There has been a flood of commentary on the credit crunch this week.
Both facts and speculations have dominated the headlines. To truly understand
the local impact we're experiencing, it's best to listen to the actual
comments from out in the field. So this week, I am simply compiling
the feedback from our agents and managers in our Bay Area offices. You
be the judge as to what is really going on.
Comments from East and North Bay offices:
"Agents dealing in highly sought after areas are less concerned
about the buyer’s mortgages since a really competitive offer would
need 20% down as a minimum……The media is saturated with news
of doom and gloom and it is intimidating our Buyers out here. Otherwise,
we are seeing increased activity this week…… We have sold
some of our older inventory this week….. Price reductions are seeing
action…… The mortgage crisis has given us all the jitters,
but as each day passes, we realize that life goes on and so does real
estate. Many of our buyers are unphased at this point, though we are
seeing drop in activity…….
Agents are busy; we have only had one escrow/loan negatively impacted
by the mortgage crunch…….. This past weekend our floor duty
was very busy. We had two “walk-ins” – one in the $3
million range and one set of buyers looking for $1.5-2 million. Also,
we experienced about 7 really good floor calls. Many agents experienced
30-40 groups through their listings...... Great attendance at open houses
that are new on the market……..Last week sales picked up……."
Our office comments on the Peninsula and in the City:
"While many agents are concerned about the “summer slowdown”,
others are choosing to simply ignore it and stepping up their activity.
One of our agents received a floor call and just ratified an all-cash
sale at $4 million, with another sale to come from the same buyer. Thanks
to all the great info coming to us from Coldwell Banker with regard
to the lender/mortgage problems, our agents are so much better equipped
to answer questions from their clients. We talked at our meeting today
about the article in the Chronicle this weekend which discussed the
fact that our peninsula is sought after by “zip codes” in
many cases….
Very quiet here – but it is seasonal. Financial markets are not
the cause of our slowdown, I believe. Some folks are being cautious,
but the buyers are still serious shoppers if they are not out of town……
Typical summer slow down prior to school starting back up. Many agents
are enjoying family vacations; those that are here and working are seeing
good activity at open houses…... We still need good quality inventory.......
Inventory is short. We anticipate an influx of listings right after
the holiday – approx. a week after. Multiple offers nearly 100%
in Palo Alto. Short inventory = small volume….. August is slow
– loan problems seem to be limited somewhat, but no doubt that
some buyers are holding back….. Lots of talk about the subprime
market and Wall Street jitters, but lots of buyers out there at Open
Houses....
More active last week for both listings and sales. Not many multiples
and we had two deals fall out due to funding. City inventory still remains
fairly low…….. Sellers are bringing their homes to the market
sooner than planned due to the uncertainty of the mortgage situation.
There are a lot of well-qualified buyers out there looking for the right
property to call home. 40% of the ratified offers for the week were
properties sold in 2 weeks or less. 10 of the 16 sales for the week
were in multiples. Good activity this week despite mortgage woes. Larger
down payments help win in multiple offers. One $1m-range condo had 7
offers and almost 20% over."
My take is that seasonal slowdown, vacations, and low inventory outweigh
challenges from the mortgage industry as potential headlines for San
Francisco/Peninsula real estate news stories. Thankfully our partner
Princeton Capital has kept us informed and offered great solutions when
we have encountered some mortgage challenges. Keep in mind - the last
time there was a statewide/national real estate downturn, we did not
have single-digit interest rates, and our employment numbers were very
unfavorable. Locally, desirability seems to be near an all-time high
in many of our communities. That simply leaves us with the laws of supply
and demand.
Rick Turley
President
Coldwell Banker SF/Peninsula
