Here’s the latest market recap based on data collected from the Coldwell Banker offices throughout the SF Bay Area. This week in our market:
- East Bay—Can you say “R-E-O” (Real Estate Owned by a lender; aka: ”foreclosures”)? Yes, that is what is driving much of the East Bay market. But caution. REOs don’t make for a perfect world. Take Castro Valley for instance. While we are consistently seeing multiple offers on most REOs, we are actually now seeing banks come back to the table asking for more money. Yes, they are actually INCREASING the sales price once the offers are on the table. Many buyers are frustrated and just walking away, in hopes that the next great deal is just around the corner. Despite this, Castro Valley went into escrow on six properties this week. Not bad! Fremont is reporting that sales in the under $600,000 entry level market continue to be brisk while the move-up market has slowed dramatically over the last several months. Livermore is definitely a city to watch. Consider this: Year over year, active inventory is down 14.6% and pending sales have increased 79% (and no, that’s not a typo!). Livermore is on our radar and it should be for many buyers, too.
- Monterey County—Monterey County seems to moving steadily along with many of its outlying areas seeing an influx of REO activity.
- North Bay—The Marin County market is buzzing with activity though we’re not seeing that buzz translate into closed deals. The good news is that we are seeing a lot of activity at opens. We are seeing a lot of buyer activity and showings. And floor time activity is increasing. Now we wait to see if all of that buzz results in closings. On the flipside, Sonoma County is all abuzz with continued REO activity. CB’s Sebastopol office reported that one $320,000 REO listing received 13 offers! And in one week they introduced 10 new REO listings to the market. Nearby Santa Rosa reports that the under $500,000 entry level market continues to prosper, often with multiple offers, while the $600,000-$1 million move-up market continues to remain slow.
- Peninsula—Foster City and Redwood Shores seem to be enjoying an unusually busy open season. CB’s Burlingame office is reporting that buyers are starting to cautiously make offers. Palo Alto seems to be on fire! Inventory is hovering around 70-75 in Palo Alto, with multiple offers occurring on almost everything below $2.5 million. The Palo Alto luxury market also remains strong, often times the listings are selling before they hit the market. Redwood City and San Carlos are reporting that buyers are very cautious about making offers and seem to still think prices will decline.
- San Francisco—Much of the City seems to suddenly be experiencing the summer doldrums. With residents fleeing the City to enjoy much needed vacations and many Agents doing the same, activity seems to have slowed a bit—but of course it is important to point out that this is very traditional for this time of year. Having said that, open houses still remain pretty active which is a good sign that activity will increase over the next month. Typically, once we are through the July and mid-August slowdown, we start to see a strong increase as we head into September and I think this year will be no different. One interesting note I would like to point out, however, is that my office, despite the summer slowdown, still saw seven homes with multiple offers this past week. Not bad for July!
- Santa Cruz County—Price seems to be the name of the game in this market. The old adage of “if it shows well and is priced well, it will sell” is certainly holding true. Sellers need to continue to price their home competitively and adjust the price downward in a timely manner in order to get the property sold.
- Silicon Valley—Continues to be a mixed bag. One thing we are seeing throughout the market is increased open house activity. It seems buyers are finally coming to the realization that this is the best time to buy and are cautiously moving forward. Our Cupertino De Anza office went up to 21 pendings this week. Our Los Altos First Street office is noting that 33% of its sales went into multiples. And Los Gatos is proudly noting “We are lucky with lots of activity and cash buyers.” The flip side? While activity is starting to increase, the issue seems to be closing the deals. Some buyers are having difficulty qualifying for loans. Others are pulling out with little to no warning. The key is keeping the transaction together which often takes a lot of negotiation on both sides of the transaction.
All in all, the market is continuing rather steadily as it has the last several weeks. Things seem to be moving at a steady pace—even with many vacationing Realtors and clients. Buyers and sellers who are facing the realities of today’s market seem to be the most successful. Those who are living in the past seem to languish.
The role of the first-time buyer is, and will be critical to an overall market turnaround. NAR Chief Economist Lawrence Yun said it best this week noting “first time home buyers are critical to the health of the housing market.” In the communities where we are experiencing downward price adjustments, the affordability factor improves. However, everything I read this week on economic outlooks pointed to the fact that its not a matter of IF the Fed will begin to increase rates, it’s a matter of WHEN. The increased affordability from lower prices could quickly get lost in increased loan rates.
