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.

What stands out the most this week is the number of price reductions we are seeing. As was explained in the meeting, many of the people selling now for less than they would have a year ago are still selling for over what they paid for the property when they bought it. In other words, there are not that many “upside down” sales where the owners owe more than they can sell for.

Another thing that was discussed is the number of ratified and sold deals that went into escrow for prices under the listing price AND then negotiated down ever further before it closed. It is truly a buyers’ market. Sellers just aren’t getting the message as clearly!

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

• 5 new listings (average price $2,023,800 – low $749,000, high $5,300,000)
• 2 ratified sales (pending) (average price $2,072,500, low $1,195,000, high $2,950,000)
• 12 closed sales (sold) (average price $1,771,333, low $649,000, high $6,800,000)
• 5 price reduced (average price $1,274,200, low $829,000, high $2,075,000)

- 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:

“What do you need a fancy suit for Charlie, you got no job to wear it to”. From the 1984 movie, The Pope of Greenwich Village. And there are a lot of fancy suits not being used, due to the massive job losses of late.

The Labor Department reported that 240,000 jobs were lost in October, which was worse than the expected loss of 200,000 jobs. In addition, the Unemployment Rate jumped to 6.5%, up from last month’s read of 6.1% and reaching the highest unemployment rate since 1994. And if the current numbers weren’t bad enough, there were heavy downward revisions to August and September numbers, which erased an additional 179,000 jobs. So far in 2008, a total of 1.18 million jobs have been lost, with 651,000 job losses coming in just the past three months. Look for things to get worse before they get better, as the unemployment rate will likely top 7% soon.

Friday’s Jobs Report was brutal and would typically nudge the Fed to cut their benchmark rates in an effort to spur on the economy. But with the Fed Funds Rate already at 1%, the Fed doesn’t have much more room to cut. This means that Stocks, which worsen on poor economic news, will likely continue to struggle as a result.

Speaking of rate cuts, the Bank of England, the European Central Bank and a few other countries central banks all lowered interest rates last week to help their economies. The good news is that these cuts should have a positive effect on the US Dollar – and therefore will also help Dollar denominated oil prices stay near present levels.

With some of the negative economic news, Bonds did manage a huge, three-day 160bp rally in the middle part of last week, and Bonds and home loan rates were able to hang on to much of this improvement on Friday. As a result, Bonds and home loan rates ended the week nearly .25% better than where they began.

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.

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

• 7 new listings (average price $2,606,286 – low $789,000, high $6,575,000)
• 3 ratified sales (pending) (average price $1,432,667, low $850,000, high $2,050,000)
• 1 closed sale (sold) ($4,600,000)

- Janis Stone

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

Today marks the end of a historically volatile month on Wall Street with some significant losses.And for the week -I had all of my clever Halloween puns planned —“It was a Spooky Week on Wall Street”—or “The Market Takes Another Ghoulish Hit”—but alas, I am pleasantly surprised to say my puns were not necessary as things were definitely looking up for the market as the week progressed.  For starters, the central bank cut the federal funds rate, a key bank lending rate, by half a percentage point to 1%, a low last seen in June 2004.  The funds rate has not been lower since 1958 when Dwight Eisenhower was president.

Just one day later the government released the latest GDP report which showed that the economy shrank at a slower pace than expected in the third quarter (though, to keep things in perspective, it did endure its biggest decline in seven years).

And if all of this news wasn’t good enough, negotiators for the Treasury and Federal Deposit Insurance Corporation announced that they are nearing an agreement on a plan to have the government guarantee the mortgage of millions of distressed homeowners.  The plan could cover as many as three million homeowners in danger of foreclosure.  If this plan were to pass, it will help us deplete our bank-owned inventory and subsequently should help stabilize home prices nationwide. 

As an aside, our parent company Realogy is doing its part to support the stimulation efforts by this week releasing a statement that proposed a short-tern government buy-down in mortgage rates to stimulate the housing market and accelerate broader economic recovery.  In a statement released to media on Tuesday, Realogy called for a short-term government buy-down of mortgage rates of at least 4.5%, or lower, for a 30-year fixed rate mortgage (down from current rates of approximately 6.04%).  This homebuyer incentive would apply to the purchase of all new and/or existing homes sold up to $1 million in price.  Only time will tell if this solution is adopted but it is commendable to see our parent company working so hard on our behalf to stimulate the housing market.

Thursday, Wall Street reacted to the week’s good news with the Dow Jones Industrial Average gaining 190 points or 2.1%, The Standard & Poor’s 500 index rose 2.6% and the NASDAQ composite (COMP) gained 2.5%.

But is all of this enough to revive an economy hit by a long list of problems stemming from the most severe financial crisis in decades?  It’s definitely a start. 

Earlier this week Time Magazine reported that there is a sign that we are bottoming out noting “The rate of sales decline slowed in August, according to Case-Shiller, and in September existing home sales rose 5.5% nationally, which means buyers are finally being lured to the market by low prices.”

As you’ll recall, President Bush said prior to signing the Emergency Economic Stabilization Act of 2008 that all of the recovery plans in store would take time to work.  And only time will tell whether or not these plans are successful.  But we are starting to see some positive stories with some better than expected results which is a good sign for all of us.

Next week we’ll learn who our new President will be, which, historically speaking, should lessen some of the concerns and (hopefully) settle some of the unrest on Wall Street.  Once investors know who will be running the government for (at least) the next four years, they’ll feel more apt to making longer-term investment decisions.

Now, let’s take a look at this week in real estate.  My overall assessment is that after a slow couple of weeks due to the economic woes on Wall Street, Main Street’s real estate is looking brighter and buyer interest is increasing.

• East Bay—Our Walnut Creek office reports that the REO market remains very active with listings in Antioch, Brentwood and other parts of East County receiving multiple offers.  Open house activity was very good this past weekend with buyers more open to engaging in conversation regarding market conditions.  In fact, the office also shares that the $1 million plus market is more active than it has been in a long time.  Livermore is reporting that REOs continue to drive much of its business with 87% of new pending sales this week were REO sales with list prices from $47,500 to $310,000.  The majority of the sales were located in the Central Valley.  The upper end in Livermore is slow.  We currently have 55 listings above the $1 million mark in Livermore.  There have been three closed sales in the past 60 days and four pending sales with the last pending on September 19.  Oakland shared some good news this week, however, noting that sales activity was increasing this week and that Agents felt that new buyers are coming into the market, based on open house activity.  Our Danville office reported this week that nearly 1/3 of its sales this month are not REOs.  That is wonderful news.  If the percentage of “normal” sales increases, that is a very good sign for the real estate market turnaround.
• Monterey County—No information provided.
• North Bay—Our Sonoma County offices continue to report a lot of activity in the entry level market.  Petaluma shares that Petaluma, Rohnert Park and Sonoma have very few properties coming on the market.  There are typically double digit multiple offers in the $300,000 range.  Santa Rosa concurs noting that the $500,000 range is very active though once you go above that it remains quiet.  Neighboring Sebastopol continues to be driven by REOs though the office did note that it saw a substantial slowdown this week with more lookers than buyers at open houses.  It is a real shame because there are some incredible opportunities in the wine country.  Buyers—be aware!  Marin County is a mixed bag.  The more affluent neighborhoods of Southern Marin remain a bit quiet—though we did double-end a $2.5 million deal this week—but the more affordable markets of San Rafael and Novato are enjoying an increase of activity.
• Peninsula—Last week’s better news on the sale of homes (thanks to DataQuick and NAR’s reports) led to a more positive turnout in open homes this weekend.  One Millbrae home had over 35 groups through.  It seems the price range between $800,000 to $1.2 million is most active in this market.  Half Moon Bay has seen a seesaw in inventory (somewhat like the stock market) hitting a long-time high of 175 properties just a few weeks ago, then a drop to 140 properties and this week another jump back up to 165 current active listings.  This represents an exceptional buying opportunity for homes near the bay or ocean.  Our Redwood City-San Carlos office is sharing that it hasn’t seen many changes.  Sellers are becoming a little more realistic and seem to be more apt to follow their Agent’s advice regarding pricing.  We did have one sales this week where the buyers wanted to make sure they could take advantage of the jumbo loan amount before it changes.
• San Francisco—Things seem to be a bit quiet in the City right now as buyers await the results of the issues on Wall Street.  Buyers don’t seem to be willing to move forward, though they aren’t exactly abandoning their search for a home either.  There is still a lot of activity at open houses but very few offers being written.  Our hope is that this is a sign of good things to come as we enter the holiday months.
• Santa Cruz County—Inventory levels have dropped considerably in the last three weeks—approximately 200 homes as we move into the winter/holiday season.  The highest percentage of pendings remains in the south county area of Watsonville. Prices are continuing to move slightly downward although this is micro-geographic in different areas and neighborhoods. The office listed a bank owned property in the Seabright beach area and the open houses were extremely well attended both Saturday and Sunday.  There were eight offers on the property; it sold for 10% over asking price. There are some great buys in Santa Cruz County!
• Silicon Valley—Though buyers are still cautious, things seem to be brighter in Silicon Valley.  Our Cupertino Stevens Creek reports “Sales continue to improve with good news looming in the media.”  Our San Jose Main office concurs noting “Our immediate market continues to be brisk.  Excellent open house traffic reported this weekend.  Entry level homes and REO properties continue to receive the greatest attention and most reported sales are in the $350,000 to $550,000 range.”  The upper-end has definitely taken a hit and the consensus is that it is slow all the way around in this niche.  Our Almaden office reported that a buyer was about to pull out of one transaction this week unless the seller dropped his price from $2.2 million to $1.975.  The seller reluctantly agreed.  Definitely a sign of the times.
• South County—The South County market continues to be driven by REOs  The luxury market is South County is very slow with properties over $1 million seeing the following statistics:
  Morgan Hill (100 listed, 9 pending)
  Gilroy (53 listed, 5 pending)
  San Martin (24 listed, 1 pending) 

Overall, it was a better week for the Bay Area and momentum continues to build after a rough September and majority of October.  Our market continues to be challenged by some buyers who are waiting to see what the market is going to do.  Buyers should be reminded of the fact that waiting could cost them plenty in terms of higher prices, lower inventory and higher interest rates.  It’s just a matter of time before we move from a buyer’s market to a more normalized exchange between buyers and sellers and we need to educate our buyers now that if they don’t act, they will reduce their purchasing power and may lose out on a bigger and better home!

Rick Turley
President
Coldwell Banker SF/Peninsula

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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:

“TAKE TIME TO DELIBERATE; BUT WHEN THE TIME FOR ACTION ARRIVES…STOP THINKING AND GO IN.” Napoleon Bonaparte. And taking action after deliberating was exactly what the Fed did last week, when they cut the Fed Funds Rate by .50%, lowering it to 1.00%.

Why did the Fed take action last week, after it had already lowered the Fed Funds Rate by .50% on October 8 in a coordinated effort with other central banks? To continue to help ease the credit crisis, and prevent a long and severe global recession. In fact, several foreign central banks followed the Fed’s lead again last week, with Hong Kong cutting their lending rate by .50%, Taiwan cutting by .25%, and Japan cutting by .20%. This is important because cuts by other nations help stabilize the US Dollar, which typically loses ground after our Fed cuts rates, because of the lower yield offered comparatively offered in the US. Another interesting point to note: since oil is Dollar denominated, the price per barrel typically jumps after our Fed cuts rates, because of the decline in the value of the Dollar. The cuts by other central banks should keep oil…and gas prices, in turn…from skyrocketing again.

Another reason the Fed took action: The Fed’s statement discounted threats of inflation, saying that slowing economic growth should lower inflation pressures over time, but added that downside risks to economic growth remain. And last week’s negative Gross Domestic Product reading is confirmation that things have slowed quite a bit. Although experts have speculated that the US may already be in a recession, the first hardcore signs appeared when the Third Quarter Advance GDP report showed that consumer spending declined at the fastest pace in 28 years. The report also reflected the largest quarterly decline since the end of the last recession in 2001.

So what did all of this mean for Bonds and home loan rates last week? After worsening early in the week, Bonds and home loan rates attempted to stabilize by week end. And while it was a treat that Bonds did bounce off an important level of technical support, home loan rates still ended the week nearly .125-.25% worse than where they began.

Read the entire report here.

- Foster Weeks

Zillow put out this press release on Thursday, October 30, 2008:

• Supporters of Republican presidential nominee John McCain have more confidence about their homes’ values than supporters of Democratic nominee Barack Obama.
• Fewer people expect to buy or sell a home in the near future:
  • Three percent plan to sell their home in the next six months, down from 5 percent last quarter.
  • Three percent plan to buy a home, down from 4 percent in the second quarter.
• …and much more!

Read the entire story here.