It’s Time to Pick Ourselves Up and Dust Ourselves Off…Yes We Can!
Regardless of your political persuasion, Tuesday’s inauguration of the 44th President of the United States was one for the history books and I think we all agree that we hope that the change President Obama has promised will come sooner rather than later.
In the words of our new President during his inaugural address, “Starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking America. For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act—not only to create new jobs, but to lay a new foundation for growth.”
There’s no question, Obama has his work cut out for him. This week CNN reported, “The scope and intensity of problems facing President Obama are similar only to those that Franklin D. Roosevelt faced in 1933.”
Obama is expected to hit the ground running. History shows that the first year of a President’s term is most critical. At some point, he will own the problems he has inherited and so time is of the essence; he knows he must take immediate action.
In the short run, Obama has pledged to work with Congress to implement aggressive policies—including as I referenced last week, making better use of the TARP funds—to prevent foreclosures and strengthen existing home sales. With the second half of the TARP funds now available to him (totaling some $350 billion) we should see the beginning use of those dollars sometime within his first 100 days in office. Obama has promised to devote $50 billion to $100 billion to a new foreclosure prevention program, leaving him between $250 billion and $300 billion of TARP money to address the continuing credit crisis.
As Obama was being sworn in, the world as we know it continued. One of the current issues most affecting our market is the drop in mortgage loan limits for conventional financing as of the end of 2008. This is dramatically hurting home sales and trade-up activity in higher price ranges. According to NAR, “The latest existing home sales data shows transactions under $400,000 are 3 percent below a year ago. However, sales of homes priced at $750,000 or more have declined a whopping 47 percent.” Buyers who need jumbo mortgages must pay interest rates that are nearly 2 percentage points higher than conventional financing; as a result, the high-end market is very slow and buyers in higher price ranges are at a severe disadvantage.
Currently NAR is pushing for the permanent increase of mortgage loan limits to that $729,750 cap. According to a statement released this week by NAR, “To illustrate in dollar terms if mortgage limits are permanently raised to $729,750…the mortgage payment on such a loan would drop by $942 per month by lowering interest rates 2 percentage points. Over the life of a 30-year loan, the homeowner would save $338,000.”
Especially here in our market, we need the increased loan limits so people in all prices are able to purchase. I am a firm believer that every segment of the housing market needs a turnaround to spark an overall housing recovery.
With this information in tow, let’s take a look at this week in real estate, including Wednesday’s release of DataQuick figures: http://www.dqnews.com/News/California/Bay-Area/RRBay090121.aspx
East Bay—The Castro Valley office reports that it has seen the low end picking up ($100-250K) driven by lots of FHA loans for first time home buyers, low interest rates and great prices. Prices in Castro Valley continue to dip, making it a hot market due to the desirability of the area. In fact, there is a single family residence currently listed in Castro Valley for $199,000, which is an unseen precedent for this area. Our Danville office reports that the market is slow but steady. Our agents are reporting good attendance at open houses and sellers are getting more realistic which are two signs of good things to come. Our Fremont office notes that we have had a slow down in the REO market that reflects in the decreasing listings and sales in our office. The REO market has slowed due to the temporary freeze that some loan agencies incurred during the holidays. Our Orinda office notes that Agents are talking about working with many buyers and how excited they are about what is about to happen in the real estate market. Finally, our Walnut Creek office shares that activity has increased. Open houses have been well attended and buyers are finally starting to take action. People who have been renting have stated they believe prices have finally hit bottom and they are ready to buy.
San Francisco—Our Lombard office notes that we’re seeing new listings and some December resurrected ones are coming on. Open house traffic is light though increasing. The hottest market in this office is the $400,000 to $700,000 range with REOs leading the way. One word of caution: buyers don’t get too complacent. One client waited for the third day to see a new listing on the market and by then the listing was already ratified and they had to compete with three back-up offers. Our Market Street office notes that Agents are signing up listings and getting good traffic at their open houses, they are just waiting for offers to be written. The Agents with qualified buyers that are looking at a property say that buyers are holding off sure that any day prices are going to soften or money may get a little cheaper. Our Noriega office notes that though we seen an active floor and LeadRouter requests, we are not seeing an uptick in sales.
Santa Cruz County—Listings seem to be coming on slow though the market continues to be driven by REOs. We do see multiple offers, though almost solely on REO properties.
Silicon Valley—Our San Jose Almaden office notes that condition and aggressive pricing yield sales even with conventional sellers. Almaden days of inventory is 288 days and Blossom Valley is at 105 days. But, we just sold a beautiful Almaden home in four days with aggressive pricing. Sellers consider this before you place your home on the market. Our San Jose Main office notes a series of increases in buyer activity, weekend traffic and listing inventory. There is good activity in the $400-700K range. Our Saratoga office notes that the luxury market remains slow and REOs are still the hottest area of the market.
South County—Our Gilroy office reports that we are starting to see the market pick up with buyers becoming more active now that the holidays are behind us and interest rates are better than ever. We are seeing great opportunities for the first time buyer and investors. Our Hollister office reports that we are seeing multiple offers on most REO listings. In other updates, REO listing inventory is decreasing, floor activity is on the rise and prices are decreasing. Our Morgan Hill office reports that South Valley homeowner’s are in mourning over their declining property values though buyers continue to rejoice over how affordable homes are becoming coupled with today’s low interest rates. Agents are delivering this message loud and clear: It’s time to buy and if you don’t have to sell, don’t. Sellers face fierce price competition from neighboring homes that are either short sales or REOs.
If nothing else, this week’s change in executive leadership of the United States of America changed—even if it was slightly—consumer confidence at a time when we need it most. During his acceptance speech in November, Obama repeated in a rhetorically symbolic gesture, “Yes, we can.” If it provides any solace in this time of challenge, I would agree with the words of our now President and add:
Yes, we can move past this challenging market.
Yes, we can rebuild our market to its once robust roots.
Yes, we can keep things in perspective and remember that we came from one of the hottest real estate markets of our time and today’s market is the economy moving back into equilibrium.
Yes, we can remember that with today’s low interest rates, motivated sellers and generous inventory, it’s a great time to buy!
Yes, we can remain united and be reminded that this too shall pass.
It’s just a matter of time. So let’s collectively pick ourselves up, dust ourselves off and move forward as our future is bright.
Regardless of your political persuasion, Tuesday’s inauguration of the 44th President of the United States was one for the history books and I think we all agree that we hope that the change President Obama has promised will come sooner rather than later.
In the words of our new President during his inaugural address, “Starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking America. For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act—not only to create new jobs, but to lay a new foundation for growth.”
There’s no question, Obama has his work cut out for him. This week CNN reported, “The scope and intensity of problems facing President Obama are similar only to those that Franklin D. Roosevelt faced in 1933.”
Obama is expected to hit the ground running. History shows that the first year of a President’s term is most critical. At some point, he will own the problems he has inherited and so time is of the essence; he knows he must take immediate action.
In the short run, Obama has pledged to work with Congress to implement aggressive policies—including as I referenced last week, making better use of the TARP funds—to prevent foreclosures and strengthen existing home sales. With the second half of the TARP funds now available to him (totaling some $350 billion) we should see the beginning use of those dollars sometime within his first 100 days in office. Obama has promised to devote $50 billion to $100 billion to a new foreclosure prevention program, leaving him between $250 billion and $300 billion of TARP money to address the continuing credit crisis.
As Obama was being sworn in, the world as we know it continued. One of the current issues most affecting our market is the drop in mortgage loan limits for conventional financing as of the end of 2008. This is dramatically hurting home sales and trade-up activity in higher price ranges. According to NAR, “The latest existing home sales data shows transactions under $400,000 are 3 percent below a year ago. However, sales of homes priced at $750,000 or more have declined a whopping 47 percent.” Buyers who need jumbo mortgages must pay interest rates that are nearly 2 percentage points higher than conventional financing; as a result, the high-end market is very slow and buyers in higher price ranges are at a severe disadvantage.
Currently NAR is pushing for the permanent increase of mortgage loan limits to that $729,750 cap. According to a statement released this week by NAR, “To illustrate in dollar terms if mortgage limits are permanently raised to $729,750…the mortgage payment on such a loan would drop by $942 per month by lowering interest rates 2 percentage points. Over the life of a 30-year loan, the homeowner would save $338,000.”
Especially here in our market, we need the increased loan limits so people in all prices are able to purchase. I am a firm believer that every segment of the housing market needs a turnaround to spark an overall housing recovery.
With this information in tow, let’s take a look at this week in real estate, including Wednesday’s release of DataQuick figures: http://www.dqnews.com/News/California/Bay-Area/RRBay090121.aspx
East Bay—The Castro Valley office reports that it has seen the low end picking up ($100-250K) driven by lots of FHA loans for first time home buyers, low interest rates and great prices. Prices in Castro Valley continue to dip, making it a hot market due to the desirability of the area. In fact, there is a single family residence currently listed in Castro Valley for $199,000, which is an unseen precedent for this area. Our Danville office reports that the market is slow but steady. Our agents are reporting good attendance at open houses and sellers are getting more realistic which are two signs of good things to come. Our Fremont office notes that we have had a slow down in the REO market that reflects in the decreasing listings and sales in our office. The REO market has slowed due to the temporary freeze that some loan agencies incurred during the holidays. Our Orinda office notes that Agents are talking about working with many buyers and how excited they are about what is about to happen in the real estate market. Finally, our Walnut Creek office shares that activity has increased. Open houses have been well attended and buyers are finally starting to take action. People who have been renting have stated they believe prices have finally hit bottom and they are ready to buy.
San Francisco—Our Lombard office notes that we’re seeing new listings and some December resurrected ones are coming on. Open house traffic is light though increasing. The hottest market in this office is the $400,000 to $700,000 range with REOs leading the way. One word of caution: buyers don’t get too complacent. One client waited for the third day to see a new listing on the market and by then the listing was already ratified and they had to compete with three back-up offers. Our Market Street office notes that Agents are signing up listings and getting good traffic at their open houses, they are just waiting for offers to be written. The Agents with qualified buyers that are looking at a property say that buyers are holding off sure that any day prices are going to soften or money may get a little cheaper. Our Noriega office notes that though we seen an active floor and LeadRouter requests, we are not seeing an uptick in sales.
Santa Cruz County—Listings seem to be coming on slow though the market continues to be driven by REOs. We do see multiple offers, though almost solely on REO properties.
Silicon Valley—Our San Jose Almaden office notes that condition and aggressive pricing yield sales even with conventional sellers. Almaden days of inventory is 288 days and Blossom Valley is at 105 days. But, we just sold a beautiful Almaden home in four days with aggressive pricing. Sellers consider this before you place your home on the market. Our San Jose Main office notes a series of increases in buyer activity, weekend traffic and listing inventory. There is good activity in the $400-700K range. Our Saratoga office notes that the luxury market remains slow and REOs are still the hottest area of the market.
South County—Our Gilroy office reports that we are starting to see the market pick up with buyers becoming more active now that the holidays are behind us and interest rates are better than ever. We are seeing great opportunities for the first time buyer and investors. Our Hollister office reports that we are seeing multiple offers on most REO listings. In other updates, REO listing inventory is decreasing, floor activity is on the rise and prices are decreasing. Our Morgan Hill office reports that South Valley homeowner’s are in mourning over their declining property values though buyers continue to rejoice over how affordable homes are becoming coupled with today’s low interest rates. Agents are delivering this message loud and clear: It’s time to buy and if you don’t have to sell, don’t. Sellers face fierce price competition from neighboring homes that are either short sales or REOs.
If nothing else, this week’s change in executive leadership of the United States of America changed—even if it was slightly—consumer confidence at a time when we need it most. During his acceptance speech in November, Obama repeated in a rhetorically symbolic gesture, “Yes, we can.” If it provides any solace in this time of challenge, I would agree with the words of our now President and add:
Yes, we can move past this challenging market.
Yes, we can rebuild our market to its once robust roots.
Yes, we can keep things in perspective and remember that we came from one of the hottest real estate markets of our time and today’s market is the economy moving back into equilibrium.
Yes, we can remember that with today’s low interest rates, motivated sellers and generous inventory, it’s a great time to buy!
Yes, we can remain united and be reminded that this too shall pass.
It’s just a matter of time. So let’s collectively pick ourselves up, dust ourselves off and move forward as our future is bright.
Until next week,
Have a great one & please let me know how I can help you or someone you know with their real estate needs.
Monica Manocha Re, CMRS
408 399 1495
