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