Lisa Thomas » Weekly Market Watch

Federal Reserve Press Release 6/23/10

lisathomas — Wed, 23 Jun 2010 18:55:21 +0000

Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually. Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad. Bank lending has continued to contract in recent months. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time.
Prices of energy and other commodities have declined somewhat in recent months, and underlying inflation has trended lower. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly.

Local Real Estate Market: March 22nd

lisathomas — Tue, 23 Mar 2010 17:40:15 +0000

Bay Area’s high-end housing market gaining momentum

Along with the beautiful early spring weather, the Bay Area’s housing market is gradually starting to warm up, too. We’re off to a much more robust and healthy start this year, and it’s not just in the lower price ranges. The mid-to-upper level market is picking up from Silicon Valley through the Peninsula and up through Marin and across to parts of the East Bay.

As I mentioned in an interview with the San Jose Mercury yesterday, after the financial market meltdown a year ago, high-end home sales dried up during the first half of 2009. Compared to those days, homes sales in higher price ranges are much more active now, pushing up median prices around the Bay. And with relatively few homes on the market in Silicon Valley and on the Peninsula, prices have stabilized and buyers are now competing for good listings.

Half of the sales reported by our Los Altos office drew multiple offers, for example. One Sunnyvale home listed at $950,000 drew 12 offers and sold for more than $1 million. In Palo Alto, we’re seeing eight to 10 multiple offers for properties that are well-priced. The San Francisco Van Ness office says some well-priced high-end listings are selling in 10-15 days. The same story is being told in Menlo Park, Southern Marin, Orinda – in fact, most of the Bay Area’s higher-end markets.

We just released our Coldwell Banker Residential Brokerage Luxury Report this week, and it shows million-dollar home sales in Marin nearly tripled last month from a year ago, while the median sale price jumped 25 percent. The same was true in Silicon Valley, where luxury sales nearly doubled as the median price edge higher.

Now don’t get me wrong. While we’re seeing a promising recovery in many of our markets, we’re still fighting our way back to normalcy. The nation’s economy recovery is still very fragile. And the housing market’s gradual improvement must be sustained over time in the face of a challenged job market. But the signs are encouraging that all sectors of our local housing market are slowly coming to life again.

Here’s a market-by-market report from our local offices:

San Francisco— The San Francisco market has the buyers – it just needs more sellers! The Van Ness office says that sales activity is very strong in $800k to $1.5M range – frequent multiple offers and selling after just 10 to 15 days for listings priced right. They’ve seen a few very high-end Previews property sales in the past two weeks, plus a fair amount in the $2M to $4M range. Some older listings still sitting while newer to market are going pending –price and condition is critical. Buyers are definitely out there looking at open houses, the Noriega office reports. One open house in the Outer Sunset, price in the mid $600,000 drew over 200 people during a three-hour Sunday open house. They expect to have over 10 offers. Value properties are definitely flying off the shelf. The Lombard and the Market Street offices say that business has definitely picked up, the majority of offers in some neighborhoods now multiple. But as with elsewhere in the City by the Bay, agents are frustrated by the lack of inventory.

SF Peninsula— Sales are better than last year and the spring market looks promising in Burlingame, although buyers are taking their time to make a decision or the right inventory is not available now.
The entry-level price for Hillsborough is now very competitive with Burlingame and higher end San Mateo. There are some excellent buys right now. Menlo Park offices report steady or increasing activity. One property listed for $1,749,000 had six offers and went substantially over the list price.   Well-priced properties are getting a lot of buyer attention with open houses very busy in all price ranges. In Palo Alto, Inventory is low compared to years past. If well priced, we see eight to 10 multiple offers above list price. It appears that buyers in Redwood City and San Carlos are thinking we are beginning to see a turn around and now is the time to buy. Properties that show well and are priced right are starting to sell quickly. Things are also heating up in San Mateo, where six out of 10 listings are attracting multiple offers.

Silicon Valley– Both sales and inventory are picking up steam in Los Altos, as half the sales are multiple offers. One new listing in Mountain View priced at $799K had over 165 groups through the first open houses last weekend. Los Gatos also reports a “dramatic” increase in activity. In San Jose’s Almaden area, entry-level to moderately priced homes are in high demand with nearly all selling with multiple offers. Prices are rebounding in Blossom Valley. The San Jose Willow Glen office is seeing more listings and buyers. Meanwhile, the San Jose Main office says activity over the past two weeks seems to have slowed a bit, but open houses remain active. Saratoga is still reporting very low inventory, down 28% from last year.

North Bay— There is a renewed sense of optimism among agents, reports the Greenbrae office – more properties are coming on the market, more multiple offers and more buyers stepping up to the table. Buyers now know a good deal when they see one and realize the time to strike is now. Activity is also increasing in Northern Marin, with the majority of the new inventory not distressed. Properties are still seeing multiple offers when priced well. Buyers are pouring into open houses in large numbers. One listing held open last weekend in Novato had over 70 people. It’s still a buyers market in Southern Marin as high end listings have been increasing rapidly (97 listings over $2 million). Santa Rosa reports inventory is still tight with multiple offers the norm in the lower price points – home above $500k are finally starting to be shown and sales are trickling in. Petaluma also is seeing a pickup in activity above $500k. Most sales remain multiple offers in Sebastopol, with cash and large down payments continuing to beat FHA offers.

East Bay – There are a sea of buyers in Berkeley, but only a trickle of listings for them to choose. Listings are slowly coming in, but most sellers are not listing unless they have compelling reason to do so. It’s a different story in Castro Valley, where they’ve gone from a listing famine to more than they can handle, in all price points. But well-priced homes are still flying off the shelves, many with multiple offers and all-cash. Danville is seeing both inventory and sales activity gradually increasing over the past several weeks. Open house attendance has been very good and some buyers seem more optimistic. Ditto for Oakland-Piedmont, as well as Orinda and Walnut Creek, where the best properties are still getting multiple offers and agents are reporting more mid-week property showings. As anticipated, Fremont reports a steady increase of listings as we approach the spring selling season. Livermore reports a very healthy market in the Tri-Valley area with listings increasing 26% in Livermore, 35.5% in Pleasanton, and 32% in Dublin this year. Pending sales have also jumped 16-24% in local cities.

Santa Cruz – We’re seeing multiple offers on many properties, both lower and mid-range. Our local offices closed two sales over $2 million. Beach properties well priced continue to draw buyers especially under $1 million. Inventory levels remain very low and prices are slowly inching upward. The median price inched up to $500K from $380K a year ago with unsold inventory dropping to 844 single-family homes vs. 1,049 a year ago. But we’re not out of the woods. Distressed properties including short sales and bank owned units represent about 48% of new inventory, so we definitely are still experiencing a stressed market.

Monterey Peninsula — The beautiful early spring weather is bringing lots of visitors down to enjoy the climate and scenery on the weekends, so our many open houses have increasing activity, especially in Carmel. Many more consumers telling us this is a good time to buy with prices and interest rates down and still good inventory, except in the REO properties. Still, buyers are careful in their offers and negotiating, not willing to pay more than their perceived value of the property, so many offers going by the wayside. We have lots of short sales, still taking many months to get approved and closed – too long for some, generally the first buyer, so the homes are mostly going to the second or third buyer.

South County– The Morgan Hill office has had an interesting first quarter. January saw sales and listings at an all time low. The office rebounded in February and March with a large number of sales. First time homebuyers dominated the market as did cash investors. Good new for some sellers is that there are very few listings and demand remains very strong. The consensus among South County Realtors is that prices remain attractive, interest rates are favorable and that there are not many new homes being built in this area – hence demand remains high for re-sale houses.

Keep in mind that the Fed seems to have made it clear this week that they will end their purchase of Mortgage Backed Securities as scheduled. This will likely result in an interest rate increase as investors for these mortgages will need to be enticed.

Written by: Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage

Local Real Estate Market: March 8th

lisathomas — Mon, 15 Mar 2010 23:33:40 +0000

Spring is in the air: Is the housing market starting to bloom?

There are encouraging signs that the Bay Area’s housing market is finally awakening from its long winter slumber. Spring is traditionally when sales perk up as homeowners try to sell in time for a summer move, and buyers get serious about finding that perfect home. But this year we’re seeing strong indications of an early spring selling season, which could bode well for a housing market recovery.

Many of our markets are seeing increasing sales activity compared to a year ago, with open escrows that will turn into closed sales one to two months down the road. Open houses, in many cases, are attracting armies of buyers, many willing to pay cash for homes if necessary. One third of the offers in Menlo Park have been all cash, for example. Multiple offers are becoming the rule, rather than the exception. There have been 14 to 23 offers on Palo Alto properties priced from $1 million to $1.5 million. There are still more buyers than sellers in most areas, which has created a seller’s market in a number of cities. That’s something you just won’t see in the media.

What’s causing the renewed interest in the local market?
One impetus undoubtedly is the upcoming deadline for the attractive federal tax credit for first-time and repeat buyers. Buyers must be in escrow by April 30 and close by June 30 to earn the credit, which ranges from $6,500 to $8,000.
Another reason is the fear that as the Fed begins pulling out of the mortgage backed securities market, mortgage rates will begin to rise from their historically low levels. It’s highly unlikely we’ll see 5 percent fixed-rate mortgages for much longer.
The stock market plays a huge role in our Bay Area housing market, especially in Silicon Valley and in our luxury Previews market. The NASDAQ is nearly double what it was exactly a year ago when the financial markets appeared to be in freefall, creating tremendous wealth for our Previews buyers.
Finally, with money earning just a fraction of a percent in one-year CDs and bonds at historically low yields, more investors are once again looking at real estate as a good investment vehicle to diversify their asset mix and take advantage of an under-valued investment class.
Here’s a market-by-market report from our local offices:

North Bay – In Marin County, low inventory is still the biggest obstacle although the spring market seems to be blooming. In Southern Marin, for example, activity is robust with buyers coming out in mass for Sunday Open Houses. Unit sales and median sales price for January and February 2010 are up substantially in all Southern Marin markets. Greenbrae reports that lack of inventory is resulting in more inquiries on currently listed properties + withdrawn/expired listings. There are lots of buyers ready to write offers on the right properties – at all ranges from entry level condos in San Rafael/Novato @ $200K to multi million dollar properties in Ross, Kentfield, Tiburon + Belvedere. In Northern Marin, the majority of home listings entering the market this week and last have not been distressed. All price points are covered. Inventory is still low, but many buyers are out attending open houses. Further north, in Sebastopol, most sales under $500k are multiple offers. Listings in the west county are slow to come onto the market and when they do if they are properly priced they sell quickly. Petaluma is also witnessing homes in under 500K range attracting a frenzy of multiple offers. And Santa Rosa reports that the spring market is slowly coming to life. Listings are up a bit and one agent reported 45 groups through an open house priced over a million.

East Bay—Berkeley is starting to see a gradual increase in inventory, while sales activity remains steady with about 20% resulting in multiple offers. Meanwhile, Fremont reports that activity is picking up on the buyer and listing side due to the expiration of the first-time home buyer’s credit in April. In Livermore, home sales are increasing even as inventory remains low. The Livermore real estate market in 2010 remains very healthy. The active inventory decreased in the past two weeks and the total pending sales in Livermore increased. Multiple offers are still the name of the game.
The Oakland-Piedmont office reports more listings are coming on the market, however the best homes are still in great demand. Oakland has an absorption rate of less than 3 months in the prime part of the market. Both sales and inventory are on the rise in Orinda with open homes robustly attended and several homes are selling at list price or above.

Monterey County— Sales activity is picking up on the Monterey Peninsula, including the higher-priced Previews luxury market in Carmel and Pebble Beach. Still buyers are looking for good values and not willing to overpay on a property no matter how much they like it. Lots of negotiating taking place on older homes needing repairs also. Inventory remains low in the REO areas, so that’s where we are seeing most of the multiple offers.

Peninsula— Lots of listings are finally coming on the market in Menlo Park. Buyers are out there but still slow to decide and very skittish. PRICE IS EVERYTHING. One third of the sales in February were all cash! Meanwhile in Palo Alto, multiple offers are commonplace as buyers compete for good listings. There have been 14 to 23 offers on properties priced from $1M to $1.5M if the home is priced correctly. Similarly, there is very little inventory in the Redwood City-San Carlos market, but good open house attendance for those people who have listed their home. The market remains steady in Woodside, while things are starting to pick up in San Mateo.

San Francisco— The Lakeside office reports that sales are climbing, probably because most of the sales are under a million – a segment very much in demand. The $2 million + market has been heating up, according to the Market Street office. Agents say listings in that price range are routinely getting multiple offers. Part of the reason for the jump in activity, agents believe, is that many buyers that were out looking at this time last year decided to rent for a year and those leases are coming up now prompting the clients to start their searches again. The inventory shortage remains critical, according to the Lombard office. They also report that some buyers reluctant to jump back into multiple offers and going way over. Fixer-uppers drawing lots of activity. The Noriega office says February was very active with lots of pending sales.

Silicon Valley– The Cupertino office reports that listings are increasing and there is lots of activity and open homes. The office’s weekend receptionist said that this was the busiest Sunday she has ever seen. About half of the sales are multiple offers as inventory still remains relatively low. Similarly, Los Gatos continues to see low inventory, which is challenging for agents. Meanwhile, in San Jose, the Almaden office reports that both inventory and activity is on the rise with nearly all sales resulting in multiple offers. Our local manager reports that you can’t under-price a property – it will sell for more than if you price it at a higher number. Buyers are still motivated by price. The San Jose Main office says activity in the lower price range (600k or less) continues to be strong with multiple offers on most properties. In Willow Glen, buyers are struggling with rejection as many listings result in multiple offers and, of course, only one winner. Most of the listings are selling at or higher than list price. Our Saratoga office reports the market seems to be developing as expected for this time of year with the upper end is still lagging

South County– The sales and listing activity in South County defies conventionality. This past month a home listed for more than $2.6 million just closed escrow, another listed for $1.6 million was just sold (for cash). Entry level homes continue to sell very quickly – often with multiple offers. It seems that the middle range properties (those listed between $700,000 and $800,000) linger on the market. A new home sub-division in Morgan Hill just began offering homes listed in the low $600,000 range. The first phase is almost sold out. The market is most challenging for “move-up” buyers but very attractive to sellers of lower priced properties. One would call the South County market a “seller’s” market (dependent upon the price range).

One last thought: The financial and real estate markets are often intertwined in the Bay Area, and both are driven by consumer confidence. While our economic recovery is still quite fragile and unemployment is still high, there are growing signs things are indeed getting better. Friday’s better-than-expected jobs report out of the Labor Department was one more macro economic indication that we’re moving in the right direction, along with improved corporate earnings. The stock market is continuing its upward movement, which can only help our region’s consumer confidence.

Will the housing market be next to join the party? Only time will tell.

Written by Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage

Local Real Estate Market: Feb 8th

lisathomas — Tue, 16 Feb 2010 18:57:36 +0000

Will Saint’s Victory Be Heavenly for the (Housing) Market?

Congratulations to the New Orleans Saints on an exciting Super Bowl victory yesterday! Now, the question is whether the Saints first championship will translate into a heavenly year for the stock market and – by extension – the housing market.

Popular wisdom maintains that the outcome of the big game can determine the stock market’s direction in the coming year. If the winning team is from the old NFL (now NFC), the theory goes, it forecasts a good year for the market vs. an AFC victory. So here’s to the former “Aints” and to a super year in 2010.

Football lore aside, we are seeing the market starting to pick up in much of the Bay Area as we head into the post-Super Bowl season for home buying. In general, 2010 is starting off considerably better than 2009 in terms of sales and overall activity. Open houses are seeing non-stop activity in many communities, an early indicator of future sales. There continues to be a shortage of properties in prime communities, but our offices are seeing a steady increase of listings as buyers realize that there are opportunities for them in this market.

The lack of inventory continues to make well-maintained, reasonably priced homes stand out. One property in southern Marin County listed at $1.35 million, for example, received 11 offers. While that was the exception to the rule, we are seeing multiple offers in many communities. Buyers are circling attractive listings and many are willing to make all-cash offers to win out.

I think we’ll see a much earlier spring selling buying season this year due to the upcoming deadline for the home buyer tax credit. The season typically takes off in March and runs through May. But buyers who want to claim this year’s tax credit, which ranges from $6,500 to $8,000, must purchase their home by April 30 and close by June 30. So look for more activity than normal in February and March as we head toward the finish line.

Here’s a market-by-market breakdown from our local offices:

East Bay—Berkley reports price reductions in the over 1.5 million range and even at the million plus range. Castro Valley stated many new listings are coming on the market. A welcome surprise. However, cash is still king. We recently sold a 600K plus house, all cash. Danville reported that the high end is still slower than the rest of the market but activity is picking up. Inventory is still an issue in the less than million market. Many homes are being sold with multiple offers, which is helping to firm up sales prices. Fremont supports the dynamic indicating extraordinary low inventories with a steady buyer pool actively pursuing properties. Walnut Creek also reported the lower priced market is extremely active. An REO listing in Antioch had 9 offers at 9:00 one morning when one of the agents called to check for a client. When she checked back at 12:00 noon, there were 49 OFFERS.

Monterey County— The Monterey Peninsula market is quite active for January, in terms of sales, open homes and even listings, which are on the rise. The Peninsula offices report continued low inventory levels in lower-priced REO areas, but they are seeing more activity in higher priced properties. In fact, they closed on two properties over $4.5 million last week.
North Bay— Low inventory is still a common issue in many areas of the North Bay. The result has been tremendous activity in many of the open homes that are out there. Novato reported one open house had 70 people, another 50. Encouraging news in Southern Marin is that four new listings over $1 million last week received multiple offers, including one at $1.35 million that received 11 offers. Greenbrae reports steady traffic at open houses but inventory still lagging behind consumer demand. Smart sellers are starting to realize now is a good time to have their home on the market. There were 13 multiple offers in Santa Rosa as open escrows are running high.

Peninsula—Activity remains steady or even increasing on the Peninsula, but low inventory continues to be a hurdle in many areas. Inventory is close to half of what is was last year, Burlingame reports. Buyers are snapping up well-priced homes when they appear, many with all-cash offers. Half Moon Bay reports seeing a dramatic increase in open house traffic with buyer’s looking for the best deal and the lowest price. They report that sellers are starting to be more realistic on their list price – starting at market value rather than reducing each month. The Menlo Park offices also report that the local market is inventory challenged. Palo Alto and Redwood City are seeing sales activity slowly picking up as well. In San Mateo, anything under $1 million is selling very quickly, while the high-end Woodside market is very slow right now.

San Francisco— Sales activity has been steady in much of The City, with buyers ready to move when they find the right property. The Lombard office reports good listings are going fast, and multiple offers are definitely back. In some cases, offers are coming in without financing contingencies despite the challenging mortgage market. Market Street reported 11 offers were received on an extreme fixer upper and seven offers were received on an entry level home. Agents are very busy writing offers, they stated. The Noriega offices reports deals are extremely difficult to get ratified in this market, while the Van Ness are is seeing a pick up in both listings and sales.

Santa Cruz County: Market activity continues to be picking up in Santa Cruz as we move toward warmer weather. Lots and lots of buyers out there circling, ready to make offers. Open houses for the most part have been well attended, weather permitting. The inventory continues to drive the multiple offer situation especially under $700K – driving prices in some areas up. Appraisals continue to be an issue, and lending is taking longer. Some better economic news has prompted more people out along with the continued low interest rates.

Silicon Valley: Cupertino reports that 2010 is starting out much better than 2009, with non-stop activity in open houses and nearly all sales triggering multiple offers. In Los Altos, the market is waking up from the winter hibernation with new listings coming on the market and buyer traffic is increasing at open houses. But it’s still slow for sales above $2 million. Similarly, Los Gatos and the San Jose Almaden area are seeing an increase in both listings and sales. Saratoga and San Jose Main are seeing a slow but sure increase in sales activity.

South County: Morgan Hill reports the buzz among agents continues to be the lack of inventory, sending many agents “back to basics” by talking to homeowners to explain why this could be a very advantageous time to list their home for sale. The old Real Estate adage, “List to Last,” rings true.

In a quick overview of our Previews properties – I’ve noticed an uptick in our luxury sales in areas that have been somewhat slower to see activity. For example- all within the past two weeks, in Burlingame we closed a $4.2M property – Carmel offices have closed three transactions at $4.7M, $4.5M, and $3.9M. Woodside closed a $5.8M sale, and our Menlo Park Santa Cruz office closed a transaction in Atherton over $11M. This certainly reinforces what we all know to be true – luxury buyers are out there, and they are purchasing properties when they find what they like, at what they perceive to be fair market value.

Written by Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage