Rick Turley, President, Coldwell Banker Bay Area
Recent Housing Stats Are Showing Encouraging Signs for Market
This week I thought I’d share some positive stories that continue to permeate not only our local news but on a national level as well.
The National Association of Realtors® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.
A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.
The pending home sales report added evidence that sales have reached a bottom. “That’s critical because once sales bottom, it’s only a matter of time before you work off excess inventories. That’s the key to stabilization in the financial system and the economy at large. We’re closer to that than people thought just a few months ago.”
– Michael Darda, chief economist at MKM Partners in Greenwich, Conn., “Sales and Construction Data Lift Hopes for Housing,” by Lucia Mutikani, Reuters, May 4, 2009.
On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.
- Home sales in major markets around the country have shown dramatic gains in the past month.
- In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.
- In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months — that’s down from 12 months the previous March.
- Median house prices may be bottoming out. The California Association of Realtors® reports the median price of homes sold was up by 2.2% for the past month.”
– “Real Estate Outlook: Sales Rising in Some Areas,” by Kenneth R. Harney, Realty Times,
May 5, 2009.
Also interesting to note:
- The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “We are seeing a lot of activity across the nation. Of course we’re in the spring market, but we’ve seen more buyers in the market now than at this same time last year.”
- “Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically,” said Robert Abbott, co-owner and VP of a northern New Jersey brokerage. “More people are not only ‘kicking the tires’ but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down.”
– “More Homes Get Multiple Offers; Downturn May be Nearing End,” by Julie Schmit, USA Today, May 6, 2009.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it’ll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall.”
– Julie Holt, owner of a title services company in Florida, “Is Now the Time for Some Home Buyers to Make a Deal?,” by Mark Koba, CNBC, April 28, 2009.
And with that news in tow, let’s take a look at this week in real estate:
- Peninsula—The Burlingame office reported that Mother’s Day didn’t slow down the open homes that were held open. There were an average of 20-25 groups through in most reports. Buyers were asking when offers were being presented and we haven’t heard that in awhile. The Half Moon Bay office reports seeing more listing Agents/sellers increasing the sale side commission to attract more showings. Good attendance at open houses. The Menlo Park El Camino office reports a great week—sales from $9.8 million to $185,000 and a lot of them! Everyone seems a bit more positive. The price base is rising; high end sellers are realizing that their prices are just too high for the current marketplace and finally are seeing the light. We had one sale listed at $3.4 mil that had turned down offers of $4 million a few months ago—same story across the board. Redwood City reports lots of activity on open houses even on Mother’s Day; 40 to 50 groups at a new San Carlos listings. We’re seeing multiple offers on the low end REOs-the $800,000 – $1m range is attracting more interest but first must be perceived as a great value. Woodside reports we are beginning to see offers being made on our higher end properties; not coming together just yet but we have hope. Two that are currently in play have come down from their high listing price about 35%
- Silicon Valley—Our San Jose Almaden office reports all 10 sales this last week were distressed properties; mostly REOs. Many REO listings are receiving 10-25 offers. Banks are jamming the list prices down in an effort to stimulate activity. And it is working. Those properties are often selling at 20% or more above asking price! The San Jose Willow Glen office reports we are a lot busier. Buyers seem to be a lot more comfortable in taking the step into home buying. Open houses are very busy with a lot of traffic as well. San Jose Main reports listings are slowing and sales increasing. Most multiple offer sales are occurring in the lower price range. Excellent weekend traffic reported at open houses both Saturday and Sunday. Saratoga reports our upper end continues to lag. On a positive note our sales under $1,500,000 were very strong last week. I’m hopeful this is a sign that buyers are comfortable that we’ve hit the bottom of the market.
- San Francisco—The Lakeside office reports that the entry level market is hot right now; anything under $600,000. The Lombard office reports that after a fast start to May, we had a slow week. Possibly due to Mother’s Day? After a flurry of multiple offers, back this week to multiple counter-offers (up to five and six). Hard negotiations. A fall out and frayed nerves over slow loan processes. Time for listing Agent and sellers to be a little more patient and accommodating. The Noriega office reports in the affordable price range $400,000-600,000, buyers are definitely off the fence, but good inventory in the price range extremely low and multiple offers are very common. The Van Ness office reports continued increase in sales activity, and is seeing activity at all price points. This week the office reported 36 ratified offers – Wow!
- East Bay—Berkeley reports that buyers are stepping forward to make offers, while others continue to have scary perceptions which keep them from offering. Job security is the biggest worry. Sellers are reluctant to reduce prices. No one knows what Cuomo’s new appraisal regulations will mean to the market. It ought to be a big convincer to sellers to keep their list prices reasonable. Banks continue to look for all cash buyers. Danville reports that inventory in San Ramon and Dublin is under two months. We need inventory! Fremont reports this past week seemed to be a bit slower, maybe because of Mother’s Day last weekend. The open homes are busy with people who are interested in buying, they just need a little encouragement. Oakland reports interest rates have come down for jumbo loans, so we are picking up listings in the upper end and they are selling. The market is really picking up and we are up over last year. The past week we have a very large percentage of multiple offers, mostly two offers on each property, one had nine in a very low price point. Still seeing appraisal issues that are new based on changing guidelines. Walnut Creek reports the low end of the price range is selling with multiple offers, driving up prices. In the mid range, the well priced, nice looking properties are selling with numerous counters back and forth between buyers/sellers. Upper end is not moving.
- Monterey County—It’s a quick-moving market to the east of us, Salinas south to Greenfield, and also Seaside, in our area, where the prices on the REOs combined with the low interest rates are motivating first-time buyers and, increasingly, local investors. Market is still sluggish in areas more our marketplace, like Carmel and Pebble Beach, where we are seeing increasing numbers of properties coming on as short sales or likely to be short sales by the time a buyer steps forward with an offer.
- North Bay—Petaluma reports inventory continues to be light and the majority of the Agents have multiple buyers hovering over a limited number of listings. Most of the properties under $300,000 are getting double digit multiple offers. Santa Rosa reports that its REO specialist says there may be some light at the end of the tunnel as assignments are starting to trickle in. We still have lots of buyers and few properties to show them. Sebastopol notes a lack of new inventory continues to be the challenge. San Rafael reports there is an increase in listing and sales activity in properties that are not distressed (REOs and short sales) in all price points. We listed two properties over a million and have offers in on two properties over $1.5 million in San Rafael and Novato. Greenbrae office says they are seeing multiple offers for well-priced, well-presented homes in Greenbrae, Larkspur, and Corte Madera. This is in sharp contrast to just a few months ago when fears of the country’s financial crisis seemed overwhelming. Things seem to be easing up now as Buyers with good credit and a job are finding it not so difficult to get a loan –and at record low interest rates! The Southern Marin offices report the first week of April saw increases across the board in our Southern Marin offices. We saw $8 million worth of new sales and close to $5 million of closed escrows, by far the most we have seen all year. Many reports of multiple offers and even the $2 to $3 million is picking up in So. Marin.
- Santa Cruz County—Steady as we go. We are cautiously optimistic about the market activity. Like other areas with a high REO number, that inventory has been drying up thus creating multiple offers on those properties. There remains an expectation that more are coming, we have yet to see any new bank owned properties to list. Buyers are realizing that time is of the essence in terms of purchasing and many are taking advantage of the tax credit for first time buyers. Along with the lowest interest rates ever, activity is steady in the lower end also. Financing, appraisals, appraisal reviews, longer loan times in general, are the norm and creating stress on most of the transactions. Managing the client expectations whether it is a buyer or seller (or the other agent) from beginning to end is crucial.
- South County—The Gilroy office reports open house activity was slow due to Mother’s day weekend and the wonderful weather. Agents are now challenged with the lack of inventory. Most new listings are receiving multiple offers and selling over list price. Bank owned properties are still the majority of the market sales. The Hollister office reports active listings are down from last week. Sale pendings are up. The average DOM is 80. The average sales price is $300,000 up from last month. REO inventory is decreasing. Short sale listings are increasing. The Morgan Hill office reports that in South County an interesting phenomenon is occurring. The demand for “entry level” (well priced homes under $300,000) is far exceeding supply. This past month Agents have experienced multiple offers of these types of properties. In most cases these listings are selling over asking price with multiple offers. This is a very encouraging sign that, perhaps, prices are stabilizing.
In short, it seems buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in California history to purchase real estate. Now, if we could just get more listings. Do we sound like we are never satisfied? Oh well, what a difference a year makes! It’s an exciting time so let’s make good use of it. I am currently wrapping up meetings in Washington DC as an NAR Director, so next week I’ll write on some of the important legislation being proposed to complete the necessary steps for our housing recovery.
Until next week,
Make it great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
