Note: While Avram Goldman is no longer with Coldwell Banker, he is still a friend and associate at Pacific Union with an excellent handle on San Francisco Real Estate:

June 17, 2008 - Just back from my youngest daughter’s graduation at UC Santa Barbara this past weekend.  Last one done.  Pretty proud father, she completed a double major and minor in three years and graduated with honors. Yahoo. Probably wondering why I mentioned this. Besides being very pleased with my daughter’s accomplishments, the student speaker at the commencement spoke on the topic of “reframing”-the concept of turning a negative perception into a positive one. In other words, it is how we choose to look at things. The sage saying, “Is the cup half empty or half full” is the bottom line.

The financial news over the last several weeks has been all over the place. The stock market is up and down like a seesaw. Lehman Bros. is in trouble and Goldman Sachs beats expectations. In an article this weekend by Kenneth Harney, even the Federal government gets to participate in the negative news announcing that homeowners have lost an estimated $879.6 billion in net equity during the past year. Certainly that sounds alarming; however like I have pointed out in previous reports, appreciation during the housing boom was astronomical. In fact nearly $3 trillion in net equity was realized. An example that Harney uses to illustrate this is the mention of Riverside-San Bernardino houses which lost 13.8% last year in value, but are still up 71.5% since 2003. Still a gain in value of 57.7%.

The media paints the picture that the entire country is suffering. The fact remains that in spite of this down cycle, 56 percent of 292 metropolitan areas surveyed showed positive—though small gains—during the first quarter of 2008. Although California has been one of the hardest hit areas in the country, we still have sections in the Bay Area where prices have leveled or slightly decreased.

Harney’s point is that National numbers–especially on the downside–get all the attention. Yes, those buyers that bought at the peak of the last boom have taken losses, but the majority of homeowners still are doing quite well.

The challenge with the media is that it influences the buying public. In spite of the perception challenges—housing prices are free falling—the reality is buyers are still out there buying. Buyers are value conscious and will not overpay. They are looking for homes that are priced well and presented in pristine condition. If they are not in pristine condition then they are looking for a price that reflects the work they would need to do.

In the current reporting period sales activity remains steady. The only noticeable difference during this period is that the number of multiple offers has fallen off in every county except San Francisco where 25% of the transactions were involved in multiples.  The lower and upper price ranges of each market appear to be the most active.

Open house activity has slowed a bit, probably due to June events including graduations, weddings, etc. We are not seeing the 100 plus visitors, however the first time open, well priced and located homes are attracting 40 plus buyers. Most open home activity is still in double digits which is a far cry from the open home activity of the past down cycle markets of the 80’s and 90’s.

Our pending sales for the first two weeks of June were up by a third over the first two weeks of May. Will this continue is difficult to say. Just like the financial markets, the housing market has become much more erratic.  We will continue to ride the Wave. To “reframe”, the market is exciting and is filled with opportunity.

- Avram

To me it makes sense. I put myself in the situation where I’ve owned my house for quite a few years. I am retired and have to live on Social (in)Security. What better way to increase the quality at which I can live by pulling money out of my house?

In an Associated Press story yesterday in the San Francisco Chronicle, they talked about the ads featuring James Garner pushing reverse mortgages as an alternative to provide seniors age 62 or older an influx of cash. (Perhaps if Ed McMahon had done this…)

As with any type of investment there are things to watch out for, but overall, the plan sounds reasonable to me. Again, from my point of view, money now versus money later when I am dead makes about as much sense as “death” insurance. This is for the people I leave behind, not for myself. So why not “borrow” from the biggest asset I own to make my retiring years a little cushier? Makes perfect sense to me… Just be sure to structure it so that the money doesn’t run out before I pass on!

- Mick Orton

Foster Weeks publishes a weekly mortgage report which is updated every Monday morning. How is this affecting the San Francisco real estate market? Read our weekly and monthly market reports. Here’s what Mr. Weeks says about last week’s activity:

Opinions certainly caused some trouble in the markets last week as several Fed members talked about inflation, the arch enemy of Bonds and home loan rates, and their comments shook the markets like a high-magnitude quake.

Last week began with Fed Chairman Ben Bernanke suggesting that the Fed is in no hurry to hike rates because of “slack” in the economy. Bonds traded lower on this news, and this may be because many economists disagree with Bernanke and believe a rate hike would actually help strengthen the US Dollar, drop oil prices closer to $100 per barrel, ease inflation pressure and…as a result, help Bonds and home loan rates improve.

Also chiming in last week was Philadelphia Fed President Charlie Plosser, who said the Fed has to take “appropriate steps to do something about” inflation. His remarks helped fan the flames of volatility for Bonds and home loan rates, adding to the sell off in Bonds and worsening of home loan rates.

There was some good economic news last week, but remember good economic news often causes money to flow from Bonds into Stocks, and when Bonds trade lower, home loan rates rise. And that’s exactly what happened when April’s Pending Home Sales report (which measures signed real estate contracts for existing single-family homes, condos and co-ops) and May’s Retail Sales Report both came in much better than expected.

Read the entire report here.

- Foster Weeks

Red alert update from the California Association of Realtors on Assembly Bill 2678 -

C.A.R. initially OPPOSED AB 2678 (Núñez) because it effectively would have required, among other things, that ALL homes and commercial property in California have an energy audit at point-of-sale, and that mandatory energy efficiency investments be made. While C.A.R. appreciates the goal of energy conservation, C.A.R. strongly opposes point-of-sale requirements because they are ineffective and because such mandates will weaken the housing market. If enacted as introduced AB 2678 could have added even tens of thousands of dollars to the cost of purchasing a home.

After thousands of REALTORS® called their legislators in opposition to the bill and thousands more lobbied against the bill in person last week at Legislative Day, the bill’s author amended AB 2678 to remove the point-of-sale requirement. The bill was further amended at C.A.R.’s request, to ensure that energy audits or improvements are not required as a condition of sale. With these changes, C.A.R. SUPPORTS AB 2678.

This is a BIG WIN for REALTORS® and their clients. Thank you for helping make this Red Alert a big success.

Our question is this: what is left in the bill? If energy audits are a good idea and a great way to save money, why do they have to be legislated???

- Mick Orton

According to yesterday’s report from California Association of Realtors (CAR) pending home sales rose in April by 6.3 percent.

The article they reported on was from Realtor.com written by Walter Mooney which said:

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in April, rose 6.3 percent to 88.2 from a reading of 83.0 in March. It’s the highest index since last October, but remains 13.1 percent lower than April 2007 when it stood at 101.5.

- Mick Orton

SFResidence is part of the TRI Coldwell Banker office at 1699 Van Ness in San Francisco which is one of the premier offices in the City and has the market share numbers to prove it. We have some of the top agents selling real estate in the San Francisco Bay Area. As a result, our office posts some impressive numbers.

The feeling is that the market is shifting for the better, and the numbers show it. Properties are being listed, ratified and sold in San Francisco, unlike other parts of the Bay Area. We are truly blessed!

Here are the numbers posted this week: 6/3/08:

• 6 new listings (average price $1,061,333 – low $549,900, high $2,100,000)
• 12 ratified sales (pending) (average price $1,147,750 – low $399,000, high $3,695,000)
• 8 closed sales (sold) (average price $1,602,250 – low $395,000, high $8,250,000)
• 1 reduced – $5,900,000

- Mick Orton

We recently purchased some nice teak patio furniture from a little place off the 101 freeway in Mill Valley and have been very happy with them. While not inexpensive, we did experience a couple of small problems, one with a fold-up table that had some loose slats and just recently with the hinges on both of the loungers.

Each time we have called them, they are very pleasant and happily send one of their guys over to take care of the problem. Today one of the fellows came over and fixed a loose slat on one of the loungers. I can’t tell you how seamless the repair was. If you didn’t know where it was done, you’d have a hard time locating the fix.

So it is with great pleasure that we highly recommend this business for their GREAT follow up after the sale!

Terra Teak and Garden
258 Redwood Hwy
Mill Valley, CA 94942
(415) 331-1603  

- Mick Orton

Today, the DailyPundit posted a “good news” story about the real estate market. We made our comments to this post.

…My question is, who are these EXPERTS and why are they ALWAYS wrong and expect the worst? Check any news story on the economy, jobless numbers, etc., and you will see that this seems to be the case almost without exception.

In other words, why are they are betting on a horrible economy? It doesn’t make any sense, unless what I’ve heard is true. According to one real estate analyst we know, news outlets are financed by entites that want to see money in stocks rather than real estate…

Read the entire article here.

- Mick Orton

Foster Weeks publishes a weekly mortgage report which is updated every Monday morning. How is this affecting the San Francisco real estate market? Read our weekly and monthly market reports. Here’s what Mr. Weeks says about last week’s activity:

“THERE IS NO BARRIER TOO HIGH, NO VALLEY TOO DEEP… NO DREAM TOO EXTREME, NO CHALLENGE TOO GREAT” ~ Charles Swindoll And that motivating phrase was a great motto for last week, as both Bonds and home loan rates ended up being greatly challenged as they dreamed of breaking through technical barriers to attempt some improvement. Lots of intra-week action ensued – but when the dust settled, Bonds and home loan rates rallied in the face of challenges and ended the week very close to where they began.

Bond prices and home loan rates started the week to the upside, as Wachovia announced they were removing their CEO and Stocks faced some selling pressure on the news, moving money into Bonds and helping rates improve. But the rally was very short lived, as Wednesday’s “unofficial” Employment Report by giant payroll processor ADP indicated 40,000 new private sector jobs were added in May…and while this good economic news gave Stocks a boost, it pulled money right back out of Bonds and caused home loan rates to worsen. Thursday’s positive economic news that unemployment claims for the week were lower than expected caused Bonds and home loan rates to worsen even further, as traders began to speculate on what the “official” Jobs Report by the Department of Labor would contain.

And on Friday morning, along came the big enchilada, the monthly Jobs Report. The Unemployment Rate increased to 5.50%, up from 5% last month – the largest jump since February of 1986. This was much worse than the market expected. And remembering that bad economic news tends to be bad news for the Stock market, but good news in turn for the Bond market, the news was positive indeed for Bonds and home loan rates – helping them to end the week relatively unchanged.

Read the entire report here.

- Foster Weeks

We usually don’t advertise on our blog, but in this case, we’re going to make an exception.

Beautiful remodeled & fully furnished, quiet, forest outlooks, private deck, slate entry, kit. w/Silestone counters & breakfast bar, open floor plan, NO STAIRS, pier, easy boat access, assigned parking.  $1,900 a month plus $2000 deposit to move in. Call (866) 224-8024 for long term lease! – E-mail Info@sfresidence.com.

Here are a few pictures of the unit.

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