San Francisco Real Estate Market Update for
week of
June 1, 2008
Read what Rick Turley, President of Coldwell Banker, San Francisco/Peninsula says in his latest weekly report:
This week’s keyword is Value. Sellers need to position their homes appropriately based on price and condition, creating that perfect combination for potential buyers. Buyers are acting—but only once they feel they’ve found that perfect “value” combination. It's why one home will get multiple offers, while another of similar size and same basic amenities just down the street sits for more than two months with little activity.
We see this everyday. Just look at the action in the REO market. In some cases we’re seeing REO properties that are getting upwards of 30 offers on one listing. That tells us that there are buyers out there—but they’re holding out; waiting to find what they perceive as a value. As a general rule, in communities where we are seeing 3 months or more supply of inventory, sellers are pricing their property at, or slightly under the most comparable and most recently sold home to get their home sold in a relatively short period of time. This ensures that a new listing receives the highest level of interest from the existing pre-qualified buyers that are already focused and educated on that neighborhood. "MarketTrends" in MyRECafe is there to help you evaluate inventory and pricing statistics broken down by MLS areas and cities.
In many markets we’re starting to see sellers realize the reality of today’s market and they are agreeing to price reductions. In many cases, once we see price reductions, the listing gets an immediate offer—and in some cases goes into a multiple offer situation. It all comes down to what the buyer perceives as a value and you and your sellers need to work to find that perfect value combination to be successful in today’s market.
Before I go into this week’s market updates, I wanted to share an interesting article I came across this week, one that supports the message of our June Reality Check initiative. As you saw in my message last week, the market is without a doubt gaining momentum and I feel strongly that a year from now we may be looking at these days as the turning point in our market.
Dozens of industry analysts are reporting the same as indicated in the June Reality Check prospecting flyer. Well, this week, there’s more exciting news for our industry including a June 3, 2008 MarketWatch article entitled, “Home economics commentary: Housing market may turn more quickly than you expect.” The writer explains, “All I would like to point out is that, in broad macro terms, the average house is no longer as overpriced as it one was. That being the case, it is no longer prudent to assume that home prices have to fall a lot more before they stabilize.” He goes on to say, “Remember, incomes are still rising, so home prices don’t have to fall as much as you think before buyers decide that they can once more afford the home of their dreams. Sooner or later, the fact that housing is more affordable will ink in. That’s when the market will turn.”
With that important insight in tow, let’s look at how the market is shaping up this week:
East Bay – A portion of the East Bay market continues to be driven by REOs. In some of the more affordable markets nearly half of the business being closed is REO based. To put it in perspective, in Castro Valley this week one Agent brought in four REO listings in one day. In some of the more affluent markets of the East Bay we are definitely seeing an increase in activity with our Danville office noting that we finally decreased to just under five months of inventory—a position we haven’t seen in months. Another interesting note is the fact that certain parts of the East Bay continue to thrive while others remain equally stable. Our Oakland office reports that they continue to see multiple offers on good properties that are priced right and are in good locations. One Berkeley property had 10 offers and even with no contingencies, a one week close and about $75,000 over the asking, we were the 4th best offer. Wow!
North Bay – The North Bay, which for weeks has been driven by a surge in the entry level market, saw some real strong signs of life this week in the high-end market. In fact, our Greenbrae office reported that a $4 million listing in San Anselmo/Ross sold before it hit the market, then fell out of escrow, only to quickly go back into escrow just days later. There seems to be no shortage of buyers in the high end which makes for an exciting opportunity for all of us. Sonoma County continues to be strong in the entry-level and REO market. We’re suddenly seeing a lot of buyers who are testing the waters with offers.Peninsula – The Peninsula market seems to be affected by two main challenges: buyers who are waiting to act and a lack of strong inventory. But when the two come together, watch out! Our Burlingame office prevailed this week in a nine offer San Mateo listing which was listed at $1,349,000. One Menlo Park listing had 13 offers. Another Redwood City listing was priced at $1,450,000. It has four offers and went $100,000 over list. What does this tell us? When sellers find that perfect combination of condition and value, their home will sell. They just have to find that sweet spot and they’ll be successful in today’s market.
San Francisco – We saw a lot of activity in the City this week. In fact, some would say it was a “huge” selling week. Though most of the offers were at or right around asking price, there were a few anomalies including a fixer in Crocker Amazon which received 38 offers. In all, our five San Francisco offices reported 15 multiple offers this week. Month's Supply of Inventory has decreased steadily each month since January in the City, now down around 3.5 months for single family homes.
Over the next several weeks your focus should be on articulating to your buyers why now may be the very best time to take action. We are seeing a lot of momentum in the market today. Before we know it, we could see a shift from one of the most successful buyer’s markets of our time, to the return of a familiar market where buyers get no opportunity to negotiate price or terms. Please use this time to encourage your buyers to act. And, don’t forget about your June Reality Check challenge of distributing the 250 prospecting flyers to your sphere, the message contained in this piece will help them see the opportunities which exist today.Rick Turley
President
Coldwell Banker SF/Peninsula
