August 31st, 2009:

by Rick Turley

Generally speaking the Bay Area real estate market has seen a bit of a bounce this summer with sales increasing in all categories—from the entry level homes and condos to the high-end market. 

National figures showed June with an 11% increase in home sales and the Bay Area seemed to share that trend with July sales up 15% over July 2008.  As the number of sold units continues an upward trend, price recovery is a bit of a mixed bag depending on the area. The entry level median price is increasing in all counties, due to very little supply against a healthy demand.  The just-under, just-over $1M mark seems to be holding its own, with a few multiple offers out there for the right property in a sought-after community. The higher end properties over $2M have, in the past 30 days, seen more activity than at any time this year, but price remains a critical factor as to which properties seeing this activity actually go into contract.  It seems the higher the price-point, the more critical it is for a very attractive list price.  Sellers who are selling are very realistic about marketing price, and Buyers who are buying are recognizing good value when they see it, and are taking action swiftly. For cash buyers or those with large down payments, this could be a great time to pick up a bargain in the luxury home market. 

This week the National Association of Realtors released its monthly existing home sales report (http://www.realtor.org/press_room/news_releases/2009/08/strong_uptrend?LID=RONav0021) noting “For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of Realtors®.”  The report went on to note, “Existing home sales – including single-family, townhomes, condominiums and co-ops – rose 7.2 percent to a seasonally adjusted rate of 5.24 million units in July from a level of 4.89 million in June, and are 5.0 percent above the 4.99 million-unit pace in July 2008.  The last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005.” 

Lawrence Yun, NAR chief economist, said he was encouraged.  “The housing market has decisively turned for the better.  A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” he said. Ultimately these are all very positive signs for our market and are a strong sign that we are moving in the right direction towards a housing recovery.

A few other interesting articles of note for the week: 

• Home Prices On An Upswing In The Second Quarter Of 2009 According To The S&P/Case-Shiller Home Price Indices; Case-Shiller
• New Home Sales Blast Past Expectations; CNNMoney.com
• The Housing Market: Has It Turned the Corner?; TIME Magazine
• Mortgage Applications Increase In Latest MBA Weekly Survey; Mortgage Bankers Association
• Home Market Shows Signs of Life as Declines Slow; Bloomberg 

Now let’s take a look at this week in real estate: 

• East  Bay—Berkeley reports some buyers are still not prepared to compete in a multiple offer situation and may not believe this market until they’ve lost out on a few properties.  Castro Valley reports there is very limited inventory in our local market right now.  We had nine homes on Brokers tour during the course of this week, and Agents are hungry for homes to sell.  We had a few properties that hit the market this week and went pending in a matter of days.  Multiples, multiples, multiples.  There is an increase in the number of buyers calling our office looking for agents to help them buy.  We have gotten a lot more floor activity in the past week, despite the drop off in activity due to kids going back to school.  Danville reports all market activity is strong.  Lack of inventory is holding down sales.  Prices at the bottom are firm – prices at the top are still correcting.  Oakland reported we had three nice sales averaging $2 million for the week.  One of them was the property that we had marketed for a year and a half.  The buyer came to an open house (we had over 100 groups through) and bought it all cash for over $2 million dollars and a very quick close.  Everyone feels there is momentum in the market.  We had more open houses last weekend than previous weekends  and they are well attended
• Monterey County—The steady beat of listings and escrows continues the Monterey Peninsula.  We are seeing sales in all price ranges, except the very top over $10 million and those are slow even in the best of times.  One third of our new escrows last week were for properties priced between $1.2 million and $1.9 million.  We see sales in that $1-2 million range really picking up of late. 
• North Bay—San Rafael reported cash is king when it comes to winning the multiple offer game in the entry level market.  Nearby Southern Marin reported every deal requires heavy negotiating and seller concessions and last minute delays in removing loan contingencies.  Sebastopol noted open houses remain well attended. Every escrow has its own special demands, lender conditions, low appraisals, and Agents on the other side that won’t play nice.  Santa Rosa noted REO listings are starting to appear in increasing numbers. A noticeable increase in open escrows from $500,000-$900,000.
• Peninsula—Burlingame noted that activity has picked up a lot, many buyers are getting involved in multiple offers and are beginning to understand that the market has changed and they need to step up to the plate when that perfect property comes along.  Half Moon Bay reported activity has picked up on the coast as seller’s are pricing their properties to sell within one or two weeks, along with the moving of some stagnate listings requiring many counter offers.  Menlo Park Santa Cruz Avenue reported two homes sold last week with multiple offers however neither went over the list price. Open houses were busy averaging 20-25 groups.  Palo Alto reported Inventory is slow to come on the market. Listings and sales are seasonally slow. Looking forward to a brisk after Labor Day market.  San Mateo reported there has been some more intense movement in the $1.2-1.5 range – Hooray!!!
• San Francisco—The Lombard office reported a slow week except for the entry level and REO markets which remain hot, with multiple offers, including a surprising number of all cash. Major price reductions on the upper-end bringing mixed results. More hints of a listing surge post Labor Day.  The Market Street office reported lots of activity the last two weeks.  Back-up offers being elevated, properties that have been on the market for a while getting into contract, and buyers who want to get in to a home before prices go up and be assured of their $8,000first-time home buyer credit. There has been more activity than a normal August with fewer agents in the office taking time off.
• Santa Cruz County—In last four months, the median price in the county has risen 23% or about $100,000 which is a very good sign.  Prices are still down about 14% from where they were a year ago at this time but it is definitely going in the right direction.  Inventory levels are down from a year ago with a 5.5 month supply of single family homes on the market as compared to 8.5 month supply in July/August of last year. Overall, there is improvement which is wonderful!
• Silicon Valley—San Jose Almaden reported a hot low end market continues to fuel sales.  Highest sale last week was $550,000.  Two-thirds of the sales were under $300,000!  The Willow Glen office reported we are seeing a lot more multiple offers on our listings.  Saratoga reported our Previews (luxury end) market is still slow.  REOs and short sales still dominate the market; however there is a slow steady increase in our office’s average sales price. I think this is due to a much healthier market in the $750,000 to $2,000,000 range.
• South County—Sale prices are exceeding list prices on sales under $400K due to lack of inventory.  On REO listings it is typical to have 5-10 multiple offers in that price range. Contingency time frames are usually shortened to strengthen the offer.  Short sale listings are increasing with back up offers in place.  Open houses are well attended and floor calls have been on the rise!  Morgan Hill reported the market remains unchanged for the past several weeks.  There is great demand for entry level homes–multiple offers happen and then there is just one successful buyer. 

Several offices are talking about a post Labor Day surge in new listings.  The Buyer appetite seems to be there, as long as the listings are priced right.  Typically August is the slowest of summer months with vacations taking priority, however this month has seen the best Buyer activity all year long for many offices.

 Please note that next week we’ll take a brief hiatus from Weekly Market Watch for the Labor Day weekend, but we will return the following week. 

Until then,

Make it a good one,

Rick 

Rick Turley

President, San Francisco Bay Area

Coldwell Banker Residential Brokerage