Real Estate on the Rise in the Bay Area Market?

What a great week it was for real estate. And no, I’m not being facetious.

A number of real estate organizations released their third quarter and/or October statistical reports—revealing some very interesting and important trends in our market. Let’s take a look:
NAR Presents Four-Point Housing Stimulus Plan to Congress
Earlier this week, NAR representatives presented a four-point plan to help foster a housing recovery to support an economic rebound. The plan calls for eliminating the repayment of the first-time home buyer tax credit that was passed in the February stimulus bill and to expand the tax credit to include all home buyers.
The plan also recommends making the increased FHA and conventional loan limits permanent to stimulate home sales and stabilize prices. In addition, the plan urges that the Troubled Asset Relief Program be put back on track by targeting the funds for mortgage relief through a mortgage interest rate buy-down. Finally, the plan recommends finalizing legislation to prohibit banks from entering into the business of real estate brokerage and property management.
“The only way to overcome today’s economic turmoil is to motivate and encourage worried or cautious housing consumers to enter the marketplace,” said NAR President Charles McMillan. “Stabilizing the housing market will lead to a quicker and greater economic recovery. Our goal is to ensure there is a healthy market and sufficient capital to support mortgage lending to qualified borrowers.”
CAR Releases First Time Home Buyer Housing Affordability Index
CAR released its First Time Buyer Housing Affordability Index which showed that the percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago.
The real estate organization reported, “The minimum household income needed to purchase an entry-level home at $287,760 in California in the third quarter of 2008 was $56,100, based on an adjustable interest rate of 5.91 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $1,870 for the third quarter of 2008.”
The organization also reported, “At $56,100, the minimum qualifying income was 44 percent lower than a year earlier when households needed $100,500 to qualify for a loan on an entry-level home. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.”

DataQuick Releases October Sales Figures
“Bay Area homes sold at their fastest pace in 17 months in October as buyers favored more affordable inland areas where depreciations and foreclosures have hit hardest. As a result, the median sale price continued its steep, months-long decline, falling a record 40.6 percent, or $256,000, from a year ago,” reported DataQuick.
“A total of 7,613 new and resale houses and condos closed escrow in the nine-county Bay Area in October. That was up 4.7 percent from 7,271 in September, and up 38.8 percent from 5,486 in October 2007,” continued the report.
“The median price paid for all new and resale houses and condos combined fell to $375,000 last month, down 6.3 percent from $400,000 in September and down a record 40.6 percent from $631,000 in October 2007.”
“Inland communities continued to fuel the bulk of the Bay Area's sales gains, attracting buyers searching for the biggest discounts.”
“Contra Costa, Napa, and Solano counties - where prices are down sharply and sales have risen the most - accounted for 36.4 percent of Bay Area sales in October, compared with 25.0 percent a year ago. Sales of existing single-family houses in those counties rose 126 to 187 percent last month from a year ago. Meantime, sales fell or rose more modestly in pricier San Francisco, Marin and San Mateo counties.”

So what does all of this news mean? Honestly, it’s music to my ears.
Real estate is in a very good position right now. Because you see, real estate makes up 20% of the Gross Domestic Product in this country and regardless of which side of the political fence you fall on, the fact remains that our country cannot be fixed without first fixing the housing sector. That puts us in a very good position because real estate—more so than any other industry—will be gaining a great deal of attention over the next several months—and as you can see from the figures above—it already has been. Whether that attention comes in the way of more tax benefits, home ownership credits, subsidies or interest rate stabilization, the leaders of our country are focused and diligent on fixing the housing sector which is perfect news for our industry and our business.
Couple that with the fact that we may very well be on the brink of a turn-around—based on what we are seeing nationwide and based on figures from DataQuick as well as the fact that homes are so much more affordable now—I believe we may be poised for a housing recovery. Just look at the figures from DataQuick. Sales in the Bay Area are up 38%. What that tells us is that many people feel like right now, real estate, in relative terms, may not be a bad place to park their money. Compare that to the volatility of the stock market and housing—if history is any indicator—is looking like a pretty darn good investment.
Keeping that in mind, let’s take a look at this week in real estate:
Silicon Valley—Our Cupertino Stevens Creek office reports closings are steady but openings and listings are slow. Our San Jose Willow Glen office is reporting that folks are sitting back and waiting, waiting and waiting. We have buyers and some offers are getting rejected. Our Saratoga office is reporting that the upper end is extremely slow. Buyers are being cautious given the negative economic news.
So while sales have been a bit quiet this week, the positive news I am seeing in our industry reminds me just how great this business truly is. No other sector of our economy is getting the attention and focus than that of real estate. We truly are poised for a housing recovery. How great? Only time will tell. But what we do know is that “this too shall pass” and while the recovery won’t happen overnight, it will happen…and based on DataQuick’s 38% sales increase, CAR’s first time home buyer affordability index (jumping 29% year over year) and NAR’s stimulus plans, all signs are pointing north. I’ll see you at the top.

Please feel free to pass this article on to your friends and family. I am never too busy for your referrals, so please keep me in mind.

Hope you enjoy your Thanksgiving Feast on Thursday and Black Friday Bargains! Happy Holidays to all!

Regards,
Monica Manocha Re, CMRS
Ph: 408 399 1495 Email: monica.manocha@cbnorcal.com
Web: www.monicamanocha.com

Bay Area Real Estate Market Update Nov 2008

Silicon Valley Weekly Market Update from Monica Manocha @ Coldwell Banker

What we are enduring is no longer a national economic crisis. We are full swing in a global financial crisis that has affected at least 11 countries around the world. Brazil, China, Germany, Iceland, India, Japan, Russia, Saudi Arabia, South Africa and the United Kingdom are now all reporting economic declines and many experts agree that their woes are a direct result of the U.S. housing decline.
World leaders gathered in Washington on Friday to talk about what is needed to get the global economy back on track. Leaders from the Group of 20, which includes the United States, members of the European Union, China, Saudi Arabia and Brazil, agreed to the summit late last month at the height of the global financial crisis.
Though regardless of the outcome of that meeting, changes won’t happen quickly as reports show that any major change will have to first wait approval of Obama, once he is sworn in as President.
The government continues to struggle with finding a solid, coherent way to help the housing sector. The administration is still working on the best way to deploy the remaining money in the $700 billion financial rescue plan passed last month. Treasury Secretary Henry Paulson said Wednesday that the government will no longer buy troubled mortgage backed securities—the original intent of the legislation—and will mainly focus on injecting money into the financial sector.
The debate amongst policy makers continues until they choose a strategy that makes the most sense for the economic well-being of our country.
While we anxiously await their next step, all we can do is continue to move forward, continue to conduct business and stay motivated in this ever-changing business climate.
One interesting piece that—I think will help you do just that—I wanted to share with you; it is a look at the housing forecast for 2009. CAR’s Leslie Appleton Young recently conducted her 2009 forecast presentation (http://www.car.org/newsstand/2009forecast/). I encourage you to watch this important (though long) presentation so you may be aware of this valuable information.
Specifically, Leslie shares how California compares to the rest of the country, noting that while we decreased further and faster than the country as a whole, we are also rebounding at a much faster rate than the rest of the country. It is an important fact that consumers should be aware of.
She also shares the importance of local forecasting noting that it really is a mistake to paint the California real estate market with a broad brush. For example, markets like Central California were hit much harder than the Bay Area yet are often lumped into California real estate stories which make our local numbers seem worse than they actually are. When in fact, our numbers are showing some compelling positive signs. Our sales in the Bay Area, according to DataQuick, have increased 45% since 2007. While we do know that much of this is related to bank owned property sales, the positive side of this is that the buyers are out there and regardless of the price point, the fact is that homes are selling. As we weed through the bank owned listings, inventory will decrease which will eventually cause the price point to increase.
With this week’s economic update in tow, let’s take a look at this week in real estate:
San Francisco—The market seemed to take a slowdown this week, though consumers and Realtors alike share the same positive outlook. Open houses were well attended with a lot of buyers. People who have been sitting on the fence for a while were writing offers this week. Our Van Ness office noted that while there are still sales happening, buyers seem to just want to hover to wait and see which direction the market will go in the upcoming months.
Silicon Valley—Morale remains high under challenging conditions. Properties under valued often receive multiple offers signaling that the buyers are still hanging around for the best values. Our Saratoga office experienced a slight increase in sales in the non-Previews market. Also, listing activity has slowed as expected given that we are approaching the end of the year.
The question I am asked most from people I meet is “how do I stay motivated in today’s economic climate, where we’re all struggling with today’s rollercoaster economy?” My best recommendation to you is to continue to stay positive—focus on the opportunities available in today’s market—and shift your focus on the encouraging aspects in your life and work. And there truly are quite a few positives: attractive interest rates, generous inventory, motivated sellers, economic stimulus benefits and more. This remains arguably one of the best opportunities to buy a home in decades. A Great time to buy investment property too! We need to focus on those positives and rejuvenate ourselves, so we continue to remain on top.

Have a great week!
Monica Manocha
P.S. Remember that I am always here to help you, your friends and family with all their real estate needs.

The Bay Area Real Estate Market Update

“Change has come to America.”

Regardless of your political persuasion, this election was one for the history books. President Elect Obama, in his acceptance speech said, “It’s been a long time coming, but tonight, because of what we did, on this date, in this election, at this defining moment, change has come to America.”
In interviews following his win, Obama said that his first order of business will be to focus on restoring our economy. Only time will tell if the change he has promised becomes a reality but for now, President Elect Obama’s plans for the White House remain clear.
“We must move forward, quickly and aggressively, with a middle-class rescue plan that will create jobs, provide relief to families, help homeowners and restore our financial system,” said Obama.
Among the notable plans he has to help stimulate the economy:
Allowing savers to temporarily tap into their retirement plans without early withdrawal penalties
Require financial institutions participating in bailout to put a 90-day moratorium on foreclosures for homeowners “acting in good faith
Allow troubled homeowners to refinance to a loan insured by FHA
Create a 10% tax credit for homeowners who do not itemize their taxes
Create a $10 billion fund to help victims of predatory loans
Authorize bankruptcy judges to reduce mortgage principal
“If the government can bail out investment banks on Wall Street, then we can extend a hand to folks who are struggling on Main Street.”
Again, only time will tell, but the hope for something new and a better future for all of us is welcome news right now.

NAR President Charles McMillan concurs noting, “We’re in a good place. Realtors are excited by this historic election and stand ready to work with our new president and the new Congress on issues that are at the heart of the American dream of homeownership.”

Silicon Valley— Though buyers are still cautious, things seem to be brighter in Silicon Valley. Many of our Agents are gearing up their business for the start of 2009. Buyers—though cautious—are out touring properties, visiting open houses and meeting with their Realtors. We seem to have a lot of buzz, though little of it has resulted in notable amounts of activity. I think much of that is due to the volatility in the stock market over the last several weeks and the lack of knowing who our next President would be. Now that one of the two is settled, I think we should see a return to stability and security in this region.

My message this week to everyone is let’s embrace this time of change. Whether you are a Republican, a Democrat or an Independent, we all need to join together in restoring our market and move ahead from here with the bright prospects of our future just beyond us. It is very possible that the worst of times has passed. But even if they haven’t, real estate remains an important investment, not only financially, but personally as well. It is in times like these that we need to be reminded of and embrace the American dream and remind ourselves that owning a home is more than an investment—though it remains one of the best investments we will make in our lifetime. Our home is where we raise our families, build traditions and create memories that will last a lifetime. And I can’t think of a better investment in our lives and our own well-being than that.

Have a great week and here’s to our future,

Monica