South Bay Home Sales Are Up!

Home Sales Are Up…But Can Someone Tell the Stock Market That?

It was an interesting week in news. More specifically, it was a great week in news for real estate—but in its third consecutive week (yes, I’m being kind) of volatility, the stock market did little to support the cause.
Let’s start with the good news. NAR released its Pending Home Sales Index—a forward-looking indicator based on contracts signed in August—noting pending homes “jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July and is 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4.”
Days later, DataQuick News reported “Bay Area home sales soared last month above the record-low levels of a year ago, marking the largest gain in over six years. The median sale price did the opposite, diving to $400,000 - 40 percent below its summer 2007 peak - as more sales shifted to lower-cost inland markets laden with foreclosures…Last month's 45 percent year-over-year sales gain was the highest for any month since April 2002, when sales shot up 49 percent.”
What the heavy foreclosure sales figures are telling us, however, is most important. The dramatic increase in sales suggests that more investors are deciding that prices have fallen to bargain levels and they are now getting into the market. Historically speaking, it is investors who determine where the bottom is. When they think prices have reached a point where they can potentially buy low, wait a bit and in a few years turn a profit, they’ll swoop in. We’re starting to see this now and that is welcome news to many.
Of course housing recovery as a whole is dependent on the course of the overall economy which had less than stellar news this week. By Thursday, the Dow rallied back after two days of declines—including a loss of 500 points on Wednesday—but the NASDAQ slipped to its lowest point in more than five years.


Locally, what the volatility on Wall Street is doing for many consumers is causing concern. We have a lot of buyers and sellers who are watching their portfolios each day and are concerned about taking action in purchasing a home until the volatility subsides. In more than one instance we’ve seen buyers back out of contracts in fear of what may happen—even if they were having no issues with gaining the loan.

And while I think we all understand the reasoning and the concern, what I do remind consumers of is the fact that we are in one of the best buyer’s markets of our generation and despite what you may be reading, home mortgages are available. Couple that with the fact that despite the turmoil in the world’s financial markets, we remain in one of the most desirable and historically speaking, stable real estate environments in the world. With bank owned properties so prominent, interest rates falling and time-sensitive benefits available through the newly enacted economic stimulus package, we have what may be the perfect storm for buyers. It’s just a matter of time before we start feeling the flow of credit, the ease of purchasing and consumer confidence restored. Buyers need to be properly counseled on these complexities (and opportunities) before they miss out.

Let’s take a look at this week in real estate:
· Silicon Valley—Silicon Valley changes from week to week and from neighborhood to neighborhood. This week our Cupertino office is reporting that although sales are treading steady, new listings that are coming on to the market are slow. Buyers continue to come through in waves looking for the under valued deal. We are seeing increased buyer activity and stronger sales, mostly in the REO price range. We are also seeing increased traffic at open houses. Entry level homes seem to get the best traffic. Overall I’d say that things are slowing down quite a bit but buyers are out there. They’re just looking for the best deals and then they act.
Before I leave you, I thought I’d share a final, interesting note released by NAR this week—projections for 2009. NAR Chief Economist Lawrence Yun “expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.”

This is a good sign for all of us and for buyers—if you are thinking about staying in your home even for just a few years—now may be the perfect time. Now’s the time to get out there and take advantage of the best buyer’s market of our generation, before it is too late.

Until next week.
Monica