Weekly Market Watch

New Year’s Update on Bay Area Housing Market: Where are the sellers!
As the New Year gets rolling, Realtors from Sonoma to Carmel and San Francisco to Danville are noticing a surprising trend –a critical shortage of homes for sale. At the entry level, and in many mid-price level markets, we have plenty of people willing to buy, just not enough homes to go around. My how things have changed in the past year! To quote one of our managers, the new lament among local Realtors is, "so many buyers, so few listings.” As an example, take a look at the inventory in San Mateo County. December inventory was down -20.5% from November and down -36% from the previous year.


What’s happening? First-time buyers are rushing to take advantage of the federal tax credit before it expires this spring. Unfortunately, we aren’t seeing a commensurate number of sellers bringing homes to the market to capitalize on this. There are inventory shortages throughout the Bay Area. Open homes are attracting a flood of serious buyers. The result is that attractive, well-priced homes in good neighborhoods are getting lots of interest and, in some cases, multiple offers.

Without as much competition for buyer’s attention, a well-maintained home could stand out like a redwood tree in a desert. This may not last for long as more homes come on the market in the weeks and months ahead (don’t forget the old adage that people start listing homes after the Super Bowl).
And with that, let’s take a look at what’s happening in the local housing markets:

- East Bay—Berkeley reports a slow start to the year. We did get several multiple offers though, four on a listing priced under $300k and three on a listing priced at $1,045,000. Danville reports we have a critical inventory shortage. There has been a decrease of 88% in the month’s supply of homes for sale in Contra Costa County over the past two years. Right now, in certain areas and price ranges, it is a seller's market with many properties getting multiple offers. Livermore reports inventory is also at the lowest level in the past two years. Listings declined 4.5% and pending sales were up 6.5%. The market is healthy with most of the activity below $750,000. We still have a high percentage of REO and short sales in Livermore especially in the attached homes (i.e. condos and townhomes). Multiple offers are still common below $600,000. Castro Valley reports an increase in the listings, with people resuming their plans after the holidays.
- Monterey County— 2010 has started off with lots of activity, though most of it is REOs and Short Sales, unlike most years that are slow until into February. As expected for first of year, the listings are coming in quickly and we're seeing lots of price reductions, as sellers are becoming increasingly competitive.
- North Bay—Greenbrae reports it is seeing some multiple offers again in the $700-800K range. Consumers seem to be ready to pull the trigger. We expect more inventory in coming weeks. Open houses are well attended. Southern Marin reports inventory is extremely low but sales are equal to or in Mill Valley’s case more than this time last year. Santa Rosa reported a strong start with open escrows. However, the weather and the shortage of inventory below $400K may slow the tide in the short term.
- Peninsula—Burlingame reports listings are starting to come in and pent up buyers are beginning to get out and make offers. Great listings are being snapped up quickly. We need more inventory. Half Moon Bay reports the market is slow on the coast with low inventory. The sellers are waiting a couple more weeks to market their property. Our Menlo Park-Santa Cruz office reported after a strong finish to 2009, there seems to be a bit of a lull at the start of 2010. Offers are being written, sellers are slow to react. The downtown Palo Alto office reported the market is still slow. We anticipate that after the Super Bowl weekend for things to get quite busy.
- San Francisco— The Lombard office reported the post holiday listing surge has not happened yet. Buyers are out there but agents comment on the lack of inventory. Multiple offers common of late with all cash deals winning out over all others. The Market Street office reported new properties coming to market are selling pretty quickly and most with multiple offers if they don’t take the first one. Serious buyers are coming in to all the open houses especially at the entry level price points. They also are seeing a lot of cash buyers just looking for the right deal. First 2 weeks of 2010 at SF Van Ness seemed lack-luster, but the third week was a huge week of new sales, all price points, with several over $3M.
- Santa Cruz County: New listings are starting to come in as we move closer to February, although inventory levels remain low overall in the county. South County bank-owned properties have drastically reduced the available inventory there with less than 20 active listings in the Watsonville area. We have received a few new REOs in the past 6 weeks and these are being released one or two at a time rather than 10 or 15 or 20. This inventory is definitely being controlled carefully by the banks. The upper end market, over $2 million, remains very slow. Given the current market conditions, and time of year, sales are better than expected for January.
- Silicon Valley: Cupertino reports things are heating up and open houses are wild. Almaden reports low inventory makes it difficult to even find homes to hold open. Over $1.1 million is very slow despite good interest rates. Agents are busy working and beginning to go on listing appointments. I expect our inventory to grow by 50 per week over the next several weeks. Willow Glen reports listings are on the increase. Open houses are somewhat busy as well. Saratoga reported new listings seem to be tracking as expected with the beginning of the year market. Sales seem to be lagging though. Hopefully, it's just a slow start and will pick up steam as the month progresses.
- South County: Morgan Hill reports the new "lament" of the South County Realtor, "so many buyers, so few listings.” With interest rates still very low and prices so attractive, demand is outpacing supply for homes in all price ranges. Well priced and well maintained homes do not stay on the market very long here in South County.

So by and large, it’s pretty much a conversation about inventory when you talk about our Bay Area real estate market. Even the luxury market, while admittedly slower than lower price points, has inventories trending down. Take San Francisco, for example, for homes over $2 million. The luxury market finished out December 2009 with a 6 months supply of inventory – compared to 10 months supply for the same period in 2008. You’ll find similar trends in the high end in many of our communities in Silicon Valley, Peninsula, Marin, and the East Bay. Accuracy in pricing and attention to detail in showing condition remains critical in the luxury markets, but sales activity is picking up and inventories are going down.

Until next time, have a great week!
Rick


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