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