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.

Berkeley's Gourmet Ghetto on YouTube

Berkeley may be known for its political activism, historically significant architecture and year-round gorgeous weather, but I've always felt the world should also know about our serious foodie leanings.

I've discovered a little gem on YouTube that proves someone else feels the same way. We are now on the YouTube map with a short video all about the excellent restaurants just outside my office door. Dangerously close, I say. We all know about Alice Waters' revolutionary kitchen at Chez Panisse, but consider as an alternative a slice of pizza from the Cheese Board Collective. Best enjoyed on the grass median in the middle of the road in front of the collective, this is the true food of the gods and a real North Berkeley neighborhood experience.

We Want Richmond View!

Just a quick note about what's happening in Richmond View this week: the home at 1826 Ralston Ave is receiving 7 offers today. Is the market cooling off? Not there. This property gained alot of attention in the past few weeks because it was a classic mid-century design in need of easy updating, and everyone loves a moderately priced easy fixer.

How to explain other moderatly priced properties in easy move-in condition lingering on the market? This is where the market feels unpredictable.