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.

Anyway, Back to Real Estate Updates

Another bit of weekly wisdom from our Coldwell Banker President:

Perhaps the long Memorial Day weekend gave both buyers and sellers the opportunity to reconsider their standoff positions. Sellers are starting to price realistically, and buyers are starting to write more reasonable offers, as evidenced by the fact that sales activity increased significantly during the week in most areas.

We held almost 400 homes open during the week and, while the lower-than-normal attendance level was anticipated, the conference rooms of most offices were busily engaged in negotiation and the closing of deals.

Still, the Bay Area market continues to be predictably unpredictable. In most areas, it is neighborhoods, schools, locations and streets that are generating the interest and buyer activity more so than the actual homes themselves. Berkeley, Oakland and El Cerrito saw multiple offers on homes in all price points. The Mission San Jose area of Fremont saw 10 offers on a listing that sold for 10% over list price. In San Francisco, two properties in the Sunset district received 11 and 22 offers respectively. An open house held over the holiday weekend by our Livermore office had 80 people through and sold with multiple offers after being on the market for six days. In Kentwood, a $3.95 million listing closed for $5 million after nine offers. Condition, price and presentation are, of course, crucial to a timely sale, however they are less important in highly desirable areas, or if the buyer perceives value.

In most areas we are still dealing with a split market. The high end is performing quite well while the first time home price ranges prove to be more challenging. You have heard it many times before but it is up to price and condition. Your property needs to be the best price in it’s class and show well also. Buyers in the entry level price range are definitely bargain shopping. As the old saying goes, if you want the property to sell fast, make it easy to buy. Instead of just using price reductions, you may want to look at offering other terms like closing cost assistance to make the property more attractive to buyers. As we start to move toward summer and schools let out, it will be interesting to see if this brings more buyers to the market. The economy looks strong and a recent report shows unemployment at very low levels. It takes jobs and increasing wages to keep prices moving up over time. The California affordability index sits at 25%, up from a recent 14%. This is due to price decreases in outlying areas but good news none the less.

Of the offices reporting, listing inventory remained steady for 16, increased for five and decreased for eight. Sales activity remained steady for 9 offices. It increased for 13 offices, and decreased in only seven.

Larry Klapow
President
San Francisco Bay Area