Welcome to our final edition of Weekly Market Watch for the year. What a ride 2009 has been. It will be interesting to look back at this edition of Weekly Market Watcha year from now to see how things have changed. Will we be out of the woods then? Will these tough economic times be a thing of the past? I believe 2010 will provide many opportunities for buyers and sellers of Bay Area real estate, and as Realtors, we can be assured of being very busy if we remain focused.
I know most of us are out finishing our holiday shopping and getting into full holiday swing so I’ll keep my last Weekly Market Watch of the year short and sweet. I came across a really good article in BusinessWeek this week and it had some very interesting images and graphics that I think help effectively tell the story of today’s market.
Following are excerpts from the BusinessWeek article entitled “A Housing Recovery Could Solidify.”
“Residential real estate prices have increased by about 5%, adjusted for inflation, since the end of the first quarter. As the inventory of existing homes for sale shrinks, a housing recovery could solidify. Sales have increased sharply in some of the hardest-hit states.
In Most of America, Home Prices Creep Up – A Lost Decade
Although home prices have been rising since March, after adjusting for inflation they are only at levels first reached in 2001.
Fewer New-Home Sales
Existing homes now make up about 93% of all sales, vs. a long-term historical average of about 85%.
Signs of Life in the Sunbelt—and Elsewhere
Four states—Nevada, Arizona, Florida, and California—have seen double-digit increases in sales volumes for existing homes since the end of 2008.”
So what does this mean and more importantly, the question of the day from so many of you is, what’s next? Well here’s what I think. While we probably are not out of the woods yet, housing is showing signs of stability, markets are showing signs of rational behavior and everyone is starting to understand the fundamental problems that brought us here. I think the combination of those have us on the right path. Are we going to suddenly see double digit appreciation in 2010? Probably not. But I think we are on a good, sustainable path that should give us some modest growth in the coming year, largely in the most sought after affordable and mid-level markets. In terms of the luxury market, I think only time will tell. It was the last to feel the downturn and in all likelihood it will be the last to recover. Knowing this, it is important to point out that there are always pockets that are the exception. Real estate is local and there are always going to be those sought after neighborhoods, those one-of-a-kind properties that just demand something different. With that said, I am pleased to say that just within the past three weeks, our local CB offices have closed an impressive number of transactions in the high end – over 15 properties closed in the $3M -$6M range, from Mill Valley in the north to San Jose in the south – plus two properties, each over $12M in Woodside and Atherton. Our inventory for desirable high end properties is surprisingly low, and it’s hard to predict what the New Year will bring. What I can assure you is that over the next year I’ll be watching the market closely and will keep you abreast of changes as they happen.
And with that said, let’s take a look at this week in real estate:
• East Bay–Berkeley reports buyers are out there and open homes are well attended. A good percentage of buyers want to buy before the end of the year and many are all cash at all price points. Castro Valley reports there are lots and lots of cash buyers. At least one in three of all offers we are receiving are cash buyers, which is amazing, since we are talking about offers in the middle price ranges in addition to the entry level markets. We have definitely slowed down as Christmas approaches, yet listings are still trickling in and we continue to show properties even as we approach the holidays. Danville reports we are definitely in the holiday slow down, although we had 2 sales in the million dollar range this week. Livermore reports an interesting trend: Since January 1. 2009 through November 2009 the inventory of active detached homes in Livermore has decreased by 52% while the average sale price has remained stable. In looking at November 2008 to November 2009, the average sales price is up almost 4% in Livermore. In Livermore, we are still seeing a lot of multiple offers due to the lack of inventory and an abundance of buyers. Bottom line, we need more listings! Orinda reports that inventory is down due to the holidays. Buyers are still out there and prices on remaining inventory remain stable.
• Monterey County–Market seems to continue to be active– more so than usual for the end of the year. Amazing number of offers still being written, at amazingly low prices that we thought we’d never see again. Last week we closed on a property at $100,000 and also five properties between 1.2 and 2.1 million.
• North Bay–Greenbrae reports lots of activity this month in the $1.5-$2.5 million range. Agents who are looking ahead to 2010 are working with serious buyers and serious sellers. While deals may not be pretty next year we are expecting a increase in number of sales. Northern Marin reports we are still experiencing multiple offers in the entry level price range of 250,000 to 450,000. We had five offers on a million dollar home as well. Inventory is lower than usual for December. Banks continue to slow down transactions with unusual conditions to fund loans. Sebastopol reports the market is very quiet! Agents are writing lots of offers on limited inventory. Cash remains king and we are seeing more multiple cash offers. Santa Rosa reports open house attendance is now very low, but those who show up are serious. Open escrows are up just a bit as last minute shoppers close out the year.
• Peninsula–Half Moon Bay reports we have experienced a real slow down this December in sales activity, listing activity and open house attendance. Menlo Park El Camino reports we had eight offers on a listing that was $899 in Menlo Park Open houses were not bad and Agents seemed to think that the buyers’ general state of mind regarding buying was positive. Little of the old comments ‘Prices are going to go down more’ and more of “We think Q1 is the right time to buy.” The only stall will be fear generated by more and more political discussion of the massive US debt. Palo Alto Downtown reports as anticipated, the holiday season has started – meaning inventory is low. Although a bit surprising, we have had a percentage of properties that have sold from $2M and up. So those buyers are still out there. Certainly the entry level market, if you have inventory, is very, very strong – anything below $1.4M/$1.5M in Palo Alto is extremely strong.
• San Francisco–Lombard reports a very slow start to December, but no consistency in traffic. We had two people through one house, 80 through another; a solo-offer deal well under asking to 13 offers on an entry fixer, well over. Some Agents working hard through the holidays, others withdrawing listings until 2nd week of January. Market Street reports that we are not seeing many multiple offers being received these last couple of weeks. Activity has slowed down at open houses and broker’s tour. We still have several buyers with cash that are looking for a home to call their own by year’s end but inventory has slowed down with the coming holiday season. Noriega reports the market is very slow, but still a lot of activities on the entry level. One REO listing in Daly City had over 120 people in a two hour span during open house. Same property received multiple offers, with several over asking, all cash. Van Ness reports that it closed 18 deals from 12/9-12/15.
• Santa Cruz County–Typical seasonal slow down with the holidays right around the corner. Agent activity including open house activity is minimal at this point in the year with many leaving town for the holidays. Inventory is down about 30% from last year at this time. REOs in south county (Watsonville) are continuing to draw multiple offers with many cash buyers – it is driving prices up slightly. Prices are about the same as they were a year ago overall, except in the high end where it seems to continue to drop.
• Silicon Valley–Cupertino reports it is remarkably busy for this time of year! Los Altos reports the market is still active. Buyers are coming to open houses and looking for the right opportunity. Multiple offers of 13 on one $500K fixer, and five offers on a modest $1.2M property with “potential.” San Jose Almaden reports a seasonal slow down but more than ever agents are working through the holidays. San Jose Willow Glen reports it has slowed down quite a bit due to the holiday season. Saratoga reports there seems to be a sudden increase in listing activity. I think that many agents are listing properties to prepare them to onto the market in early 2010. Although the previews market is slow a number of my agents are working on sizable transactions and I’m hopeful this area will open a bit in 2010.
I’d like to take this opportunity to wish all of you the very best of the Holiday season. I also want to add my thanks and congratulations to all who made our Food Bank drive for local Food Banks a huge success. Final numbers will be complete early next week, but I know that we beat our goal of $10,000 – so with the Coldwell Banker match, we will be giving more than $20,000 to your local Food Banks. Thanks again – you have shown that you are not only great professionals, but caring and compassionate as well.
See you in 2010!