From Davis-Stirling.com Newsletter. Our posts for Davis-Stirling usually regard laws around condominium conversion, however this one is more of the educational variety.

QUESTION: Our board president for the last 9 years has ALSO been the manager of our HOA. He RULES the board and claims the board appointed him as manager. He gets $30,000 a year. Since we are a nonprofit corporation I thought directors are NOT supposed to get a salary.

ANSWER: Undoubtedly his salary is earned as a manager, not as a director. However, the two roles are hard to separate and this creates significant conflicts of interest. It is not “illegal” for the president to also be the paid manager but it is an unhealthy arrangement. If the membership were smart, they would end the arrangement by (i) removing the manager from the board or (ii) replacing the manager with an outside management company. If the membership is content with the current set-up, at some point they will suffer the consequences and will have no one to blame but themselves. As de Tocqueville observed, “In a democracy, people get the government they deserve.”

This is a new column we will be featuring every week in a message from our President of Coldwell Banker, San Francisco Bay Area, Rick Turley.

The Rise and Fall of Interest Rates

As I’ve been in the offices over the past few weeks, I have received many positive comments on Reality Check and how impactful it has been with your clients. It is my goal to provide you with timely and pertinent information on key factors which affect our local real estate market. Hopefully these topics bring some clarity to Buyers and Sellers, especially when today’s consumers need it most.

One of the key elements that makes buying in today’s market so attractive is the relatively low interest rates available in our marketplace. But recently, as you know, interest rates have begun to fluctuate leaving many would-be buyers confused and wondering if they should wait.

That leads me to this month’s topic—interest rates. We met with Princeton Capital to get their view on the changing financial market. In collaboration with Brendon Riordan of Princeton Capital, we have created a Mortgage Q & A to share with your clients. This FAQ addresses today’s attractive interest rates and what the recent fluctuations may mean for a buyer.

My challenge to you this month is to share this piece with your clients. Consider distributing it to at least 250 prospects and also be sure to hand this out at every open house you host. The more we can pass on this valuable information to our clients, the more empowered they will be regarding today’s housing market.

Our message to buyers in today’s market is: “Act now.” And, that is my same suggestion to you. Act now and take advantage of all the opportunities available to you through Reality Check. Make contacts, position yourself as an expert real estate professional, educate consumers and grow your business.

I hope you are taking advantage of his information source, using it to inform and connect with your clients.

Rick Turley
President
Coldwell Banker Residential Brokerage
San Francisco Bay Area
2355 Market Street
San Francisco, CA 94114
415.577.5538 mobile
415.437.4505 office
rturley@cbnorcal.com

California Association of Realtors just released its report for May 2009 real estate activity.

Calif. median home price - May 09: $267,570 (Source: C.A.R.) (note: compared to $256,700 last month)

Calif. highest median home price by C.A.R. region May 09: Santa Barbara So. Coast $875,000 (Source: C.A.R.) (note: compared to $840,000 last month)

Calif. lowest median home price by C.A.R. region May 09: High Desert $106,210 (Source: C.A.R.) (note: compared to $106,530 last month)

Calif. First-time Buyer Affordability Index - First Quarter 2009: 69 percent (Source: C.A.R.) (note: compared to 59 percent Fourth Quarter 2008)

Mortgage rates – week ending 6/25/09:

• 30-yr. fixed: 5.42%; Fees/points: 0.7% (note: compared to 4.91% and 0.7% points last report)
• 15-yr. fixed: 4.87%; Fees/points: 0.7% (note: compared to 4.53% and 0.7% points last report)
• 1-yr. adjustable: 4.93%; Fees/points: 0.7% (note: compared to 4.69% and 0.6% points last report)

- California Association of Realtors & Freddie Mac

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 not much different than weeks past. The market keeps churing along. As we’ve said before, multiple offers do not necessarily mean over asking price deals. Often it just means the seller can negotiate a little better price from the buyers by making multiple counter offers. Even so, we are seeing listings going for UNDER the list price, and there have been MANY price reductions. If you are a buyer looking for a deal, now is probably the time to pull the trigger on that purchase!

Here are the numbers for the week of 7/8/09:

• 2 new listings ($895,000 and $1,795,000)
• 11 ratified sales (pending) (average price $1,704,818, low $629,000, high $4,500,000)
• 9 closed sales (average price $1,445,889, low $530,000, high $4,350,000)
• 2 reduced $799,000 and $879,000

- Janis Stone

He’s back!

Note: While Avram Goldman is no longer with Coldwell Banker, he is a friend and associate at Pacific Union with an excellent handle on San Francisco Real Estate:

Can You See the Bottom Yet?

There is no market report for this week because of the Fourth of July weekend. Rick will be back next week.

- 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:

I hope you and your family enjoyed the Independence Day holiday weekend. And, I sincerely hope you have been enjoying your complimentary subscription to the MORTGAGE MARKET GUIDE WEEKLY.

Due to the July 4th holiday, the next full issue will arrive on Monday, July 13. In the meantime, check out the article below on one of our nation’s most powerful symbols this time of year: the Stars and Stripes.

The MORTGAGE MARKET GUIDE WEEKLY is the industry’s leading publication of this type, and I am pleased to provide this valuable resource to you. If you feel any of your clients, friends, family members, or associates would benefit from keeping up-to-date on market and economic trends in this easy-to-read format, please let me know and I will be more than happy to add them free of charge.

Best wishes to you, and please do not hesitate to contact me if you need assistance at this time!

- Foster Weeks

Our July newsletter is now online. If you would like to subscribe to the e-mail newsletter go here.

- Janis Stone

Existing Home Sales Rise For Second Straight Month

The National Association of Realtors released its existing home sales report which noted that existing home sales rose for the second straight month in May, signaling low prices and incentives are attracting buyers. 

NAR says existing home sales, including single family homes, condos and coops rose 2.4 percent in May.  It was the first back-to-back monthly gain in existing home sales since September 2005.

NAR chief economist Lawrence Yun had this to say, “Historically low mortgage rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates.  First time buyers are also being drawn off the sidelines by the $8,000 tax credit which is helping to absorb inventory.” The numbers could be even better if it weren’t for appraisal issues.  While pending sales of existing homes—those with signed contracts but not yet closed—indicate stronger activity, some contracts are falling through from faulty valuations that keep buyers from getting a loan, said Yun.

We’re starting to experience more challenges with low appraisals here in the Bay Area, most often from out-of-area appraisers who have no experience and limited knowledge of local markets. The pendulum could be swinging a little too aggressively in some cases as regulatory controls meet market demand.  You’ll find quite a few references to appraisal issues as you look through our activity for the last two weeks from our branches:

• East Bay—The Berkeley office reported same old story.  REOs are flying off the shelf with 15-24 offers and most are cash.  In our core area, there are still not enough listings.  Sellers are either waiting for some magical return to previous years, or concerned that their appropriately priced house won’t appraise.  Appraisals are the big bug-a-boo now for all parties. Buyers are torn between “shoot the moon” offers and whether their offer price will appraise. Listing Agents and sellers are wary of extravagant offers for the same reason. Short sales are popping up in more affluent neighborhoods.  Our Castro Valley reports the market continues to improve for our local market.  We have an active base of buyers and we continue to support them in the competitive market.  We are continuing to see increased activity in the mid-range markets and we have even sold some of our oldest inventory.  In fact, listings that fall out are quickly back into escrow, since there is no shortage of buyers for us.  Our Livermore office reports in the Tri-Valley Area, active listings in Livermore are decreasing and total pending sales are increasing: active listings in Pleasanton had a small increase while total pending sales decreased; active listings in Dublin decreased and total pending sales remained stable.  The overall market in the Tri-Valley area is improving.  Walnut Creek reports listing inventory is increasing with more REO, short sale and regular listings.  The Walnut Creek mid-priced listings, $500-700K are starting to move.  Sales activity is good.  Multiple offers on most listings under $500K and even some on the higher priced listings.            
• North Bay—San Rafael and Novato are still moving inventory. Relatively in the $500-$750k range.  More REOs expected this summer. $1-$1.3M market strong in Corte Madera, Greenbrae and      Mill Valley. In the past week we have seen an increase in sales activity in Novato with 28 homes and condos going into contract versus San Rafael with only 19. We continue to see buyers driving the prices up in the entry level market with multiple offers. One home listed @ $240k sold well over $300k in Novato this month.  Our Santa Rosa office reports inventory continues to tighten with multiple offers being the rule rather than the exception. Price point is key as over priced listings can still sit with little or no activity.  The Sebastopol office reports almost all REO and short sales are multiple offers.  Lots of lookers at open houses over 30 groups on Father’s Day at a listing in the low $300,000s.  
• Peninsula—Our Burlingame office reports as hard and challenging as all the transactions are these days, there are sales being made and Agents are busy. We have had sales at every price point $200k to $4.5mil. The North County is seeing large numbers of multiple offers 10 to 20 per property, most all sales are REO or short sales. We have had a few appraisal challenges mostly the result of out of area appraisers unfamiliar with the neighborhoods and agents are doing their best to be proactive in meeting the appraiser and providing comps.  Our Menlo Park El Camino office reports open houses were slow but we also had quite a bit less.  Agents feel most buyers still have no “fire to buy” still waiting for the perfect house and the perfect price.  Palo Alto reported everyone seems to be on vacation.  Open houses have been quieter in the Palo Alto area.  There is still good demand for well priced homes.  The Woodside office reports the market feels a little slower.  Open houses were not as active.  Is it the interest rate movement or the summer doldrums?  Inventories are still short on the best properties that buyers are looking for.
• San Francisco—The Lakeside office reported the under $800,000 market is going crazy in San Francisco.  There is a lot of over bidding and then complicated escrows, but a lot of activity.  The Lombard office reported all deals were sol and under asking except with REOs which were all multiple and all over asking.  But some over asking REO deals of late have had appraisal challenges and required adjustments.  Lots of loan problems and delays of late; requires patience and cooperation from all sides.  The Market Street office reported this week was one where buyers were flocking around certain houses driving up the price and garnering multiple offers.  We lost out on a couple where 10 or more offers came in and our Agent wrote $75,000 over.  Fortunately we had a couple of listings that benefited and received multiple offers after the first open house.  The Noriega office reported sales activity is up.  A lot of negotiations going back and forth.  Financing is getting tighter with a lot of loan conditions.  Marketing a listing used to be location, location location.  Now it’s also price, price, price and affordability!                      
• Santa Cruz County—The market is clicking along; we are having one of our better months in quite some time and will probably end up with 60 sides for the month.  In the county, inventory levels are down about 21% from May of 2008, median price is down the same amount to approximately $450,000, while overall unit sales are up 23% reflecting the strong REO market.
• Silicon Valley—The Cupertino Stevens Creek office reported listings have slowed down for our office, but we are strong with sale transactions coming in.  The Los Altos office reported the market is active with low end REO getting multiple offers.  Mid range homes need to be exceptional to draw offers.  The high end continues to be slow.  The Los Gatos office reports our mid-level properties are selling in Los Gatos (finally).  Great energy in the open house arena-lots of buyers feeling that the bottom is passed.  The San Jose Almaden office reported 53% pending in Blossom Valley with inventory shrinking.  Only 96 homes were available in Blossom Valley.  That is down from 200 just one year ago.  Attractively priced homes in Almaden are selling fast.  REOs continue to receive multiple offers.  Our San Jose Main office reported open houses were absolutely crazy the past two weeks. One property in Almaden in the $875,000 range had over 200 visitors on Sunday alone! Most lower priced homes are selling with multiple offers, sometimes as many as 5 to 10 offers on each. Upper end properties are starting to see better activity.
• South County—Gilroy reports a lack of inventory continues to cause a decrease in sales. Most properties are receiving multiple offers. Appraisals are now becoming a challenge due to lack of comparables.  Hollister reports contracts are being presented with multiple offers the norm on most REO listings.  Some listing Agents are not responding in a timely fashion adding to the frustration of the buyers and buyer Agents.  Floor time has picked up with buyers ready to buy.  Seeing other contracts besides the typical CAR or PRDS being used by some REO listing Agents.  Morgan Hill reports Agents are looking for listings.  The inventory is way down and our office inventory of listings (entry-level and moderately priced homes) is also down.  Properties listed over one million dollars, however, continue to languish on the market—but those priced under $600,000 are selling briskly.

One potential challenge that may begin affecting our market is the rise in interest rates.  I recently came across this CNNMoney.com article which offers a good look at interest rates and inflation:  http://money.cnn.com/2009/06/19/news/economy/higher_inflation.fortune/index.htm.  Currently, today’s historic low interest rates are the major driver of the recovery we’ve seen so far. Housing affordability, better than it’s been in California in over a dozen years, is a balancing act of lowered pricing and attractive interest rates.  If higher interest rates take more buyers out of the market, we can expect longer standing inventory and further price declines.

I recently sat down with our partners at Princeton Capital to discuss what strategies the Fed and Treasury may have in store for interest rates as inflation concerns become more real.  Our discussion will be found in your upcoming July edition of Reality Check, which we’ll distribute after the July 4^th weekend.

Rick

Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area

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 showed continued improvement in the housing market for San Francisco. Surprisingly even though listings were down, our office ratified 16 deals meaning if we weren’t selling it, then we were representing the buyers. That’s good news since this is officially a buyers’ market and deals can be made.

Here are the numbers for the week of 6/17/09:

• 2 new listings ($419,000 and $959,000)
• 16 ratified sales (pending) (average price $1,679,814, low $389,000, high $6,750,000, 1 confidential)
• 11 closed sales (average price $1,115,545, low $499,000, high $1,950,000, 1 confidential)
• 6 reduced (average price $2,765,500, low $499,000, high $5,500,000)

- Janis Stone
DRE 00517072