Market Flash

FINGERS CROSSED? YEAH, US TOO

First it was a sigh of relief, then it was a breeze, now it is a roar. Never mind new housing starts, the Federal Reserve, Case-Shiller or the exchange rate with the Chinese Yuan; nothing can stop spring in California!

Statistics:

Statewide: The median resale price of a single-family detached home in California for April was $403,870, a decrease of 32% from April 2007 and 2.6% from last month; but sales activity has increased 2.5% year-over-year. Unsold resale inventory represented a 9.2-month supply, compared to 11.3 months (CAR’s revision; we said ten months at the time) for the same period a year ago. Median number of days till sale was 52 in April, down from 53 for April 2007.

Alameda County: The spring surge catapults Alameda County sales securely into four digits – not quite to the levels of a year ago, but the best total since August. Little slices have been disappearing from the median and add up to a decline of about $100,000 since November.

Contra Costa County: Sales are actually better than they were a year ago while median year-over-year has declined by more than a third.

El Dorado County: Encouraging when you look at the whole picture. Sales, which have been between 130 and 180 for almost every month of the last year, are now smack in the middle of that. While median is declining here as elsewhere, it has only shed a respectable $50,000 since April 2007.

Marin County: Sales are two-thirds of what they were a year ago but are also twice what they were in January. Median for the year has oscillated between $750,000 and $950,000, so the current $800,000 is not bad; and it is also the high median for the month.

Monterey County: Only a slight decline in median for the month. Sales somewhat make up for it with a 50% increase for the month, putting the sales total over 200.

Napa County: Looking pretty good, in a fast rebound from the results of January and February. Both median and sales are at roughly 90% of April 2007 levels, and just as it does in Monterey, this looks somewhat like new money from outside the county. If the wine country is catching its breath, we are glad, because it was suffering – along with the rest of the regional second-home market – for a while.

Nevada County: This county too has weathered a slump, as both sales and median climb back through the levels of last November. Sales are poised to return to triple digits if the recovery of the regional market continues.

Placer County: Median is sliding gracefully, but recent strength in sales and a sales increase of almost two-thirds year-over-year makes Placer County one of this month’s standouts. Actually, the whole Sacramento/Tahoe region is looking like itself for the first time in well over a year.

Sacramento County: Sales year-over-year more than double – a distinction that Sacramento County shares only with San Benito County. Median has declined smoothly every month since last May, but it has still only lost about a third for the year.

San Benito County: After all its struggles, this county comes out on top with a year-over-year sales increase of almost 110%. That comes at a cost of $200,000 loss in year-over-year median, but prices should pick up as the market recovers generally. Sales have not been this high since the summer of 2006.

San Francisco Bay: Median stayed almost steady from March to November 2007, but since then has declined every month and lost almost $110,000 in six months. Sales, on the other hand, are climbing enthusiastically and totaled over 6,000 for April, after being stubbornly below that since the beginning of September. Prices are finally finding the level that will bring buyers back into the market.

San Francisco County: A 50% leap in sales month-to-month means that this county’s sales have actually increased – by a sliver – year-over-year. Considering that year-over-year median has declined by a trivial 3%, we have to say that San Francisco County is in good shape.

San Mateo County: Sales are coming back smartly but still are not quite at the level of a year ago, while median (broadly speaking) has declined steadily since last July and will now have to climb back up through the magic $700,000 mark.

Santa Clara County: Santa Clara County sales are once again showing formidable volatility, nearly doubling month-over-month and climbing from three figures into a firm four figures. Considering that year-over-year median has only declined by about 12%, this is a strong showing that may continue to broaden.

Santa Cruz County: Spring is the prettiest time of year in Santa Cruz and guess what? The county had April’s best month-over-month results for both sales and median. Year-over-year median declined barely more than 10%.

Solano County: A big month-to-month jump brings sales almost within reach of the April 2007 figure. Median has been declining steadily since its recent peak in May and is down $110,000 year-over-year. Again, this looks like a county finally finding the price point attractive to prospects.

Sonoma County: A big jump for the month brings sales even with last July, although they are still a couple of hundred below the 2005-2006 average. Median seems to be perking up a bit and if this recovery keeps going, Sonoma will really be back on track.

Yolo County: Median is down $120,000 or about 40% for the year. But Yolo picked up 40 sales last month for its highest sales total in our records, which go back to 2006.

Interest Rates*: Thirty year fixed 5.95%, 5/1 ARM at 6.18%, 30-year fixed jumbo at 7.18%. The consensus seems to be that, largely because of Ben Bernanke’s understanding of deflation and macroeconomic fluctuations, the Fed has done an excellent job so far of balancing the demands (and they are demands) of lending and of inflation. The “crisis,” or more exactly, the acute phase of the current economic correction, may be largely behind us. But lenders are not about to go out on a limb in the way that they did two and three years ago; apparently, if you want a jumbo loan right now, you will need flawless finances and the longevity to back them up.

Inventory: Sales go up, inventory goes down. That said, we are still looking at a nine-month supply overall, which should be plenty for everybody. If sales keep up April’s pace all the way into summer, though, we may see short inventories as a material factor for the first time in a couple of years.

Overall Assessment: It is June, the weather is warming up and the real estate market appears to be doing the same. Prices have stabilized in many areas, affordability has increased for many individuals and inventory is still strong. All of these factors seem to indicate one thing – that now may be one of the most opportune times in years for fence sitting home buyers to jump into the market before housing begins to swing back up.

*Area interest rates are reported to be as follows:Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of June 6, 2008, the “Agency Jumbo” rates are as follows: 30-year fixed with one point is 6.25%, the 15-year fixed with one point is 5.875% and the 5/1 ARM with one point is 5.375% for loan amounts up to $729,750.

Resale Activity by City

MARKET FLASH – APRIL 2008

LOOKING FOR SIGNS OF SPRING

After several months of reshaping, there are glimmers that the Northern California real estate market is “stabilizing.” While the medians continue to move around, sales have pleasantly picked up in many areas. What does this mean? Well, while we don’t have a crystal ball, we look at the fact that our government has taken steps to try and boost the residential housing market and that buyer and seller expectations are starting to get more in line with the realities of today’s market. The arrival of spring, a traditionally strong season for real estate, has brought with it a sense of optimism too. Combined with historically low mortgage rates, increased conforming limits and plentiful inventory in many areas, the timing may be just right for those looking to enter the real estate market or “move up” to another home.

Statistics:

Statewide: The median resale price of a single-family detached home in California for February was $409,240, down almost 5% for the month and over 26% from February 2007. Sales activity decreased 28.5% from a year earlier. Unsold resale inventory represented a 14.3-month supply, compared to 8.2 months (CAR’s revision) for the same period a year ago; median number of days till sale was 69 in February, up from 66 (CAR’s revision; we said 70 at the time) for the month a year earlier.

Marin County: Median is better than most – meaning, still at a level that it has visited within the last two years – but, even after a February up tick in sales, activity is below the 200 level that seemed ironclad only last fall.

Monterey County: Median and volume have been flat since December, but both are below historical averages.

San Benito County: Median has slid in a year from almost $600,000 to barely over $400,000. Sales are at last February’s level, but at less than half of their peak last July. Sales may recover when summer comes.

San Francisco Bay: Thanks to pockets of strength within the region, median has declined only about 12% for the year; sales year-over-year are down by over a third.

San Francisco County: A bright twinkle as the county’s sales in February were 380 to 375 a year earlier, while median was about $738,000 to last year’s $749,000. Exceptional proportions of cash buyers and overseas buyers are lifting San Francisco serenely above the general turmoil.

San Mateo County: Hard to tell at the moment, because Dataquick has released two vastly different figures for February median. Taking the optimistic one, we find that the county median has declined only a bit over 3% for the year – but sales are half what they were this month a year ago.

Santa Clara County: Santa Clara County’s sales total cycles through several months of four digits, followed by several months of three digits. Right now we are in three digits, not surprisingly, but this summer we may see a switch to four. Median, at $660,000, is barely below last year’s $685,000.

Santa Cruz County: In a recovery from last month, Santa Cruz median jumped almost $100,000 to a sort-of-reasonable $631,000 – only about 5% below last February. Although we don’t have a sales figure for February 2007, we’re guessing it was roughly 200, and now it is 40% of that.

Interest Rates*:

Cutting benchmark interest rates again and again, the Fed – at least temporarily – gives clear priority to helping domestic lenders at the possible expense of international investment; as we’ve been saying for years, this is a balancing act that the Fed may have the leverage to carry off intermittently, but it can’t be sustained forever. To quote (once again) the CAR’s formidable Chief Economist, Leslie Appleton-Young: “The…recent action to reduce the federal funds rate will have little near-term direct effect on the housing market, [but] should result in more favorable real estate finance rates as we move through the year.”

Thirty-year fixed mortgages are exactly where they were last April at 5.81%, 5/1 ARM is at about 5.8% and 5/1 jumbo ARM is at about 6.6%. Rates remain attractive, qualification is a little more difficult and it will probably be much later in the year before the situation changes materially in any direction.

Inventory

In almost all cases, hardly even worth thinking about. We do hear rumors about intensifying competition for really choice properties at the top end of the market.

Overall Assessment

Spring and summer are coming, and when they do, we hope that a fresh surge of interest in well-priced, well-presented properties will come with them. Warm weather and plentiful inventory may combine to exert powerful magic. Affordability is rising for some and the Northern California market glitters. Those who buy now may reap rewards for decades.

*Area interest rates are reported to be as follows:Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of April 4, 2008, the 30-year fixed with one point is 6.875%, the 15-year fixed with one point is 6.375% and the 5/1 ARM with one point is 6.125%, on non-conforming loans of $500,000.

MARKET FLASH – MARCH 2008

SPRING REVITALIZATION?

The real estate industry is abuzz with the new FHA loan limits for California finally approved by HUD. All in all, 14 California counties saw their loan limits for FHA, Fannie Mae and Freddie Mac increased to the $729,750 cap. Most were in the San Francisco Bay Area or other parts of Northern California, including Alameda, Contra Costa, Marin, Monterey, Napa, San Benito, San Francisco, San Mateo, Santa Cruz and Santa Clara Counties. The Sacramento area also saw its loan limits increase to $580,000. What does this mean for the Northern California real estate market? Increased opportunity for new and existing home buyers. The purpose of this increase in loan limits is to assist individuals who currently have “jumbo” loans (greater than $417,000) to refinance into lower and more affordable rates and payments. With the traditionally strong spring market just around the corner, the new loan limits may be just the thing to revive the Northern California market. Read on.

Statistics:

Statewide: The median resale price of a single-family detached home in California for January was $430,370, a decrease of almost 10% for the month and about 22% from January 2007. Unsold resale inventory represented a 16.8-month supply, compared to 7.6 months (CAR’s figure) for the same period a year ago. Median number of days till sale was 72 in January, up from 69 a year ago.

San Francisco Bay: Spring and summer monthly sales were 7,000 to 8,000; in September, they declined to roughly 5,000 and stayed there for awhile; now in January they have declined again, to about 3,600. After staying above $600,000 for over two years, regional median is currently at $550,000.

County Statistics:

San Francisco County: Sales for this county have shown a hectic collection of peaks and valleys as far back as we go, but 262 for January seems to be about half the recent historical average. Median, though, has fallen less than 1% year-over-year and is less than 4% below the three-year average; the typical San Francisco County buyer is probably well-off and may be international, and we have always thought that sales here can depend on a reliable core of cash (or at least high-down-payment) customers.

Alameda County: January’s 494 sales were about a quarter as many of March 2007’s recent peak of 1,840. Median was in the vicinity of $600,000 from the summer of 2006 to the fall of 2007 and since then has dropped off.

San Mateo County: January sales of 237 were down by more than half year-over-year. Median is down more than 10% year-over-year and 11% from the two-year average.

Santa Clara County: Sales in January were 628, less than half of 1,607 a year earlier; not great until we look at January 2006 with 335, or January 2005 with 423. Santa Clara monthly sales are constantly bouncing between a few hundred and somewhere over 2,000, so in context, they are typical. Median meanwhile has lost about 5% year-over-year and, perhaps more to the point, about 8% from the two-year average…not bad.

Santa Cruz County: Now what is this about, with the same county showing both the steepest drop in median and the best – or, well, “least bad” – decline in sales month-over-month? Clearly Santa Cruz will bear watching, as is often true. Median has lost almost 20% from the two-year average and sales are down to double digits.

Interest Rates*: 30-year fixed, 5.90%; 15-year fixed; 5.27%; 5/1 ARM at 5.03% is showing an awfully big discount from 30-year fixed, since not long ago the two rates were almost comparable (remember how we kept complaining?). Nonconforming loans are obviously a different story with 30-year fixed at 6.88% and 5/1 ARM at 5.68%. Rates were headed for the sky for most of January, but the new pegging of the Fed funds rate at 3% – including, bear in mind, the biggest single cut in the history of the rate, 75 basis points in one swoop – will let lenders keep loan rates attractive.

Inventory: Once more with feeling: “In many areas, inventory now and probably for the rest of this year, simply does not have to figure into deliberations.” True last year, true now.

Overall Assessment: Last year we said, “Loans are easy to get and cheap, bargains are plentiful, and those who buy now may reap the rewards of their good luck for years or decades.” Let’s edit that for the new reality: With the conforming loan limits increased through the end of 2008 and bargains almost everywhere, those who buy now will enjoy the comfort of a roof over their heads and a historically strong, long-term investment. A home is an asset and the comfort and security that it brings offers incomparable stability to an entire household. Those wishing to buy a home owe it to themselves to consider the long-term benefits – there may be no time like the present to act.

*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of March 10, 2008, the 30-year fixed with one point is 7.25%, the 15-year fixed with one point is 6.375% and the 5/1 ARM with one point is 6.625%, on non-conforming loans of $500,000.

MARKET FLASH – JANUARY 2008

NEW YEAR, NEW CHANCE

The New Year is finally here and with its arrival comes anticipation as to where the Northern California real estate market will be heading in 2008 following the adjustments seen in the market last year. After the heydays of early 2000, people came to see multiple offers, skyrocketing prices and a lack of inventory as the norm. However, real estate, like many industries, is cyclical and therefore changes are to be expected and quite frankly, are normal.

The one important thing to remember, however, is that over time, California real estate has shown itself to be a strong, long term investment. For buyers anxiously waiting on the sidelines to purchase a new home or are looking to “move up,” 2008 may be the time to do so. Many areas continue to experience generous inventory and modest prices, giving buyers the chance of a lifetime to own a piece of the highly desired Northern California real estate market.

Statistics:

Statewide: The median resale price of a single-family detached home in California for November was $488,640, a decrease of 1.7% from October and almost 12% from November 2006. Unsold resale inventory in November was sufficient for 15.3 months, up from 6.4 months (says CAR) a year earlier; median number of days till sale was 63, a welcome improvement from last year’s 68.

Alameda County: The county median is still paddling around in the “high fives-low sixes,” where it has been for the last two years. Figures for the decline in activity year-over-year and month-over-month should be taken skeptically, since a few days of sales activity were not counted for the month.

Contra Costa County: The median declined roughly another $9,000...not a lot in the context of the total. Sales in Contra Costa County – and Alameda County too – are roughly a third of what they were two years ago.

Marin County: Median has held the ground it gained in October and a little more. Sales are roughly half what they were in May or June.

Monterey County: Rebounded from last month’s low but still shows a median over $100,000 lower than its recent peak in spring 2006. We are still accumulating figures for Monterey, but sales seem to have been fairly steady since summer.

San Benito County: Something bright to report with significant improvement in sales and a real uptick in median. These are not the salad days of 2006, but we can hope that November’s changes signal a gradual return of buyer interest.

San Francisco County: Median is holding up rather nicely, since it topped $800,000 for the first time in May and is still above that. Sales are also respectable, but it is hard to discern a trend because San Francisco sales bounce around a lot – recently they were in the four hundreds, the three hundreds, the six hundreds and the five hundreds in four consecutive months. No matter what the future may hold, San Francisco remains a blue-chip area.

San Mateo County: Median has held in a narrow range for years and now, at $770,000, is still only about 5% below its top; sales in recent months have been drifting steadily lower.

Santa Clara County: One of the most difficult counties to assess because, like San Francisco, it has oddly variable sales – so that November’s sales were half of the county’s sales last December, a familiar story, but also twice what they were in July 2006, which is a lot less typical.

Santa Cruz County: After a slide in late summer, this median has regained about half of what it lost; it is not yet back up with, say, San Mateo or Santa Clara, but it is looking fairly healthy on its own terms. Sales have declined about 12% for the month, actually better than most; we do not have year-over-year sales yet.

Interest Rates*:

It is the end of the year for mortgage rates, and to our surprise, rates went up less in 2007 then they did in 2006; in fact, in 2007 they did not go up at all, until the last week of the year. Thirty-year fixed at the moment is between 5.8% and 6.1%; 15-year fixed is between 5.3% and 5.6%; 5/1 ARM, is in exactly the same range as 30-year fixed.

Inventory:

Probably little effective change, since for most counties, number of homes on the market is about the same and DOM are the same or a little longer. Of course, everything depends on location, and we cannot say whether inventory in a particular neighborhood might be a bit better or worse than it was in October.

Overall Assessment:

Buying a home in the next couple of months may be worth doing – in fact, it may offer an opportunity that will not come again soon. The one enduring truth about California’s residential market is that it is cyclical. As time goes on, more buyers with more dollars will chase fewer properties and the balance will tip slowly toward the seller. In today’s market, the educated buyer with ready financing is in a better position than ever.

*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of January 7, 2008, the 30-year fixed with one point is 6.375%, the 15-year fixed with one point is 6.75% and the 5/1 ARM with one point is 5.875%, on non-conforming loans of $500,000

Why 2008 May Be Your Year to Own a Slice of the Golden State.

The New Year is here and with it brings countless predictions by economists, industry analysts and more regarding the impending 2008 real estate market. While I don’t profess to own a crystal ball, what I can say with definite certainty is that the current market won’t last forever which is why I am here to tell you that 2008 may be your best opportunity to own a slice of the Golden State.

What You May Expect from Real Estate in 2008
Some industry analysts predict that the market will turn around in 2008 believing that the overall economy and job growth will continue to move ahead at a decent pace, core inflation will remain under control, the credit crunch in mortgage markets is showing signs of easing, the supply-demand equation will be better balanced as builders begin to whittle down their excess inventories and that interest rates will continue to be attractive.

I tend to agree with the California Association of Realtors®’ prediction that we will see a moderate decline (between three and four percent) statewide in California home prices next year.

In areas where there is little new housing, where it is hard to build and where there is a wealthy population, I believe there may be little decline. The main reason is that there is limited opportunity for new development in these areas and therefore properties are likely to retain their values.

For Buyers
The current housing market offers a unique window of opportunity for confident buyers. The exciting news is that for the first time in quite a while, the stars are in alignment for consumers: mortgage rates remain attractive and there is a large selection of homes to choose from. Furthermore, if history is any indicator, home prices in California remain strong. Thanks to these important factors, now truly may be the best time to buy.

For Sellers
Homes are selling! They may not be selling at the red hot, multiple offer heydays of 2003 and 2004, but they definitely are selling. For those that aren’t, unfortunately those sellers may not be receiving the counsel they need to get their home sold in today’s market.

Now, possibly more so than ever, you need a qualified Realtor® who can assist you in selling your home. It is usually not enough to simply post your home on the MLS and post a “For Sale” sign in the yard. You need someone who understands the intricacies, inventory and challenges of your local market and someone who knows how to properly position your home so it stands out among the sea of listings currently available.

If you are considering buying or selling your home in 2008, I have the resources, knowledge and experience to properly represent you in today’s market. Contact me today for the expert representation you deserve.