Mark Bruno

Reposted with permission.

Joe Brown, the President of Coldwell Banker Residential Brokerage's Silicon Valley, Monterey Bay and East Bay regions writes this report every week about the real estate market here in Northern California. I thought you all might enjoy it so I have decided to repost it weekely here on my blog.

Mark

Friday, February 6, 2009

Economic Stimulus Package Could Bring Big Benefits For Real Estate Sector

If you tuned into CNN, Fox News or any of the other major news media outlets this week, you likely watched the drama unfold regarding the new Economic Stimulus Package which is currently making its way through the Senate. This controversial package has many speculating as to its legitimacy but is being driven by President Obama in an effort to jump-start our ailing economy.

To learn more about the status of the Economic Stimulus Package, click here: http://www.reuters.com/article/politicsNews/idUSTRE5136U320090204?virtualBrandChannel=10112

As of now, the Economic Stimulus bill is winding its way through the U.S. government, pushed by Demographic leaders who want to present President Obama with legislation he can sign by-mid February.

From a real estate perspective one of the biggest potential benefits of this Economic Stimulus Plan is special Amendment #353 to the Plan, a provision for the Federal Government to buy-down mortgage rates to 4.5% or less for a 30-year fixed rate loan for the purchase of a primary resident. Without question, a 4.5% or lower, 30-year fixed rate mortgage would help stimulate housing sales and would also open the door to hundreds of thousands of new potential buyers by greatly improving housing affordability.

While the Economic Stimulus Package makes its way through Washington, real estate sales continue to show new signs of life. Just this week, NAR released its pending home sales report noting that pending home sales rose 6.3 percent nationally to 87.7 from an upwardly revised reading of 82.5 in November and is 2.1 percent higher than December 2007 when it was 85.9.

Also noteworthy this week was an article I came across on Reuters.com (http://www.reuters.com/article/newsOne/idUSTRE5140H420090205) which points out that housing markets across the country may be nearing bottom and we should begin to see signs of new life by the 4th quarter of this year. Among the highlights of the article:

• "More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability," the report said.
• "The outlook, however, assumes stronger action by U.S. policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year."
• "With this help, sales are probably at bottom, stabilized by foreclosure sales, while construction will hit bottom in the first half of this year, although the pace of housing starts will remain very depressed until 2011."

The coming week will likely be an interesting one in Washington, D.C. as lawmakers make the final decisions on the Economic Stimulus Package. It will be exciting to see the details unfold and the plan take shape as lawmakers work to quickly restore our ailing economy.

Locally, we're seeing some interesting trends. As we continue to work through our bank owned properties, it is a welcome sight to finally see banks responding to short sale offers. Couple that with the fact that with 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.

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

• East Bay-Castro Valley reports that this week we are hearing that banks are starting to take action to make their REO properties more attractive to buyers. Wachovia recently advised of a new program in which its REOs will be a better value for a comparable price. They state that their REOs will feature new paint, carpet and sod in order to offer buyers a better value. Fremont notes that buyer activity is slower this time of year and this is reflective of the inventory. REO sales are still brisk. Listings are steady and there is anticipation that the REO inventory will increase substantially in the next two months. Livermore notes that one of our pendings this week was a buyer controlled sale at $730,000 which is a big sale in this office. All of our other sales for the week were $135,000 to $376,000 which is pretty typical. REOs (primarily) and short sales remain the strength of sales in this market. We're still seeing struggles with REOs including complaints from Agents that listing Agents of REO properties are requiring the buyers to be prequalified through their lender and other offers are being accepted during the prequalification phase or presentations are being delayed (sometimes a week) to complete this process. Oakland reports a bit of a different story noting that Agents are writing offers-lots of them! We are busy, the office reports, and the buyers are out there. The hot price range seems to be $600,000 to $750,000. In our office, the hot listings are getting requests for 20-30 disclosure packages and multiple offers. Walnut Creek reports that it is experiencing a shortage of well-priced listings that are in good condition. REOs are popping up in more areas like Walnut Creek and Pleasant Hill. Inventory in East Contra Costa County, which is primarily REOs and short sales, is going fast.
• Monterey County-Listing activity and sales activity are relatively stable for the week. We are starting to see some higher priced properties selling in Carmel.
• North Bay-Open house activity was good even on Super Bowl Sunday according to our Southern Marin offices. Most open houses reported positive numbers, all with a good percentage of seemingly serious, though cautious, buyers. Once reported buyers coming back after taking a hiatus for some time and are back in the market thanks to lower prices and low interest rates. San Rafael notes that we are seeing many of our short sale offers get bank approved faster than we have seen in the past. Santa Rosa reports that buyer frustrations are growing with the REO market as mandatory second pre-approvals (often with lenders who don't return calls) and credits to buyers are given only when the favored lender is used. Sebastopol notes we had multiple offers in the $100,000 to $200,000 range. We had tons of people at open houses with one Agent reporting over 100 visitors to a short sale.
• Peninsula-Burlingame notes that there are so many buyers out there but so much indecision. The daily media spin of negative news makes it difficult for many of them to feel confident in making an offer. The smart ones and those with cash, however, are aggressively going forward. Many of the offers are low and sellers are often finding this reality difficult to accept. Woodside reports that we are beginning to see some movement in house sales thanks to attractive rates and the belief by some buyers that we may be at or near the bottom. Menlo Park El Camino notes that Agents are feeling some movement on the part of the buyers. Inventory in the very desirable areas is still in short supply. There are definitely some houses becoming available due to seller duress-not necessarily desperation but straining the family budget due to loss of job.
• San Francisco-The Market Street office reports that more offers were written in the past week than in the few weeks prior. Now let's get our buyers accepted and sellers ratified. A couple of our long-term listings were ratified this week at prices below the seller's expectation but the sellers are ready to move on. Cash buyers are out there and we are seeing them write on our listings. Lombard notes that most deals seem to be under $800,000 and using the $625,000 loan ceiling for fixed rates. There are a lot of price ranges in the higher end. The Noriega office reports that the market is showing new signs of life. January sales ended pretty well and city inventory remains low and steady. The Lakeside office reports that now that the Super Bowl is over, the stimulus package may get passed, there is a renewed interest in the real estate market which makes us all hopeful. Van Ness reports that suddenly buyers are coming back, especially in the range below $1.5 million. Better financing products would help greatly.
• Santa Cruz County-No information reported this week.
• Silicon Valley-Our Cupertino De Anza office is reporting lots of activity and very busy open houses-though neither is leading to many closed transactions. We're hoping now that we are passed the Super Bowl we will see a pick-up in activity. Los Altos First Street is reporting that buyers are coming to open houses but most are saying they are waiting for better prices. Los Gatos reports that pricing is key. Homes that are priced aggressively are selling-often with multiple offers. This is a good lesson for sellers to consider as they price their home competitively for the market. San Jose Main reports that the high end is very slow. We're starting to see more short sales in Almaden where before they were non existent. The Blossom Valley market has a lot more activity but 70% of it is distressed homes. Cambrian Park is slow at the moment because of its location and price point but it is almost the most stable market. San Jose Main reports that open house activity continues to be brisk but sales seem to be slow. Most activity seems to be in the $300,000 to $500,000 price range. Many buyers are still sitting on the fence right now.
• South County-Gilroy reports that inventory is down. We have not seen the surge that normally happens after the first of the year. Of course this is not a normal market. It appears sellers are not waiting to compete against the REOs and short sales. The Hollister office reports that REO properties are going through reduction process. REO listings are decreasing while short sale listings are on the rise. Morgan Hill notes that Agents are reporting good attendance at open houses. Short sales and REOs continue to dominate the market and make up the majority of our sales under $500,000.

My overall assessment of the market this week is that buyer interest is up though buyers do remain cautious. It seems buyers are finally realizing that with today's low interest rates and generous amount of inventory-including a large number of bank owned properties-they may be in a very strong position and in all likelihood, can afford a lot more home than they could've a year ago, or even six months ago for that matter. Having said that, they aren't necessarily jumping back into the market head first. They are being cautious and making smart decisions when they perceive a true value. This is an important lesson for sellers to consider as they prepare their home for sale. If you want your home to stand out in today's competitive environment, you need to price it well and show it well from the beginning so you gain the most interest.

Next week I will release my February Reality Check which will focus on interest rates and how they may affect a buyer's purchasing power. I trust this will be helpful in educating our clients on why now truly may be the best time to buy.

Until next week, make it a great one,

JOE BROWN

I receive a weekly report from our area president, Joe Brown called Market Watch. This weeks report is pretty interesting and is describing what my business partner and I have been feeling for the past several months, so I thought I would share it with all of you. It has information from various parts of Northern California and is pretty positive news.

So the big question is, is this a trend or just a blip on the radar. I guess time will tell.

Mark Bruno

The following was writen by

Joe Brown, President Coldwell Banker Residential Brokerage
Silicon Valley~Monterey Bay~East Bay in Norther California

It has been reproduced with permission.

Is It Too Early to Call It a Trend?

Earlier this week, the National Association of Realtors reported that in December, existing home sales rose unexpectedly while inventory declined, led by a surge of sales in the West.

The national real estate organization reported, "Existing home sales - including single-family, townhomes, condominiums and co-ops - jumped 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November, but are 3.5 percent below the 4.91 million unit pace in December 2007."

In the West, existing home sales jumped 13.6 percent to an annual rate of 1.25 million in December and are 31.6 percent higher than a year ago. However, the median price was $213,100, down 31.5 percent from December 2007.

Here at home, the news only gets better. CAR reported this week that home sales increased 84.9 percent in December in California compared with the same period a year ago. No, that's not a typo. 84.9 percent. On the flip side, the median price of an existing home fell 41.5 percent, a continued symbol of buyers taking advantage of the large number of distressed properties currently available.

So why the sudden, so drastic surge in sales? There are a few reasons:

• A lot of people who were previously priced out of the housing market can finally buy
• With interest rates under 5%, a buyer's purchasing power is at its best in more than three decades
• After months of increasing or stable inventory, we are finally starting to see the numbers fall
• Increased consumer confidence (of late) based on the new administration
• We're seeing a lot more investors coming into the market in addition to first time buyers. Consider the fact that this week alone, one Gilroy Agent represented 10 properties that went into contract. Almost all were investors and the properties were condos in the under $100,000 price range.

So is it too early to call it a trend? Probably. In all honestly, we still have a lot of distressed properties to move through before we can begin to see prices stabilize. At least for the foreseeable future, buyers will probably have the edge but with an 84.9 percent increase in sales year over year and inventories on the decline, we're finally moving in the right direction. The key to all of this: buyers are ready to buy when they perceive a good value. Until then, they wait.

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

• East Bay-Our Castro Valley office reports multiple offers still seem to be the trend for REOs and offers are being accepted over asking. One Agent reports that her recent offer on an REO property in Hayward was rejected, with the winning bid accepted at approximately 12% over asking. In an interested trend, especially in Castro Valley which was one of the hardest hit by REOs, Agents are reporting that there seems to be less REO inventory available. Is it possible this market is going to be one of the first to rise from the REO short fall? Danville reports almost all of our sales are bank owned. Open houses are well attended and with the media talking about REOs, buyers are looking for bank owned bargains. Walnut Creek is feeling the same effects with 90% of its sales being REOs or short sales. On the contrary, Oakland reports it needs listings. Great listings in this market are getting multiple offers. A new Montclair listing on the market (listed at $678,000) had its first open on Sunday and had 200 groups through. We had requests for 11 disclosure packets.
• Monterey County-While the market on the Monterey Peninsula is a spotty one, Agents are writing lots of offers. Buyers are being tough and we have put 43 properties into escrow since the first of the year. An interesting fact, Carmel has had eight properties listed over $2 million go into escrow in January.
• North Bay-Greenbrae reports that sales all over central Marin are weak, though new homes that appear to be priced well are coming on the market. San Rafael notes that many of the condos listed under $200,000 in San Rafael are seeing multiple offers and are selling over asking. Petaluma notes that inventory is building in all price ranges, especially in the $600,000 plus range. We're seeing multiple offers in the under $500,000 range. All but one of our open escrows for this week were multiple offers. Santa Rosa also reports some good news noting that a new Agent helped an REO that is old to the market and had 38 groups through. A veteran Agent helped a similar property and picked up a cash buyer looking to buy three properties in the next 60 days!
• Peninsula-Burlingame notes that after last weekend's very busy open houses, buyers seem very enthusiastic. We are seeing some very attractive properties in the $800,000 range come on the market which should present opportunity to those buyers who have been sitting on the fence. Half Moon Bay notes that several offers are being negotiated and there were six new properties listed that are neither short sales nor REOs. One well-priced REO received at least four offers so buyers are ready to buy when they perceive good value. Palo Alto notes that open house activity has been slow (about 50% of the norm). There does, however, seem to be a bit of momentum in the entry level properties.
• San Francisco-The Lombard office reports that January deals remain dominated by REOs, mostly under $650,000 but one at $1.6 million. The primary market challenges: financing fall-outs and buyer fence-sitting. Our Noriega office reports that sales exploded last week with 10 ratified offers. It has been busy on floor and via online inquiries so it appears that sales are following. City inventory remains at six month lows which is creating bigger demand for available listings. One example, as shared by our Market Street office is that one client lost out on three properties due to multiple offers. Our hope is that this is an indication that more offers are starting to be written and accepted.
• Santa Cruz County-We have had two large sales over $3 million close within the last two weeks. There are still not many sales in the county over the $1 million mark. It is a combination of lack of buyers and lending issues. In the regular market, inventory remains about the same although certain areas of the county-like the west side-have seen significant decreases. Open house attendance is up and there is activity with first time buyers and investors.
• Silicon Valley-Activity definitely seems to be picking up. Our Los Altos First Street office reports that buyers are attending open houses in good numbers, mostly in the lower price ranges. Some price adjustments of 10% create offers. Our San Jose Main office disagrees noting that while open houses are busy with traffic, it isn't translating into sales. The office reports that many buyers are still sitting on the fence waiting for prices to drop further. Lower priced properties (between $250,000-$550,000) seem to be receiving the most activity.
• South County-The Hollister office reports that list prices continue to decline and cash offers are on the rise. Morgan Hill reports that this week, one Agent put 10 properties into contract. They were all in the Gilroy area and most were under $100,000 condos. The Agent represented several investors who mostly offered cash for the properties.

The bottom line is that while sales are on the rise, we still have many distressed sales that must work their way through the system. With Wednesday's controversial passing of the stimulus package (with a near party-line vote), we can only hope that the administration's plan-in what we know is unchartered territory for our country-is successful. The administration needs to move fast to stimulate a spring sales upturn and set the foundation for an economic recovery.

Until next week,

JOE BROWN
President
Coldwell Banker
Residential Brokerage
Silicon Valley~Monterey Bay~East Bay

Sales of single-family, re-sale homes surged in 2008, driven mainly by the foreclosure market.

The sales were concentrated in the lower end of the market in cities such as East Salinas, up 411.4%, North Salinas, up 331.4%, Seaside, up 196.6%.

On the other hand, these are the cities in which prices declined the greatest also. The median price in Sales was down 57.4%, in North Salinas, -45.8%, in South County, -45.9%.

Monterey County Days of inventory figures are the lowest we have seen since the start of the market downturn in 2005, indication the bottom might possible be here. We are even seeing multiple offers on REO's in the lower end of the market where pent up demand is starting to devour inventory. Many first time buyers who haven't been able to afford a piece of Monterey County are now realizing the dream of home ownership.

Year to date sales also increased dramatically, especially in the last 5-6 months of the year getting annual sales figures back to near pre-downturn levels. Again, the majority of these purchases are in the lower end and are REO's and short sales, which is taking a heavy toll on the counties average sale price and median sales price.

The sales Price to list price ratio is beginning to climb once again. This is a result of the multiple offers we are seeing on the REO's and short sales. In the higher end markets, these figures continue to stay within historical norms.

For more information on Monterey County, California's real estate market click here.

Monterey Peninsula Home Team

Mark Bruno Realtor

(831-917-8190

Sales of single-family, re-sale homes surged in 2008, driven mainly by the foreclosure market.

The sales were concentrated in the lower end of the market in cities such as East Salinas, up 411.4%, North Salinas, up 331.4%, Seaside, up 196.6%.

On the other hand, these are the cities in which prices declined the greatest also. The median price in Sales was down 57.4%, in North Salinas, -45.8%, in South County, -45.9%.

December sales of single-family, re-sale homes in Monterey County were up 256.3% year-over-year. The 367 sales recorded last month set a new all-time record.

Home prices continue to be affected by the bank-owned property that has flooded the market.

The median price fell 5.5% from November, and was off 55.2% year-over-year.

Inventory declined 11.5% from November, and was off 25.8% compared to December 2007.

The monthly increase in sales combined with the drop in inventory pushed our Days of Inventory indicator down 75 days to 154 days, the lowest it has been since September 2005.

The sales price to list price ratio fell 0.9 of a point to 97.5%.

Condo sales rose 16.7% from November, and were up 211.1% year-over-year.

The median price for condos gained 12.7% month-over-month, but was off 68.9% compared to last December.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or property, call me.

Monthly Market Trends Newsletter

Current Home Sales, City by City

OK, it was only a dusting...Or maybe even a lot of hail, but it sure is exciting for us sealevelers! I woke up yesterday morning to this on the ground! How cool is that. I should tell you that we never see the white stuff here. The snow level might get down to 1000 ft or so, but never right by the ocean.