San Francisco Real Estate Market Update for
week of
March 16, 2008
Note: While Avram Goldman is no longer with Coldwell Banker, he is still a friend and associate with an excellent handle on San Francisco Real Estate:
And now, live from New York City ---- The Goldman Report. While I review the activity around our marketplace, my wife Lori is out doing her best to keep us out of a recession.
New York City looks and feels the same. You still can’t get in the best restaurants without a reservation at least two weeks in advance (try two months for Per Se), forget trying to get a ticket to “Wicked” or Broadway’s latest “Cat on a Hot Tin Roof” with James Earl Jones, I see a few more sale signs in store windows, but the chic shops are still holding strong. Obviously the restaurants and shops frequented by the Bear Stearns 14,000 employees will be looking for new customers, although many of their employees will find other opportunities. This is still a vibrant city of eight million plus. Haven’t heard anyone talking about the recession. Like San Francisco, NYC is one of Richard Florida’s “super cities”, somewhat insulated from the general economic malaise. Plus, it is close to Europe where vacations in NYC are a bargain. If you love art, food, and theater, there is still no better place in the world to go.
Now back to reality. Given the fall out of Bears Stearns you would think this would have a dampening effect on our local real estate market. The answer is---not much---buyers are still out in force as evidenced by our open house visitors. The majority of open houses are in double digit attendance numbers. Yes, we still have a few slow ones, but they are relegated to those listings that have been on the market forever and those that are located in areas of voluminous inventories. We also had some outstanding ones like the home in Alamo listed for $2.2mil. with over 100 groups through. Montclair and Berkeley offices had a range between 12-80 buyers and San Francisco had several between 25-40 groups. Most offices reported that more buyers are coming into the market.
Sales activity is steady in the majority of our offices, although we did notice open sales falling off in the wine country (Napa and Sonoma). San Francisco still continues to be the most active market where almost 25% of our sales end up in multiple offers. This was the case during the reporting period where multiple offers ranged from 2-7 offers and going from list price to 8% over list. In the East Bay our Montclair and Berkeley offices had almost two thirds of there open escrows end up in a multiple offer. A Rockridge home priced at $799K received 17 offers. One of our agents went $50,000 over, but was one of the lower offers. You can also add to that a Piedmont Avenue home listed at $675K garnering 9 offers. Thus, in spite of trying economic times, there is money and desire to buy homes. Or at least homes that are priced and presented well in desirable neighborhoods.
The lower price ranges in Contra Costa, Alameda and Marin counties are beginning to show a little more life, but it is still the high end that appears to be alive and well. Our average price in San Francisco during the reporting period was $1.975 mil. and in Ross a listing at $9.5 mil. went into escrow.
There are still treacherous economic waters ahead as evidenced by Standard & Poor’s changing of Goldman Sachs and Lehman Brothers outlook on profitability from stable to negative. They did not change their credit ratings. This reflects the difficulty these firms will have over the next year or two because of the decline of profitability in capital-market activities---translation---write-downs will take away profits.
The momentum in the housing market will not pick up until the public becomes more comfortable with the outcome of the current financial mess. The demand for housing is present---what we need now is confidence in the future. Again the smart buyers are out their buying before the bulk of the buyers re-enter the market.
Some buyers know are figuring that out. A friend recently bought a home after looking for two years. He had been waiting for prices to come down. Why did he buy now, knowing that the market may still have not hit the bottom? First, he was tired of living in a smaller rental; second, he found a home that met his families needs for the next ten years (meaning the right size home, big backyard, and good schools) at a payment he could afford; he was tired of throwing away dollars in non-tax deductible rent; and finally, it didn’t matter whether the market was at the bottom or not, he was not buying it as an investment, it was a home, where he was going to raise his family. Lest we forget why we really buy a home.
One last thought for sellers---this is no market to test price. The feedback from the market is, if you don’t have an offer in 3-4 weeks, seriously consider a one time substantial reduction. The drip reductions don’t work long-term. Decrease your list price to the lowest level you can. This will give you the best opportunity to stand out among the pack.
Avram
Avram Goldman
President and CEO
Pacific Union GMAC Real Estate
One Letterman Drive, Bldg. C Ste. 300
San Francisco, CA 94129-1492Direct 415.345.3788
Cell 925.323.8881
Fax 415.561.2158
