Bay Area Real Estate Market Not What The Media Says

The latest figures for the nine San Francisco Bay Area counties showed a 45% increase in sales volume and a 35% drop in median price for September compared to last September. Although the numbers are accurate they are not what they seem to be because, as you know, we are in a very unusual, even historic market. 

Yes, home values are down, but not 36%.  Many more lower cost homes are selling than last September, but the number of higher priced and luxury homes sales are down substantially. Jumbo loans, loans above $729,500 with a few exceptions this year, are much harder to obtain so many more lower cost homes are selling.

Lower cost homes have dropped dramatically in price mainly because of a large number of foreclosures (bank owned properties, REOs) and bank short sales (banks negotiate with the owners to lower the principal amount of the loan when the owner has a buyer for the home.  This keeps the home out of foreclosure which is costly for a lender, but usually not as costly as foreclosing.)

Median price has plummeted for several reasons:

• Region wide price depreciation, which varies by location
• The relatively high cost and qualifying difficulties associated with the jumbo loans used to finance pricer homes
• Significant shift toward a higher portion of sales occurring in lower-cost inland markets

Prices in some coastal areas continue to hold up much better, but sales aren’t shooting up by as much, if at all.  Nearly 42% of all existing homes sold across the Bay Area last month had been foreclosed on at some point in the prior 12 months, but only up 6.9% from the previous year.

Sales figures from the Contra Costa Association of Realtors stats that cover 14 communities from Orinda to San Ramon for September compared to last September show:

• Closed sales up 65% for homes & up 10% for condos
• Pending sales up 76% for homes & up 74% for condos/townhouses

There is NOT an excess of homes/condos/townhouses on the market compared to the rate of pending sales over the last 30 days.  Active listings are down 17% for homes & 30% for condos/townhouses.

In our local area, home values have held up comparatively well compared to the inland areas with lower priced homes and a lot of new construction over the past five years that have led to numerous foreclosures and short sales along with dramatic drops in prices.  Lamorinda, Walnut Creek, Alamo, Danville, San Ramon, Pleasanton, and Fremont home values are holing up relatively well because of the low number of foreclosures and short sales.

If you would like more detailed information, contact Paul (925) 963–4246

In the long run real estate remains one of the best financial investments. Our FREE Market Reports provide you with the best weekly market trend information available.

Search Over 14,000 Homes for the One YOU Want

Real estate and mortgage blogs are beginning to report that E-Loan of Pleasanton, California will shut it’s doors on Jan. 9, 2009.

San Juan-based Popular, which is also Puerto Rico's largest bank, purchased E-Loan back in August of 2005 for around $300 million – just before the U.S. housing market turned south.

The continued challenges in the real estate, mortgage and financial industries may result in more Internet based service companies failing as worried consumers return to face-to-face relationships for more confidence in these challenging times.

Mortgage Rate Mania

I make no bones about it – Dan Green of The Mortgage Reports produces one of the most informative blogs on all things mortgage. Dan’s also a great guy. Through his savvy blogging and business efforts, he has become something of a celebrity in news circles.

This past week, Dan Green, wrote two posts that help to explain some of the challenges that exist today in getting a home sold and an escrow closed.

How To Avoid Paying Jumbo Mortgage Rates On A Jumbo-Sized Mortgage – explains what jumbo loans are and the predicament high-end buyers are finding themselves in when purchasing million dollar homes. It seems their friendly “Big Bank” banker can’t always take care of the buyer’s needs.

There's Only An 18.60% Chance That A Morning Mortgage Rate Quote Will Be Honored By The Afternoon – talks about loan rate volatility and what buyers can do to lock in loan rates.

Escrow Hell

More and more, I hear reports from fellow Realtors about how difficult it is holding deals together. Getting a transaction through the escrow process is not only challenging, it’s full-time work and baby sitting.

One Danville, California real estate agent commented to me that the 8 deals she had in the escrow process are all in jeopardy. They’re in jeopardy, not because of a lack of skill or experience on her part. They’re in jeopardy because the real estate, mortgage and lending rules are changing daily. AND because buyer/seller dynamics are at a place that make many transactions take on the appearance of a Mel Brooks film.

 Sellers That Need to Sell, Need to Sell Now

It’s becoming an epidemic. It may be worse than the bird flu – sellers ignoring reality and chasing the market down.

It is absolutely mind-boggling to hear all of the stories surfacing at the local Realtor marketing meetings about sellers who were offered reasonable prices for their homes 2 to 3 months ago and refused to entertain them.

“We won’t sell for less than…” is a common seller battle cry these days. To a person, these same sellers (there are hundreds of them locally) are now wishing they had entertained those offers as interest in their properties has evaporated and the market has continued it’s slide.

Here’s an example we know of: House priced around $800K. Two offers in first two weeks around $740K. NO THANK YOU! House around the corner with same floor plan sold at $700K. $740K offer could probably have been negotiated back to $760K, but not now – with a comp around the corner at $700K.

Looking at the reality of the situation, $800K was wishful thinking by sellers looking at their situation, needs and wishes.

To sell a home, the reality of the market needs to be considered. Buyers aren’t looking to “make the seller’s day.” They want the seller to – make my day.

Here is the reality for sellers – The market is still slowly sliding down and ALL housing market forecasts call for flat to sluggish growth through 2010.

Sellers in Alamo, Danville, Dublin, Pleasanton, San Ramon and Walnut Creek California that need to sell in the next couple of years need to consider selling now. 

Our FREE Market Reports are updated weekly. These reports are the best source of local real estate information for buyers or sellers wanting to track local real estate trends with current information – not information that is 30 to 60 days old.

The other day Tim Soldati, Senior Mortgage Planner at First Priority Financial in Pleasanton, California sent me this email out of the blue.

“Working with many real estate professionals, I have learned the difference between the good ones and the bad ones. The Harper-Mees Team is not effective just because of the years of experience in the industry, but because of the high level of respect among their peers. I have seen time and time again our mutual clients getting their offers accepted, even though they weren’t the highest price offers. They get them accepted because other agents know that the Harper-Mees Team’s clients are qualified, serious borrowers that get their transactions completed. This is almost a reason alone why a buyer should work with the Harper-Mees Team”.

We’ve worked with Tim often over the years, but in the last 6 months, we have successfully closed a few deals that were extremely challenging due to all the changes taking place in the mortgage industry. I could write the same words about Tim.

Two qualities I really admire in Tim Soldati:

• He always puts the client first
• He returns calls and emails faster than anyone in the mortgage business.

We’ve written many times about the importance of strong relationships among local Realtors and lenders. A strong professional network among peers not only gets homes sold faster, it reduces the transaction hassle factor for clients to almost nil.

Working with half-assed real estate agents or lenders is worse than having a neighbor with a barking dog, 6 beat up cars, 3 juvenile delinquents and a yard full of weeds.

Thanks Tim – we appreciate the kind words.

Home Price Reductions Continue from Concord to Pleasanton California

In the last few weeks, we've announced price reductions on:

• 4558 Lakewood Drive, Pleasanton, CA
• 213 Aptos Place in Danville
• 3661 Treat Blvd., Concord, California
• 22 Glory Court, Napa, Ca
• 15 Glory Ct. Napa
• 122 Summerside Circle, Danville, CA

 Today, the owner of the two condo units we have listed in Siena Hills reduced the price on his two units.

• 805 Watson Canyon Court #264, San Ramon is now priced at $290K
• 805 Watson Canyon Court #26, San Ramon, CA is now priced at $315K

We are nearing the end of the traditional "selling season." May through August is the period that normally sees the most activity as this is tied to the school year. This is not your normal market, but this does not mean that sellers want to miss the psychology of the selling season.

I think we are going to see higher transaction rates for the second half of 2008, than we did in 2006 and 2007. The reason for this is the amount of foreclosures and bank owned properties that continue to come on the market. Buyers looking for good deals and investors will continue to drive sales statistics for 2008. In fact, they are going to be the major factor in year-end figures.

Be that as it may, NOW is the time for buyers to lock in that rate for the home they want. All the factors are their to make a great deal. If you are coming in with a low offer - write a letter to the seller and explain why you are offering what you are. We still have some sellers out there resisting the reality of the market.

Prices have still not bottomed out, though we seem to be nearing that marker. The problem is that rising interest rates are negating sales price reductions for overall savings on the cost of owning.

Buyers are well advised to step up to the plate and throw out an offer. Windows of opportunity have a way of shifting from the buyer's side to the seller's side just when you thought it was safe to go into the water!