NAR Announces Housing Affordability Highest in 18 Years – And Many Offices Report Increased Activity in High End Sales
For months I’ve been sharing that this is one of the best times to purchase a home in decades. This week the National Association of Realtors underscored that fact –stating that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009 to its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 72.5% of all new and existing US homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000, up from 62.4% during the previous quarter and up from 53.8% during the first quarter of 2008.
Locally, the story is much more dramatic. In the San Francisco-Peninsula area, 32% of all new and existing homes sold in the first quarter of 2009 were considered affordable to families earning the area’s median income of $96,800. That’s up 60% from the previous quarter and up an incredible 146% from a year ago, when the index was a paltry 13%, one of the lowest affordability ratios in the United States.
Follow the link below to get the historical charts and details on North Bay, East Bay, Silicon Valley, and Santa Cruz, as well as many other Metros in the US.
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http://www.nahb.org/page.aspx/category/sectionID=135
Below you’ll find a few more news stories of interest from the week:
http://rismedia.com/2009-05-20/buyer-interest-in-foreclosures-spikes-says-survey/
http://www.nytimes.com/aponline/2009/05/19/us/politics/AP-US-Economy.html?_r=2&scp=17&sq=housing&st=nyt
http://rismedia.com/2009-05-18/distressed-properties-and-first-time-home-buyers-the-recipe-for-real-estate-recovery/
Many of you have asked me questions about the potential changes in the $8,000 first time buyer tax credit (http://www.realtor.org/RMODaily.nsf/pages/News2009051202?OpenDocument). Essentially the U.S. Department of Housing and Urban development announced on May 12th that the Federal Housing Administration would permit its lenders to allow home buyers to use the $8,000 first-time homebuyer tax credit as a down payment. FHA's approved lenders would be permitted to "monetize" the tax credit through short-term bridge loans. This would allow eligible buyers to access the funds immediately at the closing table. Here is a CNN Money article which explains some of the details: http://money.cnn.com/2009/05/18/real_estate/tax_credit_as_downpayment/index.htm?postversion=2009051912
I must caution that the execution of this is quite complicated and it may take some time before it becomes a reality. By late this week, there were already comments coming out of Washington that this may have been released a bit prematurely, and there is no guarantee that it will be successfully implemented. HUD would need to authorize lenders, non-profits and certain agencies to provide a bridge loan which would then be reimbursed at the time of tax refund. These players are not yet identified. Again, an encouraging and useful tool, but the execution and timing of it have yet to be fully outlined. Watch for more to come.
Most of the news lately has been about the brisk pace of sales at the entry level, where multiple offers are becoming the norm. The median price, although increasing slightly in April over March in the Bay Area, had previously been falling due to the heavy activity in foreclosures at the low end. That said, I thought it important to contrast this with what I’m seeing day to day at the branch office level at the other end of the market. Here is an incomplete list of some of our Coldwell Banker Bay Area closings just this past week:
$7+ Million – Atherton
$5+ Million – Portola Valley
$4.8 Million – San Francisco
$3.2 Million – Santa Rosa
$3 Million – Hillsborough
$2.9 Million - San Francisco
$2.9 Million - Belvedere
$2.6 Million – Los Altos
$2.2 Million - Menlo Park
$2 Million - Los Altos
$2 Million – Monterey
Many more in the $1 to $2 Million range
You won’t likely be reading about this activity in the Chron or the Mercury News – not because I’m not telling reporters about it in recent interviews, but because their focus is elsewhere. I feel everyone should know that besides these recent closings, nearly every office is reporting ratified offers and new Pending Sales in the higher end the past week or so – which is not what we were seeing a few months ago. You won’t hear me calling this a trend (yet) – but it sure is nice to see strong activity and confidence in the high end.
And with that update in tow, let’s take a look at this week in real estate:
East Bay—Berkeley shares that the market is still fast and furious at the lower price points with as many as 15 offers on some properties. Lenders and sellers are choosing all cash buyers, even if their offer is not the highest. There is some concern that these all cash bargains, usually from investors, are artificially driving down neighborhood value, since the fact that there were ready, willing and able buyers who would have offered more is not taken into account. Buyers are also asking what number to put into their offers for loan/appraisal time. Good question. Some Agents are using the number of days given to them by the buyers' loan officer, others advising to the check the "until funded" box in the contract. Castro Valley reports The Today show this week featured the Top 5 recovering cities for the country as related to the housing market. SF Bay Area was featured as number 5. It seems to correlate with the market trends that we have been experiencing lately. Short sales remain the market wildcard. In researching a property we recently wrote an offer for, we found that there was a $200,000 spread between the offer prices between two pending deals on the same street, one was REO and the other short sale. Daily operations remain busy. Oakland reports the market is really active in all price ranges. It has been steady now for all of April and now May. I think our spring market has arrived. Most of the multiple offer scenarios are two offers but occasionally one generates a large number and those are usually under-priced homes. Appraisal issues are now cropping up in escrows and they are taking much longer to close. Negotiations are more protracted. Short sales are active in every price range. Even some of the foreclosures coming on the market now seem to be in better Oakland neighborhoods. Orinda reports open homes are heavily attended and multiple offers are increasing. Sales in the luxury market are on the rise.
Monterey County— Slow but steady continues to be the pace here on the Monterey Peninsula, though the market is quick moving just east of us in the under $400,000 REO market. Many properties over $1.5 million continue to be listed; in fact, there are 283 such properties now listed on Monterey Peninsula, from $1.5 to $35 million; yet only 34 such properties have sold since beginning of year, from $1.5-$7.8 million. It's definitely a buyer's market in the higher price ranges. We did close $1.6 and $1.9 million properties last week, along with 13 others at $1 million and under.
North Bay— The Greenbrae office mentions that a flurry of new listings is looking to extend the Spring market well into Summer. Lots of activity in Central Marin in the $1M-1.1M price range. San Rafael tells us that currently there are 174 active homes & 58 condos on the market in San Rafael with 78 homes & 45 condos pending. In Novato there are 148 active homes and 58 condos which is lower than last year at this time. There are 113 homes and 48 condos pending. In Southern Marin the general feeling is that sales are picking up and buyers are getting more serious. Sebastopol states that Buyers are clamoring for low end inventory. 10+ offers are the norm under 300k. Lots of nosey neighbors at open houses have also been reported.
Peninsula— Things are definitely heating up as the Burlingame office hears more stories of multiple offers & see that the inventory is declining in most areas. Open house attendance is steady. In the Menlo Park area, a couple of higher end sales again which is encouraging. Higher end (over 3.5mil) is beginning to see some movement but higher end inventory levels give buyers a lot of power. Open houses were not as active, most likely due to the heat. Activity seems to be picking up. One Atherton listing was sold list price of $7,995,000. A couple of other high end sales last week both in Menlo & Atherton. For the Palo Alto offices the last seven to ten days has been very busy with multiple offers with prices exceeding upwards of 8-10% over list price on homes from $800k to $3M. I don't believe it's a trend, bit it is certainly very busy. We have had high-end sales & closings within ten days in Atherton at $7+M multiple offers @ $2M, multiple offers @ $3M. As many as five to 13 offers per property.
San Francisco—The Van Ness office tells us the market above 1.5 million continues at a remarkable pace – 8 for this week! For the Market St. office, lots of offers are being written this week, some have ratified, some are still being negotiated, & some were lost out on in multiple offers. Agents sense that the mood of the buyer out now is very positive & very motivated. A Previews property listed at 3.4 million was sold in the first 7 days on the market. Our Lombard office reports that solo offers this week dominated by multiple counter-offers, a number of all cash deals, and some quick deals right on the heels of a price reduction. Again, under $700k a hotter market. As for the Lakeside office, they have stated that the desired impact of the stimulus package seems to be happening. Homes under 600,000 are highly sought after by multiple parties while the higher end properties are still sitting on the market a bit longer & then negotiated down.
Santa Cruz County—The local market continues to plug along; Agents are busy writing offers, trying to get short sales accepted/approved, in general working harder than they ever have. It seems some of the uncertainty is going away and consumer confidence with real estate is on the rise. People are realizing that the window of opportunity is closing, with a lack of inventory, very competitive interest rates and great prices.
Silicon Valley—Our San Jose Almaden office reports that 11 of 13 sales were distressed this week. Currently Santa Clara Count is experiencing over 50% of its inventory pending. Of course it is all the lowest end of the marketplace. Blossom Valley is above 50%, Almaden has climbed to 30% from 12% in just two short months. One REO last received 25 offers and went 25% above asking price. San Jose Main reports a great week for sales and activity. Excellent open house traffic in all price ranges. Buyer motivation is heating up. Low to mid priced homes seem to be getting the most activity. The San Jose Willow Glen office reported we have slowed up a bit and it may be due to graduations and a holiday weekend. Though floor calls and open houses keep us quite busy.
South County—We have 187 active San Benito County single family listings. This week we had 15 closed single family transactions, 10 of which were REOs. We had 20 new active listings this week for Hollister. REO listings have picked up a bit this week. Open house activity is not very good probably due to heat this past weekend. Short sale activity is still strong. In Morgan Hill, the market has not changed from last week. Open houses are well attended, inventory of well priced (entry level) homes is decreasing while demand remains high. Agents are busy writing purchase contracts, but multiple offers are very common and prices are being bided upward. Homes that are selling beyond the asking price (due to multiple offers) are, however, facing appraisal issues.
As we head into this long three day weekend I’d like to wish everyone a very happy and safe Memorial Day weekend with family and friends. It's cold in the City and we’re trying to find the sun, but hopefully many of you will enjoy BBQs, sunshine, maybe a little swimming and (hopefully) a home sale or two.
Until next week,
Make it a great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Wednesday, May 27, 2009
Weekly Market Watch
Recent Housing Stats Are Showing Encouraging Signs for Market
This week I thought I’d share some positive stories that continue to permeate not only our local news but on a national level as well.
The National Association of Realtors® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.
A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.
The pending home sales report added evidence that sales have reached a bottom. “That's critical because once sales bottom, it's only a matter of time before you work off excess inventories. That's the key to stabilization in the financial system and the economy at large. We're closer to that than people thought just a few months ago.”
-- Michael Darda, chief economist at MKM Partners in Greenwich, Conn., “Sales and Construction Data Lift Hopes for Housing,” by Lucia Mutikani, Reuters, May 4, 2009.
On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.
Ø Home sales in major markets around the country have shown dramatic gains in the past month.
Ø In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.
Ø In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months -- that's down from 12 months the previous March.
Ø Median house prices may be bottoming out. The California Association of Realtors® reports the median price of homes sold was up by 2.2% for the past month.”
-- “Real Estate Outlook: Sales Rising in Some Areas,” by Kenneth R. Harney, Realty Times, May 5, 2009.
Also interesting to note:
Ø The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “We are seeing a lot of activity across the nation. Of course we're in the spring market, but we've seen more buyers in the market now than at this same time last year.”
Ø “Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically," said Robert Abbott, co-owner and VP of a northern New Jersey brokerage. “More people are not only 'kicking the tires' but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down.”
-- “More Homes Get Multiple Offers; Downturn May be Nearing End,” by Julie Schmit, USA Today, May 6, 2009.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall.”
-- Julie Holt, owner of a title services company in Florida, “Is Now the Time for Some Home Buyers to Make a Deal?,” by Mark Koba, CNBC, April 28, 2009.
And with that news in tow, let’s take a look at this week in real estate:
East Bay—Berkeley reports that buyers are stepping forward to make offers, while others continue to have scary perceptions which keep them from offering. Job security is the biggest worry. Sellers are reluctant to reduce prices. No one knows what Cuomo's new appraisal regulations will mean to the market. It ought to be a big convincer to sellers to keep their list prices reasonable. Banks continue to look for all cash buyers. Danville reports that inventory in San Ramon and Dublin is under two months. We need inventory! Fremont reports this past week seemed to be a bit slower, maybe because of Mother's Day last weekend. The open homes are busy with people who are interested in buying, they just need a little encouragement. Oakland reports interest rates have come down for jumbo loans, so we are picking up listings in the upper end and they are selling. The market is really picking up and we are up over last year. The past week we have a very large percentage of multiple offers, mostly two offers on each property, one had nine in a very low price point. Still seeing appraisal issues that are new based on changing guidelines. Walnut Creek reports the low end of the price range is selling with multiple offers, driving up prices. In the mid range, the well priced, nice looking properties are selling with numerous counters back and forth between buyers/sellers. Upper end is not moving.
Monterey County—It's a quick-moving market to the east of us, Salinas south to Greenfield, and also Seaside, in our area, where the prices on the REOs combined with the low interest rates are motivating first-time buyers and, increasingly, local investors. Market is still sluggish in areas more our marketplace, like Carmel and Pebble Beach, where we are seeing increasing numbers of properties coming on as short sales or likely to be short sales by the time a buyer steps forward with an offer.
North Bay—Petaluma reports inventory continues to be light and the majority of the Agents have multiple buyers hovering over a limited number of listings. Most of the properties under $300,000 are getting double digit multiple offers. Santa Rosa reports that its REO specialist says there may be some light at the end of the tunnel as assignments are starting to trickle in. We still have lots of buyers and few properties to show them. Sebastopol notes a lack of new inventory continues to be the challenge. San Rafael reports there is an increase in listing and sales activity in properties that are not distressed (REOs and short sales) in all price points. We listed two properties over a million and have offers in on two properties over $1.5 million in San Rafael and Novato. Greenbrae office says they are seeing multiple offers for well-priced, well-presented homes in Greenbrae, Larkspur, and Corte Madera. This is in sharp contrast to just a few months ago when fears of the country’s financial crisis seemed overwhelming. Things seem to be easing up now as Buyers with good credit and a job are finding it not so difficult to get a loan –and at record low interest rates! The Southern Marin offices report the first week of April saw increases across the board in our Southern Marin offices. We saw $8 million worth of new sales and close to $5 million of closed escrows, by far the most we have seen all year. Many reports of multiple offers and even the $2 to $3 million is picking up in So. Marin.
Peninsula—The Burlingame office reported that Mother’s Day didn't slow down the open homes that were held open. There were an average of 20-25 groups through in most reports. Buyers were asking when offers were being presented and we haven't heard that in awhile. The Half Moon Bay office reports seeing more listing Agents/sellers increasing the sale side commission to attract more showings. Good attendance at open houses. The Menlo Park El Camino office reports a great week—sales from $9.8 million to $185,000 and a lot of them! Everyone seems a bit more positive. The price base is rising; high end sellers are realizing that their prices are just too high for the current marketplace and finally are seeing the light. We had one sale listed at $3.4 mil that had turned down offers of $4 million a few months ago—same story across the board. Redwood City reports lots of activity on open houses even on Mother's Day; 40 to 50 groups at a new San Carlos listings. We're seeing multiple offers on the low end REOs-the $800,000 - $1m range is attracting more interest but first must be perceived as a great value. Woodside reports we are beginning to see offers being made on our higher end properties; not coming together just yet but we have hop. Two that are currently in play have come down from their high listing price about 35%
San Francisco—The Lakeside office reports that the entry level market is hot right now; anything under $600,000. The Lombard office reports that after a fast start to May, we had a slow week. Possibly due to Mother's Day? After a flurry of multiple offers, back this week to multiple counter-offers (up to five and six). Hard negotiations. A fall out and frayed nerves over slow loan processes. Time for listing Agent and sellers to be a little more patient and accommodating. The Noriega office reports in the affordable price range $400,000-600,000, buyers are definitely off the fence, but good inventory in the price range extremely low and multiple offers are very common. The Van Ness office reports continued increase in sales activity, and is seeing activity at all price points. This week the office reported 36 ratified offers - Wow!
Santa Cruz County—Steady as we go. We are cautiously optimistic about the market activity. Like other areas with a high REO number, that inventory has been drying up thus creating multiple offers on those properties. There remains an expectation that more are coming, we have yet to see any new bank owned properties to list. Buyers are realizing that time is of the essence in terms of purchasing and many are taking advantage of the tax credit for first time buyers. Along with the lowest interest rates ever, activity is steady in the lower end also. Financing, appraisals, appraisal reviews, longer loan times in general, are the norm and creating stress on most of the transactions. Managing the client expectations whether it is a buyer or seller (or the other agent) from beginning to end is crucial.
Silicon Valley—Our San Jose Almaden office reports all 10 sales this last week were distressed properties; mostly REOs. Many REO listings are receiving 10-25 offers. Banks are jamming the list prices down in an effort to stimulate activity. And it is working. Those properties are often selling at 20% or more above asking price! The San Jose Willow Glen office reports we are a lot busier. Buyers seem to be a lot more comfortable in taking the step into home buying. Open houses are very busy with a lot of traffic as well. San Jose Main reports listings are slowing and sales increasing. Most multiple offer sales are occurring in the lower price range. Excellent weekend traffic reported at open houses both Saturday and Sunday. Saratoga reports our upper end continues to lag. On a positive note our sales under $1,500,000 were very strong last week. I'm hopeful this is a sign that buyers are comfortable that we've hit the bottom of the market.
South County—The Gilroy office reports open house activity was slow due to Mother's day weekend and the wonderful weather. Agents are now challenged with the lack of inventory. Most new listings are receiving multiple offers and selling over list price. Bank owned properties are still the majority of the market sales. The Hollister office reports active listings are down from last week. Sale pendings are up. The average DOM is 80. The average sales price is $300,000 up from last month. REO inventory is decreasing. Short sale listings are increasing. The Morgan Hill office reports that in South County an interesting phenomenon is occurring. The demand for "entry level" (well priced homes under $300,000) is far exceeding supply. This past month Agents have experienced multiple offers of these types of properties. In most cases these listings are selling over asking price with multiple offers. This is a very encouraging sign that, perhaps, prices are stabilizing.
In short, it seems buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in California history to purchase real estate. Now, if we could just get more listings. Do we sound like we are never satisfied? Oh well, what a difference a year makes! It’s an exciting time so let’s make good use of it. I am currently wrapping up meetings in Washington DC as an NAR Director, so next week I’ll write on some of the important legislation being proposed to complete the necessary steps for our housing recovery.
Until next week,
Make it great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
This week I thought I’d share some positive stories that continue to permeate not only our local news but on a national level as well.
The National Association of Realtors® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.
A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.
The pending home sales report added evidence that sales have reached a bottom. “That's critical because once sales bottom, it's only a matter of time before you work off excess inventories. That's the key to stabilization in the financial system and the economy at large. We're closer to that than people thought just a few months ago.”
-- Michael Darda, chief economist at MKM Partners in Greenwich, Conn., “Sales and Construction Data Lift Hopes for Housing,” by Lucia Mutikani, Reuters, May 4, 2009.
On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.
Ø Home sales in major markets around the country have shown dramatic gains in the past month.
Ø In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.
Ø In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months -- that's down from 12 months the previous March.
Ø Median house prices may be bottoming out. The California Association of Realtors® reports the median price of homes sold was up by 2.2% for the past month.”
-- “Real Estate Outlook: Sales Rising in Some Areas,” by Kenneth R. Harney, Realty Times, May 5, 2009.
Also interesting to note:
Ø The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “We are seeing a lot of activity across the nation. Of course we're in the spring market, but we've seen more buyers in the market now than at this same time last year.”
Ø “Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically," said Robert Abbott, co-owner and VP of a northern New Jersey brokerage. “More people are not only 'kicking the tires' but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down.”
-- “More Homes Get Multiple Offers; Downturn May be Nearing End,” by Julie Schmit, USA Today, May 6, 2009.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall.”
-- Julie Holt, owner of a title services company in Florida, “Is Now the Time for Some Home Buyers to Make a Deal?,” by Mark Koba, CNBC, April 28, 2009.
And with that news in tow, let’s take a look at this week in real estate:
East Bay—Berkeley reports that buyers are stepping forward to make offers, while others continue to have scary perceptions which keep them from offering. Job security is the biggest worry. Sellers are reluctant to reduce prices. No one knows what Cuomo's new appraisal regulations will mean to the market. It ought to be a big convincer to sellers to keep their list prices reasonable. Banks continue to look for all cash buyers. Danville reports that inventory in San Ramon and Dublin is under two months. We need inventory! Fremont reports this past week seemed to be a bit slower, maybe because of Mother's Day last weekend. The open homes are busy with people who are interested in buying, they just need a little encouragement. Oakland reports interest rates have come down for jumbo loans, so we are picking up listings in the upper end and they are selling. The market is really picking up and we are up over last year. The past week we have a very large percentage of multiple offers, mostly two offers on each property, one had nine in a very low price point. Still seeing appraisal issues that are new based on changing guidelines. Walnut Creek reports the low end of the price range is selling with multiple offers, driving up prices. In the mid range, the well priced, nice looking properties are selling with numerous counters back and forth between buyers/sellers. Upper end is not moving.
Monterey County—It's a quick-moving market to the east of us, Salinas south to Greenfield, and also Seaside, in our area, where the prices on the REOs combined with the low interest rates are motivating first-time buyers and, increasingly, local investors. Market is still sluggish in areas more our marketplace, like Carmel and Pebble Beach, where we are seeing increasing numbers of properties coming on as short sales or likely to be short sales by the time a buyer steps forward with an offer.
North Bay—Petaluma reports inventory continues to be light and the majority of the Agents have multiple buyers hovering over a limited number of listings. Most of the properties under $300,000 are getting double digit multiple offers. Santa Rosa reports that its REO specialist says there may be some light at the end of the tunnel as assignments are starting to trickle in. We still have lots of buyers and few properties to show them. Sebastopol notes a lack of new inventory continues to be the challenge. San Rafael reports there is an increase in listing and sales activity in properties that are not distressed (REOs and short sales) in all price points. We listed two properties over a million and have offers in on two properties over $1.5 million in San Rafael and Novato. Greenbrae office says they are seeing multiple offers for well-priced, well-presented homes in Greenbrae, Larkspur, and Corte Madera. This is in sharp contrast to just a few months ago when fears of the country’s financial crisis seemed overwhelming. Things seem to be easing up now as Buyers with good credit and a job are finding it not so difficult to get a loan –and at record low interest rates! The Southern Marin offices report the first week of April saw increases across the board in our Southern Marin offices. We saw $8 million worth of new sales and close to $5 million of closed escrows, by far the most we have seen all year. Many reports of multiple offers and even the $2 to $3 million is picking up in So. Marin.
Peninsula—The Burlingame office reported that Mother’s Day didn't slow down the open homes that were held open. There were an average of 20-25 groups through in most reports. Buyers were asking when offers were being presented and we haven't heard that in awhile. The Half Moon Bay office reports seeing more listing Agents/sellers increasing the sale side commission to attract more showings. Good attendance at open houses. The Menlo Park El Camino office reports a great week—sales from $9.8 million to $185,000 and a lot of them! Everyone seems a bit more positive. The price base is rising; high end sellers are realizing that their prices are just too high for the current marketplace and finally are seeing the light. We had one sale listed at $3.4 mil that had turned down offers of $4 million a few months ago—same story across the board. Redwood City reports lots of activity on open houses even on Mother's Day; 40 to 50 groups at a new San Carlos listings. We're seeing multiple offers on the low end REOs-the $800,000 - $1m range is attracting more interest but first must be perceived as a great value. Woodside reports we are beginning to see offers being made on our higher end properties; not coming together just yet but we have hop. Two that are currently in play have come down from their high listing price about 35%
San Francisco—The Lakeside office reports that the entry level market is hot right now; anything under $600,000. The Lombard office reports that after a fast start to May, we had a slow week. Possibly due to Mother's Day? After a flurry of multiple offers, back this week to multiple counter-offers (up to five and six). Hard negotiations. A fall out and frayed nerves over slow loan processes. Time for listing Agent and sellers to be a little more patient and accommodating. The Noriega office reports in the affordable price range $400,000-600,000, buyers are definitely off the fence, but good inventory in the price range extremely low and multiple offers are very common. The Van Ness office reports continued increase in sales activity, and is seeing activity at all price points. This week the office reported 36 ratified offers - Wow!
Santa Cruz County—Steady as we go. We are cautiously optimistic about the market activity. Like other areas with a high REO number, that inventory has been drying up thus creating multiple offers on those properties. There remains an expectation that more are coming, we have yet to see any new bank owned properties to list. Buyers are realizing that time is of the essence in terms of purchasing and many are taking advantage of the tax credit for first time buyers. Along with the lowest interest rates ever, activity is steady in the lower end also. Financing, appraisals, appraisal reviews, longer loan times in general, are the norm and creating stress on most of the transactions. Managing the client expectations whether it is a buyer or seller (or the other agent) from beginning to end is crucial.
Silicon Valley—Our San Jose Almaden office reports all 10 sales this last week were distressed properties; mostly REOs. Many REO listings are receiving 10-25 offers. Banks are jamming the list prices down in an effort to stimulate activity. And it is working. Those properties are often selling at 20% or more above asking price! The San Jose Willow Glen office reports we are a lot busier. Buyers seem to be a lot more comfortable in taking the step into home buying. Open houses are very busy with a lot of traffic as well. San Jose Main reports listings are slowing and sales increasing. Most multiple offer sales are occurring in the lower price range. Excellent weekend traffic reported at open houses both Saturday and Sunday. Saratoga reports our upper end continues to lag. On a positive note our sales under $1,500,000 were very strong last week. I'm hopeful this is a sign that buyers are comfortable that we've hit the bottom of the market.
South County—The Gilroy office reports open house activity was slow due to Mother's day weekend and the wonderful weather. Agents are now challenged with the lack of inventory. Most new listings are receiving multiple offers and selling over list price. Bank owned properties are still the majority of the market sales. The Hollister office reports active listings are down from last week. Sale pendings are up. The average DOM is 80. The average sales price is $300,000 up from last month. REO inventory is decreasing. Short sale listings are increasing. The Morgan Hill office reports that in South County an interesting phenomenon is occurring. The demand for "entry level" (well priced homes under $300,000) is far exceeding supply. This past month Agents have experienced multiple offers of these types of properties. In most cases these listings are selling over asking price with multiple offers. This is a very encouraging sign that, perhaps, prices are stabilizing.
In short, it seems buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in California history to purchase real estate. Now, if we could just get more listings. Do we sound like we are never satisfied? Oh well, what a difference a year makes! It’s an exciting time so let’s make good use of it. I am currently wrapping up meetings in Washington DC as an NAR Director, so next week I’ll write on some of the important legislation being proposed to complete the necessary steps for our housing recovery.
Until next week,
Make it great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
Stress Test Reveals More Work to Be Done By Banks- While Entry Level Local Real Estate Market Heats Up!
This week the results of the long-awaited Stress Test on US banks were released. What the government hoped to accomplish through this Stress Test was to determine how much capital the banking sector currently has, and what level they deem appropriate to withstand the recession. The result was that 10 of the nation’s 19 largest banks will need to raise a total of $74.6 billion in capital. The Stress Test revealed that banks like Goldman Sachs and J.P. Morgan seemed to be better positioned than Citigroup and Bank of America.
At this point, according to Kiplinger, “The stronger banks will actively do what they can to return any money borrowed from the government to get out from under restrictions on dividends and executive compensation. Their ability to sell common stock to the public is far better than their weaker counterparts, who may have to privately sell stock to investors or raise capital with so-called mandatory convertible preferred shares.”
According to industry analysts, it seems that until the banks get back on their feet, credit will continue to be tight. That leaves the Federal Reserve responsible for filling in the gaps with its own programs aimed at jump-starting lending.
On a brighter note, however, the real estate sector of our economy continues to show some positive signs. USA Today reported earlier this week that “More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.” It’s exactly what we’ve seen locally, the entry level home buyer market is fueling this recovery. We forecasted this, and now that multiple offers are the norm in the majority of our entry level markets, some frustrated buyers are scratching their heads and wondering what happened to the buyer’s market. We warned that things could turn on a dime, and it seems in many starter home markets, prices are already on the rise.
Here are some links to some interesting news stories from the week:
USA Today: More homes get multiple offers; downturn may be nearing end (http://www.usatoday.com/money/economy/housing/2009-05-05-foreclosure-home-sales_N.htm?loc=interstitialskip)
Business Week: Want to Sell Your Home? Lower Your Price (http://www.businessweek.com/lifestyle/content/may2009/bw2009055_075566.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis)
RISMedia: Relocation.com Survey Shows Consumers Moving Further Due to Economy (http://rismedia.com/2009-05-05/relocationcom-survey-shows-consumers-moving-further-due-to-economy/) – This is a good reminder to consumers on why they should choose an Agent who is affiliated with a large, global real estate company that has the breadth and influence to reach the largest pool of buyers.
NYTimes: Where Home Prices Crashed Early, Signs of a Recovery (http://www.nytimes.com/2009/05/05/business/economy/05turnaround.html?_r=2&hp)
Realty Times: Real Estate Outlook: Sales Rising in Some Areas (http://realtytimes.com/rtpages/20090505_realestateoutlook.htm)
Now, let’s take a look at this week in real estate:
East Bay—Castro Valley reports short sales continue to dominate the market. Listing inventory is so limited that properties are going pending as soon as they hit the market. One property went pending one day after listing. Many of our Agents are frustrated because they set appointments with buyers to view properties, but the properties are already in escrow. REOs are starting to reappear in the market. Fremont reports it seems that the market is starting to pick up and buyers are feeling more confident in the economy—they are starting to move forward, not just looking! Livermore notes the major part of our market are properties priced below $500,000. We continue to see multiple offers on almost all properties in this price range with the majority of the sales being REOs and short sales. Something noteworthy is that they had two sales in the office this past week in $800,000 range which has not happened in several months.
Monterey County—The market continues on with slowness in the higher prices ranges and multiple offers on the REOs in Seaside, Marina, Las Palmas in Salinas and South County, where you can now buy a 5-bedroom, 3-bath home for around $265,000. Seaside is the "hot" spot and has had 86 closings this year, with only 43 active properties at this point (10 of those in escrow), while Pebble Beach has had only 18 closings this year, with 106 active listings and only one of those pending.
North Bay—Greenbrae reports that Spring seems to have sprung in the million price range. We are seeing increased activity in all Marin cities. San Rafael notes that there is still a huge turn out of buyers at open houses in San Rafael and Novato at the lower end of the market. Southern Marin reports a great week as well. Agents were involved in several multiple offer presentations and won! The market is definitely picking up in Southern Marin. Santa Rosa reports that they are starting to really feel the effects of the shortage of REO inventory. Sales of non distressed properties have picked up. Short sale escrows have increased but no apparent increase in the percentage of short sales closing. The Sebastopol office reports multiple offers in all price ranges. A dearth of new REO properties is pushing short sale offers. We’re seeing that 10-15 offers are not uncommon.
Peninsula—The Burlingame office reports that the rainy weekend didn't dampen the open house attendance. Burlingame, Hillsborough and San Mateo opens were well attended. The Agents are reporting that many buyers are feeling that we are at the bottom and now is the time to buy. There is such a need for quality inventory in the $800,000 range as this is where so many of our clients are looking. Menlo Park Santa Cruz Avenue reports that open houses were packed over the weekend in all price ranges. There seems to be a ground swell of activity with Agents writing offers that will hopefully translate to transactions next week. Palo Alto reports some optimism and some movement in the area. As inventory builds, buyers have more selections. San Mateo had a good analogy about the market: Buyers seem to be “on your mark, get set…there just isn’t enough ‘go” yet but open houses are well attended.” It’s the indecision on the part of buyers that we’re still seeing in this market.
San Francisco—The Lombard office is reporting good traffic and sales activity in the $500,000-750,000 price range. They saw more multiple offers, winning and losing, this week than any time in the last year. But buyers above $1.5 million continue their reluctance to make a move. This will all come in due time. The Market Street office reports that this is the third week in a row that a property was brought on the market and sold with multiple offers in less than one week. The list price was $749,000. The other property that was in multiples had been on the market for 90 days when two offers came in on the same day. More offers are being written and open houses are well attended. The Noriega office reports two out of the three multiples were REOs, the one that was not is an Outer Sunset home listed for $539,000, original fixer, received 11 offers, 8 out of 11 were over asking. We’re expecting a flood of REO listings coming, starting mid-late June this year. Their BPO activities were way down in Feb/March, but it really picked up in April. If you have a “value minded” buyer on the sideline, get them ready, get them pre-approved and get your Agents ready to sell these REOs. The “sale" is a limited time offer only.
Santa Cruz County—With some positive news abounding in the news and some positive indicators in the market, it seems consumer confidence is beginning to come back (we are very cautiously optimistic). We are expecting another wave of REOs to come through within the next couple of months. The inventory in South County has for the most part dried up and there are multiple (multiple) offers on what is left of the REO properties. We are seeing prices increase in South County from three months ago. Overall throughout Santa Cruz County, inventory levels are way down and we have experienced multiple offers on many properties below $800,000.
Silicon Valley—San Jose Almaden reports distressed sales continue to dominate our market. 11 or the 13 sales are distressed. Almaden which had been slow is beginning to pick up nicely. Three properties sold in Almaden within two weeks of being listed last week from this office. San Jose Main reports activity and sales continue to be brisk in the price range of $550,000 down. Many multiple offers on $250,000 to $550,000 homes and condos. Sales are up but listings continue to lag. Saratoga notes we're still experiencing a slow upper end. We're seeing some multiple offers on REOs and well priced lower end properties.
South County—The Hollister office is reporting that last week in San Benito County we had 198 active single family listings and 140 pending transactions. This week we have 183 active single family listings and 200 pending transactions. The month of April reports 52 closed single family transactions for San Benito County. Multiple offers are still being seen on most REO properties. Last month the Morgan Hill office had incredible sales activity. Agents were very busy writing offers and getting them accepted. Response time for short sale and REO offers is much more acceptable. Interest rates continue to be attractive. Our goal is to keep up the momentum.
What do we do with this information? The responsible thing is to make sure everyone hears it. It’s one thing for me to talk about a recovering market but it’s another when even the most pessimistic analysts are doing the same. The stories above share the real story. All of our offices are reporting similar stories and as I visit our offices and talk with our Agents, I’m hearing the same scenario: the market is heating up. The window of opportunity has been open and it has been inviting buyers in for months. With the speed that buyers are responding today, it won’t be open long. I can assure you there will be people years from now who will say “Why didn’t I buy more real estate in 2009?”
Until next week-
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
This week the results of the long-awaited Stress Test on US banks were released. What the government hoped to accomplish through this Stress Test was to determine how much capital the banking sector currently has, and what level they deem appropriate to withstand the recession. The result was that 10 of the nation’s 19 largest banks will need to raise a total of $74.6 billion in capital. The Stress Test revealed that banks like Goldman Sachs and J.P. Morgan seemed to be better positioned than Citigroup and Bank of America.
At this point, according to Kiplinger, “The stronger banks will actively do what they can to return any money borrowed from the government to get out from under restrictions on dividends and executive compensation. Their ability to sell common stock to the public is far better than their weaker counterparts, who may have to privately sell stock to investors or raise capital with so-called mandatory convertible preferred shares.”
According to industry analysts, it seems that until the banks get back on their feet, credit will continue to be tight. That leaves the Federal Reserve responsible for filling in the gaps with its own programs aimed at jump-starting lending.
On a brighter note, however, the real estate sector of our economy continues to show some positive signs. USA Today reported earlier this week that “More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.” It’s exactly what we’ve seen locally, the entry level home buyer market is fueling this recovery. We forecasted this, and now that multiple offers are the norm in the majority of our entry level markets, some frustrated buyers are scratching their heads and wondering what happened to the buyer’s market. We warned that things could turn on a dime, and it seems in many starter home markets, prices are already on the rise.
Here are some links to some interesting news stories from the week:
USA Today: More homes get multiple offers; downturn may be nearing end (http://www.usatoday.com/money/economy/housing/2009-05-05-foreclosure-home-sales_N.htm?loc=interstitialskip)
Business Week: Want to Sell Your Home? Lower Your Price (http://www.businessweek.com/lifestyle/content/may2009/bw2009055_075566.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis)
RISMedia: Relocation.com Survey Shows Consumers Moving Further Due to Economy (http://rismedia.com/2009-05-05/relocationcom-survey-shows-consumers-moving-further-due-to-economy/) – This is a good reminder to consumers on why they should choose an Agent who is affiliated with a large, global real estate company that has the breadth and influence to reach the largest pool of buyers.
NYTimes: Where Home Prices Crashed Early, Signs of a Recovery (http://www.nytimes.com/2009/05/05/business/economy/05turnaround.html?_r=2&hp)
Realty Times: Real Estate Outlook: Sales Rising in Some Areas (http://realtytimes.com/rtpages/20090505_realestateoutlook.htm)
Now, let’s take a look at this week in real estate:
East Bay—Castro Valley reports short sales continue to dominate the market. Listing inventory is so limited that properties are going pending as soon as they hit the market. One property went pending one day after listing. Many of our Agents are frustrated because they set appointments with buyers to view properties, but the properties are already in escrow. REOs are starting to reappear in the market. Fremont reports it seems that the market is starting to pick up and buyers are feeling more confident in the economy—they are starting to move forward, not just looking! Livermore notes the major part of our market are properties priced below $500,000. We continue to see multiple offers on almost all properties in this price range with the majority of the sales being REOs and short sales. Something noteworthy is that they had two sales in the office this past week in $800,000 range which has not happened in several months.
Monterey County—The market continues on with slowness in the higher prices ranges and multiple offers on the REOs in Seaside, Marina, Las Palmas in Salinas and South County, where you can now buy a 5-bedroom, 3-bath home for around $265,000. Seaside is the "hot" spot and has had 86 closings this year, with only 43 active properties at this point (10 of those in escrow), while Pebble Beach has had only 18 closings this year, with 106 active listings and only one of those pending.
North Bay—Greenbrae reports that Spring seems to have sprung in the million price range. We are seeing increased activity in all Marin cities. San Rafael notes that there is still a huge turn out of buyers at open houses in San Rafael and Novato at the lower end of the market. Southern Marin reports a great week as well. Agents were involved in several multiple offer presentations and won! The market is definitely picking up in Southern Marin. Santa Rosa reports that they are starting to really feel the effects of the shortage of REO inventory. Sales of non distressed properties have picked up. Short sale escrows have increased but no apparent increase in the percentage of short sales closing. The Sebastopol office reports multiple offers in all price ranges. A dearth of new REO properties is pushing short sale offers. We’re seeing that 10-15 offers are not uncommon.
Peninsula—The Burlingame office reports that the rainy weekend didn't dampen the open house attendance. Burlingame, Hillsborough and San Mateo opens were well attended. The Agents are reporting that many buyers are feeling that we are at the bottom and now is the time to buy. There is such a need for quality inventory in the $800,000 range as this is where so many of our clients are looking. Menlo Park Santa Cruz Avenue reports that open houses were packed over the weekend in all price ranges. There seems to be a ground swell of activity with Agents writing offers that will hopefully translate to transactions next week. Palo Alto reports some optimism and some movement in the area. As inventory builds, buyers have more selections. San Mateo had a good analogy about the market: Buyers seem to be “on your mark, get set…there just isn’t enough ‘go” yet but open houses are well attended.” It’s the indecision on the part of buyers that we’re still seeing in this market.
San Francisco—The Lombard office is reporting good traffic and sales activity in the $500,000-750,000 price range. They saw more multiple offers, winning and losing, this week than any time in the last year. But buyers above $1.5 million continue their reluctance to make a move. This will all come in due time. The Market Street office reports that this is the third week in a row that a property was brought on the market and sold with multiple offers in less than one week. The list price was $749,000. The other property that was in multiples had been on the market for 90 days when two offers came in on the same day. More offers are being written and open houses are well attended. The Noriega office reports two out of the three multiples were REOs, the one that was not is an Outer Sunset home listed for $539,000, original fixer, received 11 offers, 8 out of 11 were over asking. We’re expecting a flood of REO listings coming, starting mid-late June this year. Their BPO activities were way down in Feb/March, but it really picked up in April. If you have a “value minded” buyer on the sideline, get them ready, get them pre-approved and get your Agents ready to sell these REOs. The “sale" is a limited time offer only.
Santa Cruz County—With some positive news abounding in the news and some positive indicators in the market, it seems consumer confidence is beginning to come back (we are very cautiously optimistic). We are expecting another wave of REOs to come through within the next couple of months. The inventory in South County has for the most part dried up and there are multiple (multiple) offers on what is left of the REO properties. We are seeing prices increase in South County from three months ago. Overall throughout Santa Cruz County, inventory levels are way down and we have experienced multiple offers on many properties below $800,000.
Silicon Valley—San Jose Almaden reports distressed sales continue to dominate our market. 11 or the 13 sales are distressed. Almaden which had been slow is beginning to pick up nicely. Three properties sold in Almaden within two weeks of being listed last week from this office. San Jose Main reports activity and sales continue to be brisk in the price range of $550,000 down. Many multiple offers on $250,000 to $550,000 homes and condos. Sales are up but listings continue to lag. Saratoga notes we're still experiencing a slow upper end. We're seeing some multiple offers on REOs and well priced lower end properties.
South County—The Hollister office is reporting that last week in San Benito County we had 198 active single family listings and 140 pending transactions. This week we have 183 active single family listings and 200 pending transactions. The month of April reports 52 closed single family transactions for San Benito County. Multiple offers are still being seen on most REO properties. Last month the Morgan Hill office had incredible sales activity. Agents were very busy writing offers and getting them accepted. Response time for short sale and REO offers is much more acceptable. Interest rates continue to be attractive. Our goal is to keep up the momentum.
What do we do with this information? The responsible thing is to make sure everyone hears it. It’s one thing for me to talk about a recovering market but it’s another when even the most pessimistic analysts are doing the same. The stories above share the real story. All of our offices are reporting similar stories and as I visit our offices and talk with our Agents, I’m hearing the same scenario: the market is heating up. The window of opportunity has been open and it has been inviting buyers in for months. With the speed that buyers are responding today, it won’t be open long. I can assure you there will be people years from now who will say “Why didn’t I buy more real estate in 2009?”
Until next week-
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
Favorable signs in many markets
Last week I reported on positive indicators in the first-time homebuyer market. New mortgage applications for home purchases and refinances were up 77 percent from the same week in April 2008. Mortgage rates continue to average well below 5 percent – 4.7 percent last week on average for 30-year fixed rate loans and 4.5 percent for 15 year loans. Rates like these are a major factor pushing applications. Nearly 600,000 home buyers have already claimed either the $7,500 tax credit from last year or the $8,000 credit for this year, according to IRS data cited by the National Association of Home Builders.
Statewide, CAR reported improvement in both sales numbers and median price. March existing home sales were up 64% from prior year, and median price had the first month-over-month increase since August of 2007. California’s inventory of unsold homes also fell in March to five months, down from 12.2 months in March 2008, making March ‘09 a three year low for existing inventory.
Locally, I want share what’s going on in the East Bay (Alameda and Contra Costa Counties) which has been one of the markets hardest hit by foreclosures and price declines. We are starting to see some real positive news in this market. Specifically (as displayed in the graph below), when comparing accepted offers to new listings, we are currently at 112% which is a 69% increase year over year and an 86% increase from this time two years ago. The graph tells the story:
The positive trend in the East Bay numbers above are impacted greatly by the brisk sale of distressed properties; REO properties are selling at a faster pace than new bank-owned properties are getting released. Good news from our local branch offices in the East Bay is that entry level priced homes which are not bank-owned and not distress sales are also selling faster than new listings are being brought to the market. This is also what we are seeing in our Sonoma County offices and our Santa Clara County offices - the entry level is really moving.
With regards to the luxury market, we’ve had a flurry of high end sales in our San Francisco offices, so I took a look at some recent luxury market statistics. As per the San Francisco MLS, April 2009 was the third consecutive month of increased sales activity over $2 million. With 29 San Francisco $2M+ pending sales in the month, April’s high end activity was more than twice that of March 2009. The same trend occurred in San Mateo and Santa Clara Counties in the $2M+ market, although not as dramatic month-over-month increases.
The note of caution here is that while the numbers of sales are increasing in the high end – we still have a 21 month’s supply of inventory in San Mateo and Santa Clara Counties in the $2M+ market, which is nearly triple the 7.6 month’s supply we had in April ‘08. And San Francisco currently has 19 month’s supply, versus 5.5 a year ago; also nearly triple the MSI for the $2M+ market. Agents in all three counties say that it is the really competitively priced new listings, and the dramatic price reductions of older listings which are causing our recent sales activity in the high end, with a lot of other inventory just sitting.
Here is what our offices reported this week:
East Bay—Berkeley reports they had a slow week two weeks ago and things really picked up this last week. Lots of visitors to open houses, 20 - 45 groups at many of our properties. Getting some good price reductions on some listings that have been out there for awhile. Agents are beginning to have that pricing conversation early on with sellers to not get caught chasing the market downward. Castro Valley reports that short sales continue to dominate the market. The $300K price range buyers have incredible competition. Listing inventory is the lowest that it has been in years. New listings in the market this week are 47 SFR vs. the 200 or so we have seen one year ago. Multiple offers are starting to surface in the $500,000 market. Danville reports the spring market is gaining steam. Inventory in some of our market area is less than two months and the number of new pending sales in the past week shot up 50%. In the Tri-Valley in the past three weeks we have seen a very positive shift in the market. Overall listing inventory declined 6.25% in Livermore; declined 4.8% in Pleasanton; and declined 9.2% in Dublin. Walnut Creek is begging for more inventory.
Monterey County—The market continues on at a steady pace as far as new listings and escrows. There seem to be more buyers on the prowl for good buys these days. Some are voicing the opinion that we may be about to turn the corner, so this could be best time to buy, what with good selection of inventory, motivated sellers and very low interest rates.
North Bay—Greenbrae reports they’re seeing multiple offers in Greenbrae, Larkspur and San Rafael. Houses that come on with a value price and offering the elements a buyer is looking for are winning the real estate game. Southern Marin reports a busy week with five new listings, three pendings, and many more closings scheduled for this week and next. Open house reports are good, continuing to see more qualified buyers out and about. Listing Agents report getting more activity (requests for showings, disclosure packets, etc.) from seemingly real buyers. Most interesting is the below $1 million price range in Mill Valley, Tiburon and Sausalito. Units sold 2009 YTD are actually higher vs. same time a year ago. Santa Rosa reports open houses with 30 groups or more. An increase in escrows opened on non-distressed properties and a few more opens in the higher price range. Sebastopol reports six offers on a Sebastopol property listed at $629,000. There were four offers on one listed at $649,000 and five on a Santa Rosa listing listed at $250,000. We’re seeing new life in the step up market.
Peninsula—Our Burlingame office reports a Baywood San Mateo open—first time on the market in 40 years—had over 125 visitors. Other opens were well-attended across the board. Agents are reporting more serious buyers coming through and the activity in the office and conference rooms would indicate a much more positive direction. The Menlo Park El Camino office reports multiple offers on some properties and yet others still sit. We have a 12 month supply of inventory in Menlo Park vs. five months this time last year. We have 29 months in Woodside versus eight months last year. The oversupply is keeping downward pressure on prices. Redwood City reports that open houses were very well attended. Buyers are beginning to see the value of making offers in this market. Interestingly, both multiple offers were on Previews (luxury) properties. San Mateo reports active listings are up 12%, pending sales are up 7% and solds are down 43%. With active listings about even and pending sales on the rise, it would appear that we are building a solid base for a real estate recovery.
San Francisco—Our Lakeside office reports that sellers and their Agents are seeing the benefit of a well-priced home and buyers are starting to sense the urgency of buying now. The Lombard office reports open traffic was slower this week. They did have two multiple offer situations with one REO in the $400,000 range and a Victorian fixer upper with great potential. The Market Street office reports lots of traffic at open houses. Some Agents felt a different mood about the people attending. They felt more of a sense of urgency on the buyer’s part in looking for homes. A single family in District 10 had its first open on Sunday and went into contract on Tuesday with multiple offers. The Noriega office reports activity in the $500,000 to $700,000 range is very robust. The problem is that good inventory in this price range is very hard to come by and therefore multiple offers are common.
Santa Cruz County—Activity has definitely picked and there continues to be a multitude of buyers out there. There is still some reluctance to move forward with some buyers and the price point between $800,000 to $1.5 million continues to have a lack of buyers. Inventory levels are low and seem to have leveled off; there are currently about 800+ homes currently on the market.
Silicon Valley—The Cupertino De Anza office reports this is the highest number of pending sales for a single week in the last several years in Cupertino. The Cupertino Stevens Creek office concurs noting that it seems like things are picking up; the last two weeks we've seen a lot of action. Our San Jose Almaden office reports that 16 out of this week’s 21 sales were distressed properties. The San Jose Main office reports buyer interest continues to be brisk and we’re seeing excellent open house traffic in the $250,000 to $600,000 price range. Increasing interest in upper priced properties mostly due to lower interest rates. Listing inventory continues to decrease which is producing more multiple offers on available properties. Our Willow Glen office reports that the office is busy and buyers are coming out of the woodwork. We don't want to jinx anything, but things are looking up in Silicon Valley!
South County—Hollister reports that short sales are becoming more noticeable. Multiple offers on most REO sales. Open house activity is on the rise. The Morgan Hill office reports that the big question (for Agents and for clients) is, "Are we there yet?" It seems that everyone is wondering if we have, in fact, reached bottom—in terms of price declines. In South County the inventory of "very affordable" homes is shrinking quickly. Investors and first timers have swooped in and bought most of them. It would seem that prices are stabilizing (at least at the lower-end).
All in all, it seems it was a great week in SF Bay Real Estate – good activity in all price points.
Next week I will release our May Reality Check message and I will focus it on why today’s market brings such prime opportunities for savvy investors. I hope you will check it out.
Have a wonderful week-
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Last week I reported on positive indicators in the first-time homebuyer market. New mortgage applications for home purchases and refinances were up 77 percent from the same week in April 2008. Mortgage rates continue to average well below 5 percent – 4.7 percent last week on average for 30-year fixed rate loans and 4.5 percent for 15 year loans. Rates like these are a major factor pushing applications. Nearly 600,000 home buyers have already claimed either the $7,500 tax credit from last year or the $8,000 credit for this year, according to IRS data cited by the National Association of Home Builders.
Statewide, CAR reported improvement in both sales numbers and median price. March existing home sales were up 64% from prior year, and median price had the first month-over-month increase since August of 2007. California’s inventory of unsold homes also fell in March to five months, down from 12.2 months in March 2008, making March ‘09 a three year low for existing inventory.
Locally, I want share what’s going on in the East Bay (Alameda and Contra Costa Counties) which has been one of the markets hardest hit by foreclosures and price declines. We are starting to see some real positive news in this market. Specifically (as displayed in the graph below), when comparing accepted offers to new listings, we are currently at 112% which is a 69% increase year over year and an 86% increase from this time two years ago. The graph tells the story:
The positive trend in the East Bay numbers above are impacted greatly by the brisk sale of distressed properties; REO properties are selling at a faster pace than new bank-owned properties are getting released. Good news from our local branch offices in the East Bay is that entry level priced homes which are not bank-owned and not distress sales are also selling faster than new listings are being brought to the market. This is also what we are seeing in our Sonoma County offices and our Santa Clara County offices - the entry level is really moving.
With regards to the luxury market, we’ve had a flurry of high end sales in our San Francisco offices, so I took a look at some recent luxury market statistics. As per the San Francisco MLS, April 2009 was the third consecutive month of increased sales activity over $2 million. With 29 San Francisco $2M+ pending sales in the month, April’s high end activity was more than twice that of March 2009. The same trend occurred in San Mateo and Santa Clara Counties in the $2M+ market, although not as dramatic month-over-month increases.
The note of caution here is that while the numbers of sales are increasing in the high end – we still have a 21 month’s supply of inventory in San Mateo and Santa Clara Counties in the $2M+ market, which is nearly triple the 7.6 month’s supply we had in April ‘08. And San Francisco currently has 19 month’s supply, versus 5.5 a year ago; also nearly triple the MSI for the $2M+ market. Agents in all three counties say that it is the really competitively priced new listings, and the dramatic price reductions of older listings which are causing our recent sales activity in the high end, with a lot of other inventory just sitting.
Here is what our offices reported this week:
East Bay—Berkeley reports they had a slow week two weeks ago and things really picked up this last week. Lots of visitors to open houses, 20 - 45 groups at many of our properties. Getting some good price reductions on some listings that have been out there for awhile. Agents are beginning to have that pricing conversation early on with sellers to not get caught chasing the market downward. Castro Valley reports that short sales continue to dominate the market. The $300K price range buyers have incredible competition. Listing inventory is the lowest that it has been in years. New listings in the market this week are 47 SFR vs. the 200 or so we have seen one year ago. Multiple offers are starting to surface in the $500,000 market. Danville reports the spring market is gaining steam. Inventory in some of our market area is less than two months and the number of new pending sales in the past week shot up 50%. In the Tri-Valley in the past three weeks we have seen a very positive shift in the market. Overall listing inventory declined 6.25% in Livermore; declined 4.8% in Pleasanton; and declined 9.2% in Dublin. Walnut Creek is begging for more inventory.
Monterey County—The market continues on at a steady pace as far as new listings and escrows. There seem to be more buyers on the prowl for good buys these days. Some are voicing the opinion that we may be about to turn the corner, so this could be best time to buy, what with good selection of inventory, motivated sellers and very low interest rates.
North Bay—Greenbrae reports they’re seeing multiple offers in Greenbrae, Larkspur and San Rafael. Houses that come on with a value price and offering the elements a buyer is looking for are winning the real estate game. Southern Marin reports a busy week with five new listings, three pendings, and many more closings scheduled for this week and next. Open house reports are good, continuing to see more qualified buyers out and about. Listing Agents report getting more activity (requests for showings, disclosure packets, etc.) from seemingly real buyers. Most interesting is the below $1 million price range in Mill Valley, Tiburon and Sausalito. Units sold 2009 YTD are actually higher vs. same time a year ago. Santa Rosa reports open houses with 30 groups or more. An increase in escrows opened on non-distressed properties and a few more opens in the higher price range. Sebastopol reports six offers on a Sebastopol property listed at $629,000. There were four offers on one listed at $649,000 and five on a Santa Rosa listing listed at $250,000. We’re seeing new life in the step up market.
Peninsula—Our Burlingame office reports a Baywood San Mateo open—first time on the market in 40 years—had over 125 visitors. Other opens were well-attended across the board. Agents are reporting more serious buyers coming through and the activity in the office and conference rooms would indicate a much more positive direction. The Menlo Park El Camino office reports multiple offers on some properties and yet others still sit. We have a 12 month supply of inventory in Menlo Park vs. five months this time last year. We have 29 months in Woodside versus eight months last year. The oversupply is keeping downward pressure on prices. Redwood City reports that open houses were very well attended. Buyers are beginning to see the value of making offers in this market. Interestingly, both multiple offers were on Previews (luxury) properties. San Mateo reports active listings are up 12%, pending sales are up 7% and solds are down 43%. With active listings about even and pending sales on the rise, it would appear that we are building a solid base for a real estate recovery.
San Francisco—Our Lakeside office reports that sellers and their Agents are seeing the benefit of a well-priced home and buyers are starting to sense the urgency of buying now. The Lombard office reports open traffic was slower this week. They did have two multiple offer situations with one REO in the $400,000 range and a Victorian fixer upper with great potential. The Market Street office reports lots of traffic at open houses. Some Agents felt a different mood about the people attending. They felt more of a sense of urgency on the buyer’s part in looking for homes. A single family in District 10 had its first open on Sunday and went into contract on Tuesday with multiple offers. The Noriega office reports activity in the $500,000 to $700,000 range is very robust. The problem is that good inventory in this price range is very hard to come by and therefore multiple offers are common.
Santa Cruz County—Activity has definitely picked and there continues to be a multitude of buyers out there. There is still some reluctance to move forward with some buyers and the price point between $800,000 to $1.5 million continues to have a lack of buyers. Inventory levels are low and seem to have leveled off; there are currently about 800+ homes currently on the market.
Silicon Valley—The Cupertino De Anza office reports this is the highest number of pending sales for a single week in the last several years in Cupertino. The Cupertino Stevens Creek office concurs noting that it seems like things are picking up; the last two weeks we've seen a lot of action. Our San Jose Almaden office reports that 16 out of this week’s 21 sales were distressed properties. The San Jose Main office reports buyer interest continues to be brisk and we’re seeing excellent open house traffic in the $250,000 to $600,000 price range. Increasing interest in upper priced properties mostly due to lower interest rates. Listing inventory continues to decrease which is producing more multiple offers on available properties. Our Willow Glen office reports that the office is busy and buyers are coming out of the woodwork. We don't want to jinx anything, but things are looking up in Silicon Valley!
South County—Hollister reports that short sales are becoming more noticeable. Multiple offers on most REO sales. Open house activity is on the rise. The Morgan Hill office reports that the big question (for Agents and for clients) is, "Are we there yet?" It seems that everyone is wondering if we have, in fact, reached bottom—in terms of price declines. In South County the inventory of "very affordable" homes is shrinking quickly. Investors and first timers have swooped in and bought most of them. It would seem that prices are stabilizing (at least at the lower-end).
All in all, it seems it was a great week in SF Bay Real Estate – good activity in all price points.
Next week I will release our May Reality Check message and I will focus it on why today’s market brings such prime opportunities for savvy investors. I hope you will check it out.
Have a wonderful week-
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
First Time Home Buyers Are Fueling the Come Back
It’s finally happening. In my August 2008 Reality Check message I discussed our market’s need for the revival of the first-time home buyer. Because as we know, first time home buyers are a critical force that will help jump start our market rebound, creating that important domino effect that will ultimately benefit all price points. When first time home buyers purchase entry level homes, that allows the entry-level homeowners to sell and move-up to a mid-level, move-up market. By purchasing those homes, the move-up market is able to sell and ultimately purchase homes in the luxury arena. It’s a much-needed domino effect that will have significance in our market’s rebound. The numbers released over the last two weeks are showing that the process has already begun.
First, let’s look at NAR’s release this week of its March existing home sales. Now of course some media did use the nationwide month-over-month decrease in sales as an opportunity to take a negative spin but there were a lot of positives in this news. First, nationally, prices rose from February to March by 4.2 percent which is much higher than the typical 1.8 percent seasonal increase between those two months.
Second, housing inventory at the end of March fell 1.6 percent to 3.74 million existing homes available for sale, representing a 9.8 month supply at the current sales pace. This is important to note because March is frequently a strong listing month and more often than not, inventory grows in March.
In the West, existing home sales declined 4.2 percent to an annual rate of 1.13 million in March; however, of great significance is the fact that this number is 18.9 percent higher than last year at this time.
The fact is, the share of lower priced home sales have trended up, indicating a return of many first-time buyers. Sales in the upper price ranges remain stalled, but the last two weeks have produced more $1M+ pending sales than we’ve seen in a while as Buyers are taking advantage of two things in the upper end. One is the luxury of choice. Buyers can actually shop and compare. When they find what they want at an attractive list price- they are making offers. The second fact is that although Jumbo loans still have practically no secondary market (which increases competition and lowers interest rates), the Jumbo rate appears to be currently within one percent of the conforming; and buyers are seeing that it’s still a very attractive rate. For example, Princeton Capital’s rate sheet on April 20 showed a 5/1 Conforming at 4.625 –I point, and the 5/1 Jumbo at 5.3% - 1 point. FICO scores and down payment are of course key, but the market is beginning to get used to the new requirements.
Another interesting note, the Mortgage Bankers Association this week released its Weekly Mortgage Applications Survey for the week ending April 17. The index showed an increase of 5.3 percent from the previous week and that was a 76.9 percent increase compared with the same week a year ago. Yes, a 76.9% increase in mortgage applications, that’s not a typo.
While there is some criticism of certain steps our administration has taken to revive our economy, it seems some of the early work like the first time home buyer tax credit is effective. Earlier this week Inman News reported that the preliminary numbers from the IRS suggest 1.4 million taxpayers will claim the federal first-time home buyer tax credit on their 2008 tax returns, meaning the program is likely to meet or exceed the 2 million target set by lawmakers before it ends November 30, 2009.
Finally and I think this is probably most notable, the Wall Street Journal reported this week that prices have fallen back into line with what the typical household can afford to pay in most of the U.S. The report showed that home prices are dubbed “fairly” valued in 202 of the 330 markets studied. That means the average price level is within a band 14% above or below the historical norm. Twenty-one markets are “overvalued” or between 14% and 34% above the norm. And 106 markets are considered “undervalued” or more than 14% below the norm. Take a look at this graph which showcases where we were in the early part of the decade as compared to today:
I know it’s difficult to view the drop in property value a positive thing. But the fact is that though the ride was nice in the big real estate boom of the early 2000s, we couldn’t sustain those types of record appreciation levels without eliminating certain consumer niches, including first time home buyers. Now that levels are back within range, the first time home buyers are once again able to reenter the market which is why we are seeing such a strong surge in sales in that level.
Locally, we had further news this week that symbolized the first-time buyer pick-up. Rather than summarize them, I’ll simply share the links for your own reading:
http://www.dqnews.com/Articles/2009/News/California/Bay-Area/RRBay090416.aspx
http://www.dqnews.com/Articles/2009/News/California/RRCA090416.aspx
It’s just a matter of time before we weed through the remaining banked owned inventory and we should begin to see prices stabilize. Once we see that, the remaining areas of the market should begin to see an upswing, too.
With that said, let’s take a look at our week in real estate:
East Bay—Berkeley reports that open houses were very busy with up to 70 groups. Even properties holding their third open had a steady stream of visitors. Some buyers are still holding back, waiting for that mysterious "bottom,” or building in a bottom by offering 10% less. Castro Valley reports that in its micromarket, listings at the entry level present the same challenges we have been experiencing for weeks. Lots of competition for dwindling inventory. Agents with buyers in that market have learned the ropes, to bid as high as possible over asking, and to be patient. Fremont reports that it seems that people are still looking for a great deal. This week things have been slower, but it looks like buyers are starting to move as is seen in the multiple offers we have had this week. Oakland reports they are very busy and sales are strong however listing inventory is shrinking and not as many new listings are coming on. Some sales are taking longer to close and they are now seeing some appraisal issues because of new lender guidelines.
Monterey County—Had an exceptionally busy Easter week and last week, with many offers being written, and although 30 went into escrow, many didn’t come together due to seller and buyer being too far apart in price. Also have had a greater number than usual of properties in escrow falling out due to various problems encountered during escrow that were unable to be resolved. Buyers are being very cautious and picky!
North Bay—Greenbrae reports that a buyer’s Agent participated in multiple offers for a property in Larkspur that went at the least $200,000 over with five offers. The asking price was $1.2 million. A listing Agent in Greenbrae received four offers on a $1.3 million property in Greenbrae. There are signs of life plus buyers are out buying in Marin. As hot a week as Greenbrae had, Southern Marin wasn’t quite as warm. The office is reporting a slower week in sales though it was quick to note that it was expected during Spring break. Agents have been involved in many multiple offer situations on short sales and foreclosures. Properties might have five or six offers, with none at or above list price. Sebastopol shares 30-50 buyers were at two new listings in Sebastopol. They need more low end inventory, however, as that is what the buyers are looking for. Santa Rosa notes that Spring has arrived with heavy open house traffic, multiple offers and a large increase in distressed property open escrows. Agents are reporting as much as 60 groups through open homes and Agents are picking up buyers. Floor call leads are picking up as well.
Peninsula—Burlingame reports that the heat was a definite factor on open house attendance. In some areas it made for lighter than usual traffic and in others, turnout was excellent. They are definitely seeing a change in buyer attitude and confident that now might be the time to get serious about buying. Menlo Park El Camino reports a very busy week. Activity is the best it has been for about eight months. Lots of stealth activity, too, with sellers selling due to duress and wanting to be under the radar. Palo Alto reports that things appear to be more optimistic. There is a lot of attendance at open houses including upwards of over 100 people in price ranges of $1.2-$2.2 million in the prime locations of Palo Alto. San Mateo states that if a property is in good condition and is priced well, you are “gold.” Inventory is up 22% over 2008, pending sales are even with 2008 and solds are down 57% over 2008. Open houses are well attended. Lenders are still difficult in conforming and impossible in nonconforming.
San Francisco—The Lakeside office reports that buyers are finally pulling the trigger and writing offers. Lombard reports that inventory is steady or growing slightly. They’ve had good open activity at all levels. One home went slightly over in the $900,000 range; one condo took an extremely low offer in the $1.5 million range. FHA fees, rules and roadmap require an education on everyone’s part. The Market Street office reports that on one of the ratified offers this week the same buyers wrote on it two weeks ago, the owner would not accept the offer because there were additional disclosure packets out and wanted to hit her “magic” number. Two weeks passed and no offers came in, the buyers rewrote the same offer and got the house. The Agents have found that reps at the new construction units are negotiating verbally and once negotiations are finalized you need to get your buyers in to sign ASAP. A deal was almost lost because the buyers took their time getting in to sign and another buyer was put in place. It cost our buyers more money to get the unit.
Santa Cruz County—Market activity has picked up in April and we should finish the month with approximately 45 new sales. They’ve also had several million dollars in lost sales primarily resulting from some aspect of the lending process whether it be an appraisal issue, last minute conditions, lenders pulling their commitment, or last minute borrower issues, job loss or "cold feet." They’ve had great response from the Agents and the lenders regarding the short sale packages and these have been received very well by all parties. Overall, they’re moving forward with optimism; managing client expectations throughout the process.
Silicon Valley—Cupertino DeAnza reports things seem to be more active with buyers ready to make the plunge. The Cupertino Stevens Creek office concurs noting that they’re starting to see an increase in sale pendings; buyers seem ready to make a deal. Los Gatos reports that the market is definitely heating up with good consumer confidence. Prices are holding; however, still seeing short sales. The San Jose Almaden office reported numerous first time buyer calls coming in. Seems like many are deciding NOW is the time to buy and are. Our Princeton Capital loan officer is working long and hard hours every day and we’ve noticed a surge in floor calls. Terrific prices in the low million ranges and even above are selling in Almaden. Recently a property that was listed for $6 million four years ago sold this year in less than 30 days for a little less than $4 million. But it sold! The San Jose Main office reports a very active week for both sales and Open House traffic. Listing inventory dropping mostly in the mid range to lower price range properties. We’re seeing increased buyer interest.
South County—Gilroy reports that inventory continues to decrease. Multiple offer situations are the norm. Hollister reports low inventory compared to last week. Multiple offers are still going strong on the REO listings. Summer weather is bringing people out to investigate open homes. Morgan Hill reports optimism is the key word in South County. Though our sales continue to be dominated by REOs and Short Sales, there seems to be a sense that the worst is behind us. Agents are reporting good attendance at open houses and homes that are priced right and show well seem to be selling quickly. Good interest rates are also a significant factor—as are FHA loans.
Next week will bring some more interesting news. Check out this article that ran Monday in The Wall Street Journal: http://www.washingtonpost.com/wp-dyn/content/article/2009/04/19/AR2009041901875.html. Once we see the results of new home sales (existing home sales were already reported), we should have a better indicator of where we are. I’ll leave you with this excerpt from the The Wall Street Journal’s story:
“Whatever the March numbers say, there are good reasons to think that home sales will improve as the spring selling season gets underway. Anecdotal reports suggest that low mortgage rates and an $8,000 first-time home-buyer tax credit are coaxing buyers back into the market. And while foreclosures are set to rise as banks begin to move on delinquent homeowners, that actually could boost home sales as banks auction homes for whatever the market will bear.”
The market is without a doubt changing and we may finally be seeing the end of the great housing challenge of the 2000’s. I’m sure we are all up for that.
Until next week-
Have a great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
It’s finally happening. In my August 2008 Reality Check message I discussed our market’s need for the revival of the first-time home buyer. Because as we know, first time home buyers are a critical force that will help jump start our market rebound, creating that important domino effect that will ultimately benefit all price points. When first time home buyers purchase entry level homes, that allows the entry-level homeowners to sell and move-up to a mid-level, move-up market. By purchasing those homes, the move-up market is able to sell and ultimately purchase homes in the luxury arena. It’s a much-needed domino effect that will have significance in our market’s rebound. The numbers released over the last two weeks are showing that the process has already begun.
First, let’s look at NAR’s release this week of its March existing home sales. Now of course some media did use the nationwide month-over-month decrease in sales as an opportunity to take a negative spin but there were a lot of positives in this news. First, nationally, prices rose from February to March by 4.2 percent which is much higher than the typical 1.8 percent seasonal increase between those two months.
Second, housing inventory at the end of March fell 1.6 percent to 3.74 million existing homes available for sale, representing a 9.8 month supply at the current sales pace. This is important to note because March is frequently a strong listing month and more often than not, inventory grows in March.
In the West, existing home sales declined 4.2 percent to an annual rate of 1.13 million in March; however, of great significance is the fact that this number is 18.9 percent higher than last year at this time.
The fact is, the share of lower priced home sales have trended up, indicating a return of many first-time buyers. Sales in the upper price ranges remain stalled, but the last two weeks have produced more $1M+ pending sales than we’ve seen in a while as Buyers are taking advantage of two things in the upper end. One is the luxury of choice. Buyers can actually shop and compare. When they find what they want at an attractive list price- they are making offers. The second fact is that although Jumbo loans still have practically no secondary market (which increases competition and lowers interest rates), the Jumbo rate appears to be currently within one percent of the conforming; and buyers are seeing that it’s still a very attractive rate. For example, Princeton Capital’s rate sheet on April 20 showed a 5/1 Conforming at 4.625 –I point, and the 5/1 Jumbo at 5.3% - 1 point. FICO scores and down payment are of course key, but the market is beginning to get used to the new requirements.
Another interesting note, the Mortgage Bankers Association this week released its Weekly Mortgage Applications Survey for the week ending April 17. The index showed an increase of 5.3 percent from the previous week and that was a 76.9 percent increase compared with the same week a year ago. Yes, a 76.9% increase in mortgage applications, that’s not a typo.
While there is some criticism of certain steps our administration has taken to revive our economy, it seems some of the early work like the first time home buyer tax credit is effective. Earlier this week Inman News reported that the preliminary numbers from the IRS suggest 1.4 million taxpayers will claim the federal first-time home buyer tax credit on their 2008 tax returns, meaning the program is likely to meet or exceed the 2 million target set by lawmakers before it ends November 30, 2009.
Finally and I think this is probably most notable, the Wall Street Journal reported this week that prices have fallen back into line with what the typical household can afford to pay in most of the U.S. The report showed that home prices are dubbed “fairly” valued in 202 of the 330 markets studied. That means the average price level is within a band 14% above or below the historical norm. Twenty-one markets are “overvalued” or between 14% and 34% above the norm. And 106 markets are considered “undervalued” or more than 14% below the norm. Take a look at this graph which showcases where we were in the early part of the decade as compared to today:
I know it’s difficult to view the drop in property value a positive thing. But the fact is that though the ride was nice in the big real estate boom of the early 2000s, we couldn’t sustain those types of record appreciation levels without eliminating certain consumer niches, including first time home buyers. Now that levels are back within range, the first time home buyers are once again able to reenter the market which is why we are seeing such a strong surge in sales in that level.
Locally, we had further news this week that symbolized the first-time buyer pick-up. Rather than summarize them, I’ll simply share the links for your own reading:
http://www.dqnews.com/Articles/2009/News/California/Bay-Area/RRBay090416.aspx
http://www.dqnews.com/Articles/2009/News/California/RRCA090416.aspx
It’s just a matter of time before we weed through the remaining banked owned inventory and we should begin to see prices stabilize. Once we see that, the remaining areas of the market should begin to see an upswing, too.
With that said, let’s take a look at our week in real estate:
East Bay—Berkeley reports that open houses were very busy with up to 70 groups. Even properties holding their third open had a steady stream of visitors. Some buyers are still holding back, waiting for that mysterious "bottom,” or building in a bottom by offering 10% less. Castro Valley reports that in its micromarket, listings at the entry level present the same challenges we have been experiencing for weeks. Lots of competition for dwindling inventory. Agents with buyers in that market have learned the ropes, to bid as high as possible over asking, and to be patient. Fremont reports that it seems that people are still looking for a great deal. This week things have been slower, but it looks like buyers are starting to move as is seen in the multiple offers we have had this week. Oakland reports they are very busy and sales are strong however listing inventory is shrinking and not as many new listings are coming on. Some sales are taking longer to close and they are now seeing some appraisal issues because of new lender guidelines.
Monterey County—Had an exceptionally busy Easter week and last week, with many offers being written, and although 30 went into escrow, many didn’t come together due to seller and buyer being too far apart in price. Also have had a greater number than usual of properties in escrow falling out due to various problems encountered during escrow that were unable to be resolved. Buyers are being very cautious and picky!
North Bay—Greenbrae reports that a buyer’s Agent participated in multiple offers for a property in Larkspur that went at the least $200,000 over with five offers. The asking price was $1.2 million. A listing Agent in Greenbrae received four offers on a $1.3 million property in Greenbrae. There are signs of life plus buyers are out buying in Marin. As hot a week as Greenbrae had, Southern Marin wasn’t quite as warm. The office is reporting a slower week in sales though it was quick to note that it was expected during Spring break. Agents have been involved in many multiple offer situations on short sales and foreclosures. Properties might have five or six offers, with none at or above list price. Sebastopol shares 30-50 buyers were at two new listings in Sebastopol. They need more low end inventory, however, as that is what the buyers are looking for. Santa Rosa notes that Spring has arrived with heavy open house traffic, multiple offers and a large increase in distressed property open escrows. Agents are reporting as much as 60 groups through open homes and Agents are picking up buyers. Floor call leads are picking up as well.
Peninsula—Burlingame reports that the heat was a definite factor on open house attendance. In some areas it made for lighter than usual traffic and in others, turnout was excellent. They are definitely seeing a change in buyer attitude and confident that now might be the time to get serious about buying. Menlo Park El Camino reports a very busy week. Activity is the best it has been for about eight months. Lots of stealth activity, too, with sellers selling due to duress and wanting to be under the radar. Palo Alto reports that things appear to be more optimistic. There is a lot of attendance at open houses including upwards of over 100 people in price ranges of $1.2-$2.2 million in the prime locations of Palo Alto. San Mateo states that if a property is in good condition and is priced well, you are “gold.” Inventory is up 22% over 2008, pending sales are even with 2008 and solds are down 57% over 2008. Open houses are well attended. Lenders are still difficult in conforming and impossible in nonconforming.
San Francisco—The Lakeside office reports that buyers are finally pulling the trigger and writing offers. Lombard reports that inventory is steady or growing slightly. They’ve had good open activity at all levels. One home went slightly over in the $900,000 range; one condo took an extremely low offer in the $1.5 million range. FHA fees, rules and roadmap require an education on everyone’s part. The Market Street office reports that on one of the ratified offers this week the same buyers wrote on it two weeks ago, the owner would not accept the offer because there were additional disclosure packets out and wanted to hit her “magic” number. Two weeks passed and no offers came in, the buyers rewrote the same offer and got the house. The Agents have found that reps at the new construction units are negotiating verbally and once negotiations are finalized you need to get your buyers in to sign ASAP. A deal was almost lost because the buyers took their time getting in to sign and another buyer was put in place. It cost our buyers more money to get the unit.
Santa Cruz County—Market activity has picked up in April and we should finish the month with approximately 45 new sales. They’ve also had several million dollars in lost sales primarily resulting from some aspect of the lending process whether it be an appraisal issue, last minute conditions, lenders pulling their commitment, or last minute borrower issues, job loss or "cold feet." They’ve had great response from the Agents and the lenders regarding the short sale packages and these have been received very well by all parties. Overall, they’re moving forward with optimism; managing client expectations throughout the process.
Silicon Valley—Cupertino DeAnza reports things seem to be more active with buyers ready to make the plunge. The Cupertino Stevens Creek office concurs noting that they’re starting to see an increase in sale pendings; buyers seem ready to make a deal. Los Gatos reports that the market is definitely heating up with good consumer confidence. Prices are holding; however, still seeing short sales. The San Jose Almaden office reported numerous first time buyer calls coming in. Seems like many are deciding NOW is the time to buy and are. Our Princeton Capital loan officer is working long and hard hours every day and we’ve noticed a surge in floor calls. Terrific prices in the low million ranges and even above are selling in Almaden. Recently a property that was listed for $6 million four years ago sold this year in less than 30 days for a little less than $4 million. But it sold! The San Jose Main office reports a very active week for both sales and Open House traffic. Listing inventory dropping mostly in the mid range to lower price range properties. We’re seeing increased buyer interest.
South County—Gilroy reports that inventory continues to decrease. Multiple offer situations are the norm. Hollister reports low inventory compared to last week. Multiple offers are still going strong on the REO listings. Summer weather is bringing people out to investigate open homes. Morgan Hill reports optimism is the key word in South County. Though our sales continue to be dominated by REOs and Short Sales, there seems to be a sense that the worst is behind us. Agents are reporting good attendance at open houses and homes that are priced right and show well seem to be selling quickly. Good interest rates are also a significant factor—as are FHA loans.
Next week will bring some more interesting news. Check out this article that ran Monday in The Wall Street Journal: http://www.washingtonpost.com/wp-dyn/content/article/2009/04/19/AR2009041901875.html. Once we see the results of new home sales (existing home sales were already reported), we should have a better indicator of where we are. I’ll leave you with this excerpt from the The Wall Street Journal’s story:
“Whatever the March numbers say, there are good reasons to think that home sales will improve as the spring selling season gets underway. Anecdotal reports suggest that low mortgage rates and an $8,000 first-time home-buyer tax credit are coaxing buyers back into the market. And while foreclosures are set to rise as banks begin to move on delinquent homeowners, that actually could boost home sales as banks auction homes for whatever the market will bear.”
The market is without a doubt changing and we may finally be seeing the end of the great housing challenge of the 2000’s. I’m sure we are all up for that.
Until next week-
Have a great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
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