From the San Jose Mercury News as reported by California Association of Realtors in their newsletter:

Facing foreclosure? Beware when looking for help.

Due to the large number of foreclosures, many financial institutions have created mortgage modification programs to help homeowners in default modify their existing mortgage loans into fixed-rate, more affordable loans. Many banks are overwhelmed with borrowers applying for mortgage modifications, resulting in some private companies, real estate brokers, nonprofit organizations, and attorneys offering to serve as the liaison between the homeowner and the bank, sometimes for a fee.  With the numerous options available to homeowners, it can be difficult to determine which consultants are reputable.  Individuals and companies that charge a fee prior to providing the mortgage modification service must register with the California Dept. of Real Estate (DRE).  Consumers can verify that a company’s contract has been approved by visiting www.dre.ca.gov or by calling (916) 227-0770.  Individuals and companies that charge fees after the service is performed are not required to register with the DRE.

To read the full story, please click here.

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

A number of real estate organizations released their third quarter and/or October statistical reports—revealing some very interesting and important trends in our market.  Let’s take a look:

NAR Presents Four-Point Housing Stimulus Plan to Congress

Earlier this week, NAR representatives presented a four-point plan to help foster a housing recovery to support an economic rebound.  The plan calls for eliminating the repayment of the first-time home buyer tax credit that was passed in the February stimulus bill and to expand the tax credit to include all home buyers.

The plan also recommends making the increased FHA and conventional loan limits permanent to stimulate home sales and stabilize prices.  In addition, the plan urges that the Troubled Asset Relief Program be put back on track by targeting the funds for mortgage relief through a mortgage interest rate buy-down.  Finally, the plan recommends finalizing legislation to prohibit banks from entering into the business of real estate brokerage and property management.

“The only way to overcome today’s economic turmoil is to motivate and encourage worried or cautious housing consumers to enter the marketplace,” said NAR President Charles McMillan.  “Stabilizing the housing market will lead to a quicker and greater economic recovery.  Our goal is to ensure there is a healthy market and sufficient capital to support mortgage lending to qualified borrowers.”

CAR Releases First Time Home Buyer Housing Affordability Index

• CAR released its First Time Buyer Housing Affordability Index which showed that the percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago.
• The organization also reported, “At $56,100, the minimum qualifying income was 44 percent lower than a year earlier when households needed $100,500 to qualify for a loan on an entry-level home. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.”  We are already beginning to see the benefits of new affordability ratios in our outlying areas around San Francisco Bay where some homes can now be purchased in the $300’s.  While it doesn’t seem like much help for San Francisco, most of San Mateo Co, and Southern Marin – that affordability factor is slowly making a difference. It will begin to nudge move-up buyers and sellers toward our median price in these counties, which remains more than double the median price of California homes.  (new State median: $278,000 – new SF median: $699,000 )

DataQuick Releases October Sales Figures

• “Bay Area homes sold at their fastest pace in 17 months in October as buyers favored more affordable inland areas where depreciations and foreclosures have hit hardest.  As a result, the median sale price continued its steep, months-long decline, falling a record 40.6 percent, or $256,000, from a year ago,” reported DataQuick.
• “A total of 7,613 new and resale houses and condos closed escrow in the nine-county Bay Area in October.  That was up 4.7 percent from 7,271 in September, and up 38.8 percent from 5,486 in October 2007,” continued the report.
• “The median price (Bay Area) paid for all new and resale houses and condos combined fell to $375,000 last month, down 6.3 percent from $400,000 in September and down a record 40.6 percent from $631,000 in October 2007.”
• “Inland communities continued to fuel the bulk of the Bay Area’s sales gains, attracting buyers searching for the biggest discounts.”
• “Contra Costa, Napa, and Solano counties – where prices are down sharply and sales have risen the most – accounted for 36.4 percent of Bay Area sales in October.

Notice in the chart above, San Francisco County is the only one to register a drop in sales activity ’08 over ’07 – while it also has the smallest decline in median price. Contra Costa, Sonoma, and Napa Counties are off the charts with increased level of sales – at the same time showing some of the sharpest declines in price. How do you spell R-E-O?

With overall Bay Area sales up nearly 39% in October, many people feel like right now, real estate may not be a bad place to park their money.  Compare that to the volatility of the stock market, housing is looking like a pretty solid investment.

Keeping that in mind, let’s take a look at this week in real estate:

• East Bay—Our Walnut Creek office is reporting that sales have slowed however open homes are still very well attended.  People seem to want to buy but continue to be swayed back on the fence due to the negative reports on TV and in the paper.  Our Oakland office had a busy week.  Buyers seem to be getting contracts in order to get in under the wire on the loan limits which change at the end of the year.  In fact, the office saw a huge surge in sales this week.  REOs continue to flow in Fremont; there were 10 new ones this week.  There is still a lot of activity for the low end priced homes from first time home buyers and investors.
• Monterey County—No information provided.
• North Bay—Activity (in Sonoma County) continues to be steady in the under $400,000 range.  An estimated 2/3 of the properties that close are short sales and REOs.  The last three months have been record breaking months in units, according to our Petaluma office.  Santa Rosa notes that the below $550,000 market is very active but once you pass that price point it becomes very quiet.  The luxury home market is quiet though we took one new listing this week in our Santa Rosa office.  We also had an escrow that fell apart but new buyers were waiting in the wings and it took five counters to make the deal work.  Phew!  In a sign of the times, our San Rafael office saw a home that originally was listed at $460,000 go into auction with a starting bid of $16,000 in Novato.  Inventory is decreasing at the same time that more buyers are writing offers which is a sign of good things to come for this market.  As demand increases and inventory decreases, the balance between supply and demand will be on a more level playing field.
• Peninsula—Listing inventory continues to build and sales activity continues to be very slow.  Our Palo Alto office reports that the market has all but come to a halt.  From entry level to the luxury market, it seems very quiet.  Our Redwood City office agrees noting that the market continues to be very slow.  Activity at open houses is less than usual and buyers seem to be adopting the “let’s wait and see what happens” attitude.
• San Francisco—Our Lombard office reports that things are very quiet.  One deal brought multiple offers after two price reductions on a nice family fixer.  Our Noriega office had a similar story to share asking the question, “Did some turn off the tap?”  Opens seem to be very slow and REO offers are down but our Market Street office has a different story to share noting that open houses are well attended with a lot of confident buyers.  People who have been sitting on the fence for a while were actually writing offers this week.  Our Van Ness office reports a slowing down in activity but larger sales still have reasonable activity considering the economic climate.
• Santa Cruz County—No information provided.
• Silicon Valley—Our Cupertino Stevens Creek office is reporting that closings are steady but openings and listings are slow.  Our San Jose Willow Glen office is reporting that folks are sitting back and waiting, waiting and waiting.  We have buyers and some offers are getting rejected.  Our Saratoga office is reporting that the upper end is extremely slow.  Buyers are being cautious given the negative economic news.
• South County—In symbolic proof of the inland sales figures released by DataQuick, Gilroy reported that its market is still very active in the lower end.  First time home buyers and investors are taking advantage of the discounts on bank owned properties.  Our median price is down 37% YTD over 2007.  However, our office units sold is up 59%.  The lesson:  lower prices = more sales.  Morgan Hill concurs noting that REOs and short sales are the key to success in this business.  Normal sales are few and far between—at least in the South Bay.  At tour meetings—when a new listing is announced—it is very common for the listing Agent to emphasize that the listing is not short or an REO.

So while sales have been quiet this week, the positive news I am seeing in our industry reminds me just how great this business truly is.  No other sector of our economy is getting as much positive attention and focus right now. California real estate is positioning itself in all the right areas for a much desired turnaround.  Some regions in the state have been waiting nearly three years for this turnaround to begin.   As we’ve noted before, real estate makes up 20% of the Gross Domestic Product in this country, and the national economic landscape cannot be greatly improved without fixing the housing sector.  That puts us in a very good position because real estate will be gaining a great deal of attention over the next several months.  Whether that attention comes in the way of more tax benefits, home ownership credits, subsidies or interest rate stabilization, the leaders of our country are focused and diligent on fixing the housing sector which is perfect news for our industry and our business.

Rick Turley
President
Coldwell Banker SF/Peninsula

Greenville South Carolina Real Estate market is growing fast and requires up to the minute information in order to stay on top of the current market conditions. You can see all listed homes for sale in Greenville SC from this site. My specialty is in helping you with your Greenville, South Carolina real estate buying and selling needs. We specialize in Greenville County. This county includes the cities of Greenville, Greer, Simpsonville, Travelers Rest, Mauldin, Fountain Inn, and Taylors.

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 IMPORTANT THING IN THIS WORLD IS NOT SO MUCH WHERE WE STAND, AS IN WHAT DIRECTION WE ARE MOVING.” Oliver Wendell Holmes. And when it comes to the direction our economy may be moving, there was some surprising news from the Fed last week that the “Minutes” from their October meeting revealed.

After years of being concerned about inflation, the Fed is now concerned about deflation. So what exactly is deflation? Deflation is when prices drop, which generally is due to lack of demand, and therefore lack of pricing power. With the economy slowing down, we are hearing economists forecast that we may be in for a deflationary recession. In a deflationary environment, investors flee into fixed instruments like Bonds, because the fixed payment received would actually buy them more goods and services over time as prices decline.

So what does this mean for home loan rates? Remember, home loan rates improve as Bond pricing moves higher – and more demand for Bonds would mean higher prices for Bonds. In the spring of 2003, when Alan Greenspan uttered the “D” word, deflation, Bonds rallied 400bp in just a few weeks, bringing a significant drop in home loan rates. Of course, the economy is different right now, but as more money may be headed towards Bonds in a deflationary environment, we could again see a significant improvement in home loan rates down the road.

On the inflation front, last week’s Producer Price Index indicated that wholesale inflation plummeted last month – by the most since records began in 1947 – largely due to declines in energy prices. In addition, the Consumer Price Index showed that inflation at the consumer level fell by a record 1.0%, thanks again to lower costs of energy.

When it comes to the direction the economy is heading, the week did end with some hopeful news. Federal Reserve President Jeffrey Lacker said that an economic recovery could begin in 2009 as low interest rates, low energy prices, and less drag from the housing sector may shore up spending. In the meantime, Bonds and home loan rates spent much of last week trading near a key level of technical support called the 200-Day Moving Average, finally moving and staying above this level on Friday. As a result, Bonds and home loan rates ended the week unchanged to slightly better than where they began.

Read the entire report here.

- Foster Weeks

Here is First Republic Bank’s Third Quarter Report:

California Luxury Home Values Decrease

Los Angeles, San Diego, San Francisco All Post Quarterly and Annual Declines

November 18, 2008

SAN FRANCISCO — California luxury home prices declined in the third quarter of 2008 from a year ago and from the second quarter of 2008, according to the First Republic Prestige Home Index™ by First Republic Bank, a leading provider of private banking, private business banking and wealth management services.

In the quarter ended Sept. 30, 2008, the Index indicated the following:

• Los Angeles area values fell 1.9% from the second quarter of 2008 and 4.2% from the third quarter of 2007. The average luxury home in Los Angeles is now $2.33 million.
• San Diego area values dropped 2.1% from the second quarter of 2008 and 7.5% from the third quarter of 2007. The average luxury home in San Diego is now $1.98 million.
• San Francisco Bay Area values declined 0.7% from the second quarter of 2008 and 3.0% from the third quarter of 2007. The average luxury home in San Francisco is now $2.99 million.

“Values of luxury homes declined in the third quarter in response to turmoil in the financial markets and the underlying weakness in the broader housing market,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Further price declines are likely due to the overall slowdown in the U.S. and global economies.”

First Republic Bank produces the Prestige Home Index each quarter with Fiserv CSW Inc., a leading provider of automated property valuation services and home price metrics to U.S. financial institutions. Historical results of the Index are accessible at http://www.firstrepublic.com/. The Index has tracked luxury homes since 1985.

San Francisco Bay Area Values

In the San Francisco Bay Area, values fell to $2.99 million in the third quarter of 2008.

Gloria Smith of Sotheby’s International Realty said most buyers are looking for a bargain before making an offer. ”In the $3 million to $5 million range, there are still some buyers for special properties, but they are looking for a deal. In the $10 million and above range, everyone is looking for a deal. Buyers are willing to wait until prices come down.  At the same time, some sellers are pulling their properties off the market because they believe the current purchase prices are too low.”

In Palo Alto, the market has remained flat, but buyers have growing concerns about the strength of the technology sector in Silicon Valley. “Buyers are concerned about future appreciation when they are thinking about making an offer,” said Ken DeLeon of Keller Williams Realty in Palo Alto. “There has been more trepidation in the market than normal. I anticipate a further slight decline in values for at least the next three months.”

Read the rest of the report here.

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.

While we take a semi-vacation in Hawaii, the market moves on. Still available by telephone, we are not getting as many calls for showings as we did several weeks ago. As we look at the numbers for last week, we did notice that though there are still sales, the same agents are not showing up week after week. It’s a tough economy all the way around. There will probably be more shake out before this is all over. And those who don’t have to sell won’t until the market picks up again.

Here are the numbers for this week, 11/5/08:

• 2 new listings ($838,000 and $1,785,000)
• 7 ratified sales (pending) (average price $1,392,143, low $639,000, high $4,250,000)
• 2 closed sales (sold) ($895,000 and $1,175,000)
• 4 price reduced (average price $1,206,000, low $699,000, high $1,995,000)

- Janis Stone

Although there are exceptions, overall this seems to be true for home values in San Francisco:

According to the latest Zillow Real Estate Market Reports, home values in San Francisco decreased -5.50% in the third quarter of 2008, compared to the third quarter of 2007. Nationally, home values decreased -9.7% during this same period.

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

What we are enduring is no longer a national economic crisis.  We are full swing in a global financial crisis that has affected at least 11 countries around the world.  Brazil, China, Germany, Iceland, India, Japan, Russia, Saudi Arabia, South Africa and the United Kingdom are now all reporting economic declines and many experts agree that their woes are a direct result of the U.S. housing decline.

World leaders gathered in Washington on Friday to talk about what is needed to get the global economy back on track.  Leaders from the Group of 20, which includes the United States, members of the European Union, China, Saudi Arabia and Brazil, agreed to the summit late last month at the height of the global financial crisis.

Our government continues to struggle with finding a solid, coherent plan to give necessary aid to the troubled credit and housing sectors. The administration is still working on the best way to deploy the remaining money in the $700 billion financial rescue plan passed last month.  Treasury Secretary Henry Paulson said Wednesday that the government will no longer buy troubled mortgage backed securities—the original intent of the legislation—and will mainly focus on injecting money into the financial sector.

The stock market continues its frenetically sharp swings. This week brought further poor unemployment numbers, and then disappointing retail sales which were off, the resulting fear causing sell-offs, which ultimately attracted buyers taking advantage of lower stock prices.  Sounds familiar, right?  Each week for more than a month and a half, it’s been about the same story on Wall Street.

CAR’s chief economist Leslie Appleton-Young recently gave her 2009 housing forecast at the CAR statewide meetings in Long Beach.   Here is the link to her video presentation, which I encourage to take the time to watch.  It’s a little over 45 minutes, and very worthwhile. (However, the link is no longer available at this time. – Editor) 

Specifically, Leslie shares how California compares to the rest of the country, noting that while our hardest hit areas decreased further and faster than the country as a whole, these areas are also rebounding at a much faster rate than the rest of the country.  It is an important fact that consumers should be aware of.

She also shares the importance of local forecasting noting that it really is a mistake to paint the California real estate market with a broad brush.  Markets like the Central Valley were hit much harder than the Bay Area yet are often lumped in to make sensational headlines for real estate stories.  Our sales in the Bay Area, according to DataQuick, have increased 45% since 2007.   Two things we know about this sharp rise in Bay Area sales is that they are largely fueled by REO’s, and that they are dramatically pushing median price down. The positive fact is that these homes are indeed selling, and at a fairly rapid rate.  As we weed through the bank owned listings, inventory will begin to decline, which will eventually cause the price point to increase. 

With this week’s economic update in tow, let’s take a look at our week in real estate:

• East Bay—It seems we saw a little life breathed into our East Bay market this week.  After a quiet week last week—when we were in the height of the economic rollercoaster—we started seeing some steady activity this week.  Nothing to write home to mom about, but some steady activity just the same.  Walnut Creek reports that sales are slow but REO properties remain active.  Orinda reports that sales have cooled with the weather and that buyers remain very cautious.  Pleasanton concurs noting that buyers have once again adopted the wait and see attitude.  Livermore saw an anomaly this week with 50% of its new pending sales were normal sales (not REOs) and two of the sales exceeded $500,000.  This was a major feat as 85% of its pending sales are below $500,000.  Fremont is reporting steady traffic at open houses and increasing sales activity.  Castro Valley noted a lot of activity, though prices are still dropping in Castro Valley and San Lorenzo.  The good news is that deals—for the most part—that go into contract are staying in contract and closing.
• Monterey County—Listing inventory remained steady and sales activity decreased, though this is typical and expected for this time of year.  The luxury end is slower but homes priced at $1.5 million and above that are priced well and show well are moving.
• North Bay—Listing inventory in Marin County is down.  New REO listings that are coming on the market priced under what is generally perceived as “fair market value” are driving prices down in San Rafael, Novato and outlining areas.  Southern Marin noted that the higher end market just might be waking up.  The office represented both sides of two different Previews listings for a total of $11 million in one week.  REO inventory in Santa Rosa is shrinking (also noted in Sebastopol) creating a bit of a seller’s market in that niche.  We are seeing more pendings than new listings, which is a sign that price points could begin to strengthen in this market. 
• Peninsula—Buyers are taking a little time to see what will happen now that the election is over and are looking for some stability in the stock market to give them a level of comfort.  Many FHA buyers are scrambling to fund and close before the end of the year.  Our Half Moon Bay office is reporting that very few buyers visited open houses and fewer actually made offers this past week.  Only 10 homes are sale pending on the entire coast.  Of those, six are below and four above the $1 million price point.  Our Menlo Park El Camino office is reporting that this week was better than last.  Listing inventory continues to build and sales activity continues to be very slow out of our Menlo Park Santa Cruz Avenue office.
• San Francisco— Open houses were well attended with a lot of buyers, and some who have been sitting on the fence for a while were writing offers this week.  Our Van Ness office noted that while there are still sales happening, many buyers without an urgent need seem to just want to hover to wait and see which direction the market will go in the upcoming months. 
• Santa Cruz County—Inventory levels overall in the county continue to move downward while pendings have remained about the same week over week at 255 total single family residences in the county.  Most of those are in South County—the area hardest hit by REOs—with currently 107 pendings and 50 in San Lorenzo Valley.  The remainder are spread through the county with Seacliff Beach, Rio Del Mar, Seascape and La Selva Beach with the highest number at 24 pendings.  Foreclosures continue to be at an all time high in the county—however we remain optimistic.
• Silicon Valley—Morale remains high under challenging conditions.  Properties under valued often receive multiple offers signaling that the buyers are still hanging around for the best values.  Our Saratoga office experienced a slight increase in sales in the non-Previews market.  Also, listing activity has slowed as expected given that we are approaching the end of the year.
• South County—According to our Hollister office, REO listings are 49% of our active market in this region.  Listing prices are still being reduced.  We are still seeing multiple offers on well-priced REOs.  Some are requiring pre-qualification with listing Agents’/bank’s preferred lenders.  Our Morgan Hill office shares that the market continues to be a “Tale of Two Cities.”  Though the number of REOs and short sale listings continue to increase, there are excellent opportunities for buyers.  This is especially true in the South County.  Homes that were once selling in the $600,000 range are now offered (and sold) for about half that price.  Most buyers are seeing this as a great time to obtain a very nice home at very attractive prices.

The uncertainty in the financial markets is causing consumers to be cautious in all purchases, not just real estate.  Today’s consumer is looking for some certainty that there is real value in what they are considering buying.   Fully informed on the detailed local real estate market, and armed with a good solid loan approval, some buyers are stepping up – and in some cases getting into neighborhoods and homes they couldn’t afford in previous years.  I met a young couple in one of our offices this week who were excited about their recently accepted offer on a home in San Francisco.  They told me that after some negotiating on price throughout several counteroffers, they were quite pleased to have come to terms with the seller, and are really excited to become new first-time homeowners in about three weeks.  Stories like this are happening every day throughout our Bay Area.

Rick Turley
President
Coldwell Banker SF/Peninsula

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:

“NOBODY LIKES THE BRINGER OF BAD NEWS.” Ancient Greek playwright Sophocles. Last week may have been a holiday-shortened week as the Bond market was closed on Tuesday in honor of Veterans Day, but it was far from quiet as financial markets reacted to several pieces of bad economic news brought throughout the week.

The week began with the news that Circuit City filed for Chapter 11 Bankruptcy, and will be closing 150 stores – and this in advance of the holiday season, when most retailers make a larger portion of their profits for the year. Department store Nordstrom reported its growth rate is down 16%, where they were expecting an increase of 10%. Poor economic reports from Best Buy and Macy’s followed a few days later, as well as lower future earnings guidance from Wal-Mart and Intel. As if the headlines of the week weren’t enough, Friday’s Retail Sales report showed that overall retail sales fell for the fourth straight month and plunged to their worst level since record keeping began in 1992. Looks like a pretty dismal holiday shopping season ahead…probably the worst that retailers will have seen in a long, long time.

In addition, there was bad news for the automobile industry as Deutsche Bank downgraded shares of General Motors from hold to sell, giving a price target of $0…yes, $0. As a result, General Motors stock fell below $3 for the first time since April 13, 1943. Interestingly enough, the automaker was not even making cars at that time but producing only military equipment for WWII.

And the bad news continued on the job front as well, as the Initial Jobless Claims report revealed the highest number of first time unemployment claim since 2001. In addition, Continuing Jobless Claims reached their highest level in 25 years. Remember, poor economic news and a weak labor market usually cause Bonds and home loan rates to improve. This is because fewer jobs and lower confidence about keeping or finding work causes people to spend less. In turn, businesses and retailers lose pricing power, and this is a cycle that keeps inflation – the arch enemy of Bonds and home loan rates – at low levels, especially if oil remains near present reasonable prices.

However, despite all the bad economic news of the week, Bonds and home loan rates were unable to make significant improvements this week as they fought to defeat and move convincingly above a very important technical level called the 200-Day Moving Average. Read on, to understand more about the significance of this technical indicator.

Read the entire report here.

- Foster Weeks

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

Regardless of your political persuasion, this week’s election was one for the history books.  After a long, defining, historical race to the White House, Senator Barack Obama defeated Senator John McCain, earning him the position of the 44th President of the United States.  Just two years ago, with home prices in the US at an all-time high, it seemed the war in Iraq would be the single leading issue for both parties going into the campaigns.  During the past 12 months, and particularly the last three, the #1 concern by far turned to that of the economy. CNNMoney ran a very good story, “How the Economy stole the Election” which chronicles the recent historic economic events that have touched every American, as well as every economy throughout the world. http://money.cnn.com/galleries/2008/news/0810/gallery.economy_election/index.html

On Wall Street, after a sharp rally through Election Day, stocks plunged sharply in the two sessions following Obama’s victory. The Dow had lost 929 points, its biggest two-day point loss ever. With growing unemployment figures released, and news of GM’s massive quarterly loss, Wall Street saw yet another rally on Friday as investors jumped in to pick up some bargains, and the Dow ended up 248 points.  Although it was an historic election week for the US, watched by the entire world, the roller coaster pattern on Wall Street seemed just like any one of several recent volatile weeks.  President-elect Obama has stated the economy is facing the “greatest economic challenge of our lifetime,” and said he will take all necessary steps to confront the crisis. He said if a second stimulus package is not passed by the lame-duck Congress that it will be his first priority once he takes office on Jan. 20. 

The weeks ahead will bring many debates on what kind of financial stimulus is needed where –how much, how fast.  The good news is that some signs are appearing that we are taking steps in the right direction.  The 3 month Libor lending rate has fallen to a four year low, which is critical to economic recovery.  The Fed has injected another short term funding of $100 billion through their Commercial Paper Funding program to help businesses.  Although credit isn’t flowing as quickly as hoped, these steps are necessary to get banks loaning to businesses and to consumers.  Several gauges noted by Libor and Treasury bill rate-spreads show that credit confidence is finally on the rise.

Incoming NAR President Charles McMillan concurs noting, “We’re in a good place.  Realtors are excited by this historic election and stand ready to work with our new president and the new Congress on issues that are at the heart of the American dream of homeownership.”    Here is what our offices are saying:

• East Bay—After a few slow weeks, our Castro Valley office is reporting that it had a pick up in sales this week.  We have a lot of buyers who seem enticed by the dipping of prices in San Lorenzo and Castro Valley.  Our Berkeley office is sharing a similar story noting that sales picked up in the past week and some listings we have been waiting for finally arrived.  The $700,000 to $900,000 market is active.  Rumor has it, according to our on the ground experts, that things will pick up after the election, especially now that consumer confidence has been restored.  Fremont is reporting that sales and listings are generally slow this time of year but possibly slower this year due to the economic downturn.  Owner occupied sales are selling IF (and this is a big if) they are priced aggressively.  You can’t test the waters in this market.  You need to be priced aggressively from the beginning to ensure your home gains the exposure you need.
• Monterey County—Even after a tumultuous month on Wall Street, we put 51 properties into escrow last month.  Though it takes much longer, properties well-priced and well-located over $1.5 million are still selling.  Sales activity is decreasing and our listing inventory remains steady.  Agents are reporting slower attendance at open houses over the weekend, though I do believe that the seasonality has something to do with it.
• North Bay—Our Greenbrae office is reporting that deals that fall out of contract then return quickly.  Houses that have been on the market for over 100 days suddenly get two offers in one day.  These are the sudden changes we felt over the last week.  Buyers are waiting for the perfect moment and it seems now is the right time to place an offer.  Some times it just takes buyers a while to get to the point of realizing that.  Our San Rafael office notes that they are still seeing a mixed bag of properties listed in the marketplace that appear overpriced by a long shot.  Having said that, sellers who price homes just under their competition in their surrounding area are seeing multiple offers and in some cases, causing a “feeding frenzy” for buyers who are driving the price over asking.  There are so many buyers out there NOW is the time to write an offer, before they all come out at the same time.
• Peninsula— Everyone last week seemed to be in waiting mode, until after the election.  Sales are picking up, however, and we are seeing more multiple offers.  The “off market” trend continues with sales in the high end.  We are also beginning to see more offers with home contingencies and sellers are accepting them if they think the location and price is right.  In terms of the local luxury market, Hillsborough currently has 63 active listings and five pending sales.  That is about 20% more than typical inventory.  Half Moon Bay saw a bit of a slower week—possibly due to the rain, the economy, the election—or better yet, a combination of the three.  Inventory is up, sales are slow to ratify. The remainder of the Peninsula continues to see a slow down in sales activity—though buyer interest remains high.  We are still seeing a lot of activity at open houses and in floor calls which is a good sign for the near future.  The buyers that are in the market, as reported by our Redwood City-San Carlos office, who have good credit scores and large down payments aren’t shy about cutting deep into the list price, offending some sellers.  Possibly the best news reported by our offices was that of our San Mateo office.  Manager Chuck Cwieka shared that his office had its best weekend in six weeks—a sign of promise for our future.
• San Francisco—Slow but steady.  That seems to be the underlying theme for the City.  Some Agents report increased activity at open houses while others saw a slowdown.  A few transactions that seemed near death got a revival and will now close escrow –that’s a good sign.  For the most part, higher end properties show little movement.  Last week there were more than 100 properties available in San Francisco MLS at $3M and higher -  more than we’ve seen in several years.  Some buyers understand the scarcity of San Francisco property in its unique 49 square miles surrounded by water on three sides. Savvy investors with some cash for down payment are seeing the opportunity this current economic uncertainty brings.
• Santa Cruz County—Inventory levels have dropped below 1,000 single family residences in the county.  This represents about a 10% inventory decrease within the last four weeks.  The market continues to be driven from the bottom up—with most pendings in South County.  The under $500,000 market continues to attract many potential buyers who are out and looking hard at potential properties.  Some are investors but many are first time home buyers.  The luxury market is lagging both in closed sales and price point.  Over two million is less than 2% of closed sales for the year and $1-2 million is about 11% of the closed sales.  We closed two sales over $1 million in the past week.
• Silicon Valley—Just as I said last week, though buyers are still cautious, things seem to be brighter in Silicon Valley.  Many of our Agents are gearing up their business for the start of 2009.  Buyers—though cautious—are out touring properties, visiting open houses and meeting with their Realtors.  We seem to have a lot of buzz, though little of it has resulted in notable amounts of activity.  I think much of that is due to the volatility in the stock market over the last several weeks and the lack of knowing who our next President would be.  Now that one of the two is settled, I think we should see a return to stability and security in this region.
• South County—Though REOs continue to gain the most interest, we are seeing an increase in market activity in the $500-$700K—but only on well-priced homes.  Homes that are considered a value are gaining interest in this price point.  Our Morgan Hill office reports that the Previews market in South County is a series of “contrasts.”  We have one new home development with list prices of about $1.2 million that have continually slashed prices and offered buyer incentives.  As a result, they sold several homes in the past week.

My message this week to everyone is let’s embrace this time of change.  Whether you are a Republican, a Democrat or an Independent, we all need to join together in restoring our economy and move ahead with the bright prospects of our future just ahead.  It is very possible that the worst of times has passed.  And even with some challenging times ahead, real estate remains an important investment, not only financially, but personally as well.  It is in times like these that we need to be reminded of and embrace the American dream of home ownership.  We need to remind ourselves that owning a home is more than an investment—though it remains one of the best investments we will make in our lifetime.  Our home is also where we raise our families, build traditions and create memories that will last a lifetime.  And I can’t think of a better investment in our lives and our own well-being than that.

Rick Turley
President
Coldwell Banker SF/Peninsula