San Mateo Coastal area

According to First American Core Logic statisticians, the next 12 months will bring about a gain of 4.5% in home prices. Last month alone, an estimated 28,111 new and resale houses and condos were sold in California, which rose 9% from January sales.  The average mortgage payment last month was $1,068.

The below chart shows the growth in Median Home Sale Prices from 2009 to 2010 San Mateo Coastal Real Estate market.

It’s exciting time in the San Mateo Coastal area as we are seeing new homes coming on the market and are seeing properties sold!  If you are looking for a home in this desirable Coastal region, we’d love to assist you in your search.  We currently have some great properties available which we would be happy to show you!  Looking to sell?  We can help you through the process from start to finish!  We look forward to hearing from you!

Kathy & Michael Rain
Your San Mateo Coastal Real Estate Experts

San Mateo Coastal Real Estate
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As I mentioned in an interview with the San Jose Mercury yesterday, after the financial market meltdown a year ago, high-end home sales dried up during the first half of 2009. Compared to those days, homes sales in higher price ranges are much more active now, pushing up median prices around the Bay. And with relatively few homes on the market in Silicon Valley and on the Peninsula, prices have stabilized and buyers are now competing for good listings.

Half of the sales reported by our Los Altos office drew multiple offers, for example.  One Sunnyvale home listed at $950,000 drew 12 offers and sold for more than $1 million. In Palo Alto, we’re seeing eight to 10 multiple offers for properties that are well-priced.  The San Francisco Van Ness office says some well-priced high-end listings are selling in 10-15 days. The same story is being told in Menlo Park, Southern Marin, Orinda – in fact, most of the Bay Area’s higher-end markets.

We just released our Coldwell Banker Residential Brokerage Luxury Report this week, and it shows million-dollar home sales in Marin nearly tripled last month from a year ago, while the median sale price jumped 25 percent.  The same was true in Silicon Valley, where luxury sales nearly doubled as the median price edge higher.

Now don’t get me wrong. While we’re seeing a promising recovery in many of our markets, we’re still fighting our way back to normalcy. The nation’s economy recovery is still very fragile. And the housing market’s gradual improvement must be sustained over time in the face of a challenged job market.  But the signs are encouraging that all sectors of our local housing market are slowly coming to life again.

Here’s a market-by-market report from our local offices:

San Francisco— The San Francisco market has the buyers – it just needs more sellers! The Van Ness office says that sales activity is very strong in $800k to $1.5M range – frequent multiple offers and selling after just 10 to 15 days for listings priced right. They’ve seen a few very high-end Previews property sales in the past two weeks, plus a fair amount in the $2M to $4M range.  Some older listings still sitting while newer to market are going pending –price and condition is critical. Buyers are definitely out there looking at open houses, the Noriega office reports.  One open house in the Outer Sunset, price in the mid $600,000 drew over 200 people during a three-hour Sunday open house.  They expect to have over 10 offers.  Value properties are definitely flying off the shelf. The Lombard and the Market Street offices say that business has definitely picked up, the majority of offers in some neighborhoods now multiple.  But as with elsewhere in the City by the Bay, agents are frustrated by the lack of inventory.

SF Peninsula— Sales are better than last year and the spring market looks promising in Burlingame, although buyers are taking their time to make a decision or the right inventory is not available now.  The entry-level price for Hillsborough is now very competitive with Burlingame and higher end San Mateo.  There are some excellent buys right now. Menlo Park offices report steady or increasing activity. One property listed for $1,749,000 had six offers and went substantially over the list price.   Well-priced properties are getting a lot of buyer attention with open houses very busy in all price ranges. In Palo Alto, Inventory is low compared to years past.  If well priced, we see eight to 10 multiple offers above list price.  It appears that buyers in Redwood City and San Carlos are thinking we are beginning to see a turn around and now is the time to buy. Properties that show well and are priced right are starting to sell quickly. Things are also heating up in San Mateo, where six out of 10 listings are attracting multiple offers.

Silicon Valley– Both sales and inventory are picking up steam in Los Altos, as half the sales are multiple offers. One new listing in Mountain View priced at $799K had over 165 groups through the first open houses last weekend.  Los Gatos also reports a “dramatic” increase in activity. In San Jose’s Almaden area, entry-level to moderately priced homes are in high demand with nearly all selling with multiple offers.  Prices are rebounding in Blossom Valley. The San Jose Willow Glen office is seeing more listings and buyers. Meanwhile, the San Jose Main office says activity over the past two weeks seems to have slowed a bit, but open houses remain active. Saratoga is still reporting very low inventory, down 28% from last year.

North Bay— There is a renewed sense of optimism among agents, reports the Greenbrae office – more properties are coming on the market, more multiple offers and more buyers stepping up to the table.  Buyers now know a good deal when they see one and realize the time to strike is now. Activity is also increasing in Northern Marin, with the majority of the new inventory not distressed.  Properties are still seeing multiple offers when priced well.  Buyers are pouring into open houses in large numbers.  One listing held open last weekend in Novato had over 70 people. It’s still a buyers market in Southern Marin as high end listings have been increasing rapidly (97 listings over $2 million). Santa Rosa reports inventory is still tight with multiple offers the norm in the lower price points – home above $500k are finally starting to be shown and sales are trickling in. Petaluma also is seeing a pickup in activity above $500k.  Most sales remain multiple offers in Sebastopol, with cash and large down payments continuing to beat FHA offers.

East Bay – There are a sea of buyers in Berkeley, but only a trickle of listings for them to choose. Listings are slowly coming in, but most sellers are not listing unless they have compelling reason to do so. It’s a different story in Castro Valley, where they’ve gone from a listing famine to more than they can handle, in all price points. But well-priced homes are still flying off the shelves, many with multiple offers and all-cash.  Danville is seeing both inventory and sales activity gradually increasing over the past several weeks.  Open house attendance has been very good and some buyers seem more optimistic. Ditto for Oakland-Piedmont, as well as Orinda and Walnut Creek, where the best properties are still getting multiple offers and agents are reporting more mid-week property showings. As anticipated, Fremont reports a steady increase of listings as we approach the spring selling season.  Livermore reports a very healthy market in the Tri-Valley area with listings increasing 26% in Livermore, 35.5% in Pleasanton, and 32% in Dublin this year. Pending sales have also jumped 16-24% in local cities.

Santa Cruz – We’re seeing multiple offers on many properties, both lower and mid-range. Our local offices closed two sales over $2 million.  Beach properties well priced continue to draw buyers especially under $1 million.  Inventory levels remain very low and prices are slowly inching upward.  The median price inched up to $500K from $380K a year ago with unsold inventory dropping to 844 single-family homes vs. 1,049 a year ago.  But we’re not out of the woods. Distressed properties including short sales and bank owned units represent about 48% of new inventory, so we definitely are still experiencing a stressed market.

Monterey Peninsula — The beautiful early spring weather is bringing lots of visitors down to enjoy the climate and scenery on the weekends, so our many open houses have increasing activity, especially in Carmel.  Many more consumers telling us this is a good time to buy with prices and interest rates down and still good inventory, except in the REO properties.  Still, buyers are careful in their offers and negotiating, not willing to pay more than their perceived value of the property, so many offers going by the wayside.  We have lots of short sales, still taking many months to get approved and closed – too long for some, generally the first buyer, so the homes are mostly going to the second or third buyer.

South County– The Morgan Hill office has had an interesting first quarter.  January saw sales and listings at an all time low.  The office rebounded in February and March with a large number of sales.  First time homebuyers dominated the market as did cash investors.  Good new for some sellers is that there are very few listings and demand remains very strong.  The consensus among South County Realtors is that prices remain attractive, interest rates are favorable and that there are not many new homes being built in this area – hence demand remains high for re-sale houses.

Keep in mind that the Fed seems to have made it clear this week that they will end their purchase of Mortgage Backed Securities as scheduled. This will likely result in an interest rate increase as investors for these mortgages will need to be enticed.

That’s it for now. Have a great week!

Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage

“What’s happening? First-time buyers are rushing to take advantage of the federal tax credit before it expires this spring. Unfortunately, we aren’t seeing a commensurate number of sellers bringing homes to the market to capitalize on this. There are inventory shortages throughout the Bay Area. Open homes are attracting a flood of serious buyers. The result is that attractive, well-priced homes in good neighborhoods are getting lots of interest and, in some cases, multiple offers. 

Without as much competition for buyer’s attention, a well-maintained home could stand out like a redwood tree in a desert. This may not last for long as more homes come on the market in the weeks and months ahead (don’t forget the old adage that people start listing homes after the Super Bowl).

So by and large, it’s pretty much a conversation about inventory when you talk about our Bay Area real estate market.  Even the luxury market, while admittedly slower than lower price points, has inventories trending down.  Take San Francisco, for example, for homes over $2 million.  The luxury market finished out December 2009 with a 6 months supply of inventory – compared to 10 months supply for the same period in 2008.  You’ll find similar trends in the high end in many of our communities in Silicon Valley, Peninsula, Marin, and the East Bay.  Accuracy in pricing and attention to detail in showing condition remains critical in the luxury markets, but sales activity is picking up and inventories are going down.”  by Rick Turley, President, Coldwell Banker San Francisco Bay Area

Still a Buyers Market – HALF MOON BAY through MONTARA,CALIFORNIA with just under half of the listings listed at over 1 Million. The Million plus price range is finally seeing activity with 20% of sales in that price range.

Active Listings-108 Single Family Homes. 44  listed over $1,00,000, 18 listed under $600,000
Pending Sales-24 with 11 listed under $700,000 and 7 over $1 Million.  No new pending sales this week.
121 Homes Closed since January 1, 2009 with  31 that closed under $600,000 and 21 over 1 Million.

PACIFICA, CALIFORNIA
With YTD sales of 219 and active listing at 46, Pacifica continues to be a Seller’s market.

Active Listings-46 Single Family Homes. 9 listed over $900,000, 19  listed under $600,000
Pending Sales-47 with 20 listed under $500,000. 5 new Pendings this week all under $700,000.
219 Homes Closed since January 1, 2009 with  82 that closed under $500,000 and 72 between $500,000- $600,000.  One  closing this week

ABSORPTION RATE
Absorption Rate is the number of months it takes to sell the current inventory at the present rate of sales.
6 months supply is a balanced market.
Less than 6 months supply is a Sellers market.
More than 6 months supply is a Buyers market

Still a Buyers Market – HALF MOON BAY through MONTARA,CALIFORNIA with just under half of the listings listed at over 1 Million. The Million plus price range is finally seeing activity.

Active Listings-122 Single Family Homes. 53 listed over 1 Million, 25 listed under $600,000
Pending Sales-30 with 8 listed under $600,000 and 9 listed over $1,000,000.
109 Homes Closed since January 1, 2009 with only 18 that closed over $1,000,000 and 29 under $600,000

PACIFICA, CALIFORNIA
With YTD sales of 214 and active listing at 60, Pacifica continues to be a Seller’s market.

Active Listings-60 Single Family Homes. 11 listed at $900,000 or higher and 27 listed under $600,000.
Pending Sales-34 Single Family Homes with 13 listed under $500,000 and 4 over.  6 Properties went Sale Pending this week with listed prices from $430 to $718,000.
214 Closed Sales since January 1, 2009 with 9 that were listed for over $1,000,000.  82 sales were from homes listed at $500,000 or less. 5 new sales this week betweem $398,000 and $750,000.

ABSORPTION RATE
Absorption Rate is the number of months it takes to sell the current inventory at the present rate of sales.
6 months supply is a balanced market.
Less than 6 months supply is a Sellers market.
More than 6 months supply is a Buyers market

Active Listings-120 Single Family Homes. 52 listed over 1 Million, 15 listed at $900,000 to 1Million.Pending Sales-41 with 11 listed under $600,000 and 10 listed over 1Million
93 Homes Closed since January 1, 2009 with only 14 that closed over $1,000,000 and 10 between $900,000 and 1 Million.

PACIFICA, CALIFORNIA
With YTD sales of 191 and active listing at 56, Pacifica continues to be a Seller’s market.

Active Listings-56 Single Family Homes. 8 listed at $1,000,000 or higher and 17 listed under $600,000.
Pending Sales-52 Single Family Homes with 20 listed under $500,000 and 15 listed between $500,000 and $600,000. 8 Properties went Sale Pending this week with 3 listed under $500,000
191 Closed Sales since January 1, 2009 with 8 that were listed for over $900,000. 107 sales were from homes listed at $600,000 or less. 4 new sales this week.

ABSORPTION RATE
Absorption Rate is the number of months it takes to sell the current inventory at the present rate of sales.
6 months supply is a balanced market.
Less than 6 months supply is a Sellers market.
More than 6 months supply is a Buyers market

While Congress continues to debate the issue, we as Realtors, are calling for support for the expansion of the tax credit from first-time buyers to all homebuyers, increasing the maximum amount of the tax credit from $8,000 to $15,000, eliminating the existing income caps for eligibility purposes and extending this homebuyer tax credit for one year from the date of enactment.
We believe that stimulating demand for housing—particularly in the repeat buyer market—is the most effective way for Congress to help lead the U.S. economy into a recovery and back on the path to growth. And we have to remember that it’s not just the entry level that is affected. The move-up buyer begins the process in building more demand in our mid-tier price points and ultimately our higher-end markets. Timing is critical and we hope that Congress is listening.

While the clock ticks and we await the results of the debate on Capitol Hill, let’s take a look at this week in real estate:

• East Bay—Berkeley reports a rather slow start to October, compared to our previous months. Anything priced $400-750k is getting lots of attention. Open houses were competing with a popular local street fair, but still garnered 45 to 30 groups at the newer listings. Castro Valley reports new construction in our area is looking up. Pricing seems to have normalized for new construction. Otherwise, we are still seeing lots of short sales. REOs are trickling through as well. We are starting to see the Castro Valley home median price range pick up somewhat. Fremont reports the market is typical for the Fall months as people prepare for school and holidays. REO properties are still hot, but have slowed a little too. Livermore reported during this past week active listings and total pending sales remained stable in both Livermore and Pleasanton. In Dublin, this past week, there was more than a 20% increase in listings, and a decline of 10% in total pending sales. $500,000 and below still remains very “Hot” with multiple offers. Walnut Creek reports very low inventory with multiple offers on almost every sale. Even with multiple offers, properties in the $600,000 – $1,000,000 range are not selling much over asking. Buyers are still very cautious, some not quite convinced that the market has hit “bottom.” REOs are barely trickling in.
• Monterey County—Things seem to be slowing down just a bit, though we have had some high-end sales of late, as the inventory of REOs is dwindling and the expected onslaught of new REOs has not yet materialized. Great mortgage rates we’re seeing right now may encourage another surge of sales.
• North Bay—The San Rafael office reports the under $300K market in San Rafael has slowed due to lack of inventory. In Novato the $300-600K price point is steady and the under 300K price point holding steady over the past few months. Cash is still king in bidding wars. Southern Marin reports listings are slowing down considerably. Sebastopol reports buyers are kicking tires at open houses. Listing activity is very slow.
• Peninsula—Burlingame reports appraisal problems are becoming more common and buyers demands are becoming excessive. The Agents are working so hard to hold their transactions together. The number of sales have picked up however and hopes are high for a strong Q4 finish. Half Moon Bay reports the price point is the only thing that matters in receiving offers on listings. Over the $1m mark is still very quiet. Menlo Park El Camino reports buyers are absolutely out there but come out of the bushes only when lured by a great house at a great price. We had nine offers, 25 offers, 6 offers – where are the 8 and 24 and 5 buyers that didn’t get the house? They will buy when the right house gets to the current market price. Redwood City/San Carlos reports one of the multiple offers was our listing and it was priced at $775,000—in San Carlos. There were five offers and it went $55,000 over list price. Three out of the five offers were very close. Moods seem positive. Woodside reported buyers are still on the fence for anything over $4 million. Almost nothing will lure them out. Under that level, it is price, price, price.
• San Francisco—Lombard reported truism reinforced this week: “Price it right, right out of the gate.” Buyers are writing right away if they see value and sense competition. But not returning to see the stale listings with the multiple mini reductions. Many sellers are still not getting this. Market Street reported that there was a lot to do around San Francisco over the weekend so open houses were a little less well attended than past weekends. However, those who attended were especially eager to buy before the end of the year. Van Ness reported both large and small deals are moving well. Activity level is picking up again.
• Santa Cruz County—The lower end market below $600K continues to dominate the lion’s share of sales. Agents are working really hard to keep deals moving forward and at times buyers continued interest in the property if escrows drag on. The Agents are still doing a lot of short sales, some taking months and months. The REO market especially south County – Watsonville – is almost completely dried up and those few actives are getting multiple offers – with cash buyers winning the bids.
• Silicon Valley—Cupertino reports we typically have a lot more sales than listings. Last week the numbers were just about even. Open house traffic was insane! Los Altos reports buyers are trying to find an affordable home in most cases and are competing in multiple offers with cash investors. Mid tier buyers have more time to consider and the upper end is slow. San Jose Almaden reports the market is tapering off a bit on the sales now, not by much but a little. Open houses remain very busy still. With rates as good as they are and inventory shrinking and tax credits ending I would expect more sales. Perhaps the upcoming weeks will prove this to be true. All sales made this week were multiple offers. Willow Glen reports multiple offers are still the norm and many of the Agents in this office have clients that are losing out. Inventory is somewhat down as well.
• South County—Morgan Hill reports each local market is unique and comes with its own set of challenges. Here in South County offerings on the MLS range from one-bedroom condos to huge estates on acreage. We have horse properties, PUDs, single-family developments and attached housing and everything in between. The buying public, for the last six months, has zeroed in on entry level housing (those homes listed under $500,000). That segment of the market is thriving.

MONDAY MORNING MARKET UPDATE WILL RESUME NEXT WEEK

“The patient is out of intensive care, but still has a very long road ahead to a clean bill of health.” 

by Rick Turley, Bay Area President, Coldwell Banker Residential Brokerage

Those were the words last week from Fannie Mae Chief Executive Officer Michael Williams.  The CEO went on to say, “Anyone looking objectively at the economy and the housing market sees hope.”

Another good solid indicator of what I’ve been saying in my weekly updates.  The U.S. housing market still has a long road ahead but we are making some definite moves towards a housing recovery.  So what’s the challenge?  Well for starters, rising unemployment numbers aren’t helping.  The United States Department of Labor reported in its September 4 Economic Situation Summary that the number of unemployed persons increased by 466,000 to 14.9 million and the unemployment rate rose by 0.3 percentage point to 9.7%.  Just to give you an idea, since the recession began in December 2007, the number of unemployed persons has risen by 7.4 million, and the unemployment rate has grown by 4.8 percentage points.

We also need to couple that with the challenges in the mortgage industry.  Bloomberg reported, “The mortgage market is still dependent on government-affiliated programs, with private banks providing just 10 percent of loan liquidity, down from about 60 percent in 2006.  Fannie Mae and Freddie Mac are responsible for about 70 percent of all new mortgages, while the Federal Housing Administration accounts for about 20 percent.”

Before we can be truly reformed, we need to get into a position where there is more of a balance between private bank loans and Fannie Mae and Freddie Mac loans.  In all actuality, we probably won’t see that for some time.

Having said that, U.S. mortgage applications surged last week with demanding rising to its highest level since late-May as consumers sought to take advantage of the lowest interest rates in months, according to Reuters.

The Reuters article reported, “While home refinancing loans dominated demand, the appetite for applications to buy a home, a tentative early indicator of sales, hit its highest level since early January.  The overall trend bodes well for the hard-hit U.S. housing market, which has been showing signs of stabilization.”

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications which includes both purchase and refinance loans, for the week ended September 4 increased 17.0 percent to 648.3, the highest level since the week ended May 29.

These are all very positive indicators that showcase that we are on the right track…it’ll probably be a slow track…but we’re on the right one.

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

• East  Bay—Berkeley reported a slow week compared to our brisk start to September.  Castro Valley reported our local micromarket is full of challenges.  Not enough inventory, hungry buyers with lots of cash, Agents who must navigate the challenges of appraisal problems, short sale bank frustrations and stiff competition for limited inventory.  We are seeing more listings out there.  They are selling quick, though, often within a week or so of listing.  Danville reported a spurt of activity the first week of September and then it got quiet.  Inventory and sales activity is down both in our office and in our service area.  Fremont reported it seems that the recent Wall Street financial information has made buyers more comfortable and motivated to purchase now that prices are starting to increase and the first time buyer program is ending in November which is another motivator.  Walnut Creek reported sales activity has really slowed down.  Fewer REOs coming on the market though there is an increase of short sale listings.  Multiple offers on most every sale. Orinda reports lower attendance at recent open houses, but the Buyers who do show up are more serious and ready to make offers.
• Monterey County—REOs and Short Sales are continuing on at steady pace, but we are seeing more “traditional” sales than over summer.  We’re getting lower on inventory in the hot REO market of Seaside; however, we keep hearing that the release of a large number of REOs there is imminent.  With Labor Day holiday last week, our closings were weak, though had one over $1 million and one over $2 million, but had good week for new escrows.
• North Bay—Petaluma reported lots of movement in the $500,000 and above range. Under $300,000 continues to be a frenzy with double digit multiple offers. Cash is king.  Santa Rosa concurred noting, too, that cash was king though the Sonoma County market did also note that open houses weren’t as well attended last week as they have been in recent weeks.  Sebastopol reported lots of folks out despite the weather.  Good attendance in all price ranges but most offers remain in the low end.  San Rafael reported the market has slowed in the past few weeks.  Inventory is still low.  78 people came through a new listing held open for the first time in Novato in the mid $700s.  An offer came in the next day.  Greenbrae reported (San Rafael & Corte Madera) had two $1 mil properties come on for the first time last week and had multiple offers by Monday.  Activity not as robust as we hoped but lots of new properties coming on the market so perhaps buyers need a chance to digest the new investors.
• Peninsula—Menlo Park El Camino reports Agents are busy.  The job of being a real estate Agent right now is very hard but the Agents see some deals are being made.  Big loans are still like apparitions.  Menlo Park Santa Cruz Avenue reported good activity following the Labor Day Holiday.  One Hillsborough listing ($6,500,000) was ratified after one week on the market!  Redwood City-San Carlos reported open house activity has definitely picked up.  Buyers seem more ready to make offers.  Woodside reported Woodside and Portola Valley are extremely difficult markets (especially Woodside).  The price point is so high that buyers will not buy and those who are selling are only selling because they have to.  EX: just closed a house at $5.6 mil that the owners paid $13 million for in yr. 2000.  Very few homes on the market representative of the usual Woodside market.
• San Francisco—Lombard reported the number of houses going pending look OK but mostly entry level prices. Labor Day listing surge is happening in the City: 165 new listings entered. The lower the price the more offers. One REO we got in Hayward yielded 33 offers.  The Market Street office reported open house activity was brisk last weekend with 60 groups going through a listing in District 5.  2/3 of the ratified offers were for new construction where good deals are still to be had.  This week the only multiple offers came in on a short sale.  Prices varied from $300K to $940K.  The Noriega office reported Agent activities are high but it’s tough to get deals ratified.  Even after deals are ratified, it takes a lot of work and negotiations afterward to keep the deal alive.
• Santa Cruz—August was slower than 2008 in terms of number of sales and overall prices have dropped within the office about $100K since last year at this time.  Open house activity is still good and there continues to be a pent up demand for properties as the inventory levels remain low.
• Silicon Valley—Cupertino reported it’s busy and an ever increasing challenge getting those deals closed.   Los Altos reported activity is picking up as we head into the normal fall home buying season.   San Jose Willow Glen reported things are slowing up a bit. Open houses still draw a lot of crowds. A couple of the sales that have been turned in, have sold over the asking and it appears that the listing prices were set low to attract buyers.  Saratoga reported  a steady increase in average sales prices over the last six months. Instead of the sales consisting of REOs and Short Sales we’re seeing brisk sales activity up to two million.
• South County—Hollister reported we are seeing great opportunities in establishing client relationships with office floor calls and walk ins this past week.  Inventory is still low and first time homebuyers are struggling trying to secure a contract.  Some REO Listings have received up to 20 offers.  Morgan Hill reported the South County market continues its same scenario–lots of potential buyers and very low inventory.  This week the number of total listings in all of Morgan Hill fell to 125 units–an all time low.  Employing simple “supply and demand” economics, this situation should result in prices beginning to rise–though none of us has witnessed this phenomenon yet.

Our friend and Lender, Andy Block of Opes Advisors poses a very good scenario and question that may be timely for you to think about.

“Maybe now is a good time to move up to a bigger home in the neighborhood where I want to live…I can take advantage of the low interest rates and home prices…But, I won’t get what I want for my current home if I sell now…So, maybe I should hold out for a price I think I could get some day.”

But WHAT IF. . .

 You stay in your current home for the foreseeable future?  Your net worth at retirement would be $5.7M.

 You sell now for $1,000,000, buy a new house for $1,300,000 and reduce your lifestyle expenses* by $400/month? Your net worth at retirement would remain at $5.7M AND you would live in the home you prefer.  *Excludes housing expenses, taxes and savings

 You decide to hold out for 5 years when you think you can sell your home for $1,200,000 (vs. $1,000,000 today) and buy a new house then for $1,550,000? Your net worth at retirement would decline to $4.7M, a difference of $1.0M.

The detailed analysis of the above scenarios revealed varying outcomes.  Reviewing the specific results gave a client the information needed to move forward with confidence. This is the power of integrating both the asset side and the debt side of your balance sheet.

Let us know if you would like to discuss specific situations or the various “what ifs” in life.

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