Read what Rick Turley, President of Coldwell Banker, San Francisco/Peninsula says in his latest weekly report:
It May Be Time to Get Off the Fence!
With the Economic Stimulus Package and the Foreclosure Prevention Plan underway, many Americans are anxious to move forward, realizing that there will still be weeks and months of discussion and fine-tuning before all elements will be understood. At the end of the day, some elements will be popular with the majority, perceived as helpful to our recovery – and some elements will remain under heavy criticism and largely unpopular. It’s the American way. But I hope most will agree that it’s time to get back into a position where we feel secure, where we feel confident and where we can once again make strong decisions regarding our future…and that includes decisions we make about real estate.
Many buyers have been on the sidelines. They’ve been waiting to see what will happen to interest rates and to see what the results of the Economic Stimulus Package would be. Some have been on the fence regarding a personal real estate decision even though their down payment and their jobs have been safe and secure. You can’t really blame them for being cautious – but things are definitely starting to change at the entry price levels. Most new offerings listed at a competitive asking price are receiving multiple offers again. Many older listings that have taken notable price reductions are experiencing the same thing.
Now I realize that every individual situation is different so please don’t take this as a broad based brush that I am painting with, but what I can say is that buyers may truly be in one of the best positions than they have been in some 50 years to purchase a home. Consider the benefits to today’s homebuyer:
- New $8,000 first time home buyer credit (and in most cases, the buyer does not have to repay the tax credit).
- Reinstatement of FHA, Freddie Mac and Fannie Mae loan limits. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750.
- Historically low interest rates. In my February Reality Check message I shared with you how changes in mortgage rates can affect a consumer’s purchasing power. The fact is, right now interest rates are low—certainly by historical standards—and those low rates translate to increased purchasing power for buyers.
- Though we’ve seen decreasing inventory in many of our markets over the last several weeks, we still do have quite a bit of inventory in many markets. This translates to more choices for buyers. We are also anticipating that Spring will bring on a lot of good, new inventory for us and that should bring in a surge of new buyers—for today’s buyer’s, that’s competition for you.
My point is that Buyers may not want to make the mistake of waiting. Sitting on the sidelines could cost plenty in terms of higher housing prices, increased competition, fewer choices and higher interest rates. We live in one of the most desirable areas in the world and regardless of the recent slowing in the market, there is still high demand where value is perceived –normally value is perceived with respect to condition and competitive pricing. Reading on, you’ll note a surge in multiple offers at the entry-level price points.
Let’s take a look at our past week in Bay Area real estate:
- East Bay—Berkeley shares that Agents are desperate for new listings to show their ready, willing and able buyers. Berkeley tour is still anemic, not much to show buyers in many neighborhoods. One Berkeley property just received 13 offers and happily we had the winning offer. The Castro Valley office reports that the local market was slow this past week. Lack of inventory is holding prices steady but there is nothing new out there for us to sell. The inventory is so low that well priced homes are being snatched up immediately. Danville is seeing some bright spots in the upper-end. For the second week in a row, a number of our new sales were in the high-end: four sales above $1,000,000 and one sale about $2,000,000. Fremont shares that our current market is busy with REO and short sales. We have had several multiple offers regarding the REO and short sale deals. We have picked up for this week compared to last and are hoping for it to continue. Livermore provided the Tri-Valley update with Livermore figures standing out as the shining star: active inventory is down 3.5% and total pending sales are up 16% since the first week of January. Pleasanton active inventory since the first week of January is up over 28% and total pending sales are up 25%. Dublin active inventory and total pending sales has remained stable in 2009.
- Monterey—With listing inventory steady, sales activity is on the rise. We’ve had a few more sales in the last few weeks, but most are in the lower price ranges.
- North Bay—The Greenbrae office reports more contingent sales. Sellers are much more reasonable with prices as new homes get ready to come on in Spring. There is a movement and an upswing in activity. Our San Rafael office reports that there is plenty of activity at open houses. Agents are showing property, but the number of buyers writing offers has slowed in the past two weeks. It feels as if there is going to be a surge of new business about to explode due to the increase of buyers’ previewing and the number of Agents qualifying buyers with Princeton Capital loans as of late. Santa Rosa shares that for the third week in a row, conventional new inventory has come on at a slightly higher rate than distressed properties. Seeing some of the closed properties that were in multiple offers, we find that many banks took less than the highest offer in favor of cash or large downs—sometimes leaving more than $50,000 on the table. Sebastopol shares that the rain kept the lookie- loo’s at home this past weekend but the buyers weren’t bashful about writing offers. They had 13 sides on 11 properties which went into contract.
- Peninsula—Our Burlingame office reports that some days are full of hope and some days are disappointing as the buying and selling public react to the media and the stock market. We are seeing sales and listings increase, however. Some financing difficulties exist with lenders asking for larger down payments or modifying terms at approval time. Half Moon Bay shares that it was a slow week on the coast although the open house attendance was good. Everyone is looking to the stimulus package to help kick the housing market in gear. Our Menlo Park El Camino office reports that there are still a lot of low end sales. We only had one closed escrow in Menlo Park this year. It was over $2 million. Last year there were seven. Sellers are beginning to get it as our stats are becoming more compelling. Buyers and sellers will find each other. Our Menlo Park Santa Cruz Avenue office reported that one REO sale in Redwood City had 10 offers. One good Atherton property sold with a list price of $6,995,000. Hopefully this is a sign that the high-end is loosening a bit.
- San Francisco—Our Market Street office reports that some of the past week’s back-up offers moved up where primary deals failed. Multiple counteroffers also seem to be the order of the day with many of the ratified sales taking 1-2 weeks to ratify. Lakeside states that good negotiations and diligence on the part of the sales associates is what is bringing deals together in this market. All SF offices note the high end is still slow.
- Santa Cruz County—We are starting to see potential short sales in the Previews market and have a couple of escrows that meet that criteria. Two of our Agents are in the process of listing a $7 million property that is ocean front and has already attracted interest. We have a couple of new listings in the $2 million+ range. Open houses are well attended and continue to be even in this price range.
- Silicon Valley—Our Cupertino Stevens Creek office reports that the market is still strong in the Cupertino area. Schools are the constant focus of most of the clients. Our Los Altos office reports that buyers are still coming to open houses but are voicing concerns about falling prices. Our San Jose Almaden office reports one REO property that was listed by an out of area Agent received 30 offers. It was listed at $450,000 and is about $200,000 under valued. Our San Jose Willow Glen office feels like a broken record but the truth is enlightening: open houses are busy and floor calls are picking up. Buyers are looking and may still be waiting to see what happens with the stimulus package.
- South County—Our Gilroy office reports that the market continues to be driven by bank-owned properties. We are seeing that sales are up YTD over 2008. Hollister shares that REO listings continue to receive multiple offers and short sale listings are on the rise. Morgan Hill reports buyers in South County are like hungry linebackers in a buffer. They are devouring bargain priced properties in both Morgan Hill and Gilroy. In the first 25 days of February, Morgan Hill Agents managed to put 35 homes on the office sales board. Prices are still declining but properties listed under $300,000 are selling at a very good pace.
The current housing market offers a unique window of opportunity for confident buyers. The exciting news is that for the first time in quite a while, the stars are in alignment for consumers: mortgage rates remain at historic lows, loan limits have been increased, there is an $8,000 first time home buyer credit, and in some areas a good selection of homes to choose from. The only way to know that the market has “hit rock bottom” is when it is on its way up and by then, the window of opportunity is gone. Among the ongoing concerns consumers currently have regarding our economy and real estate should be one additional one: 10 years from now, we could be looking back at this market, and wish we would have bought a lot more San Francisco Bay Area real estate.
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