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 market is very steady. Despite what is going on around the rest of the country, our San Francisco market is doing quite well. Buyers keep hoping to time the bottom while sellers are hoping the bottom has passed. Only time will tell who is guessing right, but rest assured, the Bay Area market is still quite strong.

Here are the numbers for the week of 4/29/09:

• 6 new listings (average price $2,753,333, low $530,000, high $6,750,000)
• 13 ratified sales (pending) (average price $1,115,692, low $359,000, high $2,495,000)
• 7 closed sales (average price $1,773,286, low $425,000, high $5,800,000)
• 2 reduced $399,000 and $2,295,000
• 1 back on the market at $517,000

- Janis Stone

First Time Home Buyers Are Fueling the Come Back

It’s finally happening.  In my August 2008 Reality Check message I discussed our market’s need for the revival of the first-time home buyer.  Because as we know, first time home buyers are a critical force that will help jump start our market rebound, creating that important domino effect that will ultimately benefit all price points. When first time home buyers purchase entry level homes, that allows the entry-level homeowners to sell and move-up to a mid-level, move-up market.  By purchasing those homes, the move-up market is able to sell and ultimately purchase homes in the luxury arena.  It’s a much-needed domino effect that will have significance in our market’s rebound.  The numbers released over the last two weeks are showing that the process has already begun.

First, let’s look at NAR’s release this week of its March existing home sales.  Now of course some media did use the nationwide month-over-month decrease in sales as an opportunity to take a negative spin but there were a lot of positives in this news.  First, nationally, prices rose from February to March by 4.2 percent which is much higher than the typical 1.8 percent seasonal increase between those two months.

Second, housing inventory at the end of March fell 1.6 percent to 3.74 million existing homes available for sale, representing a 9.8 month supply at the current sales pace. This is important to note because March is frequently a strong listing month and more often than not, inventory grows in March.

In the West, existing home sales declined 4.2 percent to an annual rate of 1.13 million in March; however, of great significance is the fact that this number is 18.9 percent higher than last year at this time.

The fact is, the share of lower priced home sales have trended up, indicating a return of many first-time buyers.  Sales in the upper price ranges remain stalled, but the last two weeks have produced more $1M+ pending sales than we’ve seen in a while as Buyers are taking advantage of two things in the upper end.  One is the luxury of choice.  Buyers can actually shop and compare. When they find what they want at an attractive list price- they are making offers.  The second fact is that although Jumbo loans still have practically no secondary market (which increases competition and lowers interest rates), the Jumbo rate appears to be currently within one percent of the conforming; and buyers are seeing that it’s still a very attractive rate. For example, Princeton Capital’s rate sheet on April 20 showed a 5/1 Conforming at 4.625 –I point, and the 5/1 Jumbo at 5.3% – 1 point. FICO scores and down payment are of course key, but the market is beginning to get used to the new requirements.

Another interesting note, the Mortgage Bankers Association this week released its Weekly Mortgage Applications Survey for the week ending April 17.  The index showed an increase of 5.3 percent from the previous week and that was a 76.9 percent increase compared with the same week a year ago.  Yes, a 76.9% increase in mortgage applications, that’s not a typo.

While there is some criticism of certain steps our administration has taken to revive our economy, it seems some of the early work like the first time home buyer tax credit is effective.  Earlier this week Inman News reported that the preliminary numbers from the IRS suggest 1.4 million taxpayers will claim the federal first-time home buyer tax credit on their 2008 tax returns, meaning the program is likely to meet or exceed the 2 million target set by lawmakers before it ends November 30, 2009.

Finally and I think this is probably most notable, the Wall Street Journal reported this week that prices have fallen back into line with what the typical household can afford to pay in most of the U.S.  The report showed that home prices are dubbed “fairly” valued in 202 of the 330 markets studied.  That means the average price level is within a band 14% above or below the historical norm.  Twenty-one markets are “overvalued” or between 14% and 34% above the norm.  And 106 markets are considered “undervalued” or more than 14% below the norm.  Take a look at this graph which showcases where we were in the early part of the decade as compared to today:

I know it’s difficult to view the drop in property value a positive thing.  But the fact is that though the ride was nice in the big real estate boom of the early 2000s, we couldn’t sustain those types of record appreciation levels without eliminating certain consumer niches, including first time home buyers.  Now that levels are back within range, the first time home buyers are once again able to reenter the market which is why we are seeing such a strong surge in sales in that level.

Locally, we had further news this week that symbolized the first-time buyer pick-up.  Rather than summarize them, I’ll simply share the links for your own reading:

• http://www.dqnews.com/Articles/2009/News/California/Bay-Area/RRBay090416.aspx
• http://www.dqnews.com/Articles/2009/News/California/RRCA090416.aspx

It’s just a matter of time before we weed through the remaining banked owned inventory and we should begin to see prices stabilize.  Once we see that, the remaining areas of the market should begin to see an upswing, too.

With that said, let’s take a look at our week in real estate:

• East Bay—Berkeley reports that open houses were very busy with up to 70 groups.  Even properties holding their third open had a steady stream of visitors.  Some buyers are still holding back, waiting for that mysterious “bottom,” or building in a bottom by offering 10% less.  Castro Valley reports that in its micromarket, listings at the entry level present the same challenges we have been experiencing for weeks.  Lots of competition for dwindling inventory.  Agents with buyers in that market have learned the ropes, to bid as high as possible over asking, and to be patient.  Fremont reports that it seems that people are still looking for a great deal.  This week things have been slower, but it looks like buyers are starting to move as is seen in the multiple offers we have had this week.  Oakland reports they are very busy and sales are strong however listing inventory is shrinking and not as many new listings are coming on. Some sales are taking longer to close and they are now seeing some appraisal issues because of new lender guidelines.
• Monterey—Had an exceptionally busy Easter week and last week, with many offers being written, and although 30 went into escrow, many didn’t come together due to seller and buyer being too far apart in price.  Also have had a greater number than usual of properties in escrow falling out due to various problems encountered during escrow that were unable to be resolved.  Buyers are being very cautious and picky!
• North Bay—Greenbrae reports that a buyer’s Agent participated in multiple offers for a property in Larkspur that went at the least $200,000 over with five offers.  The asking price was $1.2 million.  A listing Agent in Greenbrae received four offers on a $1.3 million property in Greenbrae.  There are signs of life plus buyers are out buying in Marin.  As hot a week as Greenbrae had, Southern Marin wasn’t quite as warm.  The office is reporting a slower week in sales though it was quick to note that it was expected during Spring break.  Agents have been involved in many multiple offer situations on short sales and foreclosures.  Properties might have five or six offers, with none at or above list price.  Sebastopol shares 30-50 buyers were at two new listings in Sebastopol.  They need more low end inventory, however, as that is what the buyers are looking for.  Santa Rosa notes that Spring has arrived with heavy open house traffic, multiple offers and a large increase in distressed property open escrows.  Agents are reporting as much as 60 groups through open homes and Agents are picking up buyers.  Floor call leads are picking up as well.
• Peninsula—Burlingame reports that the heat was a definite factor on open house attendance.  In some areas it made for lighter than usual traffic and in others, turnout was excellent.  They are definitely seeing a change in buyer attitude and confident that now might be the time to get serious about buying.  Menlo Park El Camino reports a very busy week.  Activity is the best it has been for about eight months.  Lots of stealth activity, too, with sellers selling due to duress and wanting to be under the radar.  Palo Alto reports that things appear to be more optimistic.  There is a lot of attendance at open houses including upwards of over 100 people in price ranges of $1.2-$2.2 million in the prime locations of Palo Alto.  San Mateo states that if a property is in good condition and is priced well, you are “gold.”  Inventory is up 22% over 2008, pending sales are even with 2008 and solds are down 57% over 2008.  Open houses are well attended.  Lenders are still difficult in conforming and impossible in nonconforming.
• San Francisco—The Lakeside office reports that buyers are finally pulling the trigger and writing offers.  Lombard reports that inventory is steady or growing slightly.  They’ve had  good open activity at all levels.  One home went slightly over in the $900,000 range; one condo took an extremely low offer in the $1.5 million range.  FHA fees, rules and roadmap require an education on everyone’s part.  The Market Street office reports that on one of the ratified offers this week the same buyers wrote on it two weeks ago, the owner would not accept the offer because there were additional disclosure packets out and wanted to hit her “magic” number.  Two weeks passed and no offers came in, the buyers rewrote the same offer and got the house.  The Agents have found that reps at the new construction units are negotiating verbally and once negotiations are finalized you need to get your buyers in to sign ASAP.  A deal was almost lost because the buyers took their time getting in to sign and another buyer was put in place.  It cost our buyers more money to get the unit.
• Santa Cruz—Market activity has picked up in April and we should finish the month with approximately 45 new sales.  They’ve also had several million dollars in lost sales primarily resulting from some aspect of the lending process whether it be an appraisal issue, last minute conditions, lenders pulling their commitment, or last minute borrower issues, job loss or “cold feet.”  They’ve had great response from the Agents and the lenders regarding the short sale packages and these have been received very well by all parties.  Overall, they’re moving forward with optimism; managing client expectations throughout the process.
• Silicon Valley—Cupertino DeAnza reports things seem to be more active with buyers ready to make the plunge.  The Cupertino Stevens Creek office concurs noting that they’re starting to see an increase in sale pendings; buyers seem ready to make a deal.  Los Gatos reports that the market is definitely heating up with good consumer confidence.  Prices are holding; however, still seeing short sales.  The San Jose Almaden office reported numerous first time buyer calls coming in.  Seems like many are deciding NOW is the time to buy and are.  Our Princeton Capital loan officer is working long and hard hours every day and we’ve noticed a surge in floor calls.  Terrific prices in the low million ranges and even above are selling in Almaden.  Recently a property that was listed for $6 million four years ago sold this year in less than 30 days for a little less than $4 million.  But it sold!  The San Jose Main office reports a very active week for both sales and Open House traffic.  Listing inventory dropping mostly in the mid range to lower price range properties. We’re seeing increased buyer interest.
• South County—Gilroy reports that inventory continues to decrease.  Multiple offer situations are the norm.  Hollister reports low inventory compared to last week.  Multiple offers are still going strong on the REO listings.  Summer weather is bringing people out to investigate open homes.  Morgan Hill reports optimism is the key word in South County.  Though our sales continue to be dominated by REOs and Short Sales, there seems to be a sense that the worst is behind us.  Agents are reporting good attendance at open houses and homes that are priced right and show well seem to be selling quickly.  Good interest rates are also a significant factor—as are FHA loans. 

Next week will bring some more interesting news.  Check out this article that ran Monday in The Wall Street Journal:  http://www.washingtonpost.com/wp-dyn/content/article/2009/04/19/AR2009041901875.html.  Once we see the results of new home sales (existing home sales were already reported), we should have a better indicator of where we are.  I’ll leave you with this excerpt from the The Wall Street Journal’s story:

“Whatever the March numbers say, there are good reasons to think that home sales will improve as the spring selling season gets underway. Anecdotal reports suggest that low mortgage rates and an $8,000 first-time home-buyer tax credit are coaxing buyers back into the market. And while foreclosures are set to rise as banks begin to move on delinquent homeowners, that actually could boost home sales as banks auction homes for whatever the market will bear.”

The market is without a doubt changing and we may finally be seeing the end of the great housing challenge of the 2000’s.  I’m sure we are all up for that.

Rick Turley
President

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:

“AN OPTIMIST WILL TELL YOU THE GLASS IS HALF FULL; THE PESSIMIST, HALF EMPTY; AND THE ANALYST WILL TELL YOU THE GLASS IS TWICE THE SIZE IT NEEDS TO BE.” Anonymous. And indeed – last week certainly contained news that could cause you to view the economy in an optimistic or pessimistic light – let’s take a closer look.

Good earnings reports from financial companies continued as Bank of America reported earnings that were ten times greater than expectations – that’s right, TEN times better. The company also said it earned more in the first quarter of 2009 than through all of 2008, largely a result of enormous refinancing activity. In addition, Treasury Secretary Tim Geithner said that most banks are well capitalized, and there are signs that credit market conditions are improving, which is definitely something to be optimistic about. However, as earnings season marched on, there were also some weak reports, including clinkers from The Bank of New York, Caterpillar, Dupont, Coca-Cola, Merck and United Technologies.

On the housing front, New Home Sales came out slightly better than expected, and it was especially good to see that the inventory number continues to fall – now at a 10.7 month supply, compared with February’s 11.2 months. Existing Home Sales came in slightly below market estimates – and while the report showed that Existing Home inventory in March fell by a modest 1.6%, at the current sales pace it would take an estimated 9.8 months to sell that inventory of properties, slightly longer than February’s 9.7 month reading. The path back to economic recovery will go through housing, and these reports will be important to watch in the months ahead.

In other news, Initial Jobless Claims were reported in-line with expectations. Initial Jobless Claims are a leading indicator and last week’s number does not yet suggest that the employment market is starting to improve. And March’s Durable Goods Orders marked the 7th negative reading in the last 8 months, as tighter credit and lack of business investment is continuing to fuel these negative numbers. However, it will be interesting to see how these numbers change with lending abilities now freed up following the recent relaxation of mark-to-market accounting rules, which will in turn make it easier for businesses and consumers to buy and spend.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. And last week’s mix of news saw money flowing back and forth from Stocks to Bonds, with Bonds and home loan rates ultimately ending the week very close to where they began.

WHETHER YOU’RE EXPECTING TO GET A JUICY TAX REFUND OR NOT, MAKING WISE CHOICES WITH YOUR MONEY IS MORE IMPORTANT THAN EVER! CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME GREAT DOLLAR SMART TIPS.

Read the entire report here.

Instead of searching the paper for open houses, the San Francisco Association of Realtors has just launched a new website specifically for open house information. Go to:

www.sfopenhomes.com for the latest in open house information!

- Janis Stone

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 a week we had. As was reported last week, there were a bunch of ratified sales that did not make it to the sheet. Well, they did this week. All in all, the market seems to be picking up, so hold on to your seats as we shoot into summer. It could be an interesting ride.

Here are the numbers for the week of 42209:

• 8 new listings (average price $1,575,225, low $874,800, high $3,500,000)
• 19 ratified sales (pending) (average price $1,353,632, low $449,000, high $2,695,000)
• 4 closed sales (average price $1,217,500, low $625,000, high $2,200,000)
• 2 reduced $1,325,000 and $2,295,000

- 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:

TO EVERYTHING (EARN, EARN, EARN)…THERE IS A SEASON (EARN, EARN, EARN)… That’s how Pete Seeger and The Byrd’s famous 1962 hit, “Turn, Turn, Turn” could be rewritten for the financial markets of late – earnings season kicked off last week, with several reports delivering music to the economy’s ears.

The week began with the sweet sounds of investment banking giant Goldman Sachs reporting earnings that were much better than expected. More good news from the financial zone followed, with better than expected earnings from JP Morgan Chase and Citigroup. As you can see in the chart below, the financial sector has clearly been helped by the recent mark-to-market discussions and easing of the FASB ruling. In other sectors, big players Google and General Electric also reported earnings that were higher than anticipated.

And more good news last week, as Fed Chairman Ben Bernanke sang out that there are signs that the sharp decline in the economy is slowing, indicating a potential “first step” towards a recovery from the worst recession in a generation. Specifically, he said, “I am fundamentally optimistic about our economy. Today’s economic conditions are difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience, and persistence.” While last week’s Retail Sales Report came in lower than expected, indicating that consumers are still keeping a good grip on their wallets – Bernanke’s words certainly inspire some economic confidence.

There was also some inflation news to note last week – important in particular as inflation is the arch-enemy of Bonds and home loan rates. While the Producer Price Index showed that inflation at the wholesale level is tame and the overall Consumer Price Index was lower than expected, the Core Consumer Price Index – which excludes volatile food and energy prices – came in slightly hotter than expected. Although inflation is not a present concern, traders are watching carefully for signs of it heating up, particularly as the year progresses and the impact of massive economic stimulus takes hold.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. And that’s what was seen at the end of last week, as Stocks were buoyed by the strong earnings reports, causing Bonds to fall below a key technical support level as money flowed out of Bonds and into Stocks. After bouncing around a bit throughout the week, Bonds and rates ended the week at similar levels to where they began.

Read the entire 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.

This week was another one of steady activity. From the word in the office, there are a lot of listings coming on the market in the next few weeks, and we’re told there were actually 18 ratified deals rather than the 8 that were reported. Some of those were confidential.

Here are the numbers for the week of 4/15/09:

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 FACT THAT AN OPINION HAS BEEN WIDELY HELD DOESN’T MEAN THAT IT’S NOT UTTERLY ABSURD.” Bertrand Russell. True words – and last week was one that was full of opinions that moved the financial markets – here are some highlights.

The week began with bank analyst Mike Mayo spewing out a negative forecast, which included his thoughts that loan losses by financial institutions would ultimately exceed levels from the Great Depression. This was followed by word from hedge fund giant George Soros that the US banking system is insolvent and that the economy won’t recover in 2009.

However, as mentioned in many previous newsletters, the recent changes to mark-to-market should prove to have a positive impact on the economics and overall operations of financial institutions. Why? Because the recent ruling to look at mark-to-market accounting in a more relaxed light will free up the banks’ capital ratios and allow them to do more lending, which will help their profitability, as well as ultimately help the economy unlock as businesses and consumers are once again able to borrow and use credit in a more normal fashion.

Lo and behold…as earnings season began last week, there was already evidence of this playing out as true, when Wells Fargo said Thursday that it expects record 1st quarter earnings and that their Wachovia acquisition was exceeding their expectations. In addition, the New York Times said Thursday that the US banking system overall may be in better shape than most people think.

Stocks hit an all time high in October 2007…until mark-to-market accounting practices were instituted. And notice also that Stocks reversed course, and have been on a strong rise since early March of this year, buoyed simply by the speculation that there would be a change in mark-to-market, which was finally announced on April 2nd by the Financial Accounting Standards Board.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. And this is exactly what happened in the early part of the week when Stocks were plagued by the negative opinions mentioned above. However, Stocks rallied on the good news that ended the week, causing Bonds and home loan rates to give back some of the gains they had made, ending the week unchanged to slightly worse from where they began. The Bond market closed early Thursday and both the Stock and Bond markets were closed Friday in observance of the holiday weekend.

Read the entire report here.