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

“There’s no question that the government’s first-time homebuyer tax credit has spurred a significant amount of sales this year.  Latest estimates show that some 400,000 additional sales occurred this year due to the first time home buyer tax credit, which is about 8% of all sales this year.

In the latest news, The Senate has reached a compromise on extending and expanding the $8,000 tax credit for first-time home buyers.  While its passage remains uncertain, this plan would extend the existing credit for first-time homebuyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners.  The reduced credit would be available to  homeowners who have been in their current residence for a consecutive five-year period in the past eight years.  Lawmakers in Washington also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000.  Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House.  The U.S. Senate won’t vote until next week at the earliest. ” 

This week, Business Week reported “The broad improvement in the housing indicators in recent months leaves no doubt that the long-awaited housing recovery is finally under way.”  The article went on to report:  “Policy alone cannot explain the 24% gain in existing home sales since January, nor the 22% increase in new-home purchases, the 40% rise in single-family housing starts, and the recent upturn in home prices. The primary driver is historically high affordability. Fixed 30-year mortgage rates are at 5%, a multi-decade low, and prices have plunged a total of 30% since May 2006, based on the Standard & Poor’s Case-Shiller Home Price Index. By that price gauge, homes are well undervalued relative to both rents and aftertax income.”

Here is what is happening in San Mateo County

• Peninsula—Half Moon Bay reported it is sensing a slow down with less inventory. MLS tour sheet reflects all the retours, many with price reductions and few new listings.  Menlo Park El Camino reported a bit of a sea change in the market-not much new inventory, only three new listings on tour this week which is very, very low.  Menlo Park Santa Cruz Avenue reported very slow open house activity this last week.  Many listings are receiving price reductions as new inventory is limited.  Pricing is critical.  52% of the listings on the Menlo Park Atherton Broker tour have price reductions and 82% are retours.  Palo Alto Downtown reported the market is generally slow.  We feel like the holiday season has started early.  The activity is reflective of that.  Sales are down in our area.  San Mateo reported a look at its pending sales (SFR) of its six main communities; here is a breakdown of the total and the percentage of short sales plus REOs.  Belmont 31 pending sales (35% SS/REO), Burlingame 27 pending sales (33% SS/REO), Foster city 12 pending sales (18% SS/REO), Hillsborough 22 pending sales (23% SS/REO), Redwood shores 10 pending sales (10% SS/REO), San Mateo 109 pending sales (52% SS/REO).  Most of San Mateo SS/REO is in entry level areas.

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

Just looking at Half Moon Bay through Montara, 6 Homes closed since January 1, 2009. The price range was from $820,000 to $400,000. There are currently 12 properties that are Sale Pending. 3 were Pending before the first of the year and 9 have gone Pending since January 1st, 2009.

The most interesting statistic is that 4 of the 12 were listed for $999,000 or more and the other 8 Pendings were listed for $660,000 or less. It is surprising that no homes went Sale Pending that were listed in the price range between $661,000 and $998,000.

7 of the pending homes are located in Half Moon Bay, 3 in El Granada and 1 each in Moss Beach and Montara.

So what does the Pacifica market look like? 14 Homes have closed since January 1st with the highest price at $700,000 and the lowest at $355,000.

There are currently 30 homes that are Sale Pending 15 of which have gone Pending in January and 6 so far this month of February. Of the 30 homes pending, 1 was listed for over $1,000,000, 5 were listed between $600,000 and $725,000 and a whopping 24 homes pending sale were listed under $599,000.

The low end of the market is certainly the most active year to date on the entire Coastside. If you want to see a Snapshot of what is going on in your neighbor, Go to our Market Snapshot report listed on our website at www.coastal-realestate.com on the right side of the home page.

Below is a quote from Rick Turley, President, San Francisco/Peninsula/North Bay Coldwell Banker Residential Brokerage, made on 2/8/2009 which falls in line with the way the local Coastside market seems to be going:

“…Interest rates so low, buyers—especially first time home buyers and some investors—are finally beginning to feel the need to come off the fence and take action. The hardest hit markets are new construction and the upper end. Both are nearly at a stand still, though, as prices begin to stabilize and we finally weed through the bank owned properties (later this year), we should begin to see a domino effect that ultimately benefits all price ranges and housing types.”

The Coast has very little new construction and we do have the Devil’s Slide Tunnel Project progressing daily.

View the Weekly PDF Market Report for San Francisco, Peninsula & North Bay areas

View the Weekly PDF Market Report for Silicon Valley, Monterey Bay &East Bay areas

The message from Rick Turley,  President of San Francisco/Peninsula/North Bay Coldwell Banker Residential Brokerage,  gives you an overview of what is now going on in the Bay Area Real Estate Market:

Happy New Year!  It certainly is nice to be back and full swing into work.  The holidays are great but oh how I miss the energy, enthusiasm, excitement—and who could forget the 200 e-mails a day—that our day-to-day business brings.

I would imagine the most frequent questions you were asked over holiday parties and gatherings were: “When will this recession be over?” and “When will the housing market begin to rebound?”   I know these seemed to be the most frequent topics everywhere I went.

First, let’s look at the economy.  Anyone who believes that the economy will completely rebound in 2009 is probably in fantasyland.  Without a doubt, President-elect Obama has his work cut out for him when he enters office in less than two weeks.  Most experts agree that the year ahead will bring an increased jobless rate, already at 7.2% and the highest in 16 years.  Consumer consumption will dip further as people hunker down and spend with caution.

Our economy in the US will continue to be affected by global monetary concerns.

While differences of opinion and a lack of agreement on policy keep TARP money on the sidelines, more businesses and homeowners are in greater risk of failure each day.  But there are some bright spots to consider as well.

For starters, our new administration is committed to developing an economic recovery plan designed to create 2.5 to 3 million jobs while rebuilding our infrastructure, improving our schools, reducing our dependence on oil and saving billions of dollars.  Speaking to a group to George Mason University in Fairfax, Va. Thursday, President-elect Obama said, “It’s a plan that recognizes both the paradox and the promise of this moment—the fact that there are millions of Americans trying to find work even as, all around the country, there is so much work to be done,” he said.

Of course it won’t happen overnight and I think we all anticipate that much of 2009 will be focused on creating and implementing this recovery plan, but the positive news is that we are heading in the right direction for growth and prosperity with some experts predicting that by 2010 we could see as much as a 1.5% growth in our economy.

Additionally, there has been much discussion that before long we may see mortgage rates at 4.5% which could spur a great deal of positive attention for our industry.  Qualified homeowners could potentially be able to refinance at a historically low rate.  According to the Wall Street Journal, “up to 34 million households would be able to do so, at an average monthly savings of $428—or a total reduction in mortgage payments of $174 billion.  Potentially this would represent a permanent reduction in payments and is thus likely to spur appreciable increases in consumption.”

In terms of the local real estate market, the timing of our price recovery may depend on how quickly the government takes steps to mitigate foreclosures, but looking forward to 2009, many experts agree that the financial system will begin to show signs of stabilization in early 2009 and we may begin to see a real estate turnaround by the summer.  Our industry was one of the first to be hit by this recession and in all likelihood will be the first to overcome it.

And with that good news in tow, let’s take a look at this week in real estate:

East Bay—The Berkeley office notes that the holiday open houses were busy.  We had the most December sales in our history—many of which were REOs and short sales—but other sales where buyers were wanting to take advantage of rates under 5%.  Our Castro Valley office notes that though it slowed in the last few weeks of the year, we did see a lot of REO business (though less short sales).  Our Danville office notes that the luxury market remains cool and the market seems to be holding its breath waiting until after the inauguration.  Having said that, open houses are well attended and people seem to be upbeat about what is to come in the market.  Our Fremont office reports that bank owned properties and short sales represent approximately 25% of its sales.  Livermore concurs noting that of the eight sales in the office, six sales were REO sales that we listed.  We also had two normal sales with the highest sale at $517,500 and the lowest at $108,000.

Monterey County—With two weeks of holidays and only three business days each week, naturally everything really slowed down and we only had 10 new escrows over those two weeks.  This is seasonal and pretty typical for this time of year.  We did have two properties that earned multiple offers.  One of those properties was $1.5 million.

North Bay—Our Southern Marin offices are reporting that based on the number of calls from buyers and possible listings, we are optimistic about 2009!  Sebastopol notes that listings were slow as expected and sales were strong for the two weeks of the holidays.  Nearby Santa Rosa notes that the under $500,000 continued to be robust over the holidays. Our San Rafael office finished up with a great December, well ahead of forecasted number of new pending sales for the month.

Peninsula—Our Burlingame office notes that Agents are back and reporting that buyers and sellers are calling with plans to get pre-approved, start looking at homes or want to discuss listing their home.  Things are still slow but there are definitely signs of activity and optimism which is great news.  Half Moon Bay notes that the past two weeks were slow holiday times but this past weekend Agents reported very busy open homes with some earning as many as 15 groups.  Buyers appear to be ready to hear good news—they’re looking for the reasons to buy now and we have them:  inventory of homes that’s about 20% higher than usual at this time, low financing rates, money supply increasing, very motivated sellers and the optimistic news of a new administration.  Our Menlo Park El Camino office reports that one Palo Alto property had eight offers and went 4% over.  Open houses in this market were very encouraging.  Our Palo Alto office reports that the market is extremely slow—with very few listings.  The office is hoping for more over the next three weeks to help restore buyer interest.  Our Redwood City/San Carlos office notes that it saw typical holiday activity but the few open houses we had were very well attended.  Agents, buyers and sellers all seem to have a positive feeling about ’09.  Our Woodside office reports that we had 14 offers on an REO in East Palo Alto.  Buyers were out in force this week and according to the Agents there were many new buyers beginning to look.

San Francisco—Our Lombard office reports a very slow holiday season for sales.  Many listings were pulled for the month.  Now that we’ve entered the new year, we’ve seen a listing surge that should build through January.  Our Market Street office is reporting that Agents were very pleased with activity at open houses this week.  A condo in Potrero Hill which had experienced low traffic in the previous weeks had over 55 people at Sunday’s open houses.  This seemed to be the case with several other properties.

Santa Cruz County—The local single family residential inventory continues to drop and is currently under 800 homes in the county.  The number of pendings overall remains about the same with the majority of sales in the under $500,000 price range and almost are in Watsonville.  Most REO properties are getting multiple offers and it seems to be the cash buyers who are having the most success getting the properties.  Agents are writing five to six offers or more sometimes before getting their buyers into escrow.

Silicon Valley—Our Cupertino De Anza office is reporting that listing inventory decreased from 101 to 86 single family residential properties.  On the flip side, sales activity decreased as well from seven to two pending properties.  Our Los Gatos office is reporting that we are seeing a lot of new listings coming on the market now that the new year has begun.  We’ve suspected this for some time but it is nice to see the new, fresh inventory take hold and help to restore buyer interest.  Our San Jose Almaden office is reporting some interesting trends noting that listing inventory is decreasing while sales activity is increasing.  Even during the slow holiday weeks we saw five multiple offers and 17 ratified offers.  The market is almost exclusively being driven by REOs and short sales, however.  Our San Jose Willow Glen office noted that though the holidays were quiet buyer interest continued with quite a few open houses earning some heavy traffic.  The office also reports some nice success with two million dollar plus sales within the last 2.5 weeks.  Our Saratoga office is reporting the contrary noting that we are seeing some buyer reluctance—possibly due to the holiday season.  We’re hoping to see a pick-up in this market now that the new year has begun.

South County—Our Morgan Hill office notes that there is a lot of activity with bank owned properties and well priced short sale homes.  Potential buyers are intrigued with what they can buy in South County—very nice homes, lots of square footage and in many cases, unbelievable prices.  The Gilroy office has seen a substantial decrease in inventory over the last two weeks.  We expected a slight increase in the first month of ’09 as usually happens as listings that failed to sell or sellers that took their home off the market come back on the market sometime in the next 60 days.  However, we are expecting a smaller % than normal.  REOs are still leading the market in sales.  Our Hollister office notes that REOs are still receiving multiple offers.  Cash offers and investors are being seen more than usual.  First time home buyers are taking advantage of our market and low interest rates.

As you can see, activity in nearly every market is picking up now that the holidays are over.  Buyer and seller activity is increasing and it seems many buyers are finding comfort in the fact that interest rates are low, inventory is strong and many sellers are motivated.  While being realistic about the current state of our economy, we have every reason to be optimistic about real estate activity in the Bay Area for 2009.   Qualified buyers and reasonable sellers will continue to come together in this market.

Until next week-

As we prepare for our own special time with friends and loved ones over the Thanksgiving holiday, I want to take a moment to share the gratitude I have for each of you in our Coldwell Banker family.

We are experiencing some real economic challenges today, and lately it seems each day brings a mixed bag of new challenges as well as some solutions to consider. We all know that there will be no quick fix. Once the appropriate economic programs are put in place, it will still take months to work through for results to be evident to consumers, inside as well as outside of our industry.

Confidence is key right now. For many it is simply the confidence factor that is preventing some buyers from pulling the trigger. Others are truly challenged with some financial losses. I believe we are all confident that this won’t last forever; as a matter of fact, Bay Area real estate will likely be one of the first industries to bounce back considering we still have a relative short supply of land and homes in most of the communities we serve.

Knowing this, I thought it important to take this opportunity to remind each and every one of you just how much I truly appreciate all that you do. I know that so many of you continue to reach out to your spheres of influence, and your past customers, letting them know that the sky is not falling which is imperative to increasing consumer confidence. When you do put a transaction together today, I realize that it is probably with several counter offers and perhaps some negotiations which continue throughout the escrow. The level of professionalism you operate with in some of the toughest situations is to be commended. It not only makes me very proud of you, it also is what will see you through these challenging times. Many of us built a fantastic base of business during similar challenging down cycles. The true professionals really rise to the top during this time and your struggles, hard work and continued drive will pay off.

Again, thank you for your hard work and dedication. Please enjoy a wonderful Thanksgiving holiday with your family, friends and loved ones.

Thank you, Rick, for your heartening Thanksgiving message!

Home Sales Are Up…But Can Someone Please Tell the Stock Market? Week of Oct 13-19
It was an interesting week in news.  More specifically, it was a great week in news for real estate activity—but in its third consecutive week of volatility, the stock market did little to support the cause.

Let’s start with the good news.  NAR released its Pending Home Sales Index—a forward-looking indicator based on contracts signed in August—noting pending homes “jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July – 8.8 percent higher than August 2007 when it stood at 85.8.  The index is at the highest level since June 2007 when it stood at 101.4.”

Days later, DataQuick News reported “Bay Area home sales soared last month above the record-low levels of a year ago, marking the largest gain in over six years. The median sale price did the opposite, diving to $400,000 – 40 percent below its summer 2007 peak – as more sales shifted to lower-cost inland markets laden with foreclosures…Last month’s 45 percent year-over-year sales gain was the highest for any month since April 2002, when sales shot up 49 percent.”

Both the prices and sales from NAR and DataQuick’s reports reflect the dominance of foreclosure sales, which according to Data Quick accounted for 42% of all homes that traded hands in Contra Costa, Napa, Sonoma and Solano counties.  Of course not all markets are being hit as heavily by foreclosures.  San Francisco remains the lowest Bay Area county with just 9.5% of homes sold in foreclosure.  Second was Marin at 14.9%.

What the heavy foreclosure sales figures are telling us, however, is most important.  The dramatic increase in sales suggests that more investors are deciding that prices have fallen to bargain levels and they are now getting into the market.  Historically speaking, it is investors who determine where the bottom is.  When they think prices have reached a point where they can potentially buy low, wait a bit and in a few years turn a profit, they’ll swoop in.  We’re starting to see this now and that is welcome news to many.

Of course housing recovery as a whole is dependent on the course of the overall economy which had less than stellar news this week.  By Thursday, the Dow rallied back after two days of declines—including a loss of 500 points on Wednesday—but the NASDAQ slipped to its lowest point in more than five years.

The volatility on Wall Street is causing concern for many of our local consumers. We have a lot of buyers and sellers who are watching their portfolios each day and are concerned about taking action in purchasing a home until the volatility subsides.  In more than one instance we’ve seen a buyer back out of a contract in fear of what may happen—even if they were having no problem with obtaining the loan.

And while I think we all understand the reasoning and the concern, what I do remind consumers of is the fact that we are in one of the best buyer’s markets of our generation.  Despite the turmoil in credit markets, home mortgages are available, and at very attractive interest rates.  Couple that with the fact that the majority of the communities around San Francisco are amazingly resilient in economic downturns.  That’s true because we have very limited land, and we are in one of the most desirable locations in the world.  It’s why we are still seeing some multiple offers each week.

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

• East Bay—With 37.9% of home sales in Alameda County being foreclosures, and 58.7% in Contra Costa County, it is no secret that the East Bay real estate market is being driven by the bank owned market.  This week we get the feeling that a lot of people are dizzy from Wall Street’s rollercoaster as we saw fewer walk-ins and fewer floor calls.  Castro Valley saw a slower week with listing inventory starting to pick up.  Prices are stable although we are beginning to see some price drops in the mid-ranged properties ($500-700K) in Castro Valley.  Fremont shared that the REO market is still hot and that we’re starting to see the Fall slow down which is typical for this time of year.
• Monterey County—No information reported this week.
• North Bay—In Sonoma County, the last two weeks, according to our Petaluma office, listing inventory has come to a literal stand still.  Sales activity is good but we are having challenges with stock market funds affecting escrows.  Santa Rosa concurs noting that we are very active under $500,000 with multiple offers common.  The Santa Rosa office also reported success in the high-end this week with two of their high-end properties going into escrow this week.  In Marin County our Greenbrae Manager points out, “For every Agent who tells me things are slow, another is fielding multiple offers or participating in a highly contested bid.  Sales continue to happen though not at the same pace as spring.”  Nearby San Rafael notes that it continues to see more cash buyers.  One property listed under market value in a good location had 12 offers on it and went into contract $200,000 over asking.
• Peninsula—Another week of mixed stories.  Some sellers are taking their properties off the market because the market won’t bear what they want to realize in the sale.  Smart buyers who have cash are making some very good buys.  We had one Burlingame condo sell for $100,000 under asking to an all cash buyer.  In Half Moon Bay, more sales than usual were ratified over this busy weekend and one even had two offers, selling over its listed price of $1,350,000.  We also had two cash deals in excess of $1,500,000 supporting the fact that high-end cash customers recognize good value and have confidence in today’s real estate market.  Palo Alto office reports that activity at open houses in surrounding areas is relatively slow, while Palo Alto itself—with its lack of inventory—is still strong with higher activity.
• San Francisco-   Open houses appear to be filled with real buyers but they are slower to write offers and are being very selective about the properties that they are willing to write on.  Our Noriega office had one fixer upper in Sunset that had 10 offers.  The listing went well over $459,000.  The same office was involved in three other multiple offer situations this week.  The heavier activity this week has definitely been in the lower price points.
• Santa Cruz County—No information reported this week.
• Silicon Valley—Silicon Valley changes from week to week and from neighborhood to neighborhood.

This week our Cupertino office is reporting that although sales are treading steady, new listings that are coming on to the market are slow.  Buyers continue to come through in waves looking for the under valued deal.  We are seeing increased buyer activity and stronger sales, mostly in the REO price range.  We are also seeing increased traffic at open houses.  Entry level homes seem to get the best traffic.  Overall I’d say that things are slowing down quite a bit but buyers are out there.  They’re just looking for the best deals and then they act.

On a final note, I’ll share with you a comment released by NAR this week— regarding projections for 2009.  NAR Chief Economist Lawrence Yun “expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.”   You can be certain that once the national economy begins a turnaround, our San Francisco Bay Area will be one of the first regions in the nation to get firm on housing prices, and begin the upward climb of appreciation as it does in every cycle.

Update courtesy Rick Turley,  President, San Francisco/Peninsula/North Bay Coldwell Banker Residential Brokerage, http://www.cbnorcal.com