Hello Everyone,
Stock market continues strong, with traders anticipating more federal intervention to stimulate the economy.
Marin County percentage of homes in contract for both Single Family Residences (SFR) and Condos up at every price point. Active inventory of both SFR's and Condo's down 10% or more from October levels of the last two years. October's accepted offers up up up over year-ago and two-year-ago levels for both condo's and SFR's. Monthly City--by-City Report shows 10 of 13 cities and towns covered increased their percentage in contract in October while only 3 (Tiburon, Corte Madera, and Larkspur) experienced a decrease. At the same time, units sold are down down down for October from levels of the last two years.
People are confused about the market. Many buyers are sitting on the sidelines, afraid to buy now in case prices go lower later. Many sellers are reluctant to sell now, holding on, and hoping that prices may be higher next year. No one knows for sure but everyone seems to have an opinion---
In an article dated October 21, San Diego based MDA Data Quick, a real estate news service, noted the continuing downward trend in the Bay Area housing market, stating, in part:
"Bay Area home sales fell year-over-year for the fourth consecutive month in September, dropping 27 percent below average, as historically-low mortgage rates failed to nudge many would-be buyers off the sidelines---"
"Last month’s sales were the lowest for any September since 2007, when 5,014 homes sold, and were the second-lowest since September 1991, when 5,735 sold. September sales fell 26.7 percent below the average September sales tally of 8,641 since 1988, when DataQuick’s statistics begin. September sales have ranged from a low of 5,735 in 1991 to a high of 13,343 in 2003."
John Walsh, MDA DataQuick president was quoted as saying “The sidelines are getting awfully crowded in this housing game. They’re lined with people who have the ability to buy now but are waiting for the right moment, and with people who have the means but lack job confidence. Then you have all of the folks who don’t have the equity, don’t have a job or can’t qualify for the larger, so-called jumbo mortgages that were once so common in the Bay Area,” “Sales have been so low for so long – 27 percent below average last month – that significant pent-up demand is accumulating. When it will be released will depend largely on when the economy rebounds more convincingly, spurring more jobs and higher consumer confidence. If, in the meantime, prices fall more and interest rates stay the same or edge lower, then it’s easy to imagine a burst of sales activity at some point. Next spring could be very interesting.”
Read the full text of the article at http://www.dqnews.com/Articles/2010/News/California/Bay-Area/RRBay101021.aspx
In an Associated Press article dated 10/26/2010, Columnist Alan Zibel stated:
"The foreclosure problem is far from over. A "shadow inventory" of homes on the verge of foreclosure is bound to force prices lower well into next year. About 2 million loans are in foreclosure, and another 2.4 million borrowers have missed at least 90 days of mortgage payments, according to LPS Applied Analytics.
"It's like a never-ending supply" of homes, said Daniel Alpert, managing partner at the New York investment bank Westwood Capital. He expects prices to fall another 10 percent over the next year — and not improve much after that.
Full text of article available at
http://www.msnbc.msn.com/id/39845654/ns/business-real_estate/
Writing for cnn.money.com, staff analyst Les Christie, in a November 1 article, wrote:
"The good news is, 'There'll be no vicious, self-reinforcing spiral down,' according to Mark Zandi, chief economist with Moody's Analytics.
But, he added, 'more home price declines are coming'. He's forecasting another 8% drop in home prices through the third quarter of 2011, which will put the total peak-to-trough decline at 34%."
Read the text of that article at:
http://money.cnn.com/2010/11/01/real_estate/housing_market_state/index.htm
Of course, some of these articles are written about the nation-wide real estate picture. Even the local article describes the current market throughout the entire Bay Area and if we know one thing, it is that real estate is local. We cannot completely escape national trends and global economic effects, but we do have a unique market here in Marin County. Having said that, it is important to recognize that the houses that are selling here are competitively priced. Even in areas with a percentage in contract that traditionally signifies a sellers' market, sellers cannot afford to ignore buyers' price sensitivity. Houses priced right are selling while those priced higher are sitting. Buyers are doing their homework. They are patient and they are picky. Even in multiple-offer situations, properties often not going much over list price. There are some multiple- offer deals that don't even make it all the way to list price and are going out at discounts. Lots of escrows falling through when buyers and sellers can't agree---- or buyers change their minds during the contingency period. Banks being really tough on appraisals so even if a prospective buyer agrees to an over-optimistic price, an altitude-adjusting moment arrives when the appraisal comes back lower than the contract price, leaving the buyer with a choice of re-negotiating, getting out of contract, or making up the difference with an increased down payment.
If past cycles are any indication, we are somewhere near the bottom of this one and prices will be going up. Only time will tell where this market is headed and how quickly, but today's Buyers have a tremendous opportunity to purchase properties that they could only have dreamed of of owning just two years ago.
More next time. Until then, best wishes to all,
Fred
p.s. For access to spreadsheets please see http://www.fredanlyan.com
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