While nearly half of all homes have had price reductions, fewer sellers reduced their asking prices in September, according to data compiled by ZipRealty.  More than 44 percent of home listings in 28 major markets tracked by ZipRealty in September included at least one price reduction, a decrease of 2.8 percent from September 2008.  On average, homeowners reduced their listing prices by $25,362 in September, similar to August’s average reduction of $25,155, according to the report. 

Of the markets studied, those with the lowest percentage of price-reduced homes are Denver, 30.3 percent; Los Angeles, 34.7 percent; San Francisco, 37.1 percent, and Sacramento, 37.2 percent.  However, markets where sellers have reduced the most in absolute dollars are: Orange County, Calif., $55,000; San Francisco, $54,000; and Los Angeles, $44,694.  Orange County also had the highest median list price of $647,000 of the 28 markets tracked in the report.

Although still in negative territory, the annual rate of home-price decline improved last month in the 10-City and 20-City Composites tracked as one of the S&P/Case-Shiller Home Price Indices released yesterday.  The 10-City and 20-City Composites declined 10.6 percent and 11.3 percent, respectively, in August compared to the same month last year. Nineteen of the 20 metro areas and both composites showed an improvement in the annual rates of decline in August compared with the previous month.

“Broadly speaking, the rate of annual decline in home price values continues to improve” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.  “While many of the markets remain down versus this time last year, the relative rate of decline has shown some real improvement. California, in particular, has seen some real positive prints in recent months.

“Once again, however, we do want to remind people of the upcoming expiration of the Federal First-Time Buyer’s Tax Credit in November and anticipated higher unemployment rates through year-end. Both may have a dampening effect on home prices,” said Blitzer.

The Federal Housing Finance Agency (FHFA) is expected to announce, as early as next week, the new conforming loan limits for 2010.  The conforming loan limit determines the maximum size of a mortgage that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California.

Currently, as a result of the economic stimulus plan, the conforming loan limit is $417,000 for most areas in the U.S., but $729,750 in high-cost areas, including many in California.  The loan limits are set to expire at the end of this year, and could be lowered to $625,500 for high-cost areas.  If the current loan limits are reduced to $625,500 for high-cost areas, lenders likely will adjust their loan underwriting standards to align with the new 2010 loan limits, to ensure the loans can be purchased or guaranteed by Fannie, Freddie, and the Federal Housing Administration (FHA). 

To ensure consumers are not negatively impacted by the proposed changes, C.A.R. is working with NAR on a one-year extension of the current loan limits, and will keep REALTORS^® apprised of the latest developments.

The Consumer Confidence Index declined in October to 47.7 (1985=100) compared with 53.4 in September, the Conference Board reported yesterday. The Present Situation Index decreased to 20.7 in October from 23 in September and the Expectations Index declined to 65.7 from 73.7 last month, according to the report.

“Consumers’ assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment,” said Lynn Franco, director of The Conference Board Consumer Research Center.  “The Present Situation Index now is at its lowest reading in 26 years.  The short-term outlook also has grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays.

“Consumers’ assessment of current conditions was less favorable in October, with those claiming business conditions are “bad” increasing to 47.1 percent in October from 46.3 percent the previous month, while those claiming conditions are “good” decreased to 7.7 percent in October compared with 8.6 percent in September. Consumers’ appraisal of the job market also was less favorable, and their short-term outlook also was slightly more pessimistic, according to the report.

Home sales increased 2.1 percent in September in California compared with the same period a year ago, while the median price of an existing home declined 7.3 percent, C.A.R. reported yesterday.

The median price of an existing, single-family detached home in California during September 2009 was $296,090, a 7.3 percent decrease from the revised $319,310 median for September 2008, C.A.R. reported. The September 2009 median price rose 1.1 percent compared with August’s $292,960 median price.

“A new milestone was reached in September, when five C.A.R. regions reported positive year-to-year increases in the median price, the first such increase since January 2008,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “September also marked the seventh consecutive month of month-to-month increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases.”

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.

Not much has changed since last week other than the number of new listings is slowing down. This is to be expected and will probably continue as we head toward the holidays. Even so, our office has been ratifying offers. The general feeling is that buyers are starting to come to the realization that we may have hit the bottom and are stepping up and making offers.

Here are the numbers for the week of 10/21/09:

• 2 new listings ($525,000 and $789,000)
• 13 ratified sales (pending) (average price $1,499,000, low $439,000, high $3,800,000, 1 confidential)
• 17 closed sales (average price $1,472,971, low $320,000, high $4,400,000)

- Janis Stone – DRE 00517072

“U.S. Economic Recovery on Track”

While we await the results of the possible expiration, extension or expansion of the $8,000 first time home buyer tax credit, one thing is for sure, the economy seems to be moving forward—which is driving consumer confidence.  Earlier this week, Reuters.com ran a very interesting story on the U.S. economic recovery and the result was very encouraging.  Among the story’s highlights:

“The U.S. economy is firmly poised for a recovery from its deep recession but growth may be moderate and the job market will not revive immediately, senior White House aide Lawrence Summers predicted on Wednesday.”

• “On the economy, Summers said the $787 billion stimulus package and inventory rebuilding by businesses were among the “dominant drivers” lifting the economy.”
• “It will be some time before unemployment starts to decline.  Once it declines it will take a long time to return to normal levels, given how elevated it is…The jobless rate is now at a 26-year high of 9.8 percent.”
• “Most private economists think the recession, which began in December 2007, ended in the third quarter.  But there is much disagreement about the path to recovery.”
• “Some see above-average growth continuing through next year, arguing that deep recessions are typically followed by powerful recoveries, helped along by pent-up demand as consumers and companies resume spending.”

Obviously this is welcome news for the economy which ultimately benefits the local housing market.  What I can tell you is that I am encouraged by the progress we are making in the real estate market.  We’re beginning to see more days of progress than days of back stepping.  We’re watching sales activity and consumer sentiment and we are expecting over the coming months a moderate and more sustainable pace of sales at most price points.  We will probably see a modest rise in housing prices in the coming year; both nationally and statewide.  In the Bay area, it will probably be the entry level brackets which will show price improvement.   Will it be the double digit appreciation we saw in the earlier part of the decade?  Probably not.  But this “new normal” is much more sustainable and a much healthier path to build upon.  It makes me excited about the future and gives us all hope for a relatively busy and productive 2010.

Now, let’s take a look at this week in real estate:

• East Bay—Castro Valley reports inventory is slowing, with fewer investors and less multiples out there.  We are seeing more pendings, which has made the market difficult for buyers due to less inventory.  Listings are king right now.  Many listings are going pending within a week or two of hitting of market.  We had one listing that had an offer within an hour of hitting the market, sight unseen.  Fremont reported listings under $800K still have the most activity.  REO transactions at a slow pace but expected to pick up in the beginning of the new year.  Short sales are increasing – lenders seem to be more receptive to adjust loans.  Oakland reports REOs don’t seem as robust but still going into escrow with many multiple offers.  Starting to see more requests for units.  Sales are in all price ranges.  Orinda reported REOs have slowed but still have a presence in the market. Most are selling at or above asking price. Agents report open house attendance as spotty.  Walnut Creek reported we are seeing prices in some areas inch up a bit especially in East County and also part of Central Contra Costa County.  Inventory is still very low.
• Monterey County—Listings are still selling if priced right and in good condition or super buys in not-so-good condition.  The lower end is still where we are seeing the majority of sales; however, there are still multi-million dollar sales in Carmel, Pebble Beach and the coast, including one we closed on last week in Carmel for $5,000,000.
• North Bay—Greenbrae reported the low-end of the Marin market (under $700,000), cities of Novato and San Rafael, condos and REO properties have all experienced solid sales in the past few months.  Multiple offers are quite common in these areas and cash is certainly king in those battles.  Other markets like Larkspur, Corte Madera, Greenbrae and Mill Valley are all holding their own with four to seven months worth of inventory – that’s actually pretty good in this market.  Reasonably priced homes that show well, offer friendly floor-plans and close proximity to schools and shopping are still receiving multiple offers.  Marin buyers know what they are looking for and when they find it, so too do a few others with the same thoughts, bidding on the same house!  At least the Marin buyer is consistent.  And, savvy, too.  They know the inventory.  They compare properties and they look for bargains!  Sellers, in most cases, are getting the idea and pricing to sell, though buyers still might want to see one price reduction before pouncing on a property – even if priced at what seems to be a bargain from the get go.  Santa Rosa reported that we’re starting to see the first signs of slow down heading to the holidays. An influx of inventory would be countered with a host of offers.  Sebastopol reported listings and sales dried up last week. Many clients are struggling against all cash offers! This was our slowest week for both new listings and sales this year.
• Peninsula—Burlingame reported there is more sales activity and great competition at the lower price ranges with many buyers losing to investor / cash offers.  More high end listings are coming to market with very tight inventory in the $800K-1.3M range.  Menlo Park El Camino reported many sellers are just not coming to terms with buyers. Lots of rejected offers.  Build up of inventory of overpriced properties. Menlo Park Santa Cruz reported open houses were very slow this last weekend.  High end sales are still weak and the middle price ranges are moving well.  Good inventory is getting to be a huge issue.  Palo Alto Downtown reported the overall market is slow.  Well priced homes do sell with multiple offers, but the overall activity has been quieter and a bit unexpected, meaning the holiday season seems to have started sooner rather than later.  Redwood City/San Carlos reported an extremely slow week.  Very little new inventory.  Only two new listings in our office.  The one multiple we had had three offers, two of which were below asking.
• San Francisco—Lakeside reported there is a lot of activity with the homes under $800K.  Lombard reported that entry price levels are bringing the most interest and multiple offers. An off-market $4m home brought two unsolicited offers while others in that price point go begging. We are seeing continuous loan delays and occasional appraisal problems.  The Market Street office reported an agent holding an open house in the $1.8m price point was very pleased to have over 20 prospective buyers attend actively looking in that price range. All other open houses were well attended. Our ratified sales this week ranged from $275k to $1.6 and everywhere in between. Oddly enough the lowest priced property had one offer and the highest priced had three.
• Santa Cruz County—No information reported.
• Silicon Valley—Cupertino reported things are hopping! We had 27 offers on a home in Cupertino listed for $1,049,000. Needless to say, it went way over. Most of the Agents are working hard.  Los Altos reported the low end is still very busy especially in single family homes.  San Jose Almaden reported listings are slowing down, it’s too bad as lower priced homes are flying off the shelf.  San Jose Main reports activity remains strong in the $250-550k range. Multiple offers on most. Upper market still slow but showing signs of improvements.  Saratoga reports the market for all price ranges has slowed for us. I’m not sure what the cause is, but there may be an impact from buyers holding off pending the potential extension of the $8000 buyer credit.
• South County—Hollister reports the market is still driven by cash buyers on most REO sales.  Appraisal issues on some multiple offer situations due to increased offer price.  Open houses have been productive.  Buyers are willing to wait for short sale process due to low inventory.

This week I’ll conclude with a few articles of interest:

• What Housing Bust?; CNN Money
• Housing Tax Credit Working, So Keep Momentum Going, NAR Urges Congress; Realtor.org
• Shape Of The Housing Recovery; CNBC
• Real Estate Outlook: Mixed Signals; Realty Times

- Rick Turley

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 DEVIL IS IN THE DETAILS…” Or so the famous saying goes. And when it comes to really understanding the various reports and events unfolding in the economy, it’s important to take a look at the details – not just the headlines. Here’s what you need to know.

On the inflation front, the Producer Price Index, which measures wholesale inflation, unexpectedly fell due to a drop in energy prices. While that seems like good news on the surface, keep in mind that next month’s number could climb higher again, as oil and natural gas have both been on a tear higher lately.

In housing news, Housing Starts and Building Permits both came in a bit below expectations, but this may be a sign that builders are exercising some caution – particularly in the face of the $8,000 tax credit for first time homebuyers that is presently set to expire on November 30th. Existing Home Sales came in better than expected – and a whopping 45% of those homes were sold to first time homebuyers – rushing to move in on that credit. Recent studies have shown that many who qualify for this tax credit aren’t even aware of it…so please let me know if you or someone you know needs more information – the clock is ticking!

Additionally, the level of existing homes inventory shrunk to a 7.8 month supply, down from a recent high of 10.1 months in April.

Read the entire article here.

- Foster Weeks

QUESTION: By a vote of 3 to 2 my board approved a bid to repair a fence. The treasurer voted against it. A week later he asked our management company to hold off on the repair. At our next meeting I was told that the treasurer has the right to stop motions approved by the board. Is this true?

ANSWER: A treasurer does not have veto power. His vote is the same as every other director’s. He does not have special powers that gives him the right to overrule the board’s decision and give contrary instructions to the management company. However, if cash flow is a problem, he can put a temporary hold on the work until funds become available, but he cannot stop the repairs. The treasurer can also ask the board to reconsider its decision if he has new facts that were not considered when the board made its decision. Absent that, he must step aside and allow the repairs to proceed. If the treasurer continues to interfere with board decisions, he should be removed as treasurer.

Sincerely yours,

Adrian Adams, Esq.
Adams Kessler PLC