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

Quite an end to the summer.  The Olympics wrapped up tonight.  They had it all—pageantry, triumph over adversity, the ecstasy of victory and the agony of defeat.  How proud we can be of our athletes.  From the Olympics to the Presidential election season—the Democratic convention gets underway this week.  This campaign should be a real barnburner. Have a feeling it will be a good ole fashion mudslinging. When was the last time an election was decided on the issues? They keep saying that is what they are addressing, but who are the fooling.  The only part of our economy that will be surging over the next few months are those that are involved in the election. Oh, almost forgot the football season begins too. We already forgot about baseball given our local teams—maybe next season. 

What does this have to do with real estate?  You just don’t see many headlines on the state of the market. We kind of have taken the back seat.  Guess we are getting comfortable with the current market conditions. No earth shattering news other than everyone’s expectation that the government with be taking over Fannie and Freddie. The bright spot the past week is that the Fed is holding rates. Bernanke came out and declared that it appears inflation will ease. That combined with oil prices dropping, calmed the waters and the market rebounded from the early week losses with a couple of positive days.

August is being August. Although we had a slight up tick at the beginning of the month, the winds have died down as we return to the doldrums. Not unexpected, but I looked for a bit more momentum after a solid June and July. If the pattern holds, what it tells me is that the coming fall and the New Year will bring about the same as we experienced at the end of 2007 and so far in 2008. This is not all bad. Inventories have steadied and the lower half of the market has picked up speed. It will take another year for the financial markets to exorcise themselves out of the mess they got themselves into and to bring more liquidity into the market for jumbo loans.

Well priced and attractively shown homes at all price ranges are selling. Currently the REO and short sale market is very active as first-time home buyers and investors are looking for bargains.  I heard something this past week I haven’t heard of in a long time—a property listed under $100,000. At the Rohnert Park/Cotati tour meeting a one bedroom/one bath condo was listed for $95,000.  It now may be less expensive to own than to rent.  Investment opportunities now abound and buyers are becoming aware, as much of the multiple offer activity is focused on the lower end.

There are still plenty of buyers out there. Open home activity in most areas is still brisk.  The heart of the Bay Area, SF and parts of the East Bay, are still seeing 20-50 groups come through open houses. Marin and the North Bay have a few homes in that category but most range between 5-15 groups.

Almost all the multiple offer activity is in SF and East Bay (from Oakland to El Cerrito).  The vast majority of the multiples are in the under million dollar price range.

I believe we will see a pick up in home sale activity after the first week of September as many sellers have been waiting to put their homes on the market for the Fall.  The buyers are ready, as much of the inventory on the market now is that which has been available for several months.  Look for the Fall bump.

- Avram

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:

“THE FIRST THING A HURDLER LEARNS…IS HOW TO FALL.” Tonie Campbell, 1988 Olympic Bronze Medalist, 110m Hurdles. And that’s a lesson Bonds and home loan rates have now learned, too. After finally leaping over a big technical hurdle called the 50-day Moving Average (a moving average is the average closing price of a financial instrument over a given time period) for the first time in weeks, Bonds and home loan rates then quickly plunged to some of their worst levels of the week.

So what happened? Bonds and home loan rates began the week facing a tough inflation hurdle, when the Producer Price Index (PPI) came in at the biggest year-over-year increase in 27 years. The Core PPI, which excludes volatile food and energy prices, also came in at the biggest year-over-year increase since 1991. However, the recent drop in oil prices kept the topic of inflation from being too high a hurdle for Bonds and home loan rates, and they managed to leap above the 50-Day Moving Average to some of their best levels in weeks on Wednesday.

However, the quick rise in Bond prices pushed them into “overbought” territory, which pulled the reins back on their momentum. Combining this with Friday’s news that the Korea Development Bank may be interested in acquiring Lehman Brothers – which added confidence to the financial sector, causing traders to move money from Bonds into Stocks – caused Bonds and home loan rates to stumble and end the week only slightly improved than where they began.

Read the entire report here.

- Foster Weeks

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:

…Bonds began the week trading lower due to inflation fears after crude shipments from Georgia were halted amid the Russian bombardment of the country. However, some poor economic reports (remember, bad economic news is bad for Stocks and typically causes money to flow from Stocks into Bonds)…including poor earnings reports from Macy’s and farm equipment maker Deere & Co….helped Bonds and home loan rates regain some of the early ground they had lost.

Bonds continued to rally in the latter part of the week despite the hotter than expected read on consumer inflation in the July Consumer Price Index (CPI) report. According to the index, consumer prices increased 5.6% over the last year, which is the biggest year-over-year increase since January 1991. However, Bonds shrugged off the bad inflation news and traded higher because this hot reading came during the time that oil prices spiked to $147 a barrel in the month of July. Since then, oil prices have dropped significantly and are now $113 a barrel, which left traders thinking that next month’s CPI reading may be tamer. And Bonds and home loan rates continued their rally on Friday in response to some tame inflation news within the Empire State Index Report.

While inflation has been a tough opponent for Bonds and home loan rates, the technical factor known as the 25-day Moving Average (a moving average is the average closing price of a financial instrument over a given time) has been an even tougher opponent of late. Bonds and home loan rates have attempted to improve past this level several times over the last few weeks, finally succeeding on Friday to end the week nearly unchanged from where they began…

Read the entire report here.

- Foster Weeks

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

The state unemployment figures for July were released last week and reaching a  new high water mark of 7.3% (up from 7% in June).  However, three Bay Area counties added jobs—Marin, San Francisco and San Mateo creating 7600 jobs an 0.8% increase.  Every county in the Bay Area was actually under the state average (Santa Clara 4.7%, Marin 5%, San Mateo 5.1%, Napa 5.2%, Sonoma 5.6%, San Francisco 5.8%, Alameda 6.7%, Contra Costa 6.7% and Solano 7.3%).  The Bay Area is in fact, the healthiest region in the state. Just as a frame of reference, the highest unemployment rate hit in the last two down cycles of the early 80’s and 90’s was 9.5%.  The resilient employment market is helping to buffer some of the effects of the present downturn.

One thing we can say about the current real estate market; it is never boring. The beginning of August started out very sluggish and then caught a second wind. Our first two weeks of August 2008 compared to 2007 were up 20% by units. Median and average price have dropped as the majority of sales around the Bay fall under the million dollar mark. 

Our multiple offer activity reflects the strength at both ends of the market. A property listed at $6.45mil in Piedmont received two offers. Another in Fairfax listed at $2.1 mil. (the very high end in that market) had multiple offers. On the other end of the spectrum, a Berkeley 2 bedr. 2ba. home garnered 7 offers and a Montclair home in the Oakland Hills listed at $675K received 3 offers. In San Francisco, a home in Buena Vista Park with incredible views, but needed work at $1.795mil drew 7 offers.  While a Portrero condo listed at $565K had 3 offers.  The percentage of multiple offers has been slowing.  Currently we are averaging about 17% of our total sales, which is still remarkable for the current environment.  It is still those homes that reflect the best values and are staged properly that are attracting the greatest number of potential buyers.

Speaking of buyers, open homes for the month of August are still drawing good crowds. In San Francisco the open homes averaged between 12-75 groups, the Berkeley/Oakland/Piedmont area ranged from 20-65 groups and in Marin the range was 5-25 groups.  Given that August tends to be a slower trafficked month because of vacationing, these numbers indicate that there are still a good quantity of buyers in the market.

Listing activity continues to decrease keeping inventories in check. I believe we will see an up tick in new listings after Labor Day as sellers prepare their homes for the Fall market. There are certainly plenty of buyers for these homes as long as they are priced at current market values and presented at their best.

It will be interesting to see if August will continue to blow a little stronger than normal to keep us out of the typical August doldrums. Who knows, perhaps the Olympics is giving everyone a bit brighter view of the world.

- Avram

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.

Someone is selling properties in San Francisco, despite the summer slow down. Our office is doing rather well. Though average closings are taking longer, homes are selling even though other areas are not doing well.

Here are the numbers posted this week: 8/13/08:

• 7 new listings (average price $1,361,429 – low $355,000, high $2,800,000)
• 15 ratified sales (pending) (average price $1,435,067 – low $525,000, high $4,625,000)
• 9 closed sales (sold) (average price $2,367,111 – low $649,000, high $8,750,000)

- Mick Orton

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

July 28-August 3, 2008: There may be a ray of light in the Black Hole. For the last year most stories on real estate have been on declining values, foreclosures, short sales, the mortgage fiasco, and the tanking of the real estate market.  It looked abysmal.  Now we are just beginning to see the articles that are focused on looking for the time when values will have bottomed out. In last Saturday’s N.Y. Times, Catherine Rampell, looked at several different types of measurements used by economists to determine if properties in different markets are under or overvalued. One such formula by Christopher Mayer of the Columbia Business School is based on the cost of owning a home relative to renting, mortgage rates, tax rates, expected inflation and other factors. His findings show homes are still overvalued in Miami (+13%), Phoenix (+13%), Los Angeles( +6%), and Boston (+3%), while in San Diego (-1%), San Francisco (-1%), New York (-5%) and Detroit (-12%) are undervalued. There is much debate about the different methodologies, but many of these formulas are now showing that in some locations we could be at or approaching the bottom. I have attached the article for your review.

Now for a recap of July. The numbers are in and we seem to be following the same pattern as June.  Median and average prices are down from last year with one exception—-SF. San Francisco was actually up 1% in median sales price over last year and flat from last year for average sales price. As noted last month, prices have dropped appreciably due to a combination of factors. First values have declined in those markets where inventories swelled due to the sub-prime and over building. Secondly, prices continue to drop as a result of increased sales activity in the under $500,000 price range. Unit sales in this category YTD were up in every county except SF, which was down 3%. However, only 15% of the total sales in SF are under $500,000, which is the smallest percentage of any county in the Bay Area. Sales in the rest of the counties were up anywhere from 43-90% YTD over last year YTD. In contrast, unit sales over $500,000 were down in every county ranging from a low in of 22% (SF) to a high of 67% (Solano county).

Most of this negative variance was experienced in the first four months of the year. The market has shown a resurgence in closings and homes that went pending during June and July. Five of the nine Bay Area counties were up over last July including Solano (+100%), Contra Costa (+51%), Napa (44%), Sonoma (+13%), and San Mateo (+5%).  Notice the pattern. The top four are all from the counties with the lowest med. and avg. sales prices. Those counties that were off from last year, including Alameda (-3%), SF -5%, Santa Clara (-7%) and Marin     (-7.6%), for the most part represent counties with higher med. and avg. sales prices.

More encouraging is the fact that every county with one exception (SF -4%) was up in listings that went into contract during the month of July over last July. Some counties were dramatically up—Solano (+232%), Contra Costa (+147%), Napa (+93%), Sonoma (+83%), Alameda (+52%), and Santa Clara (+43%). 

With the number of new listings coming on the market slowing and with an  upswing in open sales this July compared to last, months supply of inventory continues to decline. Every county is now under 5 months (this is based on transactions going under contract divided by current active listings at the end of the month).  With one measure as to the health of a market being declining inventory supplies, if these numbers hold through the end of the year, it bodes well for 2009. In fact, in some local markets inventories are below the 3 month mark i.e. Piedmont at 1.6 months, the Lake District in SF at 1.2 months, Kentfield in Marin at 2.3 months, Moraga at 2.6 months and there are no listings available in Oakville in Napa county (o.k.—I know, there aren’t many homes in Oakville).  This affirms that real estate is a local game. Two towns adjacent to each other could be like night and day. Most amazing to me in August of 2007 American Canyon (Napa county) had a 66 month supply of inventory—it was a bastion of properties soon to be in foreclosure or a short sale.  This July the month supply of inventory sits at 3.2 months. What a difference a year makes.

August is like being becalmed in the Atlantic by the Doldrums. August is neither here nor there. A month of vacations and getting kids back to school—remember when school started after Labor Day.  For the most part August is following its normal pattern. It won’t be as strong as June and July. I believe the best we can hope for is that it will be better than last August.

Open homes attendance varies from county to county. The most active open homes are in San Francisco where most single family homes have traffic in the strong double digit range, however condo traffic can be much lighter. In the East Bay, particularly, Berkeley, Piedmont and parts of Oakland are still averaging 25-35 groups or more. Marin and the Wine Country overall average between 6-12 groups with the hottest properties attracting 25-35 groups.

Still the trend of fewer multiple offers continues.  The majority of the multiples are falling in the lower price ranges—most under $750,000.  All have gone at list price or higher. First time buyers are back.

By the next report we should have a better feel for what portends for the month of August.

- Avram

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:

…Despite strong opposing forces in the early part of the week, Bonds and home loan rates persevered like the greatest Olympian athletes, and were able to end the week in a similar position to where they began.

Remembering that inflation is the arch-enemy of Bonds and home loan rates, bad news on the inflation front caused Bonds and home loan rates to worsen Monday as the Personal Consumption Expenditure Index indicated that inflation climbed 0.8% in June, the highest monthly jump in 27 years. Not a huge surprise, given how energy and commodity prices soared in June.

Despite these inflationary pressures, the Fed announced on Tuesday that they have decided to keep the Fed Funds Rate at 2%, and released a statement that hinted they may not raise the Fed Funds Rate in the near future. Why did the Fed do this? The Fed is trying to balance a slowing economy and the threat of inflation, and while raising rates could help fight inflation, it could also slow the economy even more than it is now. The Fed is hoping that keeping the Fed Funds Rate unchanged will help boost the economy, without fanning the fires of inflation. Since this decision kept the fears of inflation strong, Bonds and home loan rates worsened as a result.

However, Bonds and home loan rates persevered and managed to rally like champions later in the week on the heels of several reports. Causing money to flow from Stocks over to Bonds were a far worse than expected Initial Jobless Claims report and Wal-Mart’s announcement that sales are expected to slow in August. Since inflation remains one of the strongest opponents for Bonds and home loan rates, I will continue to monitor this closely.

Read the entire report here.

- Foster Weeks

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:

Ended July with a bang. It was our 2nd best open and closing month since last July. I think we will see that same trend when I do the July Bay Area summary next week. For the second week in a row the Sunday SF Chronicle went sans any financial calamity stories. The best it could muster was another story on the Housing Bill. From the real estate section the main story was on how the internet has become the prime source of marketing homes.  Two other stories, one on how buyers and sellers can negotiate closing costs with title and escrow companies and the other on the on-going trend of hedge funds buying bad loan portfolios from banks and brokerage houses. If this trend continues it shows the media is moving on. It doesn’t mean we won’t see stories on a declining housing market; however the frequency is diminishing rapidly. In other words, we are unwinding the mess that Wall Street and other financial services created with the sub-prime and the coming Alt-A problems.

Fewer and fewer new listings are on coming on the market. This is not uncommon for the month of August. The most active part of the market remains in the under $ 1mil range.   REOs and short sales are still a significant part of the markets in Sonoma, Napa, Solano and parts of Contra Costa and Alameda counties. Every now and then, a higher priced listing will fall in that category of sales as did a $3.25 mil dollar Lafayette home that went into escrow.

We have noticed an increasing number of sales in the higher price ranges in the No. Bay.  Most recently we sold the multi-million dollar Cloudview Estate winery.  It was sold to the Mondavi family.  Believe it or not, there was a back-up offer. There appears to be a premium now on boutique wineries. 

Open house traffic remains steady. The most popular and well priced listings are still attracting good sized crowds as one Oakland Hills listing priced at $1.025 mil. did with 100 groups passing through. Not far behind was a Berkeley listing listed at $599K that had 75 visitors. Across the Bay in SF a Jordan Park 2 bedr. 2.5 ba. home listed at $1.875 mil. entertained 70 groups. The majority of our open homes averaged between 10-20 buyer groups.  This is contrary to the normally slow open house traffic during the month of August.

Multiple offers still are strong in the Berkeley, No. part of Oakland, Piedmont, San Francisco and Lamorinda marketplaces. Our Montclair office had over 40% of their sales involved in multiples.  Most of the multiple offer activity was in the under million dollar price range.

August could be a telltale month as to the direction of the market as we head into the Fall. Last August was the beginning of a strong downturn in the second half of 2007 when the sub-prime fiasco first manifested itself.

Today’s rally in the stock market, the highest single day rise since April 1st, , could be a positive omen. Can’t wait to see gas prices fall under $4.00 a gallon and they will—-given that we are getting close to a Presidential election.

- Avram