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

The talk this week was positive even though there was not a lot of activity the previous week. Agents feel that things are calming down as people accept the reality of the market. Deals are being made, and we should see activity start to pick up as summer gets closer. We’ll see.

Here are the numbers for this week, 1/29/08:

• 1 new listing ($2,700,000)
• 5 ratified sales (pending) (average price $958,600, low $600,000, high $1,125,900)
• 1 closed sales (sold) ($2,350,000)
• 2 price reduced ($740,000 and $3,450,000)

- Janis Stone

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

Regardless of your political persuasion, Tuesday’s inauguration of the 44th President of the United States was one for the history books.

In the words of our new President during his inaugural address, “Starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking America.  For everywhere we look, there is work to be done.  The state of the economy calls for action, bold and swift, and we will act—not only to create new jobs, but to lay a new foundation for growth.”

There’s no question, Obama has his work cut out for him.  This week CNN reported, “The scope and intensity of problems facing President Obama are similar only to those that Franklin D. Roosevelt faced in 1933.”

Obama is expected to hit the ground running.  History shows that the first year of a President’s term is most critical.  At some point, he will own the problems he has inherited and so time is of the essence; he knows he must take immediate action.

In the short run, Obama has pledged to work with Congress to implement aggressive policies—including as I referenced last week, making better use of the TARP funds—to prevent foreclosures and strengthen existing home sales.  With the second half of the TARP funds now available to him (totaling some $350 billion) we should see the beginning use of those dollars sometime within his first 100 days in office.  Obama has promised to devote $50 billion to $100 billion to a new foreclosure prevention program, leaving him between $250 billion and $300 billion of TARP money to address the continuing credit crisis.

As Obama was being sworn in, the world as we know it continued.  One of the current issues most affecting our market is the drop in mortgage loan limits for conventional financing as of the end of 2008.  This is dramatically hurting home sales and trade-up activity in higher price ranges.  According to NAR, “The latest existing home sales data shows transactions under $400,000 are just 3 percent below a year ago (referring to number of sales).  However, sales of homes priced at $750,000 or more have declined a whopping 47 percent.”  Buyers who need jumbo mortgages must pay interest rates that are nearly 2 percentage points higher than conventional financing; as a result, the high-end market is very slow and buyers in higher price ranges are at a severe disadvantage.

Currently NAR is pushing for the permanent increase of mortgage loan limits back to the $729,750 cap.  According to a statement released this week by NAR, “To illustrate in dollar terms – if mortgage limits are permanently raised to $729,750…the mortgage payment on such a loan would drop by $942 per month by lowering interest rates 2 percentage points.  Over the life of a 30-year loan, the homeowner would save $338,000.”

Especially here in our market, we need the increased loan limits so people in all prices are able to purchase.  Every segment of the housing market needs a turnaround to spark an overall housing recovery.

With this information in tow, let’s take a look at this week in real estate, including Wednesday’s release of DataQuick figures:  http://www.dqnews.com/News/California/Bay-Area/RRBay090121.aspx

• East Bay—The Castro Valley office reports that it has seen the low end picking up ($100-250K) driven by lots of FHA loans for first time home buyers, low interest rates and great prices.  Prices in Castro Valley continue to dip, making it a hot market due to the desirability of the area.  In fact, there is a single family residence currently listed in Castro Valley for $199,000, which is an unseen precedent for this area.  Our Danville office reports that the market is slow but steady.  Agents are reporting good attendance at open houses and sellers are getting more realistic which are two signs of good things to come.  Our Fremont office notes that we have had a slow down in the REO market that reflects in the decreasing listings and sales in our office. The REO market has slowed due to the temporary freeze that some loan agencies incurred during the holidays. Our Orinda office notes that Agents are talking about working with many buyers and how excited they are about what is about to happen in the real estate market.  Finally, our Walnut Creek office shares that activity has increased.  Open houses have been well attended and buyers are finally starting to take action.  People who have been renting have stated they believe prices have finally hit bottom and they are ready to buy.
• Monterey County—While our closed escrows have been slow since the beginning of January, our open escrows have been good, with 32 new escrows for the first two weeks of the year.  Also within the last week we have seen an increase in new listings and 22 price reductions for our approximately 260 listings.  These price reductions are a welcome sign to restore buyer interest.
• North Bay—In Marin County, our San Rafael office notes that we continue to see interest from buyers in the entry level condos in San Rafael and Novato.  One home we had listed in Mill Valley had multiple offers as it was priced well – making it very desirable for the area, even though it needed work. One property in Marin had 17 offers; the property was listed at $350,000.   In Sonoma County, our Petaluma office notes that short sales and REOs are 50% of our inventory and 75% of our closings.  Multiple offers are dominating the landscape.  Our Santa Rosa office concurs noting that the inventory and pricing are critical when representing buyers of REO properties.  An increasing trend is to under price by 5-20% and wait for multiple offers, leaving many buyers blindsided by the process.  The Previews market in Santa Rosa picked up a bit this week with two showings on the rise and two new Previews listings coming on the market this week.
• Peninsula—Our Burlingame office shares that things appear to have stalled a bit this week for many Agents.  The buyers we are working with seem to be in no hurry to make decisions and are choosing to take the “wait and see” approach with listings they have seen.  On the other hand, we have two listings of multi-units which have received immediate and numerous offers, several of which are all cash.  We are seeing sophisticated and savvy buyers with cash who are ready to jump when the right property presents itself.  Our Half Moon Bay office notes that the San Mateo coast is finally experiencing short sales and some REOs.  Open homes were moderately busy over the long weekend and Agents reported that buyers are anticipating that we’re close to a bottom in pricing and probably interest rates as well.  Our Menlo Park El Camino office listed a house in prime West Menlo at a price that was 14% less than the almost identical house two houses away, which sold for $1,900,000 two years ago.  It sold immediately.  Additionally, our Menlo Park El Camino Manager looked at every house that closed in Menlo Park and Palo Alto since December 1 (with a listing date prior to September 10, 2008).  The closed price as compared to the original list price was a low of 9% and a high of 24%, averaging 16% off the original list price.  Our Redwood City San Carlos office notes that open houses are very busy and buyers are becoming serious about purchasing, largely due to great interest rates and motivated sellers.  San Mateo notes that inventory is becoming very low which may lead to more people bidding on fewer properties.  This environment could lead to more multiple offers, thereby putting a floor on declining prices.  The result could be price stabilization.
• San Francisco—Our Lombard office notes new listings, as well as some December resurrected ones are coming on.  Open house traffic is light though increasing.  The hottest market in this office is the $400,000 to $700,000 range with REOs leading the way.  One word of caution:  buyers don’t get too complacent.  One client waited for the third day to see a new listing on the market and by then the listing was already ratified and they had to compete with three back-up offers – list price was $1.2M.  Our Market Street office notes that Agents are signing up listings and getting good traffic at their open houses, they are just waiting for offers to be written.  The Agents with qualified buyers that are looking at a property say that buyers are holding off sure that any day prices are going to soften or money may get a little cheaper.  Our Noriega office notes that though we seen an active floor and LeadRouter requests, we are not yet seeing an uptick in sales.
• Santa Cruz County—Listings seem to be coming on slow though the market continues to be driven by REOs.  We do see multiple offers, though almost solely on REO properties.
• Silicon Valley—Our San Jose Almaden office notes that condition and aggressive pricing yield sales even with conventional sellers.  Almaden days of inventory is 288 days and Blossom Valley is at 105 days.  But, we just sold a beautiful Almaden home in four days with aggressive pricing.  Sellers consider this before you place your home on the market.  Our San Jose Main office notes a series of increases in buyer activity, weekend traffic and listing inventory.  There is good activity in the $400-700K range.  Our Saratoga office notes that the luxury market remains slow and REOs are still the hottest area of the market.
• South County—Our Gilroy office reports that we are starting to see the market pick up with buyers becoming more active now that the holidays are behind us and interest rates are better than ever.  We are seeing great opportunities for the first time buyer and investors.  Our Hollister office reports that we are seeing multiple offers on most REO listings.  In other updates, REO listing inventory is decreasing, floor activity is on the rise and prices are decreasing.  Our Morgan Hill office reports that South Valley homeowner’s are in mourning over their declining property values though buyers continue to rejoice over how affordable homes are becoming coupled with today’s low interest rates.  Agents are delivering this message loud and clear:  It’s time to buy.  Sellers face fierce price competition from neighboring homes that are either short sales or REOs.

In speaking with many consumers as well as Realtors this week, it appears to me that the change in executive leadership of the United States has increased people’s attitude and confidence at a time when we need it most. The next 30 days will probably set the tone for the recovery mode our economy can hope for – as to how fast, how effective.  Plans and policy need to be put in place immediately for credit markets to flow properly.  For us in the San Francisco Bay Area, properties in our lower priced communities are moving fairly well.  The higher priced communities of $1M+ homes are ready for an increase in activity from this new-found confidence.  They just might see it, as several examples this week of multiple offers in the million-plus price range says that when buyers perceive value, they write offers, and another home sells.

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:

“IT’S A CRUEL, CRUEL SUMMER…LEAVING ME HERE ON MY OWN.” From 80′s band Bananarama And that’s exactly what potential home buyers and refinancers who stay on the sidelines might be singing.

Although home loan rates are very attractive now, the picture could be quite different as some inflationary factors will likely come to light heading into summer. Oil prices may be on the rise as we approach the summer driving season, some of the economic stimulus might begin to take hold, corporate cost-cutting measures could start to bear fruit, and, perhaps most importantly, the Fed will no longer be a buyer of Mortgage Bonds. These are all ingredients in a recipe that could very easily result in significantly higher interest rates this summer…so if you have been thinking about acting on a home loan, do not delay.

But with no hint of inflation in the current market, why would Bond traders be fearful now? Are they listening to strange voices and what did they say? The forward looking markets got an earful from Fed Governor Frederic Mishkin last week…and he’s not the only one. Mishkin said that “inflation could come to the forefront, given all of the government programs”, and “once the economy recovers, liquidity must be taken out of the markets”…meaning the Fed may need to rapidly hike rates down the road, to control the potential of inflation.

In other news, Stocks around the globe faced heavy selling pressure last week on renewed fears of the deepening worldwide economic slump…and this despite better than expected earnings from Google and IBM, as well as GE meeting earnings expectations. Even with the downward pressure on Stocks which can sometimes benefit Bonds, the mention of the “I” word left its mark, with home loan rates ending the week around .25% higher than where they began.

READY TO MOVE ON THAT HOME PURCHASE OR REFINANCE BEFORE THE LOW RATES GET AWAY? READ THIS WEEK’S MORTGAGE MARKET VIEW FOR A FEW IMPORTANT TIPS ON UNDERSTANDING TODAY’S LENDING CLIMATE, AND KNOWING THE SMART MOVES TO MAKE RIGHT NOW.

Read the entire report here.

- Foster Weeks

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

In continued display that the President-elect will hit the ground running when he takes office in just four days, Obama met with Congress on Tuesday to ensure he’ll have more than a trillion dollars at his disposal within weeks of his inauguration to begin rebuilding our ailing economy.  Just two days later (on Thursday), the President-elect secured access to the second half of the $700 billion financial rescue package after the Senate voted 52-42 against a measure that would have blocked the funds’ release—many members of the Senate felt the Bush administration wasted the first half and were concerned that the Obama administration may do the same.

Obama says he hopes to have the ability to tap into a portion of that money within days of becoming President.  His plans with the money as well as a stimulus package he hopes to see lawmakers approve, shortly, include:

• Creating more than three million jobs, many of them in construction and manufacturing
• A focus on helping homeowners avoid foreclosures
• Stimulate housing investment
• Provide needed liquidity to commercial mortgage markets to ensure that financing is available
• Work to make student loans and car loans more available
• Ensuring the funds do not go to unreasonable exec salaries and bonuses
• Requirement of continued reports on earning, repayments and lending practices from institutions that receive bailout funds

The incoming administration will be taking on the challenge of responsible spending of the Troubled Asset Relief Program (TARP) funds and has pledged to commit some $50 billion to $100 billion to address foreclosures. This is a challenge of immense proportions.  Which homeowners will see some level of relief?  What will be the qualifier?  For how long can foreclosures currently in process be stalled?  Will there be an across-the-board interest rate reduction for all homeowners to get a fresh start with their current mortgages?  If attractive refi rates are made available, how will loan-to-value ratios be dealt with? Currently many homes across the US have loan balances greater than what a bank appraisal would assign for value today.  These are just a few of the many questions that have to be answered before workable policies can be put in place.

The good news is that help is on the way for many.  Positive steps are in motion.   Obviously an economic turnaround will not happen immediately.  We’ve got a long road ahead and depending on what forecast you are reading, some say we’ll start seeing a turnaround in mid-2009 and others say we may not see it until 2010.  Our San Francisco Bay Area Buyer activity at the entry level is quite strong, and that’s the first step to housing recovery.  Let’s take a look:

• East Bay—Sales activity is increasing in the Berkeley area with the office noting the market remains stronger than surrounding areas and it feels like its only going to get stronger.  We had three multiple offers this week and eight ratified offers.  Our Danville office notes that the market is very quiet and seems to be in a holding pattern until after the inauguration.  Fremont notes that in spite of the recent economic news, recent sales and listings have actually increased.  The REO market is still generating multiple offers.  Standard home owner sales are steady, but only for those properties that are priced correctly.  Livermore notes that there is a lot of energy in the office and a lot of properties being shown to buyers.  We are still seeing multiple offers on properties priced at $450,000 and below.  Our Oakland/Piedmont office notes that we are starting off a little slow but that we expect to pick up momentum with the new listings coming in.  All six of our sales this week were under $750,000.  Orinda notes that January is surprisingly heating up.   Properties are selling before they hit the MLS. Our Walnut Creek office notes that open house activity was good this weekend.  The number of phone calls coming into the office from potential buyers has also increased.  We are seeing more short sale and REO listings coming on in the central part of Contra Costa County, not just East County.
• Marin County—The new year brought new attitude to higher-end real estate in Marin.  We are experiencing a surge in open house activity with one home in San Anselmo seeing 120 people in just a few hours.  The same story holds true in Fairfax, Larkspur, Tiburon and Stinson Beach. Our Southern Marin offices note that one of our Agents just co-listed a Tiburon property for $24,900,000.  We also have two pending sales for close to $2 million.  Our San Rafael office notes that there has been a steady increase in activity since the first of the year in San Rafael and Novato.  Multiple offers are common on the entry level homes/condos.  In Sonoma County, our Petaluma office notes that activity is picking up and the spring market may come early this year.  Open houses across the prices ranges had very strong traffic.  Our Sebastopol office concurs noting that we’re seeing a lot of buyer interest and this will translate into contracts shortly.
• Monterey County—Sales activity in Monterey County is relatively stable right now though our Sales Associates seem to be writing lots of offers.  We had 16 new escrows last week, in prices ranging from $200,000 to the multi-millions.
• Peninsula—Our Burlingame office notes that Agents are out showing property and getting buyers pre-approved.  Many sales are at the lower end while move-up buyers are hanging back a bit and waiting to get a “deal.”  Our Half Moon Bay office notes that open houses are busy and several offers have been written and presented.  There is definitely an improved attitude among buyers who are desperately seeking good reasons to make offers now.  Mortgage funds are more available and rates are low, so buyers are beginning to act.  Our Palo Alto office reports that activity is very slow.  Those buyers that are at open houses are more optimistic, but not ready to commit at this point.  Our San Mateo office notes that we had one multiple in Burlingame that received nine offers.  Inventory isn’t up much for this time of year so we’re beginning to wonder if supply and demand are coming back into equilibrium. 
• San Francisco—Our Lakeside and Noriega offices agree that activity hasn’t picked up substantially since the holidays.  On the flip side, our Market Street office reports that Agents are still remarking about the great traffic at their open houses over the weekend.  They believe real buyers are showing up but they are just holding off on pulling the trigger.  Our Van Ness office notes that we are seeing better activity in the last 10 days in all price ranges.
• Santa Cruz County—January seems to be starting out slow in general.  There were a few new sales for the month although we are closing quite a few from November to December.  Open houses have been well attended the last two weeks.  Our Agents are fairly optimistic about 2009.
• Silicon Valley—According to our Cupertino Stevens Creek office, the first week of 2009 showed an increase in listings and sale pending transactions.  It’s hard to know if this is the start of a trend or just coming off the cooler holiday months.  This of course will be a market we’ll continue to watch over the days and weeks ahead.  Our San Jose Almaden office notes that buyers are beginning to pick up and activity at open houses is improving.  This market continues to be driven by REOs and short sales.
• South County—Our Hollister office is reporting that REO inventory is decreasing and short sale listings are on the rise.  Our Morgan Hill office notes that open houses are well attended.  There seems to be a lot of interest and potential buyers are realizing that there has never been a better time to buy.

Depending on the community and available inventory – there are some good pockets of Buyer activity.  As I travel through our offices, I continually hear how critical pricing is for Sellers.   Not a week goes by that I don’t hear of a well-priced home in great condition selling within a few weeks, while it’s competitor down the street sits with no activity.  With incredible interest rates available and an upswing in Buyer activity, new listings need to stand out immediately, or run the risk of joining the unsold inventory.

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:

“LIVE EACH SEASON AS IT PASSES.” Henry David Thoreau. Last week saw the start of earnings season for the fourth quarter of 2008, and this is likely to be one earnings season everyone hopes passes quickly.

The beleaguered banking sector was in the spotlight throughout the week, as Citigroup reported an $8.29 Billion loss, completing its worst year ever since its inception in 1812. Bank of America also lost $1.79 Billion in the fourth quarter, making 2008 the bank’s first yearly loss in 17 years. And the news extended overseas as Deutsche Bank, which is Germany’s largest bank, warned of a fourth-quarter loss of $6.3 Billion.

There were a few bright spots to note during the week, however, as JP Morgan Chase surprised the market with an earnings report that beat expectations…it’s been awhile since a financial Stock actually surprised to the good side! In addition, Bank of America received a lifeline of $138 Billion from the government’s $700 Billion rescue fund to help absorb their purchase of Merrill Lynch.

And in inflation – or lack thereof – headlines, the Consumer Price Index for 2008 was reported the lowest since 1954, indicating that inflation is definitely not a threat at this time. The chart below shows how consumer inflation has behaved over the past decade. The blue line with dots shows overall inflation rates, while the black line with crosses shows “core” inflation, which removes volatile food and energy costs. Note how the blue dotted line drops sharply on the far right side of the chart, showing the impact of lower oil prices on overall inflation.

So what did all the news of the week mean for Bonds and Home loan rates? They did manage to hold steady for most of the week as Stocks struggled with the barrage of poor earnings reports…but when Stocks rebounded on Friday, Bonds and home loan rates worsened, leaving rates at least .125% worse than where they began the week.

Remember, while Bonds and home loan rates are still at historic levels, there will be some volatile changes due to the many variables affecting the markets. It’s more important than ever to have an advice-based strategy when it comes to your home loan, and I appreciate you trusting me with this role.

THE FEDERAL RESERVE SEEMS TO SNAP UP QUITE A FEW HEADLINES LATELY…AND THEY’LL BE MEETING AGAIN LATER THIS MONTH. EVER WONDERED WHAT EXACTLY IT IS THAT THEY DO? SEE THIS WEEK’S MORTGAGE MARKET VIEW TO LEARN MORE.

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.

Everyone’s talking real estate. The newspapers are reporting that the market is picking up. But so far, our office numbers do not reflect that.

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

• 5 new listings (average price $958,600, low $475,000, high $1,895,000)
• 3 ratified sales (pending) (average price $643,300, low $480,000, high $774,900)
• 1 closed sales (sold) ($638,000)

- Janis Stone

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

Happy New Year!  It certainly is nice to be back and full swing into work.  The holidays are great but oh how I miss the energy, enthusiasm, excitement—and who could forget the 200 e-mails a day—that our day-to-day business brings.

I would imagine the most frequent questions you were asked over holiday parties and gatherings were: “When will this recession be over?” and “When will the housing market begin to rebound?”   I know these seemed to be the most frequent topics everywhere I went.

First, let’s look at the economy.  Anyone who believes that the economy will completely rebound in 2009 is probably in fantasyland.  Without a doubt, President-elect Obama has his work cut out for him when he enters office in less than two weeks.  Most experts agree that the year ahead will bring an increased jobless rate, already at 7.2% and the highest in 16 years.  Consumer consumption will dip further as people hunker down and spend with caution.

Our economy in the US will continue to be affected by global monetary concerns.

While differences of opinion and a lack of agreement on policy keep TARP money on the sidelines, more businesses and homeowners are in greater risk of failure each day.  But there are some bright spots to consider as well.

For starters, our new administration is committed to developing an economic recovery plan designed to create 2.5 to 3 million jobs while rebuilding our infrastructure, improving our schools, reducing our dependence on oil and saving billions of dollars.  Speaking to a group to George Mason University in Fairfax, Va. Thursday, President-elect Obama said, “It’s a plan that recognizes both the paradox and the promise of this moment—the fact that there are millions of Americans trying to find work even as, all around the country, there is so much work to be done,” he said. 

Of course it won’t happen overnight and I think we all anticipate that much of 2009 will be focused on creating and implementing this recovery plan, but the positive news is that we are heading in the right direction for growth and prosperity with some experts predicting that by 2010 we could see as much as a 1.5% growth in our economy.

Additionally, there has been much discussion that before long we may see mortgage rates at 4.5% which could spur a great deal of positive attention for our industry.  Qualified homeowners could potentially be able to refinance at a historically low rate.  According to the Wall Street Journal, “up to 34 million households would be able to do so, at an average monthly savings of $428—or a total reduction in mortgage payments of $174 billion.  Potentially this would represent a permanent reduction in payments and is thus likely to spur appreciable increases in consumption.”

In terms of the local real estate market, the timing of our price recovery may depend on how quickly the government takes steps to mitigate foreclosures, but looking forward to 2009, many experts agree that the financial system will begin to show signs of stabilization in early 2009 and we may begin to see a real estate turnaround by the summer.  Our industry was one of the first to be hit by this recession and in all likelihood will be the first to overcome it. 

And with that good news in tow, let’s take a look at this week in real estate:

• East Bay—The Berkeley office notes that the holiday open houses were busy.  We had the most December sales in our history—many of which were REOs and short sales—but other sales where buyers were wanting to take advantage of rates under 5%.  Our Castro Valley office notes that though it slowed in the last few weeks of the year, we did see a lot of REO business (though less short sales).  Our Danville office notes that the luxury market remains cool and the market seems to be holding its breath waiting until after the inauguration.  Having said that, open houses are well attended and people seem to be upbeat about what is to come in the market.  Our Fremont office reports that bank owned properties and short sales represent approximately 25% of its sales.  Livermore concurs noting that of the eight sales in the office, six sales were REO sales that we listed.  We also had two normal sales with the highest sale at $517,500 and the lowest at $108,000.
• Monterey County—With two weeks of holidays and only three business days each week, naturally everything really slowed down and we only had 10 new escrows over those two weeks.  This is seasonal and pretty typical for this time of year.  We did have two properties that earned multiple offers.  One of those properties was $1.5 million.
• North Bay—Our Southern Marin offices are reporting that based on the number of calls from buyers and possible listings, we are optimistic about 2009!  Sebastopol notes that listings were slow as expected and sales were strong for the two weeks of the holidays.  Nearby Santa Rosa notes that the under $500,000 continued to be robust over the holidays. Our San Rafael office finished up with a great December, well ahead of forecasted number of new pending sales for the month.
  Peninsula—Our Burlingame office notes that Agents are back and reporting that buyers and sellers are calling with plans to get pre-approved, start looking at homes or want to discuss listing their home.  Things are still slow but there are definitely signs of activity and optimism which is great news.  Half Moon Bay notes that the past two weeks were slow holiday times but this past weekend Agents reported very busy open homes with some earning as many as 15 groups.  Buyers appear to be ready to hear good news—they’re looking for the reasons to buy now and we have them:  inventory of homes that’s about 20% higher than usual at this time, low financing rates, money supply increasing, very motivated sellers and the optimistic news of a new administration.  Our Menlo Park El Camino office reports that one Palo Alto property had eight offers and went 4% over.  Open houses in this market were very encouraging.  Our Palo Alto office reports that the market is extremely slow—with very few listings.  The office is hoping for more over the next three weeks to help restore buyer interest.  Our Redwood City/San Carlos office notes that it saw typical holiday activity but the few open houses we had were very well attended.  Agents, buyers and sellers all seem to have a positive feeling about ’09.  Our Woodside office reports that we had 14 offers on an REO in East Palo Alto.  Buyers were out in force this week and according to the Agents there were many new buyers beginning to look.
• San Francisco—Our Lombard office reports a very slow holiday season for sales.  Many listings were pulled for the month.  Now that we’ve entered the new year, we’ve seen a listing surge that should build through January.  Our Market Street office is reporting that Agents were very pleased with activity at open houses this week.  A condo in Potrero Hill which had experienced low traffic in the previous weeks had over 55 people at Sunday’s open houses.  This seemed to be the case with several other properties. 
• Santa Cruz County—The local single family residential inventory continues to drop and is currently under 800 homes in the county.  The number of pendings overall remains about the same with the majority of sales in the under $500,000 price range and almost are in Watsonville.  Most REO properties are getting multiple offers and it seems to be the cash buyers who are having the most success getting the properties.  Agents are writing five to six offers or more sometimes before getting their buyers into escrow.
• Silicon Valley—Our Cupertino De Anza office is reporting that listing inventory decreased from 101 to 86 single family residential properties.  On the flip side, sales activity decreased as well from seven to two pending properties.  Our Los Gatos office is reporting that we are seeing a lot of new listings coming on the market now that the new year has begun.  We’ve suspected this for some time but it is nice to see the new, fresh inventory take hold and help to restore buyer interest.  Our San Jose Almaden office is reporting some interesting trends noting that listing inventory is decreasing while sales activity is increasing.  Even during the slow holiday weeks we saw five multiple offers and 17 ratified offers.  The market is almost exclusively being driven by REOs and short sales, however.  Our San Jose Willow Glen office noted that though the holidays were quiet buyer interest continued with quite a few open houses earning some heavy traffic.  The office also reports some nice success with two million dollar plus sales within the last 2.5 weeks.  Our Saratoga office is reporting the contrary noting that we are seeing some buyer reluctance—possibly due to the holiday season.  We’re hoping to see a pick-up in this market now that the new year has begun.
• South County—Our Morgan Hill office notes that there is a lot of activity with bank owned properties and well priced short sale homes.  Potential buyers are intrigued with what they can buy in South County—very nice homes, lots of square footage and in many cases, unbelievable prices.  The Gilroy office has seen a substantial decrease in inventory over the last two weeks.  We expected a slight increase in the first month of ’09 as usually happens as listings that failed to sell or sellers that took their home off the market come back on the market sometime in the next 60 days.  However, we are expecting a smaller % than normal.  REOs are still leading the market in sales.  Our Hollister office notes that REOs are still receiving multiple offers.  Cash offers and investors are being seen more than usual.  First time home buyers are taking advantage of our market and low interest rates.

As you can see, activity in nearly every market is picking up now that the holidays are over.  Buyer and seller activity is increasing and it seems many buyers are finding comfort in the fact that interest rates are low, inventory is strong and many sellers are motivated.  While being realistic about the current state of our economy, we have every reason to be optimistic about real estate activity in the Bay Area for 2009.   Qualified buyers and reasonable sellers will continue to come together in this market.

Rick Turley
President
Coldwell Banker SF/Peninsula

Once we moved the blog over to our website, it seemed redundant to post monthly reports on the blog and on our market page. So to see the latest report go to www.sfresidence.com/market.htm

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:

“HAVE THE NERVE TO GO INTO UNEXPLORED TERRITORY.” Alan Alda. Taking those words to heart, Bonds and home loan rates did exactly that last week, reaching historic levels.

A few important news items from last week… First, the results are in on the Fed’s first run at purchasing Mortgage Backed Securities under their new $500 Billion buying program. Over the last week, the Fed bought $10.2 Billion of Mortgage Backed Securities. Any time there is increased buying demand – for anything – prices will move higher. When Bond prices move higher, home loan rates improve.

Next, Stocks faced selling pressure last week due to a rash of earnings warnings from the nation’s retailers, including Macy’s, who announced they are closing eleven stores. Because money coming out of Stocks is often parked over into the Bond market, Bonds and home loan rates responded by reaching never-before-seen levels.

Finally, the job market reached a level not seen since 1945. The Labor Department reported on Friday that there were 524,000 jobs lost during the month of December, which you can see in the Jobs Report chart below. Why does the chart look unusual? Because it’s measuring a negative number, for something that is normally reported as a positive, as in number of jobs created.

All told, there were 2,600,000 jobs lost in 2008, which represents the biggest job loss in any calendar year since 1945, when 2,750,000 jobs were lost as the wartime economy was demobilized. But we must consider that there are a lot more people in the US today. Adding further sting to the report was the Unemployment Rate, which shot up higher than expectations to 7.2%, the highest reading in 16 years.

As we know…Bonds and home loan rates typically improve on negative economic news, since money will flow out of Stocks and into Bonds when bad news hits the wires. But keep in mind, these are volatile times – and it’s hard to know how long the good times will last for home loan rates. Regardless of if you see a move or a refinance in your future, let’s review your situation to determine if any decisions need to be made at this time.

Read the entire report here.

- Foster Weeks