The media enjoyed a field day with the real estate industry this week
in attempting to analyze major reports issued by N.A.R. and the Commerce
Department regarding the nationwide housing market. Combined with subprime
lending issues and Wall Street’s wobbly performance, most reporters
took the easy route of predicting doom and gloom, and a longer downturn
for real estate on a national front.
The media forgot, however, to mention a few key points which indicate
that this is an excellent time to buy real estate, and savvy sellers
are reaping the rewards. Regarding issues with lending, the simple fact
is that lenders are more than happy to lend money to people who can
afford to borrow it. Standards for documented income, assets and cash
flow have become stricter, but rates remain relatively low. Additionally,
when Wall Street suffers from volatility, people tend to cash out of
the stock market and reinvest in real estate.
Median home sales prices in the Bay Area have remained steady, or increased
in most areas, and our luxury market continues to thrive. However some
buyers are unfortunately being influenced by negative media reports
and seem to be waiting for prices to drop precipitously. In the Bay
Area overall however, prices on solid homes in desirable neighborhoods
will only continue to rise. Where inventory is low such as in the City
and on the Peninsula, the competition among buyers is still pretty fierce.
Sellers in almost all Bay Area communities who price their homes at,
or slightly below, market price and are properly preparing their homes
for showing are selling competitively and at a steady pace.
The proof is in the numbers. Of the offices reporting, listing inventory
remained steady for 15. It increased for four offices and decreased
for seven, showing that inventory is steady or dropping in more than
three-quarters of our offices. Sales activity remained steady for 13
offices, increased for seven and decreased in only six.
A Palo Alto property received 13 offers. In many of San Francisco’s
ratified sales for the week, multiple offers of 3 to 4 per listing were
still common. Our Menlo Park/ El Camino Avenue office reports that every
one of their sales for the week were in multiple offer situations. Our
offices combined reported more than 70 listings receiving multiple offers
for the week.
The higher-end homes are in short supply in most areas. The Walnut
Creek office alone sold five homes last week that were each priced in
excess of $1.2 million. In San Francisco and the Peninsula, we’ve
been saying for quite some time that “Two Million is the new One
Million”. Now it appears that may be said additionally in the East
Bay and other greater Bay Area markets.
When reading front-page reports of the National housing outlook, our
Buyers need to be reminded that real estate is local. Media-influenced
buyer resistance is an unfortunate result from the reporting of national
economic data. In most parts of the Bay Area real estate market, waiting
for prices to drop isn’t the smartest thing to do. Investing during
a lull in interest rate hikes and pricing is.
Rick Turley
President
Coldwell Banker SF/Peninsula
