The deep divide is reflected in Marin, which is one of the highest priced counties in the Bay Area. In July there were 1210 single family listings—621 under a million of which 38% of them were in escrow, 359 in the one to two million dollar range of which 19% were in escrow, and 230 over two million of which only 7% were in escrow. If you looked at all of the listings over one million, only 14.6% are in escrow or about one in seven listings.

There are many reasons why this could be occurring.  Loans over the conforming limits are still more difficult to obtain, as lenders continue to require larger down payments, interest rates continue to be higher than conforming loans, and lender appraisals make for more challenging negotiations. Many sellers on the market are still testing the waters because either lower asking prices would put them under water or they think that their homes are unique and unusual, believing that buyers would be willing to overlook comparable homes that have sold for less.  Today’s WSJ article confirms these observations.

As I tour new listings around the Bay Area, I find that only about 10% of these new listings over a million dollars have a real chance of selling at or near their asking prices.  The others will wallow on the market, many having to reduce their prices until they finally have a willing buyer.  Some sellers receive offers which they consider too low and they reject them. Ironically, over time the list price falls below the offer price.  Had the seller taken the initial offer, they could have saved time, money, and stress.

Once such listing that I toured was on the market over a year ago at $2.5 mil. They were presented an offer of $2.2 mil. The seller felt it was too low, so they declined the offer. Subsequently they took their home off the market and rented it. Now the sellers have decided to put it back on the market once again, listing it for $1.9 mil.  Unfortunately we see this pattern far too often. 

The bulk of sales in most market places fall below the $700K mark. The vast majority of multiple offers are in the lower price ranges where there is strong activity for well priced homes such as the Berkeley 2 bedr./1ba. home listed at $495K receiving 15 offers or the Oakland 4bedr./4ba. home priced at $600K garnering 7 offers. First time buyers are excited by the price declines that have occurred over the last 2 years.  As I have reported previously, many homes in the over million price range require more air to be let out of their prices.  The upper end is not immune to price declines, it has just been slower in coming.

I want to make it clear that there are exceptions to all rules. There are still properties in the over million dollar range that are attracting multiple offers. These are usually homes in areas of great demand that are priced well and are staged impeccably. 

Not every home in the lower price ranges is selling like hotcakes.  There are many listings that sit as sellers and/or lenders have unrealistic price points or refuse to make the necessary repairs and/or stage in order to make these homes more appealing.

Although there are some positive trends in the economy, the housing market will continue to slog along. Homes will continue to sell, but only those that accommodate market realities. We will be selling more homes in the second half of this year over last year for the same period, with the bulk in the lower price ranges.  The upper end will struggle until listing prices become more realistic, lenders are assured that values have stabilized and therefore willing to lend more freely, and more consumers begin to feel that the worst is behind us.  It will happen; it is only a matter of time.

The current Bay Area data reflects that the watermark in the under $500K market has been set.  Median price has either been flat or rising in all counties in that price range over the last 90 days and depending on the county, we are beginning to see price stabilization in properties up to $700K. Last week you might have thought it was 2005, our SF Sunset 2 bedr. 1ba. listings priced at $545K received 53 offers. A new record for this market. Now some may say the property was a bit under priced, maybe, however it went well above the asking price. This listing demonstrates that there is certainly strong demand for that neighborhood and that buyer’s confidence is rising.

These price ranges are steadying because of diminishing inventories and sellers, which includes both banks and individuals, now coming to a more realistic view of pricing. Buyers have done their homework and know values. There is no “greater fool theory” operating. More and more buyers are evaluating based on dollar per sq. foot.

There are still challenges in the million dollar plus price range as I stressed in my last posting. Inventories are building and days on market are increasing. The million dollar plus market is hampered by lenders’ apprehensions over value. The lending industry feels prices will continue to drop and are requiring larger down payments, solid gold borrowers and, in some cases more than one appraisal. They are also concerned about the potential inventory that will be created when lenders begin to foreclose on homes whose mortgages are currently delinquent.  However, not every million dollar property reflects the current trend, as we witnessed in the closing of a SF Marina $1.8 mil. listing that received 16 offers and sold 20% over the asking price or the 5 offers that were garnered on the San Anselmo 4 bedr. 2 ba. home on an acre that was listed at $1.2 million and went into escrow over list price.  These are the exceptions, not the rule. Buyers will not overpay even in multiple offers.  A $1.15 mil. listing received 4 offers, but still went under the asking price. What it does reflect is that every area is unique and so is each home. We can’t broad brush an entire geographic area. This sector of the market will remain challenged.

The three million dollar and up range is still seeing some activity. The very special properties in exclusive neighborhoods with exceptional amenities are finding buyers.  Our $3.2 mil listing in the Shiloh gated community of Santa Rosa went into escrow a week ago. Most of the transactions in this price category and up are primarily all cash transactions.  Even the buyers in this range are looking for value as they realize that prices have come down substantially from the peak.

Activity at open houses still remains active, especially in the single family home category. The majority of these open homes are in double digit numbers with a number of homes attracting 30-50 groups. This is particularly the case in the East Bay and San Francisco.  The North Bay is slower, but in the most desired areas we are still seeing well attended open houses.

Interest rates have held steady and have decreased slightly from the current high watermark. Jumbo loans are still more difficult to come by, although a couple of lenders have re-entered the market. The issue with jumbos is that in most cases you need a minimum of 25% down and 700 plus FICO score. The positive news is that we are beginning to see a few 20% down loans. However, lenders are concerned that values in this price range are still declining.

Whether jumbo or conforming, appraisals have become more difficult, as the new Fannie and Freddie appraisal requirements have now been instated. Appraisers coming to markets that are unfamiliar to them have had a negative impact on transactions. More and more appraisals are coming in lower than purchase prices, which lead to additional negotiations or transactions falling out of escrow.

Overall the market appears to be marching in place, not rising nor falling. As long as consumer confidence holds relatively steady, we will see the same pattern in the housing market as we have witnessed in the stock market—a little up and little down.  On the bright side, sellers continue to become more realistic and buyers are willing to make offers if they perceive value. I see more of the same through the end of the year. 

The question mark for the second half of the year is how the next round of REOs and short sales will impact the market.  I think in the lower end there is enough demand and enough money to lend that those inventories will be absorbed fairly quickly which should increase the number of units sold over last year. In the upper price ranges I think buyers will have some great opportunities and it will help establish the bottom of values in the upper end priced homes. All this is necessary to get back to a healthy, balanced market.  I am looking at the end of next year or the beginning of 2011. In the meantime it will continue to be a buyer’s market. Those that take the leap now will be rewarded in the future. Only a Monday morning quarterback would understand that.

The change has come from banks unloading the bulk of their REOs and short sale properties. The under $500K properties have flown off the shelf. Inventories are now anemic with few exceptions. Seven out of nine Bay Area counties have less than a 3 months supply of inventory (MSI) in the $500K and under price segment. Only Napa at 3.3 MSI, Marin 5.6 MSI and SF 5.7 MSI are above the 3 month mark. We have begun to see improvement in the $500K to $1 mil. price range.  Five counties are under 5 months, only Marin 5.4, Sonoma 7.2, Solano 9.0, and Napa 12.6 are over. However, eight of the nine counties have fallen month over month for the last 3 months. Some of the reduction is due to seasonality, however as prices have dropped, buyers have taken advantage of the values and interest rates.  The most challenged price segment has been the million dollar plus.  The MSI has been most impacted in this sector. It varies from a low of 7.3 months in SF (last May it was at 2.4 months) to a high of 50 months in Napa (Napa varies significantly from month to month depending on the no. of closes in this price segment–last month was 35 months).  There is a bit of a silver lining in that six of the nine counties months supply of inventory has dropped month over month for the last three months. Only Solano, Napa and Alameda have varied up and down in the million dollar plus price range.

Median and average sales price continues to fall in all counties, but at a slower pace than over last year. In fact, 6 out of the 9 counties (Alameda, Contra Costa, Napa, San Francisco, San Mateo and Santa Clara counties) have actually had median price increases month over month for the last three months. Eight out of nine counties increased median price over April.  Only time will tell if this can be sustained, but it is a positive sign.

Those counties with the highest declines in median sales price have had the greatest increase in sales over last May and conversely, those with the smallest declines in median sales price have had either the lowest increase or actually declined in units sold over last May.  The three counties that had the largest declines in median price had some of the highest increases in sold units—Contra Costa (-41% MP/+21% Solds), Solano (-36%MP/+56% Solds) and Santa Clara (-33%MP/+14% Solds). The counties with the lowest median price declines had decreases in solds—San Francisco (-14%MP/-35% Solds) and San Mateo (-17%MP/-7% Solds). Only Marin county did not follow this pattern. Marin median price declined -33% and also solds declined -10%. A bit of the double whammy.

New pending sales this May compared to last May have shown marked improvement. Every county except for San Francisco is up over last year. Anywhere from a high of 130% in Solano County to 21% in San Mateo. San Francisco, the only county not up over last year, was off a mere 4%.  

These trends seem to be continuing in the month of June, in spite of interest rates rising nearly a percent over the last three weeks.  Although interest rates have increased, they still are at historic lows. Multiple offers are still occurring primarily in the under $900K range. A Berkeley 3 bedr. 2 bath home listed at $895K received 7 offers selling above list price.  We did have a $1.5 mil. Piedmont 3 bedr. 3.5 bath home that garnered 4 offers and also sold over list price. 

Open house activity appears to be strongest in San Francisco and the East Bay.  Most open houses are attracting double digit activity. The North Bay is mixed depending on location. Wine country open home activity lags in comparison to other Bay Area locations.

Have we hit bottom?  I think in the lower third of the market we have. REOs and short sales have set the bar. We are beginning to see the upper two-thirds readjusting as prices drop.  All buyers are looking for value-pricing, location and exceptional condition when deciding to make an offer. There is no shortage of demand or ability. Jim Cramer, the outspoken CNBC host thinks we are there. He is buying.  Listen to the interview by the Huffington Post.

If you really want to know when the economy has turned around, just track men’s underwear sales.  Michael Brush in his column on CNN Money writes that when men start buying underwear again, we know there is a turnaround. Read more on what other indicators can track the bottom of the current recession.

I think we can look for brighter days ahead in 2010 and a more balanced market in 2011, as the fear that griped consumers in the last quarter of 2008 and the first quarter of this year has turned into a cautious, deliberate, reasoned pragmatism that is allowing the real estate market to heal itself.  It will take time and it could still have some falls along the way, but when all is said and done, owning a piece of the rock is still one of America’s most cherished values.

These buyers are being motivated by the convergence of several factors including the steep drop in prices, the lowest interest rates since they began recording them in 1971, and the shrinking inventories.

Even the media has turned more positive and is talking about the increased activity with homes in the lesser price categories. It has taken them a while to notice.

The million dollar plus properties are moving, but nowhere near the pace of the lower priced homes. The upper price ranges are building inventory as the spring market unfolds. It is taking longer to receive offers and if properties are not priced within realistic price boundaries, it takes numerous price reductions to entice buyers to look at them. Occasionally, we will see multiple offers like the Piedmont 4 bedr. 3 ba. home listed at $1.55mil. or the 4 bedr. 3 ba. home in San Anselmo listed for $1.2 mil, which sold having received 4 offers. These homes are the exception, not the rule. They are aggressively priced, expertly staged, and in exceptional condition.

The good news is lenders are coming back in the market with jumbo product. Both buyers and lenders are still concerned that prices could fall further in the more expensive homes. Appraisals are more difficult as consequent of the uncertainty in the market, prompting both appraisers to be conservative in their estimates and some banks to drop values to protect themselves in case values drop further. Lenders have more confidence in the lower ranges despite prices having dropped from the peak anywhere from 35-70% depending on location.  The higher priced homes haven’t fallen as much, although those homes that are selling have seen their prices fall on average by 20-25% or more from the peak depending on location. It is surprising that the $3 mil. plus range is still experiencing good activity. One Napa Valley property listed at $3.3 mil. in escrow received another offer that went into back-up position. We also had several showings on a St. Helena estate property listed for $5.5 mil.

We did notice a rise of million dollar plus properties in the month of April. However, in the last week or two, the under million dollar properties have dominated sales once again.

Open house activity remains strong in most markets. The usual warm spring weather has increased traffic. Most open homes have double digit buyer activity. The strongest activity is in San Francisco and in the East Bay.  A Berkeley Hills home listed at $1.650mil. was visited by 75 groups of buyers, a Crocker Highlands home in Oakland priced at $985K had 80 buyers, an SF Inner Sunset 3 bedr. 2 ba. home priced at $1.497 garnered 50 groups, and a SF West Portal 4 bedr. 2 ba. home listed at $1.25mil. was visited by 42 groups.  Demand is still strong, but the urgency to buy is tempered with caution.

Consumer confidence is rising slowly, the increase in the number of unemployed workers is beginning to wane, and the stock market has risen nicely over the last month and half and seems to be steadying.  All these factors are helping in breathing life back into the housing market.  I know there is concern about the foreclosed properties that have been held off the market by lenders due to the moratoriums. The estimate in California alone is 80,000 homes. That could mean between 10,000-15,000 homes in the Bay Area could hit the market in a very short time. To be honest, I am not overly concerned with those properties in the lower ranges. I believe the watermark has been set and there is enough pent up demand of both first time buyers and investors to absorb those properties. I believe we will see more of upper end foreclosures and short sale properties entering the market, which will begin the process of setting the watermark for that category of properties much like it did for the lower end price ranges over the last year. 

When all is said and done, prices may roll back to 2002-2004 price levels, depending on the location of the properties. In the end, it will be healthy, allowing the housing market to come back into historical appreciation averages that can be sustained over the long run.

As we finished the first quarter of the year, there are some interesting observations to note. In those counties where average and median price are down 30% or more, inventory this year versus last is down, pending sales are up, sold homes are up, and months supply of inventory is down.  In those counties (San Francisco and Marin) where median and average prices haven’t dropped by 30% or more, inventories are up from last year, pendings and closed sales are lower, and months supply of inventory is up.  These counties are the only ones where residual inventory (inventory that is on the market over 30 days) is up over last year.  Months supply of inventory is substantially down over last year in those counties with the lowest median and average sales prices.  Those counties whose median prices are under $400K—Alameda ($305K), Contra Costa ($200K), Napa ($334K), Solano ($179K), and Sonoma ($349K)—all with one exception have MSIs under 5 months.  The national average is 9 months. Napa is the only exception with 7.2 months supply. However, when you consider that last year Napa had the highest MSI of all counties in the Bay Area with 18.4 months, they had the largest drop in MSI both in absolute and relative terms of any county.  Marin (10.1 MSI) and SF (7.5) had the two highest MSIs for March.  For San Mateo and Santa Clara whose median sales price are $520K and $415K respectively, months supply were steady or below last year’s MSI.  

In a few counties we are beginning to see price stabilization. Alameda, Marin, San Mateo, Santa Clara, and Sonoma counties have seen a small rise in average price over the last 90 days.  Median price has varied only a few percentage points in each month this quarter in the majority of Bay Area counties.  We could be close to the bottom of price swings. How long will we stay at this level is difficult to predict. This is particularly true of the lower price ranges, which have dominated sales activity in the first quarter.  A recent article in USA Today estimated when each state would see a housing recovery. California was one of a few states to begin recovery in 2009.  The recovery begins with price stabilization. Just to show you how crazy it has become in the lowest end of the market, a 3 bedr. 1 bath home in Oakland listed for $195K received 17 offers.  Most of our multiples offers occur in the under $800K price level. Even in the most challenged real estate market in our lifetime, we are still experiencing multiple offers.  This rarely occurred in past down-cycle markets. I think that the building buyer demand, historically low interest rates, the significant price drops over the last 2 years, and the REO/short-sale markets have created this rare anomaly (opportunity).

Open house activity at all price levels continues to increase as the weather and increasing number of listings come on the market. Most open homes are attracting a double-digit number of buyers. The most popular are bringing in well over 30 guests. This was the case for a Greenbrae 3bedr./3ba. listing priced at $995K which had 60 visitors, a Montclair home listed at $1.650 mil. which had 55 buyers, and the SF Seacliff  6bedr./5ba. listed at $4.580 mil. which entertained 40 groups.

There are plenty more reasons to buy other than the ones mentioned above.  Among them are the Federal government’s $8000 tax credit for first-time buyers and, in addition, the state of California just passed a $10,000 tax credit for new homes purchased this year with fewer restrictions than the feds program. I believe this spring will be a bright spot for home sales after a lackluster first quarter.

The housing market, like the stock market is up and down. One week sales pick up and the next week they slow. It is like a patient in ICU.  We are moving to health, but at a slow pace. The Bay Area reflects the same trend as the nation with the lower price ranges still dominating the vast majority of sales and many of those sales being foreclosures and short sales.

As we enter the spring market we are seeing an increase in listing inventory, particularly in the high priced counties. At the same time we are seeing more homes in the million to two million dollar range beginning to move. However let me caution that it is the best valued (competitively priced) homes in the most desired areas that are selling. A good example is the Piedmont 4 bedrooms 3 bath home listed at $1.395 mil. that after only 8 days on the market and over 300  visitors through this past weekend’s open homes, received three offers today. A home in Larkspur just listed at $899K also received 3 offers and went over full price in an all cash deal. Buyers are prepared to move, but there motivation is value. Buyers today know the inventory and the prices of recent closed sales.

Yes, sellers need to be more patient in today’s market, but many times it is better to hit the market price rather than wait and endure price reductions. Today’s buyer is willing to wait. A Sonoma listing originally listed at $1.184 mil. had been on the market for 221 days, finally received an offer when the price was reduced over time to $995K. Would the seller have been better off to have listed their home at a more competitive price at the beginning of the listing period and perhaps received multiple offers?  We will never know, but what we have seen is seller’s rejecting offers deeming them too low and then selling their homes months later at prices below the first offer they received—a very difficult lesson learned.

For most listings, we have no shortage of buyers in the most popular areas. I mentioned the Piedmont open house above, but there are others who attracted large numbers of buyers. A Piedmont Ave. Oakland listing priced at $719K had over 200 visitors. Others were into 40 plus groups like the 2bedr. 2 bath SF DuBoce Park listing which had 65 groups, an Oakland Claremont Pines home listed at $2.45mil. had 40 groups, and an SF Pacific Hts. 4bedr/3ba. listed at $1.795 mil. drew 40 groups. These numbers are from homes that are open for the first time. Open home activity usually dwindles after the first or second open as buyers are looking for the next best deal. This being another reason to list the home correctly at the beginning of the listing period.

Buyers should pay attention to my 21 year old daughter who last year graduated from college, is now working full-time and studying to take her real estate license. She is a voracious reader and subscribes to the WSJ, NY Times, and the Economist magazine.  At least once a week she reminds me that this market may be a once in a lifetime chance given the values and interest rates. She says, “I need to get into this market. Dad, you need to help me. I need to buy now”. I am weakening, because she is right. Stay tuned.

Finally those sparks in the wilderness that I mentioned last month are burning a bit more brightly. Our local Bay Area housing markets continue to take baby steps. The February results are in and the trends of the last six months continue. The lower price ranges are the most active. Sold units were up significantly over February 2008 in those counties that have the lowest median prices.  Solano county was up 105%, Sonoma was up 80 % and Contra Costa was up 38%. Counties that have a mix of lower and upper end ranges were down slightly, as was the case in Alameda which was down 11% and Napa was down 12%.  Those counties with the highest median prices dropped significantly in closed units. Santa Clara was down 25%, San Mateo was down 27%, San Francisco was down 50%, and Marin was down 54%.  Pending escrows reflected the same pattern, although it was more positive as six out of the nine counties posted positive increases over 2008. Solano was +234%, Napa +134%, Contra Costa +87%, Sonoma +82%, Alameda +27%, Santa Clara +11%, San Mateo -19%, Marin -25%, and San Francisco -32%.

Median prices year over year dropped in all counties.  The counties with the largest declines were those that had the highest increases in sales.  This being another indicator of how active the lower price ranges have been.

Months supply of inventory was down from the peak in all but one county and down from last February in four counties.  The following numbers show the current, last year’s, and peak MSI numbers. The first number is the peak MSI over the last two years, the second is February 2008, and the third is the current MSI:  Napa 24/9.9/9.9, Solano 22/14.5/4.7, Contra Costa 16/7.8/5.1, Sonoma 14.5/14.5/5.1, Alameda 13.7/4.8/6.0, Santa Clara 13.0/3.8/7.9, Marin 11.4/4.3/11.4, San Francisco 9.9/2.6/8.8, and San Mateo 9.8/3.7/7.3.

New listings coming on the market this year in February compared to last year were down in 6 of the 9 counties.  The numbers are as follows: Contra Costa -33%, Sonoma -32%, Alameda -28%, Marin -19%, Napa -5%, and Solano -2%.  Residual inventory, that is, those listings that were on the market prior to February and still available, was up in 6 of the 9 counties over last year. The six counties are San Francisco (+94%), Santa Clara (+75%), San Mateo (+56%), Alameda (+43%), Marin (+39%), and Contra Costa (+11%). The bottom line is that prices have come down substantially in the lower end of the market over the last year resulting in the reduction of inventories in those markets. The high residual inventory and the increases in MSI in the upper end markets show that prices in those markets still need to adjust downward before we reach equilibrium. As sellers in the million dollar and up ranges (in some market places $700K and up) price their properties in accordance with market conditions, we will begin to see unit sales increase and inventories decline in those markets.

The market is fluid. A recent newscast highlighted a shift in San Francisco, particularly in the lower ranges. Our sales during the second week of March were up over last year. There seems to be a greater sense of confidence in buyers, particularly in the last couple of weeks. We are beginning to see more multiple offers. Although most are in the lower end, we are now seeing a few in the million dollar plus range. A Piedmont 4 bedr. 2 ba. listing priced at $1.295 received 4 offers and went over asking.  Buyers are moving quickly when they come across a value priced home in a desirable area.  A 3 bedr. 2 ba. Larkspur remodeled home listed at $1.595 went into escrow 48 hours after going on the market.  Homes that are priced appropriately to today’s environment and show well, are selling.

Serious price reductions are producing results. Our listing in San Ramon originally listed at $635K was reduced by the seller to $535K and sold immediately. Value is on every buyer’s mind.  Regardless of the economy, there are many serious buyers looking to purchase homes. as evidenced by increasing number of buyers attending open homes. As the economy improves over the next year or two, lending in jumbo mortgages is made more available, unemployment numbers steady and consumer confidence begins to rise, we will approach a more balanced market. In the meantime buyers have a “golden opportunity”,  but it won’t be there forever.

To be sure, we can certainly be thankful for the rain this past week. If we are gloomy about financial markets, at least the thought of achieving our normal rainfall is a pleasant one. Even with the rain, buyers are still coming out to view homes. Most opens had double digit attendance.

The buyer interest is there. A few markets are beginning to see a modest pick up in sales activity. Both SF and the East Bay are seeing increasing numbers of sales. In spite of the economic conditions, a few listings are receiving multiple offers. The bulk of these sales are still under a million dollars. In SF, a 3 bedr. /2 ba. Forest Hill fixer listed at $699K entertained 8 offers and went well over asking. In SF a 3 bedr./3 ba. Sunnyside listing priced at $899K received 4 offers. In the East Bay, a 2bedr./2ba. condo in Berkeley listed at $575K garnered 6 offers.

The highlight of the week is that we are experiencing a few more million dollar plus sales, as sellers are pricing their homes more realistically to market conditions. A good example is on the Piedmont side of Montclair where a 4bedr./4ba. home priced at $1.295 mil. received 4 offers. The one to two million dollar category is seeing a little more life. These transactions require patience, as both buyers and sellers are taking their time with negotiations. It is getting done, but not without a great deal of give and take. One more note, the trend continues for unique upper end properties with a $5mil. sale of a home on the Belvedere lagoon that went into escrow after seven days on the market.

Next week’s posting will review the sales numbers for the month of February.

Interesting to note that the hottest selling part of the market today is the lower end where most of the REOs and short sales exist.  In many markets, the inventories in this sector are some of the lowest of any price range.   If the plan is successful in achieving its objective by keeping more of these homes off the market, it could have its desired effect.

In the meantime buyers remain cautious and are focused on value.  The trend I discussed last week continues and that is that, the higher end of a few Bay Area markets continue to heat up. This past week in San Francisco alone there were five homes in the $4mil.-9mil. price range that went into escrow. One home listed at $8.9 mil. received 4 offers. All of those homes were on the market less than 25 days.  We are also seeing this trend in the Piedmont and Marin markets.
These sales are increasing our average sales price on a week over week basis.  Our average sales price rose substantially by close to 30%.  However, the majority of sales are still well under the million dollar threshold.

We are seeing an increase of multiple offers in the East Bay, particularly in the Oakland, Piedmont, and Berkeley areas.  A 4bedr/2.5 ba. Oakland home listed at $695K sold over asking with 6 offers.  A Berkeley 3bedr/2ba. home priced at $640K received 3 offers and went over asking.  A Piedmont 5bedr./4.5 ba. listed at $2.55 mil. garnered 2 offers.

As prices have fallen, affordability for buyers has risen dramatically.  In a recent news article on national home affordability, the SF Metro area rose from a meager 5.7% in the 2nd quarter of 2007 to a current 20.5%.  That, combined with the continued low interest rates in the conforming loan sector, has fostered the increased activity in the lower end of the market.

It should be interesting when Mr. Bernanke, the Fed Chief, speaks to Congress in the coming week. The expectation is that he will talk about new tools that the Fed will use to get the economy on track.  The potential good news for the housing market for both buyers and sellers (at least those in the conforming loan limits) is that rates could drop lower, creating greater affordability and motivating buyers to finally make a move.

The market is taking tiny baby steps to improvement.  The buyers are still circling as open house activity is remaining constant with most opens generating between 10-20 buyers. There are larger numbers of buyers at a few listings, particularly those that are open for the first time and primarily at under million dollar homes, as exemplified by the Berkeley 2bedr/1 ba. home listed at $599K that had 66 groups visit.

What I am hearing is that we will be seeing more well-priced, attractive listings hitting the market over the next month or two. Sellers are becoming more realistic in their pricing.  We are also seeing an increase in price reductions from sellers who now realize that it is not 2006.  Both of these factors should have a positive impact on our Spring market.