contracts.
We will learn the details of the new Stimulus Package in the next several days, and as it relates to home purchases and tax credits, we can remain optimistic that we’re moving in the right direction.
Raising the conforming loan limit by $100,000 - back to its 2008 max, and some tax rebate incentives for first time home buyers will help us work through existing inventories. As an example – San Francisco currently has about 6 months supply of inventory in single family homes – similar to what it was this time last year. Conversely, San Francisco condo inventory is currently at about 16 months supply, more than twice that of pricier single family homes, and substantially more inventory for condos over same period last year. One could conclude that the higher end of the market is suffering from both the lack of well-priced new listing activity as well as from desired buyer activity. If the incentives are successful in getting more first-time buyers in the game, movement will eventually be felt all the way up - as homeowners seize the opportunity to move up.
Make it a great week-
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Update
Economic Stimulus Package Could Bring Big Benefit For Real Estate Sector
If you tuned into CNN, Fox News or any of the other major news media outlets this week, you likely watched the drama unfold regarding the new Economic Stimulus Package which is currently making its way through the Senate. This controversial package has many speculating as to its legitimacy but is being driven by President Obama in an effort to jump-start our ailing economy.
To learn more about the status of the Economic Stimulus Package, click here: http://www.reuters.com/article/politicsNews/idUSTRE5136U320090204?virtualBrandChannel=10112
As of now, the Economic Stimulus bill is winding its way through our democratic process, while President Obama and party leaders from both sides of the aisle are encouraging our politicians to not get mired in special interest elements which will impede the process. Not an easy answer here – money needs to flow, and if it comes from the taxpayer, most agree some level of regulation and accountability must be included. Who does that, and how it’s accomplished becomes controversial.
From a real estate perspective one of the biggest potential benefits of this Economic Stimulus Plan is special Amendment #353 to the Plan, a provision for the Federal Government to buy-down mortgage rates to 4.5% or less for a 30-year fixed rate loan for the purchase of a primary resident. Without question, a 4.5% or lower, 30-year fixed rate mortgage would help stimulate housing sales and would also open the door to hundreds of thousands of new potential buyers by greatly improving housing affordability.
While the Economic Stimulus Package makes its way through Washington, real estate sales continue to show new signs of life. Just this week, NAR released its pending home sales report noting that pending home sales rose 6.3 percent nationally to 87.7 from an upwardly revised reading of 82.5 in November and is 2.1 percent higher than December 2007 when it was 85.9.
Also noteworthy this week was an article I came across on Reuters.com (http://www.reuters.com/article/newsOne/idUSTRE5140H420090205) which points out that housing markets across the country may be nearing bottom and we should begin to see signs of new life by the 4th quarter of this year. Among the highlights of the article:
"More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability," the report said.
“The outlook, however, assumes stronger action by U.S. policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year.”
“With this help, sales are probably at bottom, stabilized by foreclosure sales, while construction will hit bottom in the first half of this year, although the pace of housing starts will remain very depressed until 2011.”
The coming week will likely be an interesting one in Washington, D.C. as lawmakers make the final decisions on the Economic Stimulus Package. It will be exciting to see the details unfold and the plan take shape as lawmakers work to quickly restore our ailing economy.
Locally, we’re seeing some interesting trends. As we continue to work through our bank- owned properties, it is a welcome sight to finally see banks responding to short sale offers. Couple that with the fact that with interest rates so low, buyers—especially first time home buyers and some investors—are finally beginning to feel the need to come off the fence and take action. The hardest hit markets are new construction and the upper end. Both are nearly at a stand still, though, as prices begin to stabilize and we finally weed through the bank owned properties (later this year), we should begin to see a domino effect that ultimately benefits all price ranges and housing types.
Now let’s take a look at this week in real estate:
East Bay—Castro Valley reports that this week we are hearing that banks are starting to take action to make their REO properties more attractive to buyers. Wachovia recently advised of a new program in which its REOs will be a better value for a comparable price. They state that their REOs will feature new paint, carpet and sod in order to offer buyers a better value. Fremont notes that buyer activity is slower this time of year and this is reflective of the inventory. REO sales are still brisk. Listings are steady and there is anticipation that the REO inventory will increase substantially in the next two months. Livermore notes that one of our pendings this week was a buyer controlled sale at $730,000 which is a big sale in this office. All of our other sales for the week were $135,000 to $376,000 which is pretty typical. REOs (primarily) and short sales remain the strength of sales in this market. We’re still seeing struggles with REOs including complaints from Agents that listing Agents of REO properties are requiring the buyers to be prequalified through their lender and other offers are being accepted during the prequalification phase or presentations are being delayed (sometimes a week) to complete this process. Oakland reports a bit of a different story noting that Agents are writing offers—lots of them! We are busy, the office reports, and the buyers are out there. The hot price range seems to be $600,000 to $750,000. In our office, the hot listings are getting requests for 20-30 disclosure packages and multiple offers. Walnut Creek reports that it is experiencing a shortage of well-priced listings that are in good condition. REOs are popping up in more areas like Walnut Creek and Pleasant Hill. Inventory in East Contra Costa County, which is primarily REOs and short sales, is going fast.
Monterey County—Listing activity and sales activity are relatively stable for the week. We are starting to see some higher priced properties selling in Carmel.
North Bay—Open house activity was good even on Super Bowl Sunday according to our Southern Marin offices. Most open houses reported positive numbers, all with a good percentage of seemingly serious, though cautious, buyers. Once reported buyers coming back after taking a hiatus for some time and are back in the market thanks to lower prices and low interest rates. San Rafael notes that we are seeing many of our short sale offers get bank approved faster than we have seen in the past. Santa Rosa reports that buyer frustrations are growing with the REO market as mandatory second pre-approvals (often with lenders who don’t return calls) and credits to buyers are given only when the favored lender is used. Sebastopol notes we had multiple offers in the $100,000 to $200,000 range. We had tons of people at open houses with one Agent reporting over 100 visitors to a short sale. Also welcome news from Sebastopol – anther Previews property priced at $1.9 went into contract, and many Buyers out there at this range.
Peninsula—Burlingame notes that there are so many buyers out there but so much indecision. The daily media spin of negative news makes it difficult for many of them to feel confident in making an offer. The smart ones and those with cash, however, are aggressively going forward. Many of the offers are low and sellers are often finding this reality difficult to accept. Woodside reports that we are beginning to see some movement in house sales thanks to attractive rates and the belief by some buyers that we may be at or near the bottom. Menlo Park El Camino notes that Agents are feeling some movement on the part of the buyers. Inventory in the very desirable areas is still in short supply. There are definitely some houses becoming available due to seller duress—not necessarily desperation but straining the family budget due to loss of job.
San Francisco—The Market Street office reports that more offers were written in the past week than in the few weeks prior. A couple of our long-term listings were ratified this week at prices below the seller’s expectation but the sellers are ready to move on. Cash buyers are out there and we are seeing them write on our listings. Lombard notes that most deals seem to be under $800,000 and using the $625,000 loan ceiling for fixed rates. There are a lot of price ranges in the higher end. The Noriega office reports that the market is showing new signs of life. January sales ended pretty well and city inventory remains low and steady. The Lakeside office reports that now that the Super Bowl is over, the stimulus package may pass, there is a renewed interest in the real estate market which makes us all hopeful. Van Ness reports that suddenly buyers are coming back, especially in the range below $1.5 million. Better financing products would help greatly.
Santa Cruz County—No information reported this week.
Silicon Valley—Our Cupertino De Anza office is reporting lots of activity and very busy open houses—though neither is leading to many closed transactions. We’re hoping now that we are passed the Super Bowl we will see a pick-up in activity. Los Altos First Street is reporting that buyers are coming to open houses but most are saying they are waiting for better prices. Los Gatos reports that pricing is key. Homes that are priced aggressively are selling—often with multiple offers. This is a good lesson for sellers to consider as they price their home competitively for the market. San Jose Main reports that the high end is very slow. We’re starting to see more short sales in Almaden where before they were non existent. The Blossom Valley market has a lot more activity but 70% of it is distressed homes. Cambrian Park is slow at the moment because of its location and price point but it is almost the most stable market. San Jose Main reports that open house activity continues to be brisk but sales seem to be slow. Most activity seems to be in the $300,000 to $500,000 price range. Many buyers are still sitting on the fence right now.
South County—Gilroy reports that inventory is down. We have not seen the surge that normally happens after the first of the year. Of course this is not a normal market. It appears sellers are not waiting to compete against the REOs and short sales. The Hollister office reports that REO properties are going through reduction process. REO listings are decreasing while short sale listings are on the rise. Morgan Hill notes that Agents are reporting good attendance at open houses. Short sales and REOs continue to dominate the market and make up the majority of our sales under $500,000.
My overall assessment of the market this week is that buyer interest is up though buyers do remain cautious. It seems buyers are finally realizing that with today’s low interest rates and generous amount of inventory—including a large number of bank owned properties—they may be in a very strong position and in all likelihood, can afford a lot more home than they could have a year ago, or even six months ago for that matter. Having said that, they aren’t necessarily jumping back into the market head first. They are being cautious and making smart decisions when they perceive a true value. This is an important lesson for sellers to consider as they prepare their home for sale. If you want your home to stand out in today’s competitive environment, you need to price it well and show it well from the beginning so you gain the most interest.
Next week I will release my February Reality Check which will focus on interest rates and how they may affect a buyer’s purchasing power. I trust this will be helpful in educating our clients on why now truly may be the best time to buy.
Until next week, make it a great one,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
If you tuned into CNN, Fox News or any of the other major news media outlets this week, you likely watched the drama unfold regarding the new Economic Stimulus Package which is currently making its way through the Senate. This controversial package has many speculating as to its legitimacy but is being driven by President Obama in an effort to jump-start our ailing economy.
To learn more about the status of the Economic Stimulus Package, click here: http://www.reuters.com/article/politicsNews/idUSTRE5136U320090204?virtualBrandChannel=10112
As of now, the Economic Stimulus bill is winding its way through our democratic process, while President Obama and party leaders from both sides of the aisle are encouraging our politicians to not get mired in special interest elements which will impede the process. Not an easy answer here – money needs to flow, and if it comes from the taxpayer, most agree some level of regulation and accountability must be included. Who does that, and how it’s accomplished becomes controversial.
From a real estate perspective one of the biggest potential benefits of this Economic Stimulus Plan is special Amendment #353 to the Plan, a provision for the Federal Government to buy-down mortgage rates to 4.5% or less for a 30-year fixed rate loan for the purchase of a primary resident. Without question, a 4.5% or lower, 30-year fixed rate mortgage would help stimulate housing sales and would also open the door to hundreds of thousands of new potential buyers by greatly improving housing affordability.
While the Economic Stimulus Package makes its way through Washington, real estate sales continue to show new signs of life. Just this week, NAR released its pending home sales report noting that pending home sales rose 6.3 percent nationally to 87.7 from an upwardly revised reading of 82.5 in November and is 2.1 percent higher than December 2007 when it was 85.9.
Also noteworthy this week was an article I came across on Reuters.com (http://www.reuters.com/article/newsOne/idUSTRE5140H420090205) which points out that housing markets across the country may be nearing bottom and we should begin to see signs of new life by the 4th quarter of this year. Among the highlights of the article:
"More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability," the report said.
“The outlook, however, assumes stronger action by U.S. policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year.”
“With this help, sales are probably at bottom, stabilized by foreclosure sales, while construction will hit bottom in the first half of this year, although the pace of housing starts will remain very depressed until 2011.”
The coming week will likely be an interesting one in Washington, D.C. as lawmakers make the final decisions on the Economic Stimulus Package. It will be exciting to see the details unfold and the plan take shape as lawmakers work to quickly restore our ailing economy.
Locally, we’re seeing some interesting trends. As we continue to work through our bank- owned properties, it is a welcome sight to finally see banks responding to short sale offers. Couple that with the fact that with interest rates so low, buyers—especially first time home buyers and some investors—are finally beginning to feel the need to come off the fence and take action. The hardest hit markets are new construction and the upper end. Both are nearly at a stand still, though, as prices begin to stabilize and we finally weed through the bank owned properties (later this year), we should begin to see a domino effect that ultimately benefits all price ranges and housing types.
Now let’s take a look at this week in real estate:
East Bay—Castro Valley reports that this week we are hearing that banks are starting to take action to make their REO properties more attractive to buyers. Wachovia recently advised of a new program in which its REOs will be a better value for a comparable price. They state that their REOs will feature new paint, carpet and sod in order to offer buyers a better value. Fremont notes that buyer activity is slower this time of year and this is reflective of the inventory. REO sales are still brisk. Listings are steady and there is anticipation that the REO inventory will increase substantially in the next two months. Livermore notes that one of our pendings this week was a buyer controlled sale at $730,000 which is a big sale in this office. All of our other sales for the week were $135,000 to $376,000 which is pretty typical. REOs (primarily) and short sales remain the strength of sales in this market. We’re still seeing struggles with REOs including complaints from Agents that listing Agents of REO properties are requiring the buyers to be prequalified through their lender and other offers are being accepted during the prequalification phase or presentations are being delayed (sometimes a week) to complete this process. Oakland reports a bit of a different story noting that Agents are writing offers—lots of them! We are busy, the office reports, and the buyers are out there. The hot price range seems to be $600,000 to $750,000. In our office, the hot listings are getting requests for 20-30 disclosure packages and multiple offers. Walnut Creek reports that it is experiencing a shortage of well-priced listings that are in good condition. REOs are popping up in more areas like Walnut Creek and Pleasant Hill. Inventory in East Contra Costa County, which is primarily REOs and short sales, is going fast.
Monterey County—Listing activity and sales activity are relatively stable for the week. We are starting to see some higher priced properties selling in Carmel.
North Bay—Open house activity was good even on Super Bowl Sunday according to our Southern Marin offices. Most open houses reported positive numbers, all with a good percentage of seemingly serious, though cautious, buyers. Once reported buyers coming back after taking a hiatus for some time and are back in the market thanks to lower prices and low interest rates. San Rafael notes that we are seeing many of our short sale offers get bank approved faster than we have seen in the past. Santa Rosa reports that buyer frustrations are growing with the REO market as mandatory second pre-approvals (often with lenders who don’t return calls) and credits to buyers are given only when the favored lender is used. Sebastopol notes we had multiple offers in the $100,000 to $200,000 range. We had tons of people at open houses with one Agent reporting over 100 visitors to a short sale. Also welcome news from Sebastopol – anther Previews property priced at $1.9 went into contract, and many Buyers out there at this range.
Peninsula—Burlingame notes that there are so many buyers out there but so much indecision. The daily media spin of negative news makes it difficult for many of them to feel confident in making an offer. The smart ones and those with cash, however, are aggressively going forward. Many of the offers are low and sellers are often finding this reality difficult to accept. Woodside reports that we are beginning to see some movement in house sales thanks to attractive rates and the belief by some buyers that we may be at or near the bottom. Menlo Park El Camino notes that Agents are feeling some movement on the part of the buyers. Inventory in the very desirable areas is still in short supply. There are definitely some houses becoming available due to seller duress—not necessarily desperation but straining the family budget due to loss of job.
San Francisco—The Market Street office reports that more offers were written in the past week than in the few weeks prior. A couple of our long-term listings were ratified this week at prices below the seller’s expectation but the sellers are ready to move on. Cash buyers are out there and we are seeing them write on our listings. Lombard notes that most deals seem to be under $800,000 and using the $625,000 loan ceiling for fixed rates. There are a lot of price ranges in the higher end. The Noriega office reports that the market is showing new signs of life. January sales ended pretty well and city inventory remains low and steady. The Lakeside office reports that now that the Super Bowl is over, the stimulus package may pass, there is a renewed interest in the real estate market which makes us all hopeful. Van Ness reports that suddenly buyers are coming back, especially in the range below $1.5 million. Better financing products would help greatly.
Santa Cruz County—No information reported this week.
Silicon Valley—Our Cupertino De Anza office is reporting lots of activity and very busy open houses—though neither is leading to many closed transactions. We’re hoping now that we are passed the Super Bowl we will see a pick-up in activity. Los Altos First Street is reporting that buyers are coming to open houses but most are saying they are waiting for better prices. Los Gatos reports that pricing is key. Homes that are priced aggressively are selling—often with multiple offers. This is a good lesson for sellers to consider as they price their home competitively for the market. San Jose Main reports that the high end is very slow. We’re starting to see more short sales in Almaden where before they were non existent. The Blossom Valley market has a lot more activity but 70% of it is distressed homes. Cambrian Park is slow at the moment because of its location and price point but it is almost the most stable market. San Jose Main reports that open house activity continues to be brisk but sales seem to be slow. Most activity seems to be in the $300,000 to $500,000 price range. Many buyers are still sitting on the fence right now.
South County—Gilroy reports that inventory is down. We have not seen the surge that normally happens after the first of the year. Of course this is not a normal market. It appears sellers are not waiting to compete against the REOs and short sales. The Hollister office reports that REO properties are going through reduction process. REO listings are decreasing while short sale listings are on the rise. Morgan Hill notes that Agents are reporting good attendance at open houses. Short sales and REOs continue to dominate the market and make up the majority of our sales under $500,000.
My overall assessment of the market this week is that buyer interest is up though buyers do remain cautious. It seems buyers are finally realizing that with today’s low interest rates and generous amount of inventory—including a large number of bank owned properties—they may be in a very strong position and in all likelihood, can afford a lot more home than they could have a year ago, or even six months ago for that matter. Having said that, they aren’t necessarily jumping back into the market head first. They are being cautious and making smart decisions when they perceive a true value. This is an important lesson for sellers to consider as they prepare their home for sale. If you want your home to stand out in today’s competitive environment, you need to price it well and show it well from the beginning so you gain the most interest.
Next week I will release my February Reality Check which will focus on interest rates and how they may affect a buyer’s purchasing power. I trust this will be helpful in educating our clients on why now truly may be the best time to buy.
Until next week, make it a great one,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Update
Earlier this week, the National Association of Realtors reported that in December, existing home sales rose unexpectedly while inventory declined, led by a surge of sales in the West.
The national real estate organization reported, “Existing home sales – including single-family, townhomes, condominiums and co-ops – jumped 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November, but are 3.5 percent below the 4.91 million unit pace in December 2007.”
In the West, existing home sales jumped 13.6 percent to an annual rate of 1.25 million in December and are 31.6 percent higher than a year ago. However, the median price was $213,100, down 31.5 percent from December 2007.
Here at home, CAR reported this week that home sales increased 84.9 percent in December in California compared with the same period a year ago. No, that’s not a typo. 84.9 percent. On the flip side, the median price of an existing home fell 41.5 percent, a continued symbol of buyers taking advantage of the large number of distressed properties currently available.
So why the sudden, so drastic surge in sales? There are a few reasons:
A lot of people who were previously priced out of the housing market can finally buy
With interest rates under 5%, a buyer’s purchasing power is at its best in more than three decades
After months of increasing or stable inventory, we are finally starting to see the numbers fall
Increased consumer confidence (of late) based on the new administration
We’re seeing a lot more investors coming into the market in addition to first time buyers. Consider the fact that this week alone, one Gilroy Agent represented 10 properties that went into contract. Almost all were investors and the properties were condos in the under $100,000 price range.
So is it too early to call it a trend? Probably. In all honestly, we still have a lot of distressed properties to move through before we can begin to see prices stabilize. At least for the foreseeable future, buyers will probably have the edge but with an 84.9 percent increase in sales year over year and inventories on the decline, we’re finally moving in the right direction. The key to all of this: buyers are ready to buy when they perceive a good value. Until then, they wait.
Now let’s take a look at this week in real estate:
East Bay—Our Castro Valley office reports multiple offers still seem to be the trend for REOs and offers are being accepted over asking. One Agent reports that her recent offer on an REO property in Hayward was rejected, with the winning bid accepted at approximately 12% over asking. In an interested trend, especially in Castro Valley which was one of the hardest hit by REOs, Agents are reporting that there seems to be less REO inventory available. Is it possible this market is going to be one of the first to rise from the REO short fall? Danville reports almost all of our sales are bank owned. Open houses are well attended and with the media talking about REOs, buyers are looking for bank owned bargains. Walnut Creek is feeling the same effects with 90% of its sales being REOs or short sales. On the contrary, Oakland reports it needs listings. Great listings in this market are getting multiple offers. A new Montclair listing on the market (listed at $678,000) had its first open on Sunday and had 200 groups through. We had requests for 11 disclosure packets.
Monterey County—While the market on the Monterey Peninsula is a spotty one, Agents are writing lots of offers. Buyers are being tough and we have put 43 properties into escrow since the first of the year. An interesting fact, Carmel has had eight properties listed over $2 million go into escrow in January.
North Bay—Greenbrae reports that sales all over central Marin are weak, though new homes that appear to be priced well are coming on the market. San Rafael notes that many of the condos listed under $200,000 in San Rafael are seeing multiple offers and are selling over asking. Petaluma notes that inventory is building in all price ranges, especially in the $600,000 plus range. We’re seeing multiple offers in the under $500,000 range. All but one of our open escrows for this week were multiple offers. Santa Rosa also reports some good news noting that a new Agent helped an REO that is old to the market and had 38 groups through. A veteran Agent helped a similar property and picked up a cash buyer looking to buy three properties in the next 60 days!
Peninsula—Burlingame notes that after last weekend’s very busy open houses, buyers seem very enthusiastic. We are seeing some very attractive properties in the $800,000 range come on the market which should present opportunity to those buyers who have been sitting on the fence. Half Moon Bay notes that several offers are being negotiated and there were six new properties listed that are neither short sales nor REOs. One well-priced REO received at least four offers so buyers are ready to buy when they perceive good value. Palo Alto notes that open house activity has been slow (about 50% of the norm). There does, however, seem to be a bit of momentum in the entry level properties.
San Francisco—The Lombard office reports that January deals remain dominated by REOs, mostly under $650,000 but one at $1.6 million. The primary market challenges: financing fall-outs and buyer fence-sitting. Our Noriega office reports that sales exploded last week with 10 ratified offers. It has been busy on floor and via online inquiries so it appears that sales are following. City inventory remains at six month lows which is creating bigger demand for available listings. One example, as shared by our Market Street office is that one client lost out on three properties due to multiple offers. Our hope is that this is an indication that more offers are starting to be written and accepted.
Santa Cruz County—We have had two large sales over $3 million close within the last two weeks. There are still not many sales in the county over the $1 million mark. It is a combination of lack of buyers and lending issues. In the regular market, inventory remains about the same although certain areas of the county—like the west side—have seen significant decreases. Open house attendance is up and there is activity with first time buyers and investors.
Silicon Valley—Activity definitely seems to be picking up. Our Los Altos First Street office reports that buyers are attending open houses in good numbers, mostly in the lower price ranges. Some price adjustments of 10% create offers. Our San Jose Main office disagrees noting that while open houses are busy with traffic, it isn’t translating into sales. The office reports that many buyers are still sitting on the fence waiting for prices to drop further. Lower priced properties (between $250,000-$550,000) seem to be receiving the most activity.
South County—The Hollister office reports that list prices continue to decline and cash offers are on the rise. Morgan Hill reports that this week, one Agent put 10 properties into contract. They were all in the Gilroy area and most were under $100,000 condos. The Agent represented several investors who mostly offered cash for the properties.
The bottom line is that while sales are on the rise, we still have many distressed sales that must work their way through the system. With Wednesday’s controversial passing of the stimulus package (with a near party-line vote), we can only hope that the administration’s plan—in what we know is unchartered territory for our country—is successful. The administration needs to move fast to stimulate lending (and spending) in order to set the foundation for an economic recovery.
It’s nearly kick-off time – Go Cardinals!!!
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
The national real estate organization reported, “Existing home sales – including single-family, townhomes, condominiums and co-ops – jumped 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November, but are 3.5 percent below the 4.91 million unit pace in December 2007.”
In the West, existing home sales jumped 13.6 percent to an annual rate of 1.25 million in December and are 31.6 percent higher than a year ago. However, the median price was $213,100, down 31.5 percent from December 2007.
Here at home, CAR reported this week that home sales increased 84.9 percent in December in California compared with the same period a year ago. No, that’s not a typo. 84.9 percent. On the flip side, the median price of an existing home fell 41.5 percent, a continued symbol of buyers taking advantage of the large number of distressed properties currently available.
So why the sudden, so drastic surge in sales? There are a few reasons:
A lot of people who were previously priced out of the housing market can finally buy
With interest rates under 5%, a buyer’s purchasing power is at its best in more than three decades
After months of increasing or stable inventory, we are finally starting to see the numbers fall
Increased consumer confidence (of late) based on the new administration
We’re seeing a lot more investors coming into the market in addition to first time buyers. Consider the fact that this week alone, one Gilroy Agent represented 10 properties that went into contract. Almost all were investors and the properties were condos in the under $100,000 price range.
So is it too early to call it a trend? Probably. In all honestly, we still have a lot of distressed properties to move through before we can begin to see prices stabilize. At least for the foreseeable future, buyers will probably have the edge but with an 84.9 percent increase in sales year over year and inventories on the decline, we’re finally moving in the right direction. The key to all of this: buyers are ready to buy when they perceive a good value. Until then, they wait.
Now let’s take a look at this week in real estate:
East Bay—Our Castro Valley office reports multiple offers still seem to be the trend for REOs and offers are being accepted over asking. One Agent reports that her recent offer on an REO property in Hayward was rejected, with the winning bid accepted at approximately 12% over asking. In an interested trend, especially in Castro Valley which was one of the hardest hit by REOs, Agents are reporting that there seems to be less REO inventory available. Is it possible this market is going to be one of the first to rise from the REO short fall? Danville reports almost all of our sales are bank owned. Open houses are well attended and with the media talking about REOs, buyers are looking for bank owned bargains. Walnut Creek is feeling the same effects with 90% of its sales being REOs or short sales. On the contrary, Oakland reports it needs listings. Great listings in this market are getting multiple offers. A new Montclair listing on the market (listed at $678,000) had its first open on Sunday and had 200 groups through. We had requests for 11 disclosure packets.
Monterey County—While the market on the Monterey Peninsula is a spotty one, Agents are writing lots of offers. Buyers are being tough and we have put 43 properties into escrow since the first of the year. An interesting fact, Carmel has had eight properties listed over $2 million go into escrow in January.
North Bay—Greenbrae reports that sales all over central Marin are weak, though new homes that appear to be priced well are coming on the market. San Rafael notes that many of the condos listed under $200,000 in San Rafael are seeing multiple offers and are selling over asking. Petaluma notes that inventory is building in all price ranges, especially in the $600,000 plus range. We’re seeing multiple offers in the under $500,000 range. All but one of our open escrows for this week were multiple offers. Santa Rosa also reports some good news noting that a new Agent helped an REO that is old to the market and had 38 groups through. A veteran Agent helped a similar property and picked up a cash buyer looking to buy three properties in the next 60 days!
Peninsula—Burlingame notes that after last weekend’s very busy open houses, buyers seem very enthusiastic. We are seeing some very attractive properties in the $800,000 range come on the market which should present opportunity to those buyers who have been sitting on the fence. Half Moon Bay notes that several offers are being negotiated and there were six new properties listed that are neither short sales nor REOs. One well-priced REO received at least four offers so buyers are ready to buy when they perceive good value. Palo Alto notes that open house activity has been slow (about 50% of the norm). There does, however, seem to be a bit of momentum in the entry level properties.
San Francisco—The Lombard office reports that January deals remain dominated by REOs, mostly under $650,000 but one at $1.6 million. The primary market challenges: financing fall-outs and buyer fence-sitting. Our Noriega office reports that sales exploded last week with 10 ratified offers. It has been busy on floor and via online inquiries so it appears that sales are following. City inventory remains at six month lows which is creating bigger demand for available listings. One example, as shared by our Market Street office is that one client lost out on three properties due to multiple offers. Our hope is that this is an indication that more offers are starting to be written and accepted.
Santa Cruz County—We have had two large sales over $3 million close within the last two weeks. There are still not many sales in the county over the $1 million mark. It is a combination of lack of buyers and lending issues. In the regular market, inventory remains about the same although certain areas of the county—like the west side—have seen significant decreases. Open house attendance is up and there is activity with first time buyers and investors.
Silicon Valley—Activity definitely seems to be picking up. Our Los Altos First Street office reports that buyers are attending open houses in good numbers, mostly in the lower price ranges. Some price adjustments of 10% create offers. Our San Jose Main office disagrees noting that while open houses are busy with traffic, it isn’t translating into sales. The office reports that many buyers are still sitting on the fence waiting for prices to drop further. Lower priced properties (between $250,000-$550,000) seem to be receiving the most activity.
South County—The Hollister office reports that list prices continue to decline and cash offers are on the rise. Morgan Hill reports that this week, one Agent put 10 properties into contract. They were all in the Gilroy area and most were under $100,000 condos. The Agent represented several investors who mostly offered cash for the properties.
The bottom line is that while sales are on the rise, we still have many distressed sales that must work their way through the system. With Wednesday’s controversial passing of the stimulus package (with a near party-line vote), we can only hope that the administration’s plan—in what we know is unchartered territory for our country—is successful. The administration needs to move fast to stimulate lending (and spending) in order to set the foundation for an economic recovery.
It’s nearly kick-off time – Go Cardinals!!!
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
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