Last week we had great housing news with the announcement that May home prices posted their first monthly increase since the summer of 2006 (based on the Standard & Poor’s/Case-Schiller 20-city index).
We also learned that sales of newly built and existing homes rose in June for the third consecutive month. New home construction, though still weak, is the best it has been since the fall.
This week the good news continued. As announced by the Mortgage Bankers Association, Mortgage loan application volume increased 4.4 percent compared to the previous week. On an adjusted basis, the Index increased 4.1 percent compared with the previous week and 18 percent compared with the same week one year earlier. In addition, the Refinance Index increased 7.2 percent from the previous week. The Index has climbed about 35 percent above its recent low at the end of June. The seasonally adjusted Purchase Index increased 0.9 percent from one week earlier.
Also interesting to note is this week’s release of the National Association of Realtors’ Pending Home Sales Index revealed an increase of 3.6% during the month. That was 6.7% higher than June 2008. It was the fifth straight month of increases, the first time that has happened since July 2003. The jump was much higher than expected with a consensus of industry experts put together by Briefing.com forecasting an increase of just 0.7%.
NAR’s Chief Economist Lawrence Yun had this to say, “Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines.” It seems all of these incentives, much like the Cash for Clunkers program in the auto industry, is finally pushing people off of the fence.
Now, let’s take a look at this week in our local real estate:
- Peninsula—The Half Moon Bay office reported a busier than usual week. Seeing more sellers taking all contingencies to move upper end properties. Pending sales this month more than doubled from April. Menlo Park El Camino reports that we’re struggling still at the $1,500,000 range and up. Scarcity of comps is making it hard to define prices and buyers are still holding back. Palo Alto Downtown reports we’re still building inventory in the Palo Alto, Menlo Park and Los Altos areas. If well priced, we will have multiple offers. Redwood City reports an active market in the $600-$900,000 range. Short sales and REOs are garnering multiple offers; we had 19 offers on an REO in Hayward, eight were all cash. Good open house activity both Saturday and Sunday – buyers are out there many without Agents. Woodside and Portola Valley have been seriously impacted by the financial downturn. Portola Valley has faired better due to some prices being in the low range for county property. Woodside is pretty much frozen. The San Mateo office says the lack of saleable listings is slowing down sales activity.
- Silicon Valley— The Cupertino office reported the office is buzzing with activity and the vibes are positive. The Los Gatos office reported good movement if priced right. The over $2.5 is still very weak. The San Jose Almaden office reports REOs continue to be hot and receive multiple offers. Short sales in some cases are moving a little faster and in other cases, not. It depends on the bank and Agent. Outlook among Agents is positive as there are numerous signs that the market is improving and properties are selling. The San Jose Willow Glen office reports the lower to middle end is extremely active. We’re still seeing multiple offers in many cases.
Overall the market this week is much like it has been over the last several. Low-end sales have been the strongest segment of the market, an indication that the first-time homebuyers tax credit is contributing to the rise. The clock, however, is ticking on this credit and it may have buyers stepping up their shopping to get their purchases in under the wire. Because it may take as long as two months to close on a home after signing a contract, first time home buyers must act fairly soon to take advantage of the credit. To qualify, they must close on the sale by November 30.
I’m also pleased to report more Previews high-end sales this week from our Luxury Leader Coldwell Banker offices. Among last week’s closings are: San Francisco -$11.5M Ross -$11M Pebble Beach- $9.2M Hillsborough- $8M Atherton- a $5.3M and a $3.9M closing Monte Sereno (Los Gatos/Saratoga) -$4.2M Orinda $3.5M Los Altos $3.6M and 5 more in the City between $2M and $3M. I’m very proud of the fact that we are not only the Bay Area Market Leader – but also, thanks to our Previews program, and our incredible Previews agents –we dominate the Luxury market as well. As confidence begins to return to several economic sectors (some of us are finally starting to open up the mail when the 401K statements come), we will see continued activity in our Previews markets around the Bay Area. Price/Value/Condition will remain to be key and critical for these sales to continue.
All the Best until Next Week-
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
