There's 2 things that stand out; 1) we're seeing some  improvement and 2) the influence that REO's have had in our markets.

I usually speak about the relationship between actives and pendings as being an indication of markets, just as months supply and median price comparisons give us a clue to better understand real estate on a local basis.

Pendings hit an all time low last fall in most areas. Surprisingly they have rebounded since the beginning of the year to their highest levels since I've been tracking them, (July 2005). Why the rebound?

1)      Investors looking for bargains, positive cash flows in markets that were virtually non-existent in the Bay Area 2 years ago.

2)      Ownership costs vs cost of renting as pointed out in an article written by Carolyn Said of the Sf Chronilce. View her article HERE.

3)      Prices have dropped to the point where buyers can now afford a house that they couldn't before.

4)      Much of what's selling are foreclosures. Typically, banks take longer to close escrow. This skews the numbers, keeping  them in  a pending status for longer periods of time.

However, it's obvious that the trend is moving towards improvement in most areas. The most dramatic improvements are coming from many of the areas that have shown the worst performances over the last two years. Obviously, the areas that have had the highest inventory levels and foreclosure rates have also shown the largest price declines.  Brentwood's a good example. Notice that inventory is now coming down while pendings are increasing. 74% of all sales in Brentwood over the past 3 months were foreclosures. There was a 14.2 months supply of homes there at the start of the year, now only 7.7 months.

Also, banks that we've been working with have become very aggressive in their pricing. I couldn't speak for other agencies involved heavily in foreclosure  sales, but we've seen multiple offers in about half of our sales and pendings transactions. As a rule, banks typically spend very little to improve their property's "curb appeal." They understand inventory and competitor factors in the markets. Reducing prices to attractive levels has become their strategy in an attempt to unload assets. As a result, those areas highest in inventory and foreclosure rates have suffered the largest price reductions overall.