From A Slow Crawl…To a Brisk Walk
I heard someone earlier this week say that the housing market has gone from a slow crawl to a brisk walk. I think that is the perfect metaphor to explain the recent changes in the real estate market. The market is coming back. It’s not roaring, but it’s coming back.
This week, according to Reuters.com, U.S. mortgage applications jumped as record low interest rates spurred a surge in demand for home refinancing loans. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 32.2 percent to 1,159.4 for the week ended March 20. Refinancing accounted for 78.5 percent of all applications.
Furthermore, interest rates on mortgages fell after the Federal Reserve last week said it would buy Treasury securities for the first time in more than four decades as well as more than double its planned purchases of mortgage-related securities. Reuters.com reported that “Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.63 percent, down 0.26 percentage point from the previous week, reaching a record low….Interest rates were well below year-ago levels of 5.74 percent.”
Meanwhile, according to Realty Times, housing starts took a surprise jump of 22 percent in February over January's depressed levels. Most of the increase was attributable to apartments and condominiums, but single family starts were up by one percentage point, and new home permits were up by 11 percent, after months of sharp declines.
Existing home sales are also seeing some good trends. NAR reported this week that sales activity for single family, townhomes, condominiums and co-ops rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January.
The West is leading much of the nation’s recovery, with California leading the charge. Our median listing price is beginning to rise for the first time in three years. Existing home sales in the West increased 2.6 percent to an annual rate of 1.2 million in February and remain 30.4 percent higher than a year ago.
Last week I recommended that you watch Coldwell Banker president and CEO, Jim Gillespie on CNBC’s “Roadmap to Rebound” which focused on the state of the housing market. If you missed it, Gillespie stated that “the government could do a lot more than they are already doing in order to get the real estate market moving again.” Congressmen and economists continually say that in order to get the economy going, we need to first get real estate going. Gillespie believes that two key changes are needed in order to get the economy moving, and the first item that needs to be addressed is to set a fixed-rate mortgage. “Lowering the interest rate to 4% to 4.5% for 12 months is one way to get the inventory moving.” Along with setting a fixed-rate mortgage, increasing the tax credit to $15,000 and including all buyers of primary residences will help move buyers along and get the market to shift.
Gillespie also stated that the demand side needs to be looked at closely, because once we start to burn off the inventory that we currently have, prices will begin to stabilize and go up again, which will help those in distressed situations. “Fifty-five percent of loan modifications have failed after six months because jobs are not being created and homeowners are losing the jobs they have,” says Gillespie. “In order to create jobs, we need to create demand, both of which will get the housing market and economy moving.”
I for one appreciate seeing our leadership team speaking out on our behalf, serving as the visionaries for our industry. It’s enlightening and certainly makes me proud.
Now, let’s take a look at this week in real estate:
East Bay—Berkeley reports we are busy selling every day. There appears to be more optimism amongst the Agents, but still some trepidation from buyers. Eight of our most recent sales had 2-5 offers, though, so buyers are beginning to buy. Buyers are being a little less demanding if they are in contract on a house they really want. Still tough to get sellers to price right or lower a list price. Danville notes that inventory and new pending sales have remained flat the past couple of weeks. The high-end in Blackhawk and Alamo is very slow. On the other hand, a condo in San Ramon priced at $200,000 got 17 offers. Fremont reports that listings are starting to pick up. Sales are somewhat slower than last week, but still, they are selling. People are looking for a great deal! They continue to watch and wait. Because of the moratorium, the REOs are still slow at this time. Oakland reports that our sales inventory is increasing because deals are taking longer to close. The prime issues are short sale approval, REO approval and now appraisals are starting to ask for conditions that were ignored in the past as well as numbers are coming in below the sales price. New sales for the month are coming in slower than they did in February. Orinda reports steady market in the Lamorinda area. Lots of new listings, not so many sales, but we are hanging in there and keeping our eyes on the prize! The market will pick up soon; we have faith and are staying very positive and supporting one another.
Monterey County—Though last week was a rather slow one for new escrows, activity at open houses and writing offers seem to be picking up. Also over the past three weeks, we've had price reductions on about 40 listings as sellers become more resigned to the current buyer’s market.
North Bay—Greenbrae reports that open houses were well attended this weekend. Despite more homes going into contract, negotiations are tough and more complex. Short sales are creating some new issues for Agents as they try to work with the banks to make deals happen and we’re starting to see more of them in the high-end of the market. Well presented homes in the $1 million range in Corte Madera, Greenbrae and San Anselmo seem to be gaining interest. Three of our Greenbrae listings just over $1 million experienced significant price reductions and went into contract. A Fairfax listing hit the price reduction point and garnered four offers—with the victorious offer from our office! Southern Marin notes that we are seeing a number of new listings coming on and sales are starting to trickle in. There seems to be more consumer confidence that is at least getting buyers to be a bit more serious and now they are even writing up some offers. The $2-3 million price range is still extremely sluggish. Petaluma reports that open houses are generating double digit attendees with one property on the west side having 40 groups. We are still seeing multiple offers and Agents are picking up buyers. Floor time has been productive with unattached buyers calling in on properties.
Peninsula—The Half Moon Bay office reports the coast is slow, especially over the $1 million price point. Sales activity has increased with the REOs and short sales. The Menlo Park El Camino office reports a sterling week in sales—all over the map sales. From $800,000 to $5.9 million and multiple offers to boot. We are hoping this is not a blip on the screen but as the song says, “The start of something big.” Open houses were buzzing many turn into a roar! The Menlo Park Santa Cruz Avenue office concurs noting there was a jolt of life in our market last week. Energy seems to be building. We saw sales in the $230,000 to $5.9 million. Good interest rates and well priced inventory seems to be the ticket. One REO listing in San Mateo had 10 offers. Palo Alto notes the luxury market is extremely slow but activity between $1 million and $2 million has picked up. If well priced, properties will sell and some times with multiple offers—although not typically over list price. Inventory is building. Woodside reports sales all over the map—from $500,000 to $3.5 million. Sales over $3 million are running 15-25% off their pre September prices.
San Francisco—Our Lombard office reports good traffic but only a trickling in of transactions. Fallouts returned this week, one each for cold feet, financing and a short sale appraisal. REOs yielding multiple offers in 1-2 days. Private sellers could learn some pricing lessons from Asset Managers. Our Market Street office reports a single-family with unit in the Eureka Valley-Dolores Heights are garnered three offers in only 13 days at a list price of $1.695 million. A 4-unit building on the market for six days received five offers. It was listed for $1.050 million and was close to USF. There is a lot of optimism at open houses this weekend with buyers getting back into the market due to low rates.
Santa Cruz County—In the past five months the overall inventory level in the county has dropped by about 30% and the number of pendings have gone up about 10% overall. There seems to be an uptick in activity this week with some positive news from the media and the stock market. Open houses have been very well attended in most areas and new listings are attracting a lot of attention from buyers.
Silicon Valley—Our Cupertino De Anza office reports that things are picking up and nearby Cupertino Stevens Creek concurs noting that we’re seeing increased open house activity. Los Gatos notes that more buyers are coming into the market, with more confidence. Our San Jose Almaden office reports some interesting trends. The days of inventory in Almaden is just a little less than three years. High end properties are not moving. Blossom Valley and Santa Teresa however are above 40% pending. 25% of that inventory is traditional sellers while the rest are distressed sales. Almaden has about 15% pending. Cambrian seems to be the healthiest with 28% pending and fewer distressed properties. Prices have held better there, too. I would say that Almaden has dropped nearly 25% in the last year. Blossom Valley around 30% and Cambrian closer to 20%. Our San Jose Main office notes that buyer interest continues to be brisk. Sales of homes in the $250K-600K range are on the rise. Weekend open house traffic was excellent in all price ranges. Lower interest rates are helping to influence sales.
South County—Our Gilroy office notes that we had 20 multiple offer situations. Agents are suddenly experiencing a similar situation as they did in the peak of the market: low inventory and not being able to get buyers a home due to multiple offers. Hollister notes that REO inventory decreased this week. Short sale listings increased.
After a week of positive indicators, my best advice is for buyers to get out there. There are some fantastic deals out there right now and as more people begin to realize it, competition will come back and begin to drive activity. You know what they say about the early bird!
I am headed away for vacation and will be gone through April 7. During this time, we’ll take a brief hiatus from Weekly Market Watch but will return the following week with a robust edition.
Until next time,
Make it a great one,
Rick Turley
President
San Francisco, Peninsula, North Bay
Saturday, March 28, 2009
Monday, March 23, 2009
Weekly Market Watch
It Was a Week of Surprises…And Best of All, Spring Has Sprung!
First, CNNMoney.com reported a sudden, unexpected surge in U.S. housing starts. According to the Commerce Department, housing starts rose to a seasonally adjusted annual rate of 583,000 last month, up 22% from a revised 477,000 in January. The big surprise: Economists were expecting starts to decline to 450,000, according to consensus estimates by Briefing.com.
Furthermore, applications for building permits, considered a reliable sign of future construction activity, rose 3% to a seasonally adjusted annual rate of 547,000 last month. The other big surprise: Economists were expecting permits to fall to 500,000.
Also interesting this week, retail sales figures fell much less than expected in February, and surprisingly strong January sales were revised even higher. According to CNNMoney.com, “U.S. store sales showed a smaller-than-expected decline in February after an unexpected surge in January that was bigger than originally reported…The Commerce Department said total retail sales fell 0.1% last month, compared with January’s revised increase of 1.8%. Economists surveyed by Briefing.com had been expecting a decrease of 0.5% for February.”
So, is it safe to call this a trend? Are we out of the woods yet? It’s tough to say. In all honesty, you don’t know whether or not you’ve hit bottom until you’re on your way back up but it seems some of the critical signs are starting to show signs of life which is welcome relief for our wounded economy.
Also in the news this week, the Federal Reserve announced plans to purchase up to $750 billion in mortgage-backed securities and up to $300 billion in longer term Treasury securities. Our representatives at the National Association of Realtors applauded the plans noting “This is great news for American home buyers and homeowners because mortgage interest rates will continue at historic lows.”
What this means for Americans is that a greater number of home buyers will be able to purchase a home and some homeowners facing challenges will be able to refinance into better terms. As NAR noted, “We already are experiencing a great improvement in housing affordability due to historically low interest rates and the Fed’s move will push affordability conditions to the best levels in 40 years. In addition, continued low rates will lessen foreclosure pressure and help stabilize home prices sooner, as more Americans buy homes and draw down inventory.”
Along the lines of mortgage relief, the Treasury Department this week launched a new website for consumers seeking information about the Obama Administration’s Making Home Affordable loan modification and refinancing program. The site, www.MakingHomeAffordable.gov, offers features including interactive self-assessment tools that will empower borrowers to determine if they are eligible to participate and calculate the monthly mortgage payment reductions they could stand to realize under the Making Home Affordable program. This is a helpful site that we should all be sharing with our friends, families and clients alike.
Finally, on Friday, Jim Gillespie, president and CEO of Coldwell Banker Real Estate LLC, participated in a discussion about the state of the housing market, live from the New York Stock Exchange on CNBC, on the “Roadmap to Rebound” segment hosted by Maria Bartiromo. Yale economist Dr. Robert Schiller and Sanjiy Das, CEO of CitiMortgage, also participated. I am proud of Coldwell Banker and really pleased with Jim’s part of the discussion –sticking to the facts of what is still needed to make a significant difference for the housing recovery. Jim calls upon government leaders to enact a $15,000 non-refundable tax credit to ALL buyers and also a mortgage buy down that would bring rates to the 4-4.5% range. This, NAR reports, could generate an additional 840,000 home sales over 12 months. This home buying activity would have major implications in stimulating the overall US economy since NAR also reports that each home sold generates more than $60,000 in economic activity. The proposal would also have a greater impact on foreclosures than the current stimulus package. Take a look: http://www.cnbc.com/id/15840232?play=1&video=1067527935
Now, with all of that exciting news for the week in tow, let’s take a look at our local real estate news:
East Bay—The Berkeley office reports a steady stream of buyers at our open houses. We sold three houses in one day. Some "seasoned" listings are finally pending. The mood seems better than just a few months ago. Castro Valley reports new listings are being shown and open house attendance has been great for open houses of new listings. We are starving for fresh inventory. Prices are holding steady in our market, seemingly stabilizing. The Fremont office reports that the market appears to be on an upswing due to the decrease of REO listing inventory. Buyers are attempting to take advantage of the low interest rates and appear more competitive in regards to the well priced homes. Livermore reports our office had four pending sales this week. All were multiple offers and three of the four pending sales were at prices that we have not seen in a long time ($145,000, $150,000 and $250,000). The other sale in San Ramon was at $453,000. Oakland reports that several deals in the upper end have fallen out mostly due to financing issues. So far this month is not starting off as busy as last month, but Agents are working and open houses command lots of groups.
Monterey County—We are seeing steady sales activity and listing inventory. We had three multiple offer situations this week—two of which were REOs.
North Bay—Our San Rafael office is reporting that REO listings have dropped off dramatically due to the moratorium. Short sale offers are being approved faster and entry level homes and condos are being sold with multiple offers driving the prices up. With interest rates so low and the $8,000 tax credit, we are seeing many first time home buyers writing offers. Our Southern Marin offices report seven new listings came on in the Mill Valley market between $2 and $3 million. There are currently 22 listings in that range with only one pending in Mill Valley. There are approximately 55 listings in Tiburon/Belvedere listed at over $2 million with very few sales. The high end in Marin is experiencing far greater supply than demand. In Sonoma County, our Petaluma office reports that inventory is shrinking. Rohnert Park currently has 75 properties for sale (50 REO or short sale) and 112 in escrow. Petaluma has 50% of all sales are REO. Short sales are slowing closing. We’re seeing lots of approvals but only six have closed. Sharp, well-priced homes are moving. Open houses are well attended. Sebastopol concurs noting there is a lot of activity at open houses. We’re seeing multiple offers on REOs and short sales. New REO listings appear to have dropped off across all companies.
Peninsula—Our Burlingame office reports that open house attendance has really picked up this week with surprisingly strong showings in town homes and condos. The interesting thing is that buyers believe that they should be able to buy these condos for $200,000 under asking, which would bring our condo market into the $500,000 range. Surely this is the pressure from the price reductions on single family homes. Menlo Park El Camino reports that things remain a waiting game. Some buyers just can’t budge. Some make offers and if they get a counter, they walk away. They feel that they are totally in the driver’s seat. Redwood City/San Carlos reports open houses were extremely well attended this weekend. Two of our opens had at least 40 people through. We’re getting much more positive vibes from buyers.
San Francisco—Our Lombard office reports a better week in transactions, no fall-outs and sort of a breakthrough in price point: a sizeable commercial deal plus three homes over $2 million went into escrow. Our Market Street office reports that activity was good at open houses this weekend. Offers are being written, even if they are low, hoping to start the discussion and bring the parties to a mutually acceptable price and in most cases, this is working. Van Ness reports that listings are coming in faster than in the last two weeks but sales (closings) are a bit slower. It appears that within the last few days, things seem to be picking up.
Santa Cruz County—The median price dipped to $380,000 (single family) in February vs. $682,500 a year ago. Listing inventory is about the same as 2008, just at 1000 in the county, with 92 closed sales in February. A total of 11.4 months represents the unsold inventory index for SFR which is down from 16.6 months a year ago. The Agents are also having some challenges with appraisals coming in at value, lenders wanting to review appraisals and the entire process taking much longer.
Silicon Valley—Our Cupertino De Anza office reports that activity seems to be picking up. Our Cupertino Stevens Creek concurs noting that we are getting great listings and are still helping buyers. The Los Altos office reports that the market is picking up and new listings are coming in and some are turning into sales. Our Los Gatos office reports that buyers continue to look for deals. Open houses are filled with lots of buyers. Many are still hesitant. There is not much movement in the high end. Our San Jose Almaden office reports that short sales are being approved but because of the time it takes to have them approved, buyers are backing out. Confidence is evident in investors who are paying cash for REOs with multiple offers. Higher price points remain slow while lower price points remain brisk. Blossom Valley has nearly 40% of its inventory pending while Almaden only has 15%. The San Jose Willow Glen office reports little change from last week. Open houses are quite busy and the floor calls are coming in, though they have slowed up a bit. Sellers are not getting what they want for their homes and the buyers are smart enough to know that they are in the driver’s seat.
South County—Our Gilroy office is reporting there is a lack of inventory in the entry level/investor market. These properties are receiving multiple offers and selling for slightly over list price. We are seeing appraisal issues that may arise if an accepted offer is too high. The next price tier is beginning to also see more interest and some multiple offers. Open house traffic is excellent. Buyers are out there. The Hollister office reports that open house activity is up. Short sale listings are continually rising. First time home buyers are taking advantage of the new $8,000 tax credit. Our Morgan Hill office also has great news to report. The word on the street is “optimism.” Clients and Agents alike want to believe that the worst is behind all of us. Sales are up and inventory in South County is declining. Again, if a property is perceived to be a good value, it is selling quickly. REOs and short sales dominate the market—but most will agree that any sale is a good thing.
With spring break on the horizon and the warmer, spring weather in the air, look for the first of the garage sales as well as lots of great homes holding open houses! For a schedule of open houses, go to www.OpenHouse.com or www.CaliforniaMoves.com. Spring has sprung!
Until next week-
Make it a great one,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
First, CNNMoney.com reported a sudden, unexpected surge in U.S. housing starts. According to the Commerce Department, housing starts rose to a seasonally adjusted annual rate of 583,000 last month, up 22% from a revised 477,000 in January. The big surprise: Economists were expecting starts to decline to 450,000, according to consensus estimates by Briefing.com.
Furthermore, applications for building permits, considered a reliable sign of future construction activity, rose 3% to a seasonally adjusted annual rate of 547,000 last month. The other big surprise: Economists were expecting permits to fall to 500,000.
Also interesting this week, retail sales figures fell much less than expected in February, and surprisingly strong January sales were revised even higher. According to CNNMoney.com, “U.S. store sales showed a smaller-than-expected decline in February after an unexpected surge in January that was bigger than originally reported…The Commerce Department said total retail sales fell 0.1% last month, compared with January’s revised increase of 1.8%. Economists surveyed by Briefing.com had been expecting a decrease of 0.5% for February.”
So, is it safe to call this a trend? Are we out of the woods yet? It’s tough to say. In all honesty, you don’t know whether or not you’ve hit bottom until you’re on your way back up but it seems some of the critical signs are starting to show signs of life which is welcome relief for our wounded economy.
Also in the news this week, the Federal Reserve announced plans to purchase up to $750 billion in mortgage-backed securities and up to $300 billion in longer term Treasury securities. Our representatives at the National Association of Realtors applauded the plans noting “This is great news for American home buyers and homeowners because mortgage interest rates will continue at historic lows.”
What this means for Americans is that a greater number of home buyers will be able to purchase a home and some homeowners facing challenges will be able to refinance into better terms. As NAR noted, “We already are experiencing a great improvement in housing affordability due to historically low interest rates and the Fed’s move will push affordability conditions to the best levels in 40 years. In addition, continued low rates will lessen foreclosure pressure and help stabilize home prices sooner, as more Americans buy homes and draw down inventory.”
Along the lines of mortgage relief, the Treasury Department this week launched a new website for consumers seeking information about the Obama Administration’s Making Home Affordable loan modification and refinancing program. The site, www.MakingHomeAffordable.gov, offers features including interactive self-assessment tools that will empower borrowers to determine if they are eligible to participate and calculate the monthly mortgage payment reductions they could stand to realize under the Making Home Affordable program. This is a helpful site that we should all be sharing with our friends, families and clients alike.
Finally, on Friday, Jim Gillespie, president and CEO of Coldwell Banker Real Estate LLC, participated in a discussion about the state of the housing market, live from the New York Stock Exchange on CNBC, on the “Roadmap to Rebound” segment hosted by Maria Bartiromo. Yale economist Dr. Robert Schiller and Sanjiy Das, CEO of CitiMortgage, also participated. I am proud of Coldwell Banker and really pleased with Jim’s part of the discussion –sticking to the facts of what is still needed to make a significant difference for the housing recovery. Jim calls upon government leaders to enact a $15,000 non-refundable tax credit to ALL buyers and also a mortgage buy down that would bring rates to the 4-4.5% range. This, NAR reports, could generate an additional 840,000 home sales over 12 months. This home buying activity would have major implications in stimulating the overall US economy since NAR also reports that each home sold generates more than $60,000 in economic activity. The proposal would also have a greater impact on foreclosures than the current stimulus package. Take a look: http://www.cnbc.com/id/15840232?play=1&video=1067527935
Now, with all of that exciting news for the week in tow, let’s take a look at our local real estate news:
East Bay—The Berkeley office reports a steady stream of buyers at our open houses. We sold three houses in one day. Some "seasoned" listings are finally pending. The mood seems better than just a few months ago. Castro Valley reports new listings are being shown and open house attendance has been great for open houses of new listings. We are starving for fresh inventory. Prices are holding steady in our market, seemingly stabilizing. The Fremont office reports that the market appears to be on an upswing due to the decrease of REO listing inventory. Buyers are attempting to take advantage of the low interest rates and appear more competitive in regards to the well priced homes. Livermore reports our office had four pending sales this week. All were multiple offers and three of the four pending sales were at prices that we have not seen in a long time ($145,000, $150,000 and $250,000). The other sale in San Ramon was at $453,000. Oakland reports that several deals in the upper end have fallen out mostly due to financing issues. So far this month is not starting off as busy as last month, but Agents are working and open houses command lots of groups.
Monterey County—We are seeing steady sales activity and listing inventory. We had three multiple offer situations this week—two of which were REOs.
North Bay—Our San Rafael office is reporting that REO listings have dropped off dramatically due to the moratorium. Short sale offers are being approved faster and entry level homes and condos are being sold with multiple offers driving the prices up. With interest rates so low and the $8,000 tax credit, we are seeing many first time home buyers writing offers. Our Southern Marin offices report seven new listings came on in the Mill Valley market between $2 and $3 million. There are currently 22 listings in that range with only one pending in Mill Valley. There are approximately 55 listings in Tiburon/Belvedere listed at over $2 million with very few sales. The high end in Marin is experiencing far greater supply than demand. In Sonoma County, our Petaluma office reports that inventory is shrinking. Rohnert Park currently has 75 properties for sale (50 REO or short sale) and 112 in escrow. Petaluma has 50% of all sales are REO. Short sales are slowing closing. We’re seeing lots of approvals but only six have closed. Sharp, well-priced homes are moving. Open houses are well attended. Sebastopol concurs noting there is a lot of activity at open houses. We’re seeing multiple offers on REOs and short sales. New REO listings appear to have dropped off across all companies.
Peninsula—Our Burlingame office reports that open house attendance has really picked up this week with surprisingly strong showings in town homes and condos. The interesting thing is that buyers believe that they should be able to buy these condos for $200,000 under asking, which would bring our condo market into the $500,000 range. Surely this is the pressure from the price reductions on single family homes. Menlo Park El Camino reports that things remain a waiting game. Some buyers just can’t budge. Some make offers and if they get a counter, they walk away. They feel that they are totally in the driver’s seat. Redwood City/San Carlos reports open houses were extremely well attended this weekend. Two of our opens had at least 40 people through. We’re getting much more positive vibes from buyers.
San Francisco—Our Lombard office reports a better week in transactions, no fall-outs and sort of a breakthrough in price point: a sizeable commercial deal plus three homes over $2 million went into escrow. Our Market Street office reports that activity was good at open houses this weekend. Offers are being written, even if they are low, hoping to start the discussion and bring the parties to a mutually acceptable price and in most cases, this is working. Van Ness reports that listings are coming in faster than in the last two weeks but sales (closings) are a bit slower. It appears that within the last few days, things seem to be picking up.
Santa Cruz County—The median price dipped to $380,000 (single family) in February vs. $682,500 a year ago. Listing inventory is about the same as 2008, just at 1000 in the county, with 92 closed sales in February. A total of 11.4 months represents the unsold inventory index for SFR which is down from 16.6 months a year ago. The Agents are also having some challenges with appraisals coming in at value, lenders wanting to review appraisals and the entire process taking much longer.
Silicon Valley—Our Cupertino De Anza office reports that activity seems to be picking up. Our Cupertino Stevens Creek concurs noting that we are getting great listings and are still helping buyers. The Los Altos office reports that the market is picking up and new listings are coming in and some are turning into sales. Our Los Gatos office reports that buyers continue to look for deals. Open houses are filled with lots of buyers. Many are still hesitant. There is not much movement in the high end. Our San Jose Almaden office reports that short sales are being approved but because of the time it takes to have them approved, buyers are backing out. Confidence is evident in investors who are paying cash for REOs with multiple offers. Higher price points remain slow while lower price points remain brisk. Blossom Valley has nearly 40% of its inventory pending while Almaden only has 15%. The San Jose Willow Glen office reports little change from last week. Open houses are quite busy and the floor calls are coming in, though they have slowed up a bit. Sellers are not getting what they want for their homes and the buyers are smart enough to know that they are in the driver’s seat.
South County—Our Gilroy office is reporting there is a lack of inventory in the entry level/investor market. These properties are receiving multiple offers and selling for slightly over list price. We are seeing appraisal issues that may arise if an accepted offer is too high. The next price tier is beginning to also see more interest and some multiple offers. Open house traffic is excellent. Buyers are out there. The Hollister office reports that open house activity is up. Short sale listings are continually rising. First time home buyers are taking advantage of the new $8,000 tax credit. Our Morgan Hill office also has great news to report. The word on the street is “optimism.” Clients and Agents alike want to believe that the worst is behind all of us. Sales are up and inventory in South County is declining. Again, if a property is perceived to be a good value, it is selling quickly. REOs and short sales dominate the market—but most will agree that any sale is a good thing.
With spring break on the horizon and the warmer, spring weather in the air, look for the first of the garage sales as well as lots of great homes holding open houses! For a schedule of open houses, go to www.OpenHouse.com or www.CaliforniaMoves.com. Spring has sprung!
Until next week-
Make it a great one,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Weekly Market Watch
Foreclosure Prevention Plan Guidelines Revealed
Earlier this week, the Obama administration released the guidelines which enable lenders to begin modifications of eligible mortgages under the administration’s Homeowner Affordability and Stability Plan. Here is a summary of the guidelines, direct from the Department of Treasury: http://www.treas.gov/press/releases/reports/guidelines_summary.pdf.
This “foreclosure prevention plan” (dubbed by the media as such) is estimated to help some seven to nine million homeowners make their mortgages more affordable and help to prevent the continuation of the devastation that foreclosures have caused in this country.
According to the U.S. Department of Treasury, “The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
“GSE lenders and servicers already have much of the borrower’s information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance program ends in June 2010.
”The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners program.
With the information now available, servicers can begin immediately to modify eligible mortgages under the Modification program so that at-risk borrowers can better afford their payments.”
Industry online magazine, RISMedia, weighed in on the plan this week and offered this insight that I thought would be helpful: http://rismedia.com/2009-03-04/how-to-help-homeowners-understand-obamas-foreclosure-plan/
I know that many clients have a lot of questions right now and we are working to gather some communication tools to help. One good option in the meantime is a consumer-friendly Q&A recently put together by the Treasury Department, the U.S. Department of Housing and Urban Development (HUD) located at http://www.financialstability.gov/makinghomeaffordable/.
Now, let’s take a look at this week in our local real estate:
East Bay—Our Berkeley office reported 75 visitors to a Crocker Highlands listing, though traffic was rather slow at our other open houses. Berkeley was recently named #1 suburb in which to sell a home by Forbes. The article reported “Prices are up 9% this year, with homes selling for a median price of $790,986…it may not be a boom, but given regional problems, it’s a good market to be in.” Castro Valley reports that buyers are snatching up well-priced listings in light of dwindling inventory. We are selling some of our aging listings and our new listings are going pending quickly. We sold two of our aged listings this week and two other listings were sold soon after hitting the market. Danville reported that one of our San Ramon listings, listed in the high six hundreds (not an REO or short sale) had six offers. The Oakland-Piedmont office reports open house activity is picking up. February was a strong month for sales in this office in all price ranges. The $600,000 to $700,000 is very hot. Short sales are now in all price ranges. Foreclosures are almost all in the lowest of the price range. Multiple offers in the foreclosures are about 30%. Orinda reported this week that we are having a lot of people come through our open houses, especially as we are working on reducing asking prices with sellers.
Monterey County—The market has remained the same for the past few weeks. Many Agents are working with potential buyers who are reluctant to get into contract on a property as they believe the prices will continue to go down—unless of course, they see a particular property that appeals to them and it appears to be a great value.
North Bay—Greenbrae reports that even despite the rain, serious buyers were out in full force. Southern Marin shares that activity seems to be picking up across the board. Sales are in the low end – and the very high end, but the $2-3 million category seems to be the softest of all price categories. The Petaluma office reports that open houses are well attended. Activity was high even during the rainy Sunday. One property that was on the market for one day priced at $599,000 received six offers that same day. Multiple offers continue in the lower priced properties. Santa Rosa reports that one Agent reported three groups at his open house and had one offer. Three other Agents reported that they were shut out at their open. Probably the rain. Still seeing the under $500,000 as the white water of the market but each week we are seeing more and more properties hitting the market above $500,000 and some are now drawing offers.
Peninsula—Burlingame shares, “It’s all about price, price, price.” Everyone wants a deal. Agents are trying hard to price things correctly with their clients and finding that the buying public wants even less. Media perception and continued negative press aren’t helping matters. Open homes were all over the map this week. Some had only two—others had 80+ people walk through. Half Moon Bay reports good open house activity even with all of the rain. One Agent had a sale over the $1 million mark with seven counteroffers. Everyone remains upbeat looking forward to the completion of the tunnel and a brighter economy. Our Menlo Park Santa Cruz Avenue office reported properties under the $2 million mark are getting buyer’s attention. One Menlo Park listing at $1,950,000 sold. Another listing in the Skyline area listed at $1,350,000 sold as well. Palo Alto reports open house activity has been dreary—consistent with the weather. The number of sales overall on MLS is extremely slow. For the clients, there is no reason to sell. They’re in the neighborhood they want to be in and because it isn’t a great market, they are not selling—we have a log jam. San Mateo shares that although we are holding our own, buyers are having difficulty making a decision. They seem to have a “you first” attitude. It is hard for buyers to make a decision to move forward.
San Francisco—Our Lombard office reported a good week as well as good February sales. We doubled ended three deals thanks to open houses. The traffic is picking up in the $1.5 to $3 million range, but this interest pick up hasn’t translated to transactions yet. Our Market Street office reported that a property listed in the Mission district received 20 offers. It was listed at $549,000 in move-in condition and had one weekend of open houses. Overall, not a bad week for the City with our offices reporting a total of 34 sales for the week.
Santa Cruz County—The office had several great new listings priced from $300,000 to $7.5 million. There is a lot of potential listing activity and appointments. Many of the sellers are in a short sale situation. Our March sales are starting out stronger than last month so we will see how consumers continue to move forward buying—it certainly is the best time in many years. For sellers, the market continues to be driven by prices. This is an important fact to consider when sellers put their home on the market.
Silicon Valley—Our Los Gatos office reports that we have a lot of buyers but we’re having a hard time getting them to step up. We’re also seeing challenges with interested buyers who are trying to qualify for a loan. The San Jose Main office shares that we’re seeing good open house traffic. We’ve seen increased interest in lower-end priced properties between $250,000 to $500,000.
South County—Our Hollister office reports that short sales are now being well attended to in a more timely manner. Agents are back to investigating short sales with a positive attitude. We saw an increase in new REO listings this week. Our Morgan Hill office reports that Agents are reporting an increased number of guests at open houses. It seems that potential buyers have graduated from the “lookie loo” mentality to that of seriously considering a future purchase. Though, as one Agent recently said, “I have to get buyers from sitting on the fence to walking into the front door.”
The news of the week should bring comfort to millions of American homeowners, and for the real estate sector, it is just what the doctor ordered. It is imperative that we continue to move with speed to make housing more affordable and to help stop the spiral in our housing markets. I believe that this plan will encourage additional loan modifications and will ultimately reduce the foreclosure rate. In the end, this is one—and possibly the most important—way to stabilize prices and once again get us moving in the right direction. Helping families keep their homes is critical, both for the health of our economy and for neighborhoods across the country.
It’s very clear that the American economy cannot be turned around without fixing the housing crisis. With the recent release of the second half of the TARP funds coupled with the Emergency Economic Stabilization Act and now the Homeowner Affordability and Stability Plan, the housing sector now has a foundation on which to build. Politicians, economist and media still debate daily as to if some of these steps are the right steps; however I do believe that we are headed in the right direction. On a local level, we’re already starting to feel the initial flow of these benefits. In a broad sense throughout our San Francisco Bay Area offices, we are seeing increased floor activity and increased open house activity. Many Buyers are now inquiring about the first time home buyer credit, the increase in conforming loan limits, and seeking counsel on how to best position themselves in order to buy.
Until next week,
Make it a great one,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
Earlier this week, the Obama administration released the guidelines which enable lenders to begin modifications of eligible mortgages under the administration’s Homeowner Affordability and Stability Plan. Here is a summary of the guidelines, direct from the Department of Treasury: http://www.treas.gov/press/releases/reports/guidelines_summary.pdf.
This “foreclosure prevention plan” (dubbed by the media as such) is estimated to help some seven to nine million homeowners make their mortgages more affordable and help to prevent the continuation of the devastation that foreclosures have caused in this country.
According to the U.S. Department of Treasury, “The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
“GSE lenders and servicers already have much of the borrower’s information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance program ends in June 2010.
”The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners program.
With the information now available, servicers can begin immediately to modify eligible mortgages under the Modification program so that at-risk borrowers can better afford their payments.”
Industry online magazine, RISMedia, weighed in on the plan this week and offered this insight that I thought would be helpful: http://rismedia.com/2009-03-04/how-to-help-homeowners-understand-obamas-foreclosure-plan/
I know that many clients have a lot of questions right now and we are working to gather some communication tools to help. One good option in the meantime is a consumer-friendly Q&A recently put together by the Treasury Department, the U.S. Department of Housing and Urban Development (HUD) located at http://www.financialstability.gov/makinghomeaffordable/.
Now, let’s take a look at this week in our local real estate:
East Bay—Our Berkeley office reported 75 visitors to a Crocker Highlands listing, though traffic was rather slow at our other open houses. Berkeley was recently named #1 suburb in which to sell a home by Forbes. The article reported “Prices are up 9% this year, with homes selling for a median price of $790,986…it may not be a boom, but given regional problems, it’s a good market to be in.” Castro Valley reports that buyers are snatching up well-priced listings in light of dwindling inventory. We are selling some of our aging listings and our new listings are going pending quickly. We sold two of our aged listings this week and two other listings were sold soon after hitting the market. Danville reported that one of our San Ramon listings, listed in the high six hundreds (not an REO or short sale) had six offers. The Oakland-Piedmont office reports open house activity is picking up. February was a strong month for sales in this office in all price ranges. The $600,000 to $700,000 is very hot. Short sales are now in all price ranges. Foreclosures are almost all in the lowest of the price range. Multiple offers in the foreclosures are about 30%. Orinda reported this week that we are having a lot of people come through our open houses, especially as we are working on reducing asking prices with sellers.
Monterey County—The market has remained the same for the past few weeks. Many Agents are working with potential buyers who are reluctant to get into contract on a property as they believe the prices will continue to go down—unless of course, they see a particular property that appeals to them and it appears to be a great value.
North Bay—Greenbrae reports that even despite the rain, serious buyers were out in full force. Southern Marin shares that activity seems to be picking up across the board. Sales are in the low end – and the very high end, but the $2-3 million category seems to be the softest of all price categories. The Petaluma office reports that open houses are well attended. Activity was high even during the rainy Sunday. One property that was on the market for one day priced at $599,000 received six offers that same day. Multiple offers continue in the lower priced properties. Santa Rosa reports that one Agent reported three groups at his open house and had one offer. Three other Agents reported that they were shut out at their open. Probably the rain. Still seeing the under $500,000 as the white water of the market but each week we are seeing more and more properties hitting the market above $500,000 and some are now drawing offers.
Peninsula—Burlingame shares, “It’s all about price, price, price.” Everyone wants a deal. Agents are trying hard to price things correctly with their clients and finding that the buying public wants even less. Media perception and continued negative press aren’t helping matters. Open homes were all over the map this week. Some had only two—others had 80+ people walk through. Half Moon Bay reports good open house activity even with all of the rain. One Agent had a sale over the $1 million mark with seven counteroffers. Everyone remains upbeat looking forward to the completion of the tunnel and a brighter economy. Our Menlo Park Santa Cruz Avenue office reported properties under the $2 million mark are getting buyer’s attention. One Menlo Park listing at $1,950,000 sold. Another listing in the Skyline area listed at $1,350,000 sold as well. Palo Alto reports open house activity has been dreary—consistent with the weather. The number of sales overall on MLS is extremely slow. For the clients, there is no reason to sell. They’re in the neighborhood they want to be in and because it isn’t a great market, they are not selling—we have a log jam. San Mateo shares that although we are holding our own, buyers are having difficulty making a decision. They seem to have a “you first” attitude. It is hard for buyers to make a decision to move forward.
San Francisco—Our Lombard office reported a good week as well as good February sales. We doubled ended three deals thanks to open houses. The traffic is picking up in the $1.5 to $3 million range, but this interest pick up hasn’t translated to transactions yet. Our Market Street office reported that a property listed in the Mission district received 20 offers. It was listed at $549,000 in move-in condition and had one weekend of open houses. Overall, not a bad week for the City with our offices reporting a total of 34 sales for the week.
Santa Cruz County—The office had several great new listings priced from $300,000 to $7.5 million. There is a lot of potential listing activity and appointments. Many of the sellers are in a short sale situation. Our March sales are starting out stronger than last month so we will see how consumers continue to move forward buying—it certainly is the best time in many years. For sellers, the market continues to be driven by prices. This is an important fact to consider when sellers put their home on the market.
Silicon Valley—Our Los Gatos office reports that we have a lot of buyers but we’re having a hard time getting them to step up. We’re also seeing challenges with interested buyers who are trying to qualify for a loan. The San Jose Main office shares that we’re seeing good open house traffic. We’ve seen increased interest in lower-end priced properties between $250,000 to $500,000.
South County—Our Hollister office reports that short sales are now being well attended to in a more timely manner. Agents are back to investigating short sales with a positive attitude. We saw an increase in new REO listings this week. Our Morgan Hill office reports that Agents are reporting an increased number of guests at open houses. It seems that potential buyers have graduated from the “lookie loo” mentality to that of seriously considering a future purchase. Though, as one Agent recently said, “I have to get buyers from sitting on the fence to walking into the front door.”
The news of the week should bring comfort to millions of American homeowners, and for the real estate sector, it is just what the doctor ordered. It is imperative that we continue to move with speed to make housing more affordable and to help stop the spiral in our housing markets. I believe that this plan will encourage additional loan modifications and will ultimately reduce the foreclosure rate. In the end, this is one—and possibly the most important—way to stabilize prices and once again get us moving in the right direction. Helping families keep their homes is critical, both for the health of our economy and for neighborhoods across the country.
It’s very clear that the American economy cannot be turned around without fixing the housing crisis. With the recent release of the second half of the TARP funds coupled with the Emergency Economic Stabilization Act and now the Homeowner Affordability and Stability Plan, the housing sector now has a foundation on which to build. Politicians, economist and media still debate daily as to if some of these steps are the right steps; however I do believe that we are headed in the right direction. On a local level, we’re already starting to feel the initial flow of these benefits. In a broad sense throughout our San Francisco Bay Area offices, we are seeing increased floor activity and increased open house activity. Many Buyers are now inquiring about the first time home buyer credit, the increase in conforming loan limits, and seeking counsel on how to best position themselves in order 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 Watch
It May Be Time to Get Off the Fence!
With the Economic Stimulus Package and the Foreclosure Prevention Plan underway, many Americans are anxious to move forward, realizing that there will still be weeks and months of discussion and fine-tuning before all elements will be understood. At the end of the day, some elements will be popular with the majority, perceived as helpful to our recovery – and some elements will remain under heavy criticism and largely unpopular. It’s the American way. But I hope most will agree that it’s time to get back into a position where we feel secure, where we feel confident and where we can once again make strong decisions regarding our future…and that includes decisions we make about real estate.
Many buyers have been on the sidelines. They’ve been waiting to see what will happen to interest rates and to see what the results of the Economic Stimulus Package would be. Some have been on the fence regarding a personal real estate decision even though their down payment and their jobs have been safe and secure. You can’t really blame them for being cautious - but things are definitely starting to change at the entry price levels. Most new offerings listed at a competitive asking price are receiving multiple offers again. Many older listings that have taken notable price reductions are experiencing the same thing.
Now I realize that every individual situation is different so please don’t take this as a broad based brush that I am painting with, but what I can say is that buyers may truly be in one of the best positions than they have been in some 50 years to purchase a home. Consider the benefits to today’s homebuyer:
New $8,000 first time home buyer credit (and in most cases, the buyer does not have to repay the tax credit).
Reinstatement of FHA, Freddie Mac and Fannie Mae loan limits. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750.
Historically low interest rates. In my February Reality Check message I shared with you how changes in mortgage rates can affect a consumer’s purchasing power. The fact is, right now interest rates are low—certainly by historical standards—and those low rates translate to increased purchasing power for buyers.
Though we’ve seen decreasing inventory in many of our markets over the last several weeks, we still do have quite a bit of inventory in many markets. This translates to more choices for buyers. We are also anticipating that Spring will bring on a lot of good, new inventory for us and that should bring in a surge of new buyers—for today’s buyer’s, that’s competition for you.
My point is that Buyers may not want to make the mistake of waiting. Sitting on the sidelines could cost plenty in terms of higher housing prices, increased competition, fewer choices and higher interest rates. We live in one of the most desirable areas in the world and regardless of the recent slowing in the market, there is still high demand where value is perceived –normally value is perceived with respect to condition and competitive pricing. Reading on, you’ll note a surge in multiple offers at the entry-level price points.
Let’s take a look at our past week in Bay Area real estate:
East Bay—Berkeley shares that Agents are desperate for new listings to show their ready, willing and able buyers. Berkeley tour is still anemic, not much to show buyers in many neighborhoods. One Berkeley property just received 13 offers and happily we had the winning offer. The Castro Valley office reports that the local market was slow this past week. Lack of inventory is holding prices steady but there is nothing new out there for us to sell. The inventory is so low that well priced homes are being snatched up immediately. Danville is seeing some bright spots in the upper-end. For the second week in a row, a number of our new sales were in the high-end: four sales above $1,000,000 and one sale about $2,000,000. Fremont shares that our current market is busy with REO and short sales. We have had several multiple offers regarding the REO and short sale deals. We have picked up for this week compared to last and are hoping for it to continue. Livermore provided the Tri-Valley update with Livermore figures standing out as the shining star: active inventory is down 3.5% and total pending sales are up 16% since the first week of January. Pleasanton active inventory since the first week of January is up over 28% and total pending sales are up 25%. Dublin active inventory and total pending sales has remained stable in 2009.
Monterey County—With listing inventory steady, sales activity is on the rise. We’ve had a few more sales in the last few weeks, but most are in the lower price ranges.
North Bay—The Greenbrae office reports more contingent sales. Sellers are much more reasonable with prices as new homes get ready to come on in Spring. There is a movement and an upswing in activity. Our San Rafael office reports that there is plenty of activity at open houses. Agents are showing property, but the number of buyers writing offers has slowed in the past two weeks. It feels as if there is going to be a surge of new business about to explode due to the increase of buyers’ previewing and the number of Agents qualifying buyers with Princeton Capital loans as of late. Santa Rosa shares that for the third week in a row, conventional new inventory has come on at a slightly higher rate than distressed properties. Seeing some of the closed properties that were in multiple offers, we find that many banks took less than the highest offer in favor of cash or large downs—sometimes leaving more than $50,000 on the table. Sebastopol shares that the rain kept the lookie- loo’s at home this past weekend but the buyers weren’t bashful about writing offers. They had 13 sides on 11 properties which went into contract.
Peninsula—Our Burlingame office reports that some days are full of hope and some days are disappointing as the buying and selling public react to the media and the stock market. We are seeing sales and listings increase, however. Some financing difficulties exist with lenders asking for larger down payments or modifying terms at approval time. Half Moon Bay shares that it was a slow week on the coast although the open house attendance was good. Everyone is looking to the stimulus package to help kick the housing market in gear. Our Menlo Park El Camino office reports that there are still a lot of low end sales. We only had one closed escrow in Menlo Park this year. It was over $2 million. Last year there were seven. Sellers are beginning to get it as our stats are becoming more compelling. Buyers and sellers will find each other. Our Menlo Park Santa Cruz Avenue office reported that one REO sale in Redwood City had 10 offers. One good Atherton property sold with a list price of $6,995,000. Hopefully this is a sign that the high-end is loosening a bit.
San Francisco—Our Market Street office reports that some of the past week’s back-up offers moved up where primary deals failed. Multiple counteroffers also seem to be the order of the day with many of the ratified sales taking 1-2 weeks to ratify. Lakeside states that good negotiations and diligence on the part of the sales associates is what is bringing deals together in this market. All SF offices note the high end is still slow.
Santa Cruz County—We are starting to see potential short sales in the Previews market and have a couple of escrows that meet that criteria. Two of our Agents are in the process of listing a $7 million property that is ocean front and has already attracted interest. We have a couple of new listings in the $2 million+ range. Open houses are well attended and continue to be even in this price range.
Silicon Valley—Our Cupertino Stevens Creek office reports that the market is still strong in the Cupertino area. Schools are the constant focus of most of the clients. Our Los Altos office reports that buyers are still coming to open houses but are voicing concerns about falling prices. Our San Jose Almaden office reports one REO property that was listed by an out of area Agent received 30 offers. It was listed at $450,000 and is about $200,000 under valued. Our San Jose Willow Glen office feels like a broken record but the truth is enlightening: open houses are busy and floor calls are picking up. Buyers are looking and may still be waiting to see what happens with the stimulus package.
South County—Our Gilroy office reports that the market continues to be driven by bank-owned properties. We are seeing that sales are up YTD over 2008. Hollister shares that REO listings continue to receive multiple offers and short sale listings are on the rise. Morgan Hill reports buyers in South County are like hungry linebackers in a buffer. They are devouring bargain priced properties in both Morgan Hill and Gilroy. In the first 25 days of February, Morgan Hill Agents managed to put 35 homes on the office sales board. Prices are still declining but properties listed under $300,000 are selling at a very good pace.
The current housing market offers a unique window of opportunity for confident buyers. The exciting news is that for the first time in quite a while, the stars are in alignment for consumers: mortgage rates remain at historic lows, loan limits have been increased, there is an $8,000 first time home buyer credit, and in some areas a good selection of homes to choose from. The only way to know that the market has “hit rock bottom” is when it is on its way up and by then, the window of opportunity is gone. Among the ongoing concerns consumers currently have regarding our economy and real estate should be one additional one: 10 years from now, we could be looking back at this market, and wish we would have bought a lot more San Francisco Bay Area real estate
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
With the Economic Stimulus Package and the Foreclosure Prevention Plan underway, many Americans are anxious to move forward, realizing that there will still be weeks and months of discussion and fine-tuning before all elements will be understood. At the end of the day, some elements will be popular with the majority, perceived as helpful to our recovery – and some elements will remain under heavy criticism and largely unpopular. It’s the American way. But I hope most will agree that it’s time to get back into a position where we feel secure, where we feel confident and where we can once again make strong decisions regarding our future…and that includes decisions we make about real estate.
Many buyers have been on the sidelines. They’ve been waiting to see what will happen to interest rates and to see what the results of the Economic Stimulus Package would be. Some have been on the fence regarding a personal real estate decision even though their down payment and their jobs have been safe and secure. You can’t really blame them for being cautious - but things are definitely starting to change at the entry price levels. Most new offerings listed at a competitive asking price are receiving multiple offers again. Many older listings that have taken notable price reductions are experiencing the same thing.
Now I realize that every individual situation is different so please don’t take this as a broad based brush that I am painting with, but what I can say is that buyers may truly be in one of the best positions than they have been in some 50 years to purchase a home. Consider the benefits to today’s homebuyer:
New $8,000 first time home buyer credit (and in most cases, the buyer does not have to repay the tax credit).
Reinstatement of FHA, Freddie Mac and Fannie Mae loan limits. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750.
Historically low interest rates. In my February Reality Check message I shared with you how changes in mortgage rates can affect a consumer’s purchasing power. The fact is, right now interest rates are low—certainly by historical standards—and those low rates translate to increased purchasing power for buyers.
Though we’ve seen decreasing inventory in many of our markets over the last several weeks, we still do have quite a bit of inventory in many markets. This translates to more choices for buyers. We are also anticipating that Spring will bring on a lot of good, new inventory for us and that should bring in a surge of new buyers—for today’s buyer’s, that’s competition for you.
My point is that Buyers may not want to make the mistake of waiting. Sitting on the sidelines could cost plenty in terms of higher housing prices, increased competition, fewer choices and higher interest rates. We live in one of the most desirable areas in the world and regardless of the recent slowing in the market, there is still high demand where value is perceived –normally value is perceived with respect to condition and competitive pricing. Reading on, you’ll note a surge in multiple offers at the entry-level price points.
Let’s take a look at our past week in Bay Area real estate:
East Bay—Berkeley shares that Agents are desperate for new listings to show their ready, willing and able buyers. Berkeley tour is still anemic, not much to show buyers in many neighborhoods. One Berkeley property just received 13 offers and happily we had the winning offer. The Castro Valley office reports that the local market was slow this past week. Lack of inventory is holding prices steady but there is nothing new out there for us to sell. The inventory is so low that well priced homes are being snatched up immediately. Danville is seeing some bright spots in the upper-end. For the second week in a row, a number of our new sales were in the high-end: four sales above $1,000,000 and one sale about $2,000,000. Fremont shares that our current market is busy with REO and short sales. We have had several multiple offers regarding the REO and short sale deals. We have picked up for this week compared to last and are hoping for it to continue. Livermore provided the Tri-Valley update with Livermore figures standing out as the shining star: active inventory is down 3.5% and total pending sales are up 16% since the first week of January. Pleasanton active inventory since the first week of January is up over 28% and total pending sales are up 25%. Dublin active inventory and total pending sales has remained stable in 2009.
Monterey County—With listing inventory steady, sales activity is on the rise. We’ve had a few more sales in the last few weeks, but most are in the lower price ranges.
North Bay—The Greenbrae office reports more contingent sales. Sellers are much more reasonable with prices as new homes get ready to come on in Spring. There is a movement and an upswing in activity. Our San Rafael office reports that there is plenty of activity at open houses. Agents are showing property, but the number of buyers writing offers has slowed in the past two weeks. It feels as if there is going to be a surge of new business about to explode due to the increase of buyers’ previewing and the number of Agents qualifying buyers with Princeton Capital loans as of late. Santa Rosa shares that for the third week in a row, conventional new inventory has come on at a slightly higher rate than distressed properties. Seeing some of the closed properties that were in multiple offers, we find that many banks took less than the highest offer in favor of cash or large downs—sometimes leaving more than $50,000 on the table. Sebastopol shares that the rain kept the lookie- loo’s at home this past weekend but the buyers weren’t bashful about writing offers. They had 13 sides on 11 properties which went into contract.
Peninsula—Our Burlingame office reports that some days are full of hope and some days are disappointing as the buying and selling public react to the media and the stock market. We are seeing sales and listings increase, however. Some financing difficulties exist with lenders asking for larger down payments or modifying terms at approval time. Half Moon Bay shares that it was a slow week on the coast although the open house attendance was good. Everyone is looking to the stimulus package to help kick the housing market in gear. Our Menlo Park El Camino office reports that there are still a lot of low end sales. We only had one closed escrow in Menlo Park this year. It was over $2 million. Last year there were seven. Sellers are beginning to get it as our stats are becoming more compelling. Buyers and sellers will find each other. Our Menlo Park Santa Cruz Avenue office reported that one REO sale in Redwood City had 10 offers. One good Atherton property sold with a list price of $6,995,000. Hopefully this is a sign that the high-end is loosening a bit.
San Francisco—Our Market Street office reports that some of the past week’s back-up offers moved up where primary deals failed. Multiple counteroffers also seem to be the order of the day with many of the ratified sales taking 1-2 weeks to ratify. Lakeside states that good negotiations and diligence on the part of the sales associates is what is bringing deals together in this market. All SF offices note the high end is still slow.
Santa Cruz County—We are starting to see potential short sales in the Previews market and have a couple of escrows that meet that criteria. Two of our Agents are in the process of listing a $7 million property that is ocean front and has already attracted interest. We have a couple of new listings in the $2 million+ range. Open houses are well attended and continue to be even in this price range.
Silicon Valley—Our Cupertino Stevens Creek office reports that the market is still strong in the Cupertino area. Schools are the constant focus of most of the clients. Our Los Altos office reports that buyers are still coming to open houses but are voicing concerns about falling prices. Our San Jose Almaden office reports one REO property that was listed by an out of area Agent received 30 offers. It was listed at $450,000 and is about $200,000 under valued. Our San Jose Willow Glen office feels like a broken record but the truth is enlightening: open houses are busy and floor calls are picking up. Buyers are looking and may still be waiting to see what happens with the stimulus package.
South County—Our Gilroy office reports that the market continues to be driven by bank-owned properties. We are seeing that sales are up YTD over 2008. Hollister shares that REO listings continue to receive multiple offers and short sale listings are on the rise. Morgan Hill reports buyers in South County are like hungry linebackers in a buffer. They are devouring bargain priced properties in both Morgan Hill and Gilroy. In the first 25 days of February, Morgan Hill Agents managed to put 35 homes on the office sales board. Prices are still declining but properties listed under $300,000 are selling at a very good pace.
The current housing market offers a unique window of opportunity for confident buyers. The exciting news is that for the first time in quite a while, the stars are in alignment for consumers: mortgage rates remain at historic lows, loan limits have been increased, there is an $8,000 first time home buyer credit, and in some areas a good selection of homes to choose from. The only way to know that the market has “hit rock bottom” is when it is on its way up and by then, the window of opportunity is gone. Among the ongoing concerns consumers currently have regarding our economy and real estate should be one additional one: 10 years from now, we could be looking back at this market, and wish we would have bought a lot more San Francisco Bay Area real estate
Until next week,
Rick
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage
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