Getting Better All the Time

I don’t know about you, but I am so over the doom and gloom.  The only way we can turn this around is to start looking at the world with our glass half full.  I don’t mean we should live in denial. Yes, we do have a serious situation.  My pitch is to look for the positive as often as we are barraged by the negative.

Let’s focus on the encouraging signs both in the economy and in the local housing market.  For the economy, retail sales were up 1 % over last January, numbers for those filing for unemployment were down over the previous week, and Congress approved the President’s stimulus bill.  The stimulus bill contains provisions that are directly aimed at improving the housing market. The good news for us locally is that the former limits for conforming loans are back. That means the new limits for 7 out of the 9 Bay Area counties will return to $729,750.  That is over a $100,000 increase in the existing limit. This will allow more home buyers to access reasonable interest rates and have an easier time qualifying.  The original bill tried to raise the tax credit for first-time home buyers from $7500 to $15,000.  That provision didn’t make it, however the credit was raised to $8,000 and eliminated the payback provision. It also included over $50 billion for foreclosure mitigation. Combined with Treasury Secretary Geithner’s plan to deal with the banks, these provisions should bring more credit into the market for homes and slow the rate of foreclosures. All of these moves are aimed at stabilizing real estate values to create a more normalized market. 

On the local front, the lower end price ranges are still dominating the majority of sales; however we are beginning to see a new trend.  I spoke of the $4.4 million SF listing in my last report that sold quickly with two offers. Since that time, we have had a number of homes between $3-6 million go into escrow—a $6 million Tiburon home, a $3.2 Belvedere home, a $4.5 million and a $3.5 million SF home, and a $3.4 million home in Piedmont. This is the most activity in this price range we have seen in many months.  Three of these sales were of properties that have been on the market for a number of months and have undergone price reductions. I believe sellers are coming to the realization that the market has changed and therefore becoming more realistic in their expectations.  Conversely, buyers in this price range are negotiating transactions that they feel are of exceptional value.

We are just beginning to see more activity in the $1-3 million price range.  A good indicator is the $1.295 million home in the Upper Rockridge area of Oakland that received 6 offers. It was aggressively priced and showed extremely well.  The buyers responded strongly to the value. What it tells us about the market is that there is pent up demand, but it is only exercising itself when all the ingredients are present.

Another trend is that agents are making offers on listings that have either been taken off the market or have expired.  We had two cases in Sonoma where offers were presented on expired listings and both are now in escrow.  I think this is occurring for two reasons. First, in certain price ranges there is a dearth of listings and second, sellers have become more reasonable in what they would receive for their properties.

The closer buyers and sellers expectations align, the healthier the real estate market will become.