Coldwell Banker Weekly Market Watch

August 19, 2007

Larry Klapow, Coldwell Banker Northern California President says:

This will be a brief report due to a holiday week and the fact that I was on vacation.

Media reports regarding the condition of the mortgage industry continue to have a confounding effect on buyers. Some potential buyers aren’t even attempting to qualify for loans for fear of rejection, or because they are simply confused by what the media is reporting and think that loans don’t exist any more.

The reality is that credit tightening has only affected a very, very small percentage of buyers. The fact is that they could be missing a good buying opportunity by waiting, or not trying to qualify.

Savvy buyers are recognizing that working with a solid, well-capitalized multi-source lender, such as our partner Princeton Capital, allows them to remain educated and helps them to enjoy a successful real estate transaction. This remains a great time to buy a home, and working under the guidance and expertise of a top-notch lender provides the buyer with the chance to leverage the many opportunities now available.

In areas of the East Bay and North Bay, sellers are beginning to lower their listing prices meaning that there are bargains to be had. In other areas, multiple offer situations and tighter inventory render it absolutely crucial for buyers to be working with a strong, solid lender.

Traditionally, this is vacation time. The kids are getting ready to go back to school, and things slow down a bit in the housing market. While our offices witnessed a slight dip in activity overall, many were surprised to see that our more than 500 open homes were well attended by potential buyers.

San Francisco and much of the Peninsula continue to enjoy multiple offer situations and homes that are selling for as much as 20 and 30 percent over asking. Inventory levels do continue to impact both areas, however an influx of fresh homes after the Labor Day weekend should help mitigate their tight inventory situation.

Buyers have more leverage right now than they have in years. Armed with good credit, a Coldwell Banker sales associate, and an expert multi-source lender like Princeton Capital, right now is the ideal time to consult with the experts, and buy that dream home.

Have a great week!

From the Mouth of the Money Man: Interview Part 2

"...guidelines have been changing daily, and banks have been closing weekly."

How does it affect current sellers?

"If a seller is reviewing an offer with a buyer’s pre-approval, it is a good idea to get a second opinion from not only the realtor, but also a loan consultant. As for the buyers, they should call me (chuckles) to get a pre-approval. Sellers should always have the offers with a pre-approval double checked, especially if the offer is less than 10% down.”

Why is that?

“Because many programs that require less than 10% down payment that are no-income qualifying have disappeared in the last month.”

And what is a no income qualifier?

“A no income qualifier is when the lender doesn’t require income verifications such as w2’s, pay stubs or full tax returns.”

Why is it important for buyers to be pre-approved prior to writing an offer?

“Lender approval means a true pre-approval, not a “pre-qualification”. “Pre-qualified” means nothing has been verified, “lender approved” means income and assets have been verified and the loan is pre-approved, the only condition is to find the house and have it appraised.”

Should buyers be afraid to be buying in a market like this?

“Absolutely not. Conforming loans (under $417K) are aggressively priced, and current values are perfect for buyers."

From the Money Expert

This is an interview I'll be publishing in two parts: look for the second half later this week!

My guest is Kenny Leather, Princeton Capital Loan Consultant. I hope he can clear up some issues we are all wondering about...

There's been a lot of recent news about changes in the mortgage industry, for instance qualifying standards for certain loans are tightening. Let's talk about how the following groups will be affected by some of these changes:

How does it affect buyers looking for a home?

"Tightening of underwriting criteria is going to affect some buyers. Buyers will have to have more money for a down payment in order to get into a house. With that said, zero down payment programs are available, but the guidelines are much tighter than in the past few years."

How does it affect buyers already in contract?

"If you are in contract, always check to make sure your pre-approval is still good, because guidelines have been changing daily, and banks have been closing weekly."

How does it affect current sellers?

"If a seller is reviewing an offer with a buyer's pre-approval, it is a good idea to get a second opinion from not only the realtor, but also a loan consultant. As for the buyers, they should call me (chuckles) to get a pre-approval. Sellers should always have the offers with a pre-approval double checked, especially if the offer is less than 10% down."

Why is that?

"Because many programs that require less than 10% down payment that are no-income qualifying have disappeared in the last month."

More of this interview to come... Stay tuned!

Interested in learning how Kenny and I can help you buy or sell real estate? We will be happy to hear from you!

Our Coldwell Banker President has this to say:

Coldwell Banker Weekly Market Watch

It has been an interesting week! The market reacted to the tightening of credit in the mortgage industry and the resulting stricter qualification criteria. Therefore, it is imperative to thoroughly review and understand the financing qualifications and terms for each potential home buyer. In order for any transaction to be closed successfully, buyers will require a real estate professional that is fully informed, knowledgeable and able to provide expert guidance as it relates to the financing aspects of the transaction. It is also important to ensure that buyers are working with a well-capitalized, established lender such as our partner, Princeton Capital.

In the Bay Area, the start of August shows numerous bright spots in what is traditionally a slower month for real estate sales. Many areas have seen an increase in activity as sellers have adjusted their pricing, and for qualified buyers this remains an excellent opportunity to invest in some great real estate deals. Working with an experienced Realtor® remains the savviest means for buyers and sellers to navigate the muddy mortgage waters. As one Sebastopol agent succinctly put it, “they need us more than ever.”

In Sonoma County open houses were well attended and there are reports of a few multiple offer situations. In general the market is holding steady with inventory continuing to build slowly. The Marin market remains mixed. The high end continues to outperform the lower priced properties. Mill Valley and Corte Madera are well into seller market territory for well priced and attractive properties. San Rafael and Novato are indicating more of a balanced to buyers market this past week. The East Bay markets remain stable from last week with price reductions showing good results on existing inventory. The Fremont, Livermore and Tri Valley areas are showing inventory building. The high end is performing well and well priced properties are needing aprox. 60 to 90 days to see offers.

For sellers, pay close attention to the intended financing as offers come in. For buyers, there are still a lot of options for financing and some excellent deals out there if you do your homework. Now more than ever, having a well educated agent is the essential first step in the process.

A Weekly Update from My Boss

Here's what Larry Klapow of Coldwell Banker has to say:

Coldwell Banker Weekly Market Watch

July 29, 2007

An island of good news appeared this week in a sea of negative media regarding weakness in the housing market. The National Association of Realtors' pending home sales index jumped five percent to 102.4 in June.

The index was created to be a more forward-looking snapshot on home sales than NAR's existing home sales report, which charts sales at the time of closing. The pending home sales index tracks when a sales agreement is signed, generally a month or two ahead of closing. The nationwide report is good news in that it indicates that home sales could see an increase in coming months.

In the Peninsula and San Francisco markets, the tighter inventory levels are creating pent-up demand among potential buyers. In Palo Alto, multiple offers on one property went up to 26. Another transaction closed in less than one week for a $16 million property. In San Francisco, a home in the West Portal area listed for $999,000 and received eight offers.

Considering that our more than 500 homes held open last week saw a surprising amount of traffic in most areas, it could be that those buyers who are unable to move into to the City or the Peninsula communities are starting to look in areas with more available inventory and a wider selection. In the Tri-Valley area, higher inventory is starting to level off while pending sales have remained relatively steady. Walnut Creek notes an increase in the number of entry level and mid-range priced homes sold. A small Richmond home and a Berkeley property each received nine offers.

In the mortgage arena, the media continues to hammer us with bad news. Since when is needing documentation, a decent credit score and perhaps a down payment a bad thing? The lenders are attempting to get back to where we once were and clean up years of sloppy practices. This is not a liquidity crisis that the media would like to make it out to be. The fact is that the fundamentals of the housing market are still strong. Interest rates are still low and we have a decent economy and job market. The stock market took a haircut last week but is still very strong when you look at the whole year. In the upscale sector there continues to be great demand. For the starter and median price ranges, the market and buyers are going to need to adjust to new lending standards. If you are a seller in this sector now, get the price right the first time or reduce if needed because we will be dealing with media shock and an adjustment period for a while.

Survey Highlights from the California Association of Realtors

2007 Internet Versus Traditional Buyers Survey:

Housing market conditions are rapidly changing in the past couple years and are affecting the behavior of buyers. Earlier this year, the CALIFORNIA ASSOCIATION OF REALTORS® conducted the annual Internet Versus Traditional Buyers Survey, which describes these changes in consumer behaviors driven in part by the slowdown in the demand of housing, as well as by the influence that the Internet has on the real estate marketplace.

Home buyers are more concerned about the direction of the housing market, are more cautious about their home buying process, and are spending more time doing research on their own before making a purchase. They spent more time considering buying and investigating homes before contacting an agent, and they spent more time previewing homes with their agent.

Many home buyers preferred the dynamic online experience that the Internet offers over the static paper experience that print advertisements offer. Only 12 percent of all home buyers looked at newspaper/magazine ads to search for a home, while more than seven of ten home buyers used the Internet as a significant part of the home buying and selection process.

The share of Internet buyers has grown from 28 percent in 2000 to 72 percent in 2007, while the share of traditional buyers declined from 72 percent in 2000 to 28 percent in 2007. Growth in the use of the Internet in the home buying and selection process has been accelerated by the growth in broadband use. The two percentage point increase from 2006 to 2007, however, was the smallest increase since the inception of this study.

The Internet played a more important role in the home buying process for younger generation groups. Three of five Gen X home buyers considered the Internet a vital tool in their home buying and selection process, compared to two of five Baby Boomers. Perhaps more noteworthy, no one in the age group of 55 and over said the Internet was significant to their process of home buying.

Despite the adjustment in behavior and attitude brought on by the change in market conditions, home buyers continued to rely on real estate agents to carry them through the process of home buying. Consistent with past years' results, nine of ten home buyers hired an agent to assist them through the home sales transaction.

With buyers being more concerned about housing market conditions, and more cautious about their home purchase, they expected quicker and more frequent communication from their agent. When asked how important the agent's response time was in their decision on the selection process, almost three quarters of all home buyers considered the agent's response time either a "very important" or an "extremely important" factor in their decision-making process.

When selecting their agents, both first-time buyers and repeat buyers considered their agent's responsiveness the most important factor, followed by their agent's aggressiveness. With the housing market slowing down, buyers also grew more price-conscious during the agent selection process, when compared to 2006.

Home buyers are expecting more from their agent: faster response time, more effective communication, more aggressive negotiation skills, and simply more "VALUE". REALTORS® who understand these changes in consumer behavior and adapt accordingly will be able to deliver their service to their clients with a maximized level of satisfaction, and be able to establish a long-term relationship with their clients.