Weekly Market Watch

This week Realogy (Coldwell Banker Residential Brokerage’s parent company) President Richard Smith met with legislators regarding the need for policy initiatives concerning the real estate industry and the economy as a whole. Specifically, the Business Roundtable (an association of chief executive officers of leading U.S. corporations)— of which Richard is the chair—issued a set of recommendations for the White House and Congress that are aimed at jump starting the housing market in order to stimulate a broader economic recovery.

The Business Roundtable’s recommendations are as follows:

· Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year;
· Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
· Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
· Make permanent the current temporary conforming loan limits; and
· Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.

We believe targeted, demand-side solutions—such as the ones Business Roundtable is recommending—will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole. To obtain a copy of the Business Roundtable press release and its Housing Working Group’s detailed recommendations, click here. To read an article that appeared in today’s online edition of The Wall Street Journal containing an interview about the Business Roundtable’s recommendations and why they are crucial to jumpstarting the housing market, click here. We will communicate with you as any legislative opportunities occur for you to contact members of Congress and voice your support—but for now, just know that we appreciate your support and are proud to be part of this initiative.

In other news this week, RealtyTrac released its foreclosure findings with positive news that foreclosure filings dipped 6% in May compared with April. But the news wasn’t all positive as the number is still 18% above this time last year. In California, the picture continues to be a bit more bleak. We are ranked No. 2 out of 50 states in foreclosure filings with 92,249 total filings or one in every 144 households. While the last two months showed a decline with a 4.5% drop from April 2009 to May 2009, the year-over-year number is still a 22.8% increase. For a complete look at the USA Today story that ran on the figures, click here: http://www.usatoday.com/money/economy/housing/2009-06-10-may-home-foreclosures_N.htm#chart.
While none of us are happy to hear about more homes in the foreclosure process, our local markets are telling us that there is sufficient demand for bank-owned properties – most are still receiving multiple offers when they hit the market.

Now let’s take a look at this week in real estate:

East Bay—The Berkeley office reports 40% of our sales this past week had multiple offers. One REO received 22 offers, all cash. Our higher end is also busy. In the $800,000 to $1 million range, we have seven active Berkeley listings and only one month supply; the $1-1.5 million price range has 18 active listings and a 3.6 mo. supply and the $1.5-2million range has 9 properties and a 9 month supply. Castro Valley reports the market continues to deliver multiples and bid wars in the low range markets. Inventory is much needed and there is no shortage of backup offers if a deal falls out. Fremont reports resale activity is picking up. REOs and short sales are still experiencing multiple offers due to low market prices and reduced inventory. Livermore reports two of the three open houses this past weekend were very active with over 25 groups visiting each open house. Inventory of active homes and total pending sales of existing homes in the Tri-Valley area remained stable this past week. Multiple offers continue on homes listed below $500,000! Two REO listings in the office had more than 20 offers on each property. Walnut Creek reports we are experiencing an increase number of sales falling through for various reasons and also at various stages of escrow. The most common reason being "low appraisals". Seven our our REO properties were recently sold to buyers paying "All Cash.” Even though these listings located got multiple offers, often at higher than the "asking price,” the Seller’s "banks" held out for the "All Cash" offer. These properties were located in Pleasant Hill, Concord, Antioch and Vallejo.
Monterey County—No information reported.
North Bay—Our Greenbrae office reported San Rafael and Novato market are hot, hot, hot! San Anselmo, Corte Madera and Greenbrae are also doing well with 30% + in contract. Novato at 46% in contract. Just had multiples on a $1.2mil house in Greenbrae. Appraisals are slowing down a bit plus price adjusting downwards accordingly or the deals fall through. Our San Rafael office is reporting homes priced at market value in Novato and San Rafael are moving quickly. One home listed at $720k in Novato had an accepted offer in less than ten days. Many homes between $300-500k are seeing multiple offers which is driving the prices up. The Santa Rosa office reports there are more real buyers out there than new sellers right now. Inventory is getting tighter below $500,000 and in selected geographical areas above the $500,000.
Peninsula—The Burlingame office reports it seems that there are protracted negotiations on every deal and buyers asking for further seller concessions after they are in contract. We have started to see a few appraisal problems which mostly seem to be the result of out of area appraisers. That being said there is more activity and sales and listings are increasing. Half Moon Bay reports the coast slowed down considerably this past week-either buyers are attending school graduations or watching the interest rats in hopes of them coming down. The Menlo Park El Camino office reports that things are feeling busier. Higher price ranges selling and some real competitiveness among buyers. Loans are still very evasive for many buyers—well-qualified or not. The Palo Alto Downtown office reports the market has been slow again these last 10 days. Although, the Midtown office seems to be busier with the entry level market. The entry level in Mountain View, Santa Clara and Cupertino seems to be relatively strong compared to the months past. The Palo Alto market has slowed down as far as number of sales and the high-end is again quiet. The San Mateo office reports the lower end of the market is hot, with multiple offers. Middle market to $800,000 is also very active. $1mil and up beginning to show life. Loans are still a problem.
San Francisco—The Lombard office reports a slow week, but this week's ratified deals were almost a reflection of the YTD. Three REO sales with multiple offers (up to 10), all over asking. A $1.5m home with multiple counters but with immediate loan problems. And a $2.6m investment deal whose terms were all dictated. The Market Street office reported Agents are writing offers but find they are running in to more competition than in the past few weeks. We are all at the edge of our seats with respect to financing until the deal is closed. Many last minute conditions coming up, not unmanageable but frustrating for our clients. Open house activity is still steady across the city and many unattached clients are looking to make the right connection with an Agent. Our Noriega office reported demand of affordable SFH is high, inventory is low. Buyer’s Agents are writing offers left and right, but most are competing in multiple offer situations. Activity is high; a lot of deals are falling apart over financing. The Van Ness office reports activity is excellent with 18 deals closed this week alone.
Santa Cruz County—Inventory levels continue to lag - south county Watsonville REO inventory is nearly gone, very few homes left and those new properties are receiving multiple offers. Short sales continue to be a big part of our market and our Agents are doing their best keeping these moving forward - and we have been relatively successful thanks to the short sale packages which they are using. Open house activity for the most part has been active.
Silicon Valley—Our Cupertino De Anza office reports we had 11 offers on a small SFR in Blossom Valley. It got bid nicely up. A Sunnyvale home with three offers went pending $20,000 under the list price. Agents are starting to see more attractive terms on some of their offers, even if the prices are not going sky high. Our Cupertino De Anza office reports multiple offers continue to dominate the lower to mid ranged priced homes in our area. We continue to see more buyers come off the fences for the $1.2m to $1.5m range and actively pursuing the homes with quality offers at or just above the asking price. The Los Altos office reports the market is active in most price ranges except for the higher end. We did have one $5M sale that was not on the MLS and is scheduled to close by the end of the month. The San Jose Willow Glen office reports buyers are out there but they may be waiting for prices to drop because it is a buyer’s market. Things have slowed up a bit and probably due to graduations. The Saratoga office reports the office has been buzzing with sales especially over the last two weeks. We finished the month with a fantastic 107 buyer sides. Our over $2 mil market is still very slow.
South County—Gilroy reports the lack of inventory continues to hinder our market. Agents and buyers are frustrated in submitting offers on properties where there are multiple offers in the double digits. Banks need to release more properties in order to keep up with the current demand. The Morgan Hill office reports the dynamics of the market are interesting, but frustrating for buyers and for Agents alike. It seems that only a short time ago, buyers were not buying and yet it was a true buyer’s market. During these past several months, however, buyers are making offers on anything that is priced right and shows well. Multiple offers are the norm. One Agent in the Morgan Hill office made 23 offers for one young couple but were beat out 22 times by higher bids. They have just gone into contract this week on their starter home. Inventory is way down, demand is way up; there just aren't enough moderately priced homes to bring the market into balance.

For a quick look at the Bay Area market for properties over $1,000,000 –here’s what I am seeing:
Monterey and Santa Cruz counties took a month over month decrease in number of sales and a slight decrease in median price. East Bay counties remain fairly flat in number of sales, and in price. San Mateo and Santa Clara counties took a big jump in May; number of sales up 32% over April, and median price highest since April of 2008. Similarly, in San Francisco, median price jumped 27% over prior month to $1,750,000 and highest number of sales since last September. Marin and Sonoma counties had their third monthly increase in number of million+ dollar sales, and a slight increase in median price. The prevailing commentary you’ll hear in any areas that are experiencing increased high-end activity is very careful selection of listing price and great attention to detail for showing condition of the property.

We’ll take a break next week for the Weekly Market Watch, and I’ll be bringing you two weeks of news for the following week.
Until then,
Rick
Rick Turley
Coldwell Banker Residential Brokerage San Francisco Bay Area

Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage