Not sure what is going on in your neck of the woods, but out here our biggest battle has been with the banks and there appraisals.  Lately I have seen many transactions go south because of an appraisal that is way out of bounds.  The new rules seem to be making things worse on buyers instead of better.

Here is a link to a great article about this topic. If it was already posted, my apologies for the repost, but it is worth a second read.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/05/RELE18FM31.DTL

Let me know how your market is affected by this "new and better" process.

Mark

Greetings from the beautiful Monterey Peninsula, CA (Carmel, Pebble Beach, Pacific Grove, Monterey, Seaside, Marina) .  Here is our Market Flash for June of 2009.

The market continues to show signs of either being at the bottom or being very close to it depending on what price range you are looking at.  Lynda and I continue to work very hard, particularly on the lower end properties (under $350,000) where it has now become a "seller's" market based on a lack of inventory and a bunch of prequalified buyers.  If you have good credit, purchasing a property in this price range is finally comparable to renting with interest rates as low as they are. We are still seeing multiple offers on just about every home priced under $350,000!  Most end up selling for right around full price and we are even starting to see prices increase slightly.  I don't believe this is a trend yet as there are supposedly a glut of foreclosures on the way that the bank has been holding onto.  

Our seasonal increase in sales activity materialized this summer, especially in the middle price ranges with the second home buyers, although sales are still way below normal levels in the middle price ranges.  The high end is still pretty slow although there has been a flurry of activity over the last 30 days centered in Pebble Beach, Carmel and Pacific Grove.  There were even reports of multiple offers on a $10+ million property in Pebble Beach!

We have also been working hard to market our listings and have been getting incredible amounts of exposure for our client's homes utilizing both traditional print advertising and the internet.  We have seen a flurry of offers over the past 60 days, but they are very difficult to keep together as buyers are very particular and buyer's remorse seems to be playing a key role.  Seller's need to hang in there and remember it is a buyer's market unless you are priced like a distress property.  Two of our current listings are in escrow with all conditions removed and we have offers on three others!  It has been busy!

Thank you to those of you who have referred your friends and family to us for their real estate needs!  We are extremely lucky to have so many great clients who refer us business all year!  You are truly the lifeblood of our business and we appreciate you putting your trust in us! 

Let's talk about what is going on here.

First, let me define what I mean by a "sale." These are any properties that have an accepted offer and go pending during the specific month. Some of these will fall out of escrow, but most will eventually close. The reason I am using "pendings" as a barometer is that is gives a good snap shot of how many buyers are actually finding properties that they are willing to make an offer on and since most agents are requiring a pre-approval letter with the offer, they are "qualified buyers" as well.

Like the last report, Monterey County is STILL a story of three price points.  There are the high end properties, let's call it over $2,000,000, the lower end, say under $400,000, and everything in the middle.

The high end actually slowed a bit in June when compared to May.  However, we seem to be seeing things pick up a bit over the last week or so of June and into July. I think the July numbers will show a little uptick.  

The story in the middle is much the same as it was in May.  If anything there is a lack of quality inventory to choose from and sales have slid just a bit.  The middle is a wide range of prices from $400,000 all the way up to $1,999,999 and normally would represent several different market segments.  However, this entire range was suffering from the same set of issues which is a lack of loan programs to service a large portion of this price range and a lack of step up buyers due to their inability to sell there property for a profit.  Bank of America has come out with a pretty good jumbo loan program and the Feds have allowed the conforming loan limit to increase to $729,750. With these two new programs hitting in March, we saw a flicker of activity here. It seems to have cooled a bit in June again due to a lack of step up buyers in this range. 

The overwhelming majority of the sales activity is in the lower price ranges, under $400k.  In February and March there was an average of 300 sales per month compared to 646 in April!!! Things have cooled a bit due to a shortage of inventory to only 460 sales in June.  Things are still in high gear in this price range.  There are a lot of buyers waiting on inventory.  Once the banks release the foreclosures they are sitting on, things will pick up here again. The biggest issue Lynda and I are having now is a lack of quality inventory in this price range. Anything nice has multiple offers and is going into escrow almost immediately. It is not uncommon for our buyers to offer on 5-6 homes before getting an offer accepted!  Active inventory levels are down to under 2 months supply based on the current rate of sales!  Patience is key for our entry level buyers!

The sheer number of properties selling in this lower price range combined with the lack in high end sales is the driving force behind the Monterey County average price and median price steep decline. We are starting to see the average price come up a bit, but with this type of volume in the lower price range it will be awhile before we see any significant changes in either statistics. Just remember the middle price ranges are steady, which can be an indicator of the market getting close to the bottom there as well.

The Monterey County Sales for June broke down as follows: 

$4M+ - Zero sales   
$3.99M-$3M -  1 sales (Carmel Highlands)
$2.99M-$2M - 6 sales  (1 in PB, 4 in CAR & 1 in CV)
$1.99M-$1M - 13 sales (7 in CAR, 3 in PB, 1 in CV,1 in MRY & 1 in SS)
$999k-$900k - 5 sales (2 in MSH, 1 in MRY, 1 in CAR & 1 in PB)
$899k-$800k - 6 sales (2 in CAR, 2 in MRY, 1 in CV, 1 in PG, 1 MSH, 1 PB)
$799k-$700k - 13 sales (3 in CAR, 2 in MSH, 2 in CV, 1 in PG, 1 in MRY, 1 in SS, 1 in SAL)
$699k-$600k - 14 sales - (4 in PG, 3 in MRY, 3 in SS, 2 in NMC, 1 in CV, 1 in CAR)

$599k-$500k - 15 sales (5 in NMC, 4 in PG, 3 in MRY, 1 in MSH, 1 in SAL, 1 in SS) 
$499k-$400k - 24 sales (7 in SAL, 6 MAR, 3 in SMH, 2 in PG, 2 in NMC, 1 in MRY,      1 in DRO, 1 in CV & 1 in Big Sur)
$399k-$300k - 72 sales (28 SAL, 21 NMC, 7 MAR, 9 SS, 3 SMC, 2 MSH, 1 PG & 1 DRO)
$299k-$200k - 137 sales (74 SAL, 27 SMC,18 NMC, 9 SS, 4 MAR, 1 MRY)
$199k-$100k - 208 sales (117 SAL, 75, SMC, 10 NMC, 5 SS & 1 MSH)
<$99k - 43 sales - (18 SMC, 24 SAL, 1 NMC)

It's a great time to be a first time buyer!  Programs are great, interest rates are at historical lows...Many who thought they would never be able to buy a home here are able to purchase one right now!  Both Lynda and I have been working with a lot of first time buyers who can now afford to own a piece of real estate here on the Peninsula!  The only thing you need to remember is it is now getting very competitive in the lower priced markets. Multiple offers are becoming the norm again! Who would have thought that was possible so quickly?

It is also a great time to purchase investment property here.  For the first time in longer than most can remember, there are investment properties that pencil out and either break even or even make a couple of bucks!  Give us a call to discuss opportunities.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For detailed history of a particular cities statistics, visit our website's Monterey County RE Stats page.  For complete information on a particular neighborhood or property, give us a call. 

Both Lynda and I hope this was informative and that you enjoy receiving these monthly updates.  If you know of anyone who could benefit from this information or who would just be interested in reading it, please feel free to forward it on or send me their name and email address and I can add them to our list of recipients.

Take care,

Mark Bruno

www.MontereyPeninsulaHomeTeam.com

Oh by the way, if you or anyone you know is interested in buying or selling a home, we are never too busy for any of your referrals!

Sales of single-family, re-sale homes were up 77.1% in May, year-over-year. Year-to-date, home sales are up 133.8%.  Home sales are at their highest level, through the first five months of the year, since we've been keeping track: 1997. 

The median price for homes fell 4.7% from April, and was off 42.2% year-over-year.

The average price for homes dropped 10.6% compared to April, and was down 46.2% year-over-year. 

Inventory continued to fall, dropping 54.7% compared to last May.  Our Days of Inventory indicator fell seven days last month to land at 99 days. 

The sales price to list price ratio for homes rose 1.1 points to 99%. 

Days on market fell seven days to 73 days. 

Condo sales were down 34.9% from April, but were up 211.1% year-over-year. Year-to-date, condo sales are up 111.4%.  

The median price for condos fell 15.3% month-over-month, and was off 76.6% compared to last May. 

Condo inventory was off 52.3% year-over-year.  

The sales price to list price ratio for condos fell 2.3 points to 93.3%. 

In May, it took an average of 99 days to sell a condo. 

The real estate market is very hard to generalize. It is a market made up of many micro-markets. For complete information on a particular neighborhood or property, call me. 

The Basics: 2009 First-Time Home Buyer Tax Credit 

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

WHO QUALIFIES?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.  To qualify as a first-time home buyer the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

WHICH PROPERTIES ARE ELIGIBLE?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single family homes, condos, townhomes, and co-ops.

HOW MUCH WILL THE CREDIT BE?

The maximum allowable credit for home buyers is $8,000. Each home buyer"s tax credit is determined by two factors:  The price of the home - the credit is equal to 10% of the purchase price of the home, up to $8,000. The buyer's income - single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 - may receive the maximum tax credit.

IF THE BUYER(S)' INCOME EXCEEDS THESE LIMITS, CAN HE/SHE STILL GET  A CREDIT?

Yes, some buyers may still be eligible for the credit.  The credit decreases for buyers

who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income - over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

WILL THE TAX CREDIT NEED TO BE REPAID?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

TAX CREDIT CAN BE USED ON CLOSING COSTS

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban development on so-called home buyer tax credit loans that was released today.  Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent. The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.

Now that school is almost out, we're finding many families are starting to look at homes in anticipation of getting settled prior to next school year.  Showing activity in many markets has increased considerably.

Sellers are getting their homes on the market and, in general, seem to be quite receptive to staging and pricing strategies.  The homes in the entry-level market are moving well if they are in good condition, and if fairly and competitively priced. We are seeing multiple offer situations in most of our first time home buyer markets.  The price point for this activity is of course different by county, and by specific MLS zones, but this week as I visited several Santa Clara County and Marin County offices - I was told about numerous multiple offer situations garnering 10 to 20 offers in the $400,000 to $500,000 range. One property listed at $399,000 (in a mid-$400's neighborhood, I believe) received over 50 offers.

Though we have seen sporadic new activity in the upper end market, it is still relatively slow for properties over $2M.  The month's supply of inventory for  high end properties is more than triple that of homes listed under $800,000.  Having said that, we also need to make note of the current momentum we're starting to see in our offices in the high end.  Just looking at one particular day this week, among many other sales, we closed escrow on homes ranging from $1.7M to $2.7M in Palo Alto, Carmel, and Mill Valley, and a home in Los Altos Hills just shy of $3M.

The most notable news this week was The Mortgage Bankers Association's (MBA) release of is Weekly Mortgage Applications Survey for the week ending May 29, 2009.  The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier but was 14.4% higher than the same week a year ago.  This increase is due, largely in part to the first time home buyer market which, as we know, has been vastly stimulated by low interest rates, the $8,000 first time home buyer tax credit and increased affordability.  Together these incentives are finally getting buyers in the first time home buyer market off the fence and into the market which is why we are starting to see some price stabilization at this level.

While entry level prices currently seem to be on an upward trajectory, it will take some time to return to the median price levels of our pre-recession market.  A recent study notes that US real estate is now as affordable as it has been in the past 38 years (this of course relates to median homes when compared to median mortgage rates and incomes). The fact is, the peak of unaffordability was in 2006, when an average family in the United States needed to spend 44% of their monthly income toward the purchase of an average single family home.

A couple of other interesting articles of note this week:

-          RISMedia's First Time Home Buyers Grabbing Houses and Tax Credit (http://rismedia.com/2009-06-03/first-time-home-buyers-grabbing-houses-and-tax-credit/)

-          Realty Times Multifamily Builder Confidence Up From Record Lows; Interest From Prospective Renters and Buyers Rises (http://realtytimes.com/rtpages/20090603_confidenceup.htm)

-          Realtor.org Pending Home Sales Up For Three Months in a Row (http://www.realtor.org/press_room/news_releases/2009/06/phs_up)

Now, let's take a look at this week in real estate: 

• East Bay-Berkeley reports we were inundated with multiple offers this week and large turnouts at open houses.  75% of our deals this week saw multiple offers, any number from 2-8 on seller owned and 12-18 on bank owned.  Cash is still king on many deals because of increasing anxiety about appraisals. Castro Valley reports we are still facing an inventory shortage here in our micromarket.  We are seeing cash offers everywhere and one Agent reports that she has been outbid from the last five offers she has written by all cash deals.  The number of multiples in the low range markets has been in the range of 10-60 offers, to give you an idea as to the inventory shortage we are facing here in our micromarket.  Agents are waiting for banks to release more REOs.  One thing is certain, we are definitely a recovering market.  The Danville office reported the activity level is good but we need more inventory.  Lots of buyers are jumping off the fence.  The Fremont office is reporting the market is becoming competitive in the Tri-City area.  The listing inventory is reducing.  The Livermore office reports our pending sales are up in the office and the overall market in the Tri-Valley area remains strong. Multiple offers are still the rage below $500,000.  The Pleasanton office reports homes under $450K are moving very fast with multiple offers.
• Monterey County-Market continues to have lots of activity in the lower price ranges and slower as price range goes up, as only 25 properties in Carmel and Pebble Beach have sold for over $2 million in the first five months of this year, with highest at almost $8 million.  As is typical for end of the month, we had a good week for closings, even though Monday was a holiday, with 14 closed sales ranging in price from an incredibly low $128,000 in Seaside to a lot in Tehama at $1,325,000.
• North Bay-The Petaluma office reports that the frenzy continues as buyers compete for entry level homes that are in the $200-$400k (2 years ago were $500-$600k) across the board these homes have multiple offers and are typically going into escrow over the asking price. One home on the west side of Petaluma had 32 offers and went $80,000 plus over asking. With inventory shrinking and more buyers entering the market we are seeing an upswing in median price in this segment of the market (under $500,000). Is this the bottom in that price range? Looking for more inventory REO or otherwise. The $500-700k market is starting to pick up. Inventory in the million dollar plus market is accumulating fast. Not as many buyers in that market. But there are some circling.       Our San Rafael office reports there has been an increase in multiple offers over the past week in the price point of $300-500k in San Rafael and Novato. We ratified an offer on a home listed in Novato for $2.1mil.  Our Southern Marin office reports quite a week in So. Marin, from a $2,725,000 Mill Valley closing where we represented both ends, to six offers on a $679k Corte Madera listing in our office. For the first 5 months of the year, Mill Valley is 24% down in sold units vs. same period a year ago and 18% down in average sales price, Sausalito is 43% down in units vs same period a year ago, and 15% down in average sales price and Tiburon is 57% down in sold units and 2.4% down in average sales price.                       
• Peninsula-The Agents feel that we may be seeing the bottom in the North County and in the lower price points. The inventory has been greatly reduced in these areas and multiple offers have become the norm.  The $1mil to $2.5 range is still slower and many buyers are concerned with availability of mortgage money. We still are seeing cash buyers however and others with large down payments.   Our Menlo Park El Camino office reports we are still getting multiples on low end and well priced properties.  Some Agents feel that buyers are beginning to realize what great rates are out there and afraid they are going to go away. They want sales contingent on COE not just a sale of their properties. Sellers will take LOWER offers if they feel it has a higher chance of closing. Very cautious clients, very risk-averse.  Our Menlo Park Santa Cruz Avenue office reports one sale in Menlo Park (list price $799k) which sold with four offers and went substantially over list. Good feedback from Agents who held open houses.  Buyers are out in full force.            Palo Alto reports the following year to year comparison: The first three months of this year were slower, as far as closed sales compared with the first three months of last year. Months four and five of last year were actually slower than months four and five this year. Yet, we are one closed escrow          short of last year per the MLS here in Palo Alto. Hopefully optimistic a trend going up.
• San Francisco-The Lombard office reports the lower the price the more offers. As price goes up flawed properties and not price presented well are sitting. A couple of investment property closings this week, and completing the financing was extremely difficult.           The Market Street office reports multiple offers were the order of the day with mostly two offers, but one received three and one received four. Negotiations in most cases are still lengthy. Great traffic at open houses over the weekend and Agents are seeing more private showings.  Buyers are coming back three and four times before writing the offer.
• Santa Cruz County-Agents are busy writing offers and June is starting out to be a stronger month than we have had the past few months.  Inventory levels remain low; we are seeing multiple offers on homes that are not bank owned.  Short sales continue to be a big part of the market and the timeframes remain slow and cumbersome for moving through the process in most cases.  We know the pent up buyer demand is there and as rates start to creep up - it may bring more of them to the table ready to write. 
• Silicon Valley-Our Cupertino DeAnza office reported Agents are frustrated dealing with REO/Short Sale listing Agents who don't return calls or emails. On a positive note, we had a number of sales over $1M and one over $2M.  Our Los Altos office reported buyers are making offers on the lower end homes.  The higher end price tiers are slower in both the condo and single family homes.  The San Jose Almaden office reported inventory is still shrinking and bringing more pressure to bear on our low end market in every area.  I hear of multiple offers in all parts of our county.  From Los Altos to Gilroy, it is not just limited to REO bargains anymore.  The only criteria are that it has to be priced for this year's market-not previous years.  One traditional sale in Sunnyvale sold for 2% above list in as many days with back up offers in place, high $800,000 price range.  Of those who report to me on open homes, I hear they're busy.  Time is running out for the first time buyers who are waiting for whatever... prices to drop, interest rates to fall further or more government concessions.  Bottom was two months ago and we need to get that word out!  Our San Jose Main office reports activity continues to be brisk in the lower price range of $250K to $550K with multiple offers on many properties.  Activity in the upper price range is slow. Open houses in all price ranges were very active this past weekend. Increase in interest rates the past week may slow our current busy market.
• South County-The real estate business cycle here in the South County has remained unchanged for the last several months.  Entry level (investment properties) priced between $300,000 and $400,000 are selling with multiple offers.  Upper end homes are still languishing on the market.  Inventory is decreasing and demand remains high.  This  may result in prices (and values) moving upward.

It seems we've enjoyed another week in SF Bay Area real estate much like the past several weeks; stabilizing if not increasing prices in the entry level, and a nice up-tick in the mid and higher price points.  The delayed Spring selling season continues - at least for another week.

All the Best,

Rick 

Rick Turley

President, San Francisco Bay Area

Coldwell Banker Residential Brokerage

NAR Announces Housing Affordability Highest in 18 Years - And Many Offices Report Increased Activity in High End Sales

For months I've been sharing that this is one of the best times to purchase a home in decades.  This week the National Association of Realtors underscored that fact -stating that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009 to its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).  The HOI showed that 72.5% of all new and existing US homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000, up from 62.4% during the previous quarter and up from 53.8% during the first quarter of 2008. 

Locally, the story is much more dramatic.  In the San Francisco-Peninsula area, 32% of all new and existing homes sold in the first quarter of 2009 were considered affordable to families earning the area's median income of $96,800.  That's up 60% from the previous quarter and up an incredible 146% from a year ago, when the index was a paltry 13%, one of the lowest affordability ratios in the United States.

Follow the link below to get the historical charts and details on North Bay, East Bay, Silicon Valley, and Santa Cruz, as well as many other Metros in the US.

http://www.nahb.org/page.aspx/category/sectionID=135

Below you'll find a few more news stories of interest from the week: 

• http://rismedia.com/2009-05-20/buyer-interest-in-foreclosures-spikes-says-survey/
• http://www.nytimes.com/aponline/2009/05/19/us/politics/AP-US-Economy.html?_r=2&scp=17&sq=housing&st=nyt
• http://rismedia.com/2009-05-18/distressed-properties-and-first-time-home-buyers-the-recipe-for-real-estate-recovery/

Many of you have asked me questions about the potential changes in the $8,000 first time buyer tax credit (http://www.realtor.org/RMODaily.nsf/pages/News2009051202?OpenDocument).  Essentially the U.S. Department of Housing and Urban development announced on May 12^th that the Federal Housing Administration would permit its lenders to allow home buyers to use the $8,000 first-time homebuyer tax credit as a down payment.  FHA's approved lenders would be permitted to "monetize" the tax credit through short-term bridge loans. This would allow eligible buyers to access the funds immediately at the closing table.  Here is a CNN Money article which explains some of the details:  http://money.cnn.com/2009/05/18/real_estate/tax_credit_as_downpayment/index.htm?postversion=2009051912

I must caution that the execution of this is quite complicated and it may take some time before it becomes a reality.  By late this week, there were already comments coming out of Washington that this may have been released a bit prematurely, and there is no guarantee that it will be successfully implemented.  HUD would need to authorize lenders, non-profits and certain agencies to provide a bridge loan which would then be reimbursed at the time of tax refund.  These players are not yet identified.  Again, an encouraging and useful tool, but the execution and timing of it have yet to be fully outlined.  Watch for more to come.

Most of the news lately has been about the brisk pace of sales at the entry level, where multiple offers are becoming the norm.  The median price, although increasing slightly in April over March in the Bay Area, had previously been falling due to the heavy activity in foreclosures at the low end.  That said, I thought it important to contrast this with what I'm seeing day to day at the branch office level at the other end of the market. Here is an incomplete list of some of our Coldwell Banker Bay Area closings just this past week:

$7+ Million - Atherton

$5+ Million - Portola Valley

$4.8 Million - San Francisco

$3.2 Million - Santa Rosa

$3 Million - Hillsborough

$2.9 Million - San Francisco

$2.9 Million - Belvedere

$2.6 Million - Los Altos

$2.2 Million - Menlo Park

$2 Million - Los Altos

$2 Million - Monterey

Many more in the $1 to $2 Million range

You won't likely be reading about this activity in the Chron or the Mercury News - not because I'm not telling reporters about it in recent interviews, but because their focus is elsewhere.  I feel everyone should know that besides these recent closings, nearly every office is reporting ratified offers and new Pending Sales in the higher end the past week or so - which is not what we were seeing a few months ago.  You won't hear me calling this a trend (yet) - but it sure is nice to see strong activity and confidence in the high end.

And with that update in tow, let's take a look at this week in real estate:

• East Bay-Berkeley shares that the market is still fast and furious at the lower price points with as many as 15 offers on some properties. Lenders and sellers are choosing all cash buyers, even if their offer is not the highest.  There is some concern that these all cash bargains, usually from investors, are artificially driving down neighborhood value, since the fact that there were ready, willing and able buyers who would have offered more is not taken into account. Buyers are also asking what number to put into their offers for loan/appraisal time.  Good question.  Some Agents are using the number of days given to them by the buyers' loan officer, others advising to the check the "until funded" box in the contract.  Castro Valley reports The Today show this week featured the Top 5 recovering cities for the country as related to the housing market.  SF Bay Area was featured as number 5.  It seems to correlate with the market trends that we have been experiencing lately. Short sales remain the market wildcard.  In researching a property we recently wrote an offer for, we found that there was a $200,000 spread between the offer prices between two pending deals on the same street, one was REO and the other short sale. Daily operations remain busy.  Oakland reports the market is really active in all price ranges. It has been steady now for all of April and now May.  I think our spring market has arrived.  Most of the multiple offer scenarios are two offers but occasionally one generates a large number and those are usually under-priced homes.  Appraisal issues are now cropping up in escrows and they are taking much longer to close.  Negotiations are more protracted. Short sales are active in every price range.  Even some of the foreclosures coming on the market now seem to be in better Oakland neighborhoods.  Orinda reports open homes are heavily attended and multiple offers are increasing.  Sales in the luxury market are on the rise.
• Monterey County- Slow but steady continues to be the pace here on the Monterey Peninsula, though the market is quick moving just east of us in the under $400,000 REO market.  Many properties over $1.5 million continue to be listed; in fact, there are 283 such properties now listed on Monterey Peninsula, from $1.5 to $35 million; yet only 34 such properties have sold since beginning of year, from $1.5-$7.8 million.  It's definitely a buyer's market in the higher price ranges.  We did close $1.6 and $1.9 million properties last week, along with 13 others at $1 million and under.
• North Bay- The Greenbrae office mentions that a flurry of new listings is looking to extend the Spring market well into Summer. Lots of activity in Central Marin in the $1M-1.1M price range. San Rafael tells us that currently there are 174 active homes & 58 condos on the market in San Rafael with 78 homes & 45 condos pending. In Novato there are 148 active homes and 58 condos which is lower than last year at this time. There are 113 homes and 48 condos pending. In Southern Marin the general feeling is that sales are picking up and buyers are getting more serious. Sebastopol states that Buyers are clamoring for low end inventory. 10+ offers are the norm under 300k. Lots of nosey neighbors at open houses have also been reported.
• Peninsula- Things are definitely heating up as the Burlingame office hears more stories of multiple offers & see that the inventory is declining in most areas. Open house attendance is steady.  In the Menlo Park area, a couple of higher end sales again which is encouraging. Higher end (over 3.5mil) is beginning to see some movement but higher end inventory levels give buyers a lot of power. Open houses were not as active, most likely due to the heat. Activity seems to be picking up. One Atherton listing was sold list price of $7,995,000.  A couple of other high end sales last week both in Menlo & Atherton. For the Palo Alto offices the last seven to ten days has been very busy with multiple offers with prices exceeding upwards of 8-10% over list price on homes from $800k to $3M. I don't believe it's a trend, bit it is certainly very busy.  We have had high-end sales & closings within ten days in Atherton at $7+M multiple offers @ $2M, multiple offers @ $3M. As many as five to 13 offers per property.
• San Francisco-The Van Ness office tells us the market above 1.5 million continues at a remarkable pace - 8 for this week!  For the Market St. office, lots of offers are being written this week, some have ratified, some are still being negotiated, & some were lost out on in multiple offers. Agents sense that the mood of the buyer out now is very positive & very motivated. A Previews property listed at 3.4 million was sold in the first 7 days on the market.  Our Lombard office reports that solo offers this week dominated by multiple counter-offers, a number of all cash deals, and some quick deals right on the heels of a price reduction. Again, under $700k a hotter market.  As for the Lakeside office, they have stated that the desired impact of the stimulus package seems to be happening. Homes under 600,000 are highly sought after by multiple parties while the higher end properties are still sitting on the market a bit longer & then negotiated down.
• Santa Cruz County-The local market continues to plug along; Agents are busy writing offers, trying to get short sales accepted/approved, in general working harder than they ever have.  It seems some of the uncertainty is going away and consumer confidence with real estate is on the rise.  People are realizing that the window of opportunity is closing, with a lack of inventory, very competitive interest rates and great prices.
• Silicon Valley-Our San Jose Almaden office reports that 11 of 13 sales were distressed this week.  Currently Santa Clara Count is experiencing over 50% of its inventory pending.  Of course it is all the lowest end of the marketplace.  Blossom Valley is above 50%, Almaden has climbed to 30% from 12% in just two short months.  One REO last received 25 offers and went 25% above asking price.  San Jose Main reports a great week for sales and activity. Excellent open house traffic in all price ranges. Buyer motivation is heating up. Low to mid priced homes seem to be getting the most activity.  The San Jose Willow Glen office reported we have slowed up a bit and it may be due to graduations and a holiday weekend.  Though floor calls and open houses keep us quite busy.
• South County-We have 187 active San Benito County single family listings.  This week we had 15 closed single family transactions, 10 of which were REOs.  We had 20 new active listings this week for Hollister.  REO listings have picked up a bit this week.  Open house activity is not very good probably due to heat this past weekend.  Short sale activity is still strong.  In Morgan Hill, the market has not changed from last week.  Open houses are well attended, inventory of well priced (entry level) homes is decreasing while demand remains high.  Agents are busy writing purchase contracts, but multiple offers are very common and prices are being bided upward.  Homes that are selling beyond the asking price (due to multiple offers) are, however, facing appraisal issues.

As we head into this long three day weekend I'd like to wish everyone a very happy and safe Memorial Day weekend with family and friends.  It's cold in the City and we're trying to find the sun, but hopefully many of you will enjoy BBQs, sunshine, maybe a little swimming and (hopefully) a home sale or two.

Until next week,

Make it a great one,

Rick

Rick Turley

President

Coldwell Banker Residential Brokerage San Francisco Bay Area

I received an email today from CAR (California Association of Realtors) and in it was a news flash outlining the new Obama Short Sale Incentives and Uniform Process Program.  This was desperately needed in my opinion and should help turn many short sales into real sales, saving home owners from foreclosure and hopefully streamlining the process at the bank.

Mark

Obama Administration Announces Financial Incentives and Uniform Process for Short Sales

The NATIONAL ASSOCIATION OF REALTORS® (NAR) today announced that the Obama Administration has added new incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP), part of  the administration's Making Home Affordable plan. 

Loan servicers may consider short sales or deeds-in-lieu of foreclosure for borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program.   

•·      Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program, but don't qualify for a modification or do not successfully complete the three-month trial period.  Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate. 

•·      Incentives include:  $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders). 

•·      The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter.  The goal is to minimize complexity and increase use of the short sale option. 

•·      Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements.  The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement. 

•·      In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions.  Property must be listed with a licensed real estate professional with experience in the neighborhood.  No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.  

•·      The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received. 

•·      Servicers may not charge fees to borrowers/homeowners for participating in the FAP. 

•·      The program is in effect through 2012. 

•·      Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).  

This week I thought I'd share some positive stories that continue to permeate not only our local news but on a national level as well.

The National Association of Realtors^® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.

A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.

The pending home sales report added evidence that sales have reached a bottom. That's critical because once sales bottom, it's only a matter of time before you work off excess inventories. That's the key to stabilization in the financial system and the economy at large. We're closer to that than people thought just a few months ago.

-- Michael Darda, chief economist at MKM Partners in Greenwich, Conn., "Sales and Construction Data Lift Hopes for Housing," by Lucia Mutikani, Reuters, May 4, 2009.

On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.

 •      Home sales in major markets around the country have shown dramatic gains in the past month.

 •      In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.

 •      In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months -- that's down from 12 months the previous March.

 •      Median house prices may be bottoming out. The California Association of Realtors^® reports the median price of homes sold was up by 2.2% for the past month.”

-- "Real Estate Outlook: Sales Rising in Some Areas," by Kenneth R. Harney, Realty Times,
May 5, 2009.

Also interesting to note:

•      The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate.  “We are seeing a lot of activity across the nation. Of course we're in the spring market, but we've seen more buyers in the market now than at this same time last year.”

•     "Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically," said Robert Abbott, co-owner and VP of a northern New Jersey brokerage.  "More people are not only 'kicking the tires' but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down."

-- "More Homes Get Multiple Offers; Downturn May be Nearing End," by Julie Schmit, USA Today, May 6, 2009.

Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. "If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall."

-- Julie Holt, owner of a title services company in Florida, "Is Now the Time for Some Home Buyers to Make a Deal?," by Mark Koba, CNBC, April 28, 2009.

And with that news in tow, let’s take a look at this week in real estate: 

• East Bay—Berkeley reports that buyers are stepping forward to make offers, while others continue to have scary perceptions which keep them from offering.  Job security is the biggest worry.  Sellers are reluctant to reduce prices.  No one knows what Cuomo's new appraisal regulations will mean to the market.  It ought to be a big convincer to sellers to keep their list prices reasonable.  Banks continue to look for all cash buyers.  Danville reports that inventory in San Ramon and Dublin is under two months.  We need inventory!  Fremont reports this past week seemed to be a bit slower, maybe because of Mother's Day last weekend.  The open homes are busy with people who are interested in buying, they just need a little encouragement.  Oakland reports interest rates have come down for jumbo loans, so we are picking up listings in the upper end and they are selling.  The market is really picking up and we are up over last year.  The past week we have a very large percentage of multiple offers, mostly two offers on each property, one had nine in a very low price point.  Still seeing appraisal issues that are new based on changing guidelines.  Walnut Creek reports the low end of the price range is selling with multiple offers, driving up prices.  In the mid range, the well priced, nice looking properties are selling with numerous counters back and forth between buyers/sellers.  Upper end is not moving.
• Monterey County—It's a quick-moving market to the east of us, Salinas south to Greenfield, and also Seaside, in our area, where the prices on the REOs combined with the low interest rates are motivating first-time buyers and, increasingly, local investors.  Market is still sluggish in areas more our marketplace, like Carmel and Pebble Beach, where we are seeing increasing numbers of properties coming on as short sales or likely to be short sales by the time a buyer steps forward with an offer.
• North Bay—Petaluma reports inventory continues to be light and the majority of the Agents have multiple buyers hovering over a limited number of listings. Most of the properties under $300,000 are getting double digit multiple offers.  Santa Rosa reports that its REO specialist says there may be some light at the end of the tunnel as assignments are starting to trickle in.  We still have lots of buyers and few properties to show them.  Sebastopol notes a lack of new inventory continues to be the challenge.  San Rafael reports there is an increase in listing and sales activity in properties that are not distressed (REOs and short sales) in all price points. We listed two properties over a million and have offers in on two properties over $1.5 million in San Rafael and Novato. Greenbrae office says they are seeing multiple offers for well-priced, well-presented homes in Greenbrae, Larkspur, and Corte Madera.  This is in sharp contrast to just a few months ago when fears of the country’s financial crisis seemed overwhelming. Things seem to be easing up now as Buyers with good credit and a job are finding it not so difficult to get a loan –and at record low interest rates!  The Southern Marin offices report the first week of April saw increases across the board in our Southern Marin offices. We saw $8 million worth of new sales and close to $5 million of closed escrows, by far the most we have seen all year. Many reports of multiple offers and even the $2 to $3 million is picking up in So. Marin.
• Peninsula—The Burlingame office reported that Mother’s Day didn't slow down the open homes that were held open.  There were an average of 20-25 groups through in most reports. Buyers were asking when offers were being presented and we haven't heard that in awhile.  The Half Moon Bay office reports seeing more listing Agents/sellers increasing the sale side commission to attract more showings. Good attendance at open houses.  The Menlo Park El Camino office reports a great week—sales from $9.8 million to $185,000 and a lot of them!  Everyone seems a bit more positive. The price base is rising; high end sellers are realizing that their prices are just too high for the current marketplace and finally are seeing the light. We had one sale listed at $3.4 mil that had turned down offers of $4 million a few months ago—same story across the board.     Redwood City reports lots of activity on open houses even on Mother's Day; 40 to 50 groups at a new San Carlos listings. We're seeing multiple offers on the low end REOs-the $800,000 - $1m range is attracting more interest but first must be perceived as a great value.  Woodside reports we are beginning to see offers being made on our higher end properties; not coming together just yet but we have hop. Two that are currently in play have come down from their high listing price about 35%            
• San Francisco—The Lakeside office reports that the entry level market is hot right now; anything under $600,000.  The Lombard office reports that after a fast start to May, we had a slow week.  Possibly due to Mother's Day? After a flurry of                          multiple offers, back this week to multiple counter-offers (up to five and six). Hard negotiations. A fall out and frayed nerves over slow loan processes. Time for listing Agent and sellers to be a little more patient and accommodating.  The Noriega office reports in the affordable price range $400,000-600,000, buyers are definitely off the fence, but good inventory in the price range extremely low and multiple offers are very common.       The Van Ness office reports continued increase in sales activity, and is seeing activity at all price points. This week the office reported 36 ratified offers - Wow!                                          
• Santa Cruz County—Steady as we go.  We are cautiously optimistic about the market activity.  Like other areas with a high REO number, that inventory has been drying up thus creating multiple offers on those properties.  There remains an expectation that more are coming, we have yet to see any new bank owned properties to list.  Buyers are realizing that time is of the essence in terms of purchasing and many are taking advantage of the tax credit for first time buyers.  Along with the lowest interest rates ever, activity is steady in the lower end also.  Financing, appraisals, appraisal reviews, longer loan times in general, are the norm and creating stress on most of the transactions.  Managing the client expectations whether it is a buyer or seller (or the other agent) from beginning to end is crucial.
• Silicon Valley—Our San Jose Almaden office reports all 10 sales this last week were distressed properties; mostly REOs.  Many REO listings are receiving 10-25 offers.  Banks are jamming the list prices down in an effort to stimulate activity.  And it is working.  Those properties are often selling at 20% or more above asking price!  The San Jose Willow Glen office reports we are a lot busier. Buyers seem to be a lot more comfortable in taking the step into home buying.  Open houses are very busy with a lot of traffic as well.  San Jose Main reports listings are slowing and sales increasing.  Most multiple offer sales are occurring in the lower price range.  Excellent weekend traffic reported at open houses both Saturday and Sunday.  Saratoga reports our upper end continues to lag. On a positive note our sales under $1,500,000 were very strong last week. I'm hopeful this is a sign that buyers are comfortable that we've hit the bottom of the market.
• South County—The Gilroy office reports open house activity was slow due to Mother's day weekend and the wonderful weather. Agents are now challenged with the lack of inventory. Most new listings are receiving multiple offers and selling over list price. Bank owned properties are still the majority of the market sales.  The Hollister office reports active listings are down from last week.  Sale pendings are up.  The average DOM is 80.  The average sales price is $300,000 up from last month.  REO inventory is decreasing.  Short sale listings are increasing.  The Morgan Hill office reports that in South County an interesting phenomenon is occurring.  The demand for "entry level" (well priced homes under $300,000) is far exceeding supply.  This past month Agents have experienced multiple offers of these types of properties.  In most cases these listings are selling over asking price with multiple offers.  This is a very encouraging sign that, perhaps, prices are stabilizing.

In short, it seems buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in California history to purchase real estate.  Now, if we could just get more listings. Do we sound like we are never satisfied?  Oh well, what a difference a year makes!  It’s an exciting time so let’s make good use of it.  I am currently wrapping up meetings in Washington DC as an NAR Director, so next week I’ll write on some of the important legislation being proposed to complete the necessary steps for our housing recovery.

Until next week,

Make it great one,

Rick

Rick Turley

President

Coldwell Banker Residential Brokerage San Francisco Bay Area