Weekly Bay Area Real Estate Update

Dear friends,
Here is a weekly report to keep you updated on the changes in the real estate market. Please feel free to pass this on to your friends, family & colleagues.
As you may know, earlier this week, Federal officials unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.
As CNN pointed out, “The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington’s most dramatic attempt yet to shore up the nation’s housing market, which is suffering from record foreclosures and falling prices.”
Under this new plan, the government is stepping in to stabilize the mortgage market by taking conservatorship of the two entities. Essentially, the government will temporarily run Fannie Mae and Freddie Mac until they are on stronger footing.
So what does it mean for consumers? I see this is a positive step for our industry, one that should have a positive impact on consumers. The ultimate goals are to help stabilize the mortgage market, improve mortgage rates in the near term, improve consumer confidence and possibly spur some new housing demand.

NAR President Richard F. Gaylord responded to the news with this statement, “I commend Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen.
“NAR believes that the announced plan will help restore confidence in the secondary mortgage market. We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. This demonstrates that the government is clearly committed to keeping the flow of capital uninterrupted, which is crucial to the housing sector and the economy.”

Soon after the takeover was announced, Wall Street rebounded and interest rates dropped. Take a look at these excerpts from Tuesday’s USA Today article entitled Mortgage rates drop; investors applaud Freddie, Fannie rescue:
“Wall Street staged its biggest rally in a month Monday as stock investors bet that the government's move to seize and backstop the USA's two largest mortgage finance companies will help stabilize the housing market, thaw credit markets and boost the ailing economy.”
“The Dow Jones industrial average jumped 289.78 points, or 2.6%, to 11,510.74. But common shares of Fannie and Freddie were essentially wiped out, since common-stock shareholders are last in line in any claims.”
“Average rates on 30-year fixed-rate mortgages, which have hovered well above 6% for months, plunged from 6.5% Friday to near 6% Monday, says Bankrate.com, according to national overnight averages. And most analysts expect the government's takeover of Fannie and Freddie to extend that decline, at least in the short term.
“In part, that's because in taking control of the two companies, the U.S. Treasury will buy mortgage-backed securities, thereby driving their prices up and mortgage yields down. The takeover should also shore up confidence in Fannie and Freddie and the mortgages they own or guarantee.”

I truly believe that the government rescue of Fannie Mae and Freddie Mac is a good thing for our industry and a great thing for interest rates and consumer confidence. It will be interesting to watch it unfold over the next several weeks.

With this week’s good news in tow, let’s take a look at this week in real estate:
Peninsula—My Half Moon Bay colleagues are singing the tune of new listings. Traditionally they have just about 110 listings on the market on the coast. Currently they have 148 which means better, more quality choices for buyers. The high-end market of the Peninsula seems to be moving well. Menlo Park is reporting that they had both a $3 million and a $5 million sale this week. Palo Alto continues to be plagued by lower inventory but is noting that though the inventory is low, buyers are looking for the right property that is priced well. Unless a home is priced well and shows well, even in a market that has limited inventory, it will sit. Buyers want value no matter what market you’re in. Our Redwood City office saw the first signs of the Freddie Mac and Fannie Mae takeover noting, “Slow week though buyers who were on the fence are now deciding to purchase with the government takeover of Fannie Mae and Freddie Mac.”
San Francisco—Our anticipated post Labor Day serge is coming to fruition in the City! We had a total of nine multiple offers amongst our five San Francisco offices this week. Our Market Street office noted, “Of the three multiple offers we had, one property had not even reached the open market. We had 10 new listings come on the market this week ranging from a condo at $499,000 to units at just under $3 million.” Our Lombard office saw a big post Labor Day week, too, noting that one sale was pre-emptive for 15% over in the $2 million range. The Van Ness and Noriega offices have yet to see the post Labor Day bounce but are confident they, too, will soon feel it. Van Ness continues to report success in the upper-end.
Silicon Valley—As our Cupertino office points out, “Lots of enthusiasm! Let’s hope it translates into transactions!” We’re definitely seeing increased buyer interest right now. Pendings are up 121% over this time last year and inventory is down. But buyers are still cautious and slow to make offers. Our Los Altos San Antonio office points out that “Activity was way up from last week. Buyers seem to be out in full force at our open homes.” Our Saratoga office concurs, despite what they thought was going to be a slow week. “Although sales have been decreasing,” said Saratoga Manager Pat McKeany, “we experienced a spike in sales yesterday with nine being processed. Hopefully this is a sign of improvement. Additionally we had 10 offers on a well-priced Saratoga home.”


I know I said it last week, but now that Labor Day is over and everyone is back from vacation, I think we’re going to see a spike in sales. Couple that with the Fannie Mae, Freddie Mac takeover and we’re in a pretty solid situation heading into fall.

Have a great weekend,

Monica Manocha Re, CMRS
408 399 1495

Your referrals are the lifeline of my business. Please let me know how I can help you or others you know with their real estate needs.