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.

Not so impressive this week. Again, we are approaching another holiday, things are starting to grind to a halt, albiet a bit earlier than usual. The reason? Can you say, “Stock Market”? Sure you can. While there is great opportunity for buyers to get a great deal what are they doing? Sitting on the sidelines and waiting for things to get better. Really?

Has anyone forgotted the multiple offer frenzy that we saw just a few short years ago? Everyone was bidding over and above the asking price just to get their home. Now, when it would be easy to pick the low-hanging fruit, what happens? Everyone holds back. It just doesn’t make sense, but that’s what’s happening in some areas and in some price ranges.

Recent statistics show that new and used home sales are way up in many areas because prices have already come down. So if you are sitting on the fence with the money to buy and want to own your own home, now might be the best time to purchase.

Here are the numbers for this week, 10/23/08:

- Janis Stone

Read what Rick Turley, President of Coldwell Banker, San Francisco/Peninsula says in his latest weekly report:

Home Sales Are Up…But Can Someone Please Tell the Stock Market? It was an interesting week in news.  More specifically, it was a great week in news for real estate activity—but in its third consecutive week of volatility, the stock market did little to support the cause.

Let’s start with the good news.  NAR released its Pending Home Sales Index—a forward-looking indicator based on contracts signed in August—noting pending homes “jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July – 8.8 percent higher than August 2007 when it stood at 85.8.  The index is at the highest level since June 2007 when it stood at 101.4.”

Days later, DataQuick News reported “Bay Area home sales soared last month above the record-low levels of a year ago, marking the largest gain in over six years. The median sale price did the opposite, diving to $400,000 – 40 percent below its summer 2007 peak – as more sales shifted to lower-cost inland markets laden with foreclosures…Last month’s 45 percent year-over-year sales gain was the highest for any month since April 2002, when sales shot up 49 percent.”

Both the prices and sales from NAR and DataQuick’s reports reflect the dominance of foreclosure sales, which according to Data Quick accounted for 42% of all homes that traded hands in Contra Costa, Napa, Sonoma and Solano counties.  Of course not all markets are being hit as heavily by foreclosures.  San Francisco remains the lowest Bay Area county with just 9.5% of homes sold in foreclosure.  Second was Marin at 14.9%.

What the heavy foreclosure sales figures are telling us, however, is most important.  The dramatic increase in sales suggests that more investors are deciding that prices have fallen to bargain levels and they are now getting into the market.  Historically speaking, it is investors who determine where the bottom is.  When they think prices have reached a point where they can potentially buy low, wait a bit and in a few years turn a profit, they’ll swoop in.  We’re starting to see this now and that is welcome news to many.

Of course housing recovery as a whole is dependent on the course of the overall economy which had less than stellar news this week.  By Thursday, the Dow rallied back after two days of declines—including a loss of 500 points on Wednesday—but the NASDAQ slipped to its lowest point in more than five years.

The volatility on Wall Street is causing concern for many of our local consumers. We have a lot of buyers and sellers who are watching their portfolios each day and are concerned about taking action in purchasing a home until the volatility subsides.  In more than one instance we’ve seen a buyer back out of a contract in fear of what may happen—even if they were having no problem with obtaining the loan.

And while I think we all understand the reasoning and the concern, what I do remind consumers of is the fact that we are in one of the best buyer’s markets of our generation.  Despite the turmoil in credit markets, home mortgages are available, and at very attractive interest rates.  Couple that with the fact that the majority of the communities around San Francisco are amazingly resilient in economic downturns.  That’s true because we have very limited land, and we are in one of the most desirable locations in the world.  It’s why we are still seeing some multiple offers each week. 

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

• East Bay—With 37.9% of home sales in Alameda County being foreclosures, and 58.7% in Contra Costa County, it is no secret that the East Bay real estate market is being driven by the bank owned market.  This week we get the feeling that a lot of people are dizzy from Wall Street’s rollercoaster as we saw fewer walk-ins and fewer floor calls.  Castro Valley saw a slower week with listing inventory starting to pick up.  Prices are stable although we are beginning to see some price drops in the mid-ranged properties ($500-700K) in Castro Valley.  Fremont shared that the REO market is still hot and that we’re starting to see the Fall slow down which is typical for this time of year.
• Monterey County—No information reported this week.
• North Bay—In Sonoma County, the last two weeks, according to our Petaluma office, listing inventory has come to a literal stand still.  Sales activity is good but we are having challenges with stock market funds affecting escrows.  Santa Rosa concurs noting that we are very active under $500,000 with multiple offers common.  The Santa Rosa office also reported success in the high-end this week with two of their high-end properties going into escrow this week.  In Marin County our Greenbrae Manager points out, “For every Agent who tells me things are slow, another is fielding multiple offers or participating in a highly contested bid.  Sales continue to happen though not at the same pace as spring.”  Nearby San Rafael notes that it continues to see more cash buyers.  One property listed under market value in a good location had 12 offers on it and went into contract $200,000 over asking.
• Peninsula—Another week of mixed stories.  Some sellers are taking their properties off the market because the market won’t bear what they want to realize in the sale.  Smart buyers who have cash are making some very good buys.  We had one Burlingame condo sell for $100,000 under asking to an all cash buyer.  In Half Moon Bay, more sales than usual were ratified over this busy weekend and one even had two offers, selling over its listed price of $1,350,000.  We also had two cash deals in excess of $1,500,000 supporting the fact that high-end cash customers recognize good value and have confidence in today’s real estate market.  Palo Alto office reports that activity at open houses in surrounding areas is relatively slow, while Palo Alto itself—with its lack of inventory—is still strong with higher activity.
• San Francisco-   Open houses appear to be filled with real buyers but they are slower to write offers and are being very selective about the properties that they are willing to write on.  Our Noriega office had one fixer upper in Sunset that had 10 offers.  The listing went well over $459,000.  The same office was involved in three other multiple offer situations this week.  The heavier activity this week has definitely been in the lower price points. 
• Santa Cruz County—No information reported this week.
• Silicon Valley—Silicon Valley changes from week to week and from neighborhood to neighborhood.  This week our Cupertino office is reporting that although sales are treading steady, new listings that are coming on to the market are slow.  Buyers continue to come through in waves looking for the under valued deal.  We are seeing increased buyer activity and stronger sales, mostly in the REO price range.  We are also seeing increased traffic at open houses.  Entry level homes seem to get the best traffic.  Overall I’d say that things are slowing down quite a bit but buyers are out there.  They’re just looking for the best deals and then they act. 

On a final note, I’ll share with you a comment released by NAR this week— regarding projections for 2009.  NAR Chief Economist Lawrence Yun “expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.”   You can be certain that once the national economy begins a turnaround, our San Francisco Bay Area will be one of the first regions in the nation to get firm on housing prices, and begin the upward climb of appreciation as it does in every cycle.

Rick Turley
President
Coldwell Banker SF/Peninsula

Previous Market Reports

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:

“JUST ANOTHER MANIC MONDAY…” The Bangles. And last week wasn’t just another manic Monday, as the markets were wild the entire week. During the past two months in the stock market, there have been 19 trading days with a 3% move. It had previously taken 6 years to see 19 days with a 3% move.

Bonds and home loan rates began the week with a strong rally on news that the world’s largest Bond Fund, PIMCO, raised its stake in Mortgage-Backed Securities to its highest in over seven years. Also helping Bonds and home loan rates break above important technical levels were poor earning reports by companies like DuPont, Texas Instruments, Merck, Wachovia, and Boeing.

However, the gains were short lived as both Stocks and Bonds worsened on Friday after heavy selling took place in Asia and Europe. The waves of panic selling started in Japan due to weak earnings reported by Sony and Samsung, then spilled over into the UK as Britain’s economy shrank for the first time since 1992, signaling a recession.

And while a strong sell-off in Stocks would typically cause money to flow into Bonds, helping Bonds and home loan rates improve, there is currently a bit of a departure from the normal “see-saw” trading you may typically see between Stocks and Bonds. This is occurring because securities must be liquidated to raise capital. In an effort to offset margin calls, all securities are being cashed in. Additionally, fear from individual investors, where people throw in the towel and want to get out of the market, is creating massive redemptions from fund managers. Despite the continued volatility and massive action of the last week, Bonds and home loan rates ended the week very close to where they began.

FORGETTING TO CHANGE YOUR CLOCKS CAN CAUSE A MANIC MONDAY WHEN DAYLIGHT SAVING TIME COMES AROUND! CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME FASCINATING FACTS ON THIS YEAR’S DAYLIGHT SAVING TIME.

Read the entire report here.

- Foster Weeks

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.

Like we said last week, the market turmoil is making buyers sit on the sidelines and wait for the dust to settle. The problem with that is in doing so, people are possibly missing a fantastic opportunity to get their dream home at a bargain price.

Time and time again, the “herd” mentality keeps those who are too conservative to break out of following the crowd to miss their chance to get a good deal. Look at it this way. Just a year ago agents were putting property on the market, showing it for 10 days, then taking offers which usually resulted in multiple offer situations. Who do you think will get a better purchase price? The buyer who has to compete with 3-4 other buyers (and bidding the price up)? Or the lone buyer who can make an under list price offer? Tony Robbins says watch which way the herd is heading and then go the opposite direction. Your chances are better!

With that said,

Here are the numbers for this week, 10/23/08:

- Janis Stone

Read what Rick Turley, President of Coldwell Banker, San Francisco/Peninsula says in his latest weekly report:

It was a week of decisive action by the U.S. government as it worked to fix the problems affecting Wall Street and the ever expanding global economic unrest.  Earlier this week, President Bush announced a historic and reworked financial-rescue plan, confirming that the U.S. will take equity stakes in nine banks (among them Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, to name a few), backstop virtually all non-interest-bearing bank accounts and guarantee most new loans between banks. The White House plan marks the first such deep government intervention in markets since the Great Depression.

The plan found support among economists and experts.  “This is finally the comprehensive and detailed plan that the market has been looking for,” said Jaret Seiberg, financial institution analyst for the Stanford Group.  “It addresses the biggest problems that banks face, which is a capital crunch, and it attempts to fix the short term debt markets, plus it reduces the risk of liquidity runs on banks.  That’s a pretty powerful first punch.”

In layman’s terms, this plan means that the government will now own a stake in several private U.S. companies—something that has many Americans rightfully concerned—though for now provides a stable backing in an effort to increase the availability of financing for consumers and businesses.  Without this backing, consumer and business spending was shrinking which ultimately leads to businesses cutting jobs or worse yet, closing their doors.  In theory, this plan will allow for restoration of more normal market functioning, and reinvigorate the financial markets.  But as evidenced by the week on Wall Street, this apparently will take a little time.

One day after the White House announced the plan, the Dow tumbled to its second worst session ever on a point basis.  The slide of 7.9% was the Dow’s 9th worst ever.  In fact, according to CNNMoney, the decline wiped out $1.1 trillion in market value on the Dow Jones Wilshire 5000, the broadest measure of the stock market.

Thursday, however, things seemed to get brighter as Wall Street rallied, finding positive momentum as the lowest oil prices in more than a year gave investors a reason to scoop up shares battered in the recent market sell-off.  The Dow Jones surged 401 points late in the day leaving many to wonder if the market was finally taking a u-turn.  Friday was yet another rollercoaster ride, another day like nine other days in October where the Dow has ricocheted in a range greater than 5% throughout the day’s trading.  On Friday the Dow ended down 1.4% amidst a sell-off just prior to the closing bell.  A quote I read in the WSJ Friday from a mutual fund firm CEO says it in a nutshell:  “If you don’t like the (stock) price, just wait five minutes.” 

So what has this week’s rollercoaster ride on Wall Street meant for our local housing market?  I am pleased to report that some offices are having near-normal new pending sales activity.  They higher-end communities seem to be the most lethargic during the wild Wall Street ride, as you’d expect.  The Santa Rosa office, with the most REO’s in our region, has hit 98% of their October projected open units prior to Oct 15th.   Let’s take a look…

• East Bay—The Berkeley office is again reporting low inventory in Albany, Berkeley, Kensington and El Cerrito which consistently have less than two months supply.  Other nearby markets are experiencing a heavy influx of bank-owned sales with the office reporting 70% of its sales this month have been REOs.  Danville’s REO surge from last week may have been an anomaly as sales slowed dramatically this week.  The high-end is also seeing dramatic lulls with inventory in Alamo at 13 months and in Blackhawk and 14 months.  Fremont continues to see some sales highs thanks to the large number of REOs.   Pleasanton and Orinda saw very little change this week, both noting that buyers are cautious, most glued to their televisions and the latest news on Wall Street.  Agents continue to guide their clients and educating them on the opportunities available in today’s market and doing what they can to get their buyers into their new homes buy the holidays.
• Monterey County—Listing inventory and sales activity have been steady.  We had two REOs this week—both with multiple offers.  For the luxury market, we have 22 properties pending in the MLS above $1.5 million on the Monterey Peninsula.  Of those, 14 properties are below $2.5 million and eight are $2.5 to $6.8 million. 
• North Bay—The Greenbrae office is reporting decreasing listing inventory and decreasing sales activity though they did have a Larkspur listing that was a major fixer upper that was listed in the high sevens and had 22 offers.  It went for over $1 million.  The San Rafael office noted that it listed a Novato house this week for $359,000—a price unheard of for Marin County.  Even with these types of values, some buyers are leery to commit.  Sonoma County continues to see increased activity in the bank-owned arena though Santa Rosa saw an increase in activity in the $900,000 to $1 million market this week (a market that has been asleep at the wheel for much of the year).
• Peninsula—Half Moon Bay witnessed the results of Wall Street’s volatility this week as two buyers canceled contracts out of fear that their reserves were disappearing.  Woodside is reporting that there are a lot of great deals right now with the high-end quiet, and some sellers are motivated. A $2.7M off-market sale in Menlo Park, plus several sales in Burlingame with multiple offers over $1M, all cash, reminds us that Buyers are out there for the right deals. The rest of the Peninsula seems to be seeing a lot of interested buyers who are entering the market, though waiting to see what comes of the economy.  Perhaps they are measuring the market so they are prepared to jump in and buy at the first sign that consumer confidence is rising. 
• San Francisco—San Francisco saw a similar week to that of the Peninsula with buyers waiting to see what comes of Wall Street and the government’s new plan.  The Market Street office also saw two deals fall through as buyers feared what was happening with the economy, although neither were having issues with securing funding.  While we’ve noted that a few transactions have cancelled, it’s equally important to note that more than 27 new escrows were opened in our San Francisco offices during this volatile Wall Street week.
• Santa Cruz County—Listing inventory is steady and sales activity seems to be decreasing.  Overall YTD through September, units are down in Santa Cruz County 12-15% from 2007.  Over 20% of the sales in the county have occurred in the Watsonville area (south county) and 87% are under $1 million.  The upper end of the market has been pretty slow this year.  In the county, YTD through September, there have been 20 sales over $2 million representing 1.8% of the closed inventory.  The lower-end, like most regions, continues to drive the market.  Lending continues to be an obstacle with strict guidelines, less money to loan and unyielding appraisals.
• Silicon Valley—There are two types of buyers out there right now—those who see this as an opportune time and are acting on it and those who have adopted the wait and see philosophy and are afraid to act.  For the most part, our Silicon Valley offices are reporting that buyer interest has slowed with floor calls and open house activity decreasing.  However, our San Jose Main office disagrees noting that buyer activity at open houses this week actually increased.  The market that seems to be fairing the best is the entry level and continued success lies in the bank-owned arena where REO properties continue to generate multiple offers.  There are two types of clients who are seeing success in today’s market (the rest languish so clients of all regions take note): Buyers who see real estate as a long-term investment and this market, in particular, as an opportunity and are acting on it
  Sellers who price their home right, stage it and are motivated.
• South County—With all of the drama on Wall Street, things have slowed quite a bit.  Activity has slowed with the exception of the bank-owned market where well-priced REOs are often selling quickly, with multiple offers.  The luxury market in South County seems to be languishing with the exception of bank-owned properties.  An Agent in the Morgan Hill office just sold a home that was listed earlier this year for $1.1 million—the final purchase price was $750,000 (as a short sale).  

There is our market in a nutshell.  Overall, things seem to be steady.  Bank owned properties continue to drive much of our activity. The higher end properties are more sensitive to pricing than they have been in several years. But make no bones about it, homes are selling today, and not a week goes by without several reports of multiple offers.

Rick Turley
President
Coldwell Banker SF/Peninsula

Previous Market Reports

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:

“I’m always making a comeback but nobody ever tells me where I’ve been.” Billie Holiday. Making a comeback was exactly what Bonds and home loan rates attempted last week, after approaching some of their worst levels this year.

While the Bond market was closed last Monday in Observance of Columbus Day, the early part of the week wasn’t short of market-impacting news. On Tuesday, the Bush Administration, including Treasury Secretary Henry Paulson, Federal Chairman Ben Bernanke, and FDIC Chairman Sheila Bair announced a plan to use $250 billion of the $700 billion financial rescue bill recently passed by Congress to buy directly into American banks. The government will begin by buying stock in nine of the largest banks including Bank of America, JPMorgan Chase, and Citigroup.

Why did the government do this? Because the financial crisis is due to over-leverage…that means the ratio of outstanding loans to capital is too high. If left unchecked, this can lead to the failure of institutions. And it has already taken a great toll. The only way to repair this is by reducing the leverage ratio, or “de-leveraging”. That means sell off loans or increase capital. The Fed’s plan helps this on both sides as they can be a buyer of some loans as well as an investor in some banks.

Another result of the current financial crisis is that economic reports are taking a back seat to market dynamics in ways that have never been seen before. In the past, fund managers or institutional traders would typically contemplate which direction would best favor the market, and position their portfolio in Stocks if the outlook was favorable, or Bonds if the outlook was cloudy. So we have come to expect Bond prices to move in the opposite direction from Stock prices much of the time, as money flows out of one and into the other. But the pressure to “de-leverage” has all but removed the thought process, and forced selling of all types of securities to raise capital. And while this situation should stabilize and return to normal (which we saw some evidence of on Friday as Stocks and Bonds alternated going up and down), it is one I will continue to monitor as the weeks and months progress.

And after all the ups and downs of the week, Bonds and home loan rates did manage a comeback, ending the week a bit better than where they began.

Read the entire report here.

- Foster Weeks

Read what Rick Turley, President of Coldwell Banker, San Francisco/Peninsula says in his latest weekly report:

Does it feel like the movie Groundhog Day?  Following the second straight week of economic unrest, watching coverage from the trading floors on Wall Street resembled an endless video loop, replaying the same performance day after day. The U.S. stock market endured its worst five-day performance since 1932 on fears of a severe economic downturn.  Two days later (on Thursday), stocks plunged in the final hour of trading, sending the Dow Jones industrial average down more than 675 points or more than 7% to its lowest level in five years.  In response to this news, overnight stocks plunged in Europe and Asia, as well.  Most notably, Japan’s Nikkei fell more than 10 percent Friday.

We’re all affected by this, whether or not we have 401k’s and stock portfolios suffering large losses.  The business owner who may be completely detached from the stock market personally, and fortunate enough to not be in need of a commercial loan to make payroll, is still affected by his or her customers who are experiencing actual losses.  Many consumers were afraid to open their third quarter 401K statements as they arrived this week in the mail.  Others are making countless calls to their financial advisors in hopes of a miracle or a quick fix to stop the decline.  Still others are choosing to ignore it with the “ignorance is bliss” philosophy.  The bottom line is, we’re all in this together.

What I am thankful for is that I am not hearing very many instances of our customers who are qualified for loans by today’s standards not being able to get loans.  I am meeting very regularly with our Princeton Capital president Rob Reid over the subject, and we just aren’t seeing situations where loans are being pulled or denied unreasonably at the last minute. I have heard from some agents that they’ve dealt with a lender that had a buyer qualified for 25% down, and then changed the requirement to 30%.  This is by far the exception rather than the rule.  To date, most loans opened in the past 30 days are funding as they were packaged.  Naturally, jumbo loan resources are fewer today, but there is enough money out there at very reasonable rates to satisfy the current demand.

Last week’s passing of the Emergency Economic Stabilization Act of 2008 should help to alleviate some strain as one of the goals of the act is to unfreeze the credit markets to encourage intra-bank lending.  Once we start to see this, banks should begin to lessen their stringent requirements and consumers should be able to once again see more resources for mortgages, auto, and school loans.

Historically speaking, during times of economic crisis consumers tend to invest their money in tangible assets, like real estate.  We expect that this may be the case in the months ahead as consumers look to buy homes for all of the lifestyle reasons that prompt people to buy (i.e. marriage, births, divorce, deaths, retirement, job relocation, etc.) but also with a consideration of the historic long-term appreciation that makes homeownership a valuable investment over time.

Earlier this week, Bloomberg.com reported, “Rates are low enough that some consumers stung by losses in their portfolios may want to pull the trigger on a purchase or refinance if they can lower their payments.”

Indicative of this fact, the article went on to report, “A nationwide survey of consumer credit rates showed 30-year fixed rate mortgages averaged 5.8 percent yesterday, according to Bankrate.com.  Rates were 6.26 percent on August 29 and also July 31, in the same survey.  Home-loan applications rose 2.2 percent last week, according to the Mortgage Bankers Association and purchases were at a six-year low the previous week.”

We certainly are in a time of uncertainty.  But while many sit glued to CNN and others fret over their investment portfolios, the housing market continues to labor on in the Bay Area.  Because the beautiful thing about real estate is that it’s not just an investment—though it may be one of the most important investments a consumer will make in his/her lifetime.  Your home is where you raise your family and plant your roots.  It’s where you hang your hat and make memories to last a lifetime. 

You can’t live in your stock portfolio – which is why some people will always need to buy or sell a home, regardless of the state of the national economy.  Here’s what was going on in our local markets:

• EastBay – A very mixed bag in the East Bay this week.  Castro Valley—a market which has been successful in sales for most of the year thanks to bank-owned properties—seems to finally have slowed down a bit as its REO inventory decreases.  Berkeley seems to be feeling the hit of the economic freeze as buyers seem to be hesitant to make offers.  Oakland concurs noting that “Buyers are on the fence about price.  We are seeing offers coming 10% below the asking price and not coming together.”  This is an important fact for sellers to think about as they are pricing their homes in today’s market.  Affluent San Ramon Valley is starting to see an increase in REO activity.  While just six to nine months ago, REOs were the exception to the rule, today only two of the office’s new sales are not REOs.  Fremont seems to be a bright spot reporting, “Even in light of the recent economic news, listings and sales are still active.  The REO market is very active.  Buyers previewing at open houses are surprisingly active.”  Livermore is seeing quite a bit of activity in the REO market noting that five of seven pending sales this week were REO.  The upper-end of Livermore is stagnant. 
• Monterey – Buyers were very hesitant this week in light of the economic turmoil.  We had fewer opened escrows last week than we usually do.
• North Bay – Greenbrae is reporting that “confusion and uncertainty has led to a paralysis in the market, though lenders are still lending and there are still great deals to be had.”  Nearby San Rafael notes that there was a slowdown this week in open house activity and Southern Marin concurs noting that it had no new sales for the week as buyers remained cautious.  Sonoma County seems to be feeling the strain as well though Santa Rosa did note a bright spot:  the $500,000 to $1 million range—which has been sleeping for a good part of ’08—seems to have awakened over the last three weeks.  Though three weeks does not define a trend, it is a sign of good things to come as we need the move-up buyers to be moving in order for the upper-end to pick-up.
• Peninsula – Overall optimism is high along the Peninsula right now.  We had two very competitive multiple offers out of our Burlingame office this week which have yet to be ratified.  While at the same time, we had a few nervous buyers back out of an offer and then attempt to renegotiate on the same deal.  Half Moon Bay saw open house activity pick-up this week thanks to the LPGA tournament and a few high end deals that continue to be negotiated.  Our Menlo Park Santa Cruz Avenue office is reporting that things are slow though the office is quick to note that “savvy buyers are taking advantage of the great opportunities.”
• San Francisco – Agents are finding that some of their buyers are holding tight right now waiting to see what is going to happen with the economy before they are willing to write an offer.  In a sign of good things to come, open houses were well attended in some areas.  City buyers are just waiting for that perfect opportunity to swoop down on the best deals.  Sellers take note:  the buyers are out there so if you price your home competitively from the beginning, you should be able to attract some interest.
• Santa Cruz County – No information provided.
• Silicon Valley – People are concerned.  There’s no question.  Buyers and sellers alike seem to be in a wait and see mode.  Buyers want to see what is going to come of the market over the next several weeks and most sellers are only selling if they really need to put their homes on the market.  The bright spot?  Some buyers are seeing the opportunities available in today’s market despite what is going on in Wall Street.  Bank-owned properties also continue to drive many of our outlying markets and we do continue to see multiple offers on such properties.  Our San Jose Almaden office is reporting that we are having trouble with financial commitment from some lenders.  Agents are now trying to get financing contingency to remain in effect until the loans are funded.
• South County – The local market continues to be dominated by bank-owned properties.  Prices continue to drop but buyer interest is very high as interest rates are good and prices become increasingly attractive.  Moderately priced homes are selling fairly quickly—if they are priced right and show well.  Activity with higher-end homes has slowed as there are not many “move-up” buyers. Lending continues to be a challenge.  Buyers who once could get into a home with just 10-% down are now required to have 20% to 30%.

As you can see, overall the housing market for the week was a bit of a mixed bag.  Areas that have a high REO rate continue to see quick sales.  More affluent regions seem to be feeling the wait and see philosophy.  And for most, the ability to get a mortgage seems to be more of a psychological challenge rather than an actual one, at least at the moment.

I agree with many of my colleagues that Q4 could be the best opportunity in a long time to purchase real estate.  Buyers should understand that the best time to buy is when others are not.

Rick Turley
President
Coldwell Banker SF/Peninsula

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.

With all the turmoil in the markets and the pending election, people do not seem to be able to make up their minds. While our inventory is in good shape, it is truly a buyers’ market. Yet the deals are few and far between.

Here are the numbers for this week, 10/8/08:

- Janis Stone

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:

“THOSE WHO CAN SOAR TO THE HIGHEST HEIGHTS CAN ALSO PLUNGE TO THE DEEPEST DEPTHS.” Lucy Maud Montgomery. Despite all of the government’s efforts, markets here and around the world plunged this week as the financial crisis continues to grow.

On Tuesday, the Fed and Treasury Department announced plans to purchase short-term commercial paper that many companies rely on to finance their day-to-day operations, to help businesses with their short-term credit and funding needs. The government hoped this announcement would help ease uncertainty, restore confidence, and give Stocks a boost. They hoped for a similar result on Wednesday when the Federal Reserve cut the Fed Funds Rate by 50 basis points, and coordinated an emergency global interest rate cut with the European Central Bank, Canada, the UK, Switzerland and Sweden. The Central Banks in Asia followed suit and cut their benchmark interest rates overnight as well.

However, on Thursday, Stocks plummeted nearly 700 points to a five-year low, and on Friday Stocks ended the day another 126 points lower (after plunging 500 points three times throughout the day). Bonds and home loan rates also worsened sharply in the second part of the week, as Bonds dropped below several important floors of support, and home loan rates ended the week .50% higher than where they began.

From a historical perspective, we are in the midst of a brutal bear market that began on October 9th 2007. Remember that a decline of 20% constitutes a bear market…and a 10% decline is a “correction.” The last bear market occurred between March 24th of 2000 and October 9th 2002 saw a 49% drop. Overall, the average bear market lasts for 12.3 months, with the average decline being 32%. The current bear market is right in line with the average historical time frames, and the extent of the decline is worse than previous bear market averages, but still slightly better than the bottom made in 2002. So the historical data might suggest that we could be nearing a bottom. I will continue to monitor this situation closely, and let you know how this will impact home loan rates in the weeks and months ahead. One bright spot is that oil prices are also plunging, falling from a high of $147 per barrel last July to around $80 per barrel Friday morning…which at least makes a trip to fill up at the gas station slightly less painful.

PLUNGING PORTFOLIOS ARE SOMETHING WE NEVER WANT TO SEE HAPPEN, AND NEITHER ARE PLUNGING SAVINGS ACCOUNTS. CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME GREAT TIPS ON STAYING WITHIN YOUR BUDGET!

Read the entire report here.

- Foster Weeks