San Francisco Bay Area Housing is Turning the Corner
Real estate investors and home buyers who aren’t buying San Francisco Bay Area real estate right now, are going to miss the boat. Home owners in the East Bay have seen the worst, but don’t expect price values to start climbing until Spring of 2009.
A recent article in the Wall Street Journal backs up what we have been saying since the end of last year – the housing crisis will bottom out in the first half of 2008 and the second half of the year will see more stable prices and higher than normal sales activity.
“The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.”
Read the article – The Housing Crisis Is Over. The article also reflects, in part, the analysis given recently by Mukesh Bajaj, Ph.D, a financial economist teaching at UC Berkely.
What we see happening with local housing markets supports the opinion given in the WSJ article. For example, we had clients in from Florida this week looking to buy. The top five properties on their list all had received acceptable offers in the 24–hour period proceeding their arrival. One of the properties had been on the market for over 120 days. Several of the properties received multiple offers.
Our last listing that entered escrow had six offers submitted. Prices are not climbing, they are stabilizing. Multiple offers are bringing the sale price up to the asking price. There are a few sales closing where the sale price is above the asking price, but this is not the norm.
What does this mean to local home buyers and sellers?
The upper end of the market will remain more sluggish than the bottom end. Investors looking for cash flow properties and buyers looking for great deals that hold the most potential for rapid appreciation are beginning to gobble up foreclosures and bank owned properties. This “bottom-feeder” activity is going to escalate and drive sales activity figures up for the second half of the year.
The increased activity is not going to drive up prices. It is going to reduce and stabilize the downward pressures on pricing.
Residents of communities like Dublin and San Ramon where there is still a significant presence of new home builders are going to see some relief as reduced new construction starts begin to impact the overall local housing markets. This is bittersweet news for existing homeowners in these communities as the value of their new homes has been hammered more than other areas.
Eastern Contra Costa County communities like Antioch and Brentwood are going to see huge reductions in inventory as investors increase their activities in these foreclosure rich areas. International investors and buyers are showing increased interest in U.S, real estate foreclosures as the weak dollar coupled with depressed prices affords them an incredible investment opportunity.
Bottom line? Home sellers have seen the worst. Buyers need to get off the fence if they don’t want to miss the boat.
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