FOGGY VIEWS

How do you catch a falling knife? Sorry, I don’t have the answer, largely due to the fact that I’m not willing to do the research.  But what I can tell you is that in Northern California regions which have experienced a price decline, home prices are now more affordable than they have been in years. This obviously creates opportunity for many buyers.   In areas where price has softened somewhat, but overall limited inventory still prevails, we could see a shift from a buyer’s market to a seller’s market almost overnight.

In a recent survey conducted by RealTrends of the leading Broker/owners of the real estate industry, 69% of respondents said that, as of end of May, they strongly or somewhat agree that their market is showing signs of improvement.

While I don’t want to paint too rosy of a picture, what I can tell you is that while we still have a surplus inventory of homes in some areas, those homes that are priced accordingly are selling.  Unfortunately too many buyers right now are relying on data reported by the media that has a three or even four month lag.  Their perception may be that nothing is selling, when in fact; the sales rate may be brisk for well-priced property. 

Take San Francisco for instance.  According to the Altos 10-City Composite Price Index, which is known for “real-time real estate research”, as of the end of May, San Francisco had the fastest rate of inventory turnover among all 10 major cities in the country with just 73 days on the market, in comparison to Miami which had the longest days on market at 152.  Plus, consider the fact that according to the U.S. Bureau of Labor Statistics and the Census Bureau, San Francisco is the second leading producer of jobs in the country—which creates organic demand for the housing industry.  Now throw in the fact that we live in one of the most desirable markets in the world.  There will certainly be “would-be” buyers who, several years from now, will wish they would have bought in the summer of 2008.

Just take a look at what happened this week in the Bay Area:

• East Bay – Business continues to build momentum in the East Bay, largely in part (in many markets) due to bank-owned properties.  In Berkeley this week Coldwell Banker had nine listings go into escrow of which three (or 1/3) went into multiple offers.  In Castro Valley, prices continue to dip which makes for increased activity.  Now that sellers have adjusted their prices, buyers are really starting to take action, which should be a lesson for all markets that once sellers reduce their price to a position that a buyer considers a “value,” then buyers will move from the ever important position of “fence sitter” to “house sitter.”
• North Bay – The North Bay is seeing its own share of teeter totter success.  Many homes are being sold prior to hitting the market—some even with multiple offers—and then others continue to sit.  Price and value is truly key to market success and some consumers haven’t realized this reality yet.  South of San Rafael seems to be holding strong with good market activity.  And a new $6.5 million listing in Sausalito just received multiple offers in its first week on the market.  Not bad!  Sonoma County continues to thrive—again, largely in part due to bank-owned homes.  In fact, CB’s Petaluma office had 17 agents involved in multiple offers this week.  Of the ratified sales, five were foreclosures and seven were short sales.
• Peninsula – We’re starting to see fence sitting buyers in the Peninsula take action.  In fact, we are starting to see more multiple offers in many markets.  Buyers are making offers instead of waiting on the sidelines.  A micro-climate of its own, CB Half Moon Bay is seeing a surge of inventory, and is also reporting open home visitor levels at near record highs, with the expectation that many of these properties will soon be in escrow.  CB Palo Alto reports that open house activity has been very good but that there still is some skepticism from buyers.  The good news is that volume of sales has actually increased in CB’s Palo Alto Downtown office over the last few weeks.  Of CB’s eight reporting Peninsula offices this week, 19 of the pending sales were in multiple offers, a strong sign of upcoming activity as those buyers who didn’t prevail will be looking for the next new listing.
• San Francisco – It seems sales activity in the City slowed this week.  Was it due to the incredible weather, or perhaps the stock market?  This was the week that the dollar was finding new lows while oil was finding new highs.  But don’t fear- I can tell you that several CB offices had already picked up their pace by the end of the week (keeping in mind that the individual office reports are gathered throughout the week at your sales meetings from the preceding week’s activity).   

Overall, it was a good week for the Bay Area and momentum continues to build.  Our market continues to be challenged by some buyers who are waiting to see what the market is going to do.  The best thing you can do is educate yourself on how waiting could cost you plenty in terms of higher prices, lower inventory and higher interest rates.  It’s just a matter of time before we swiftly move from a buyer’s market to a more normalized exchange between buyers and sellers, and buyers that don’t act will reduce their purchasing power and possibly lose out on that bigger and better home!