My New Blog

Weekly Market Watch

DataQuick, the real estate information service that the media looks to every month, issued yet another gloomy report on Thursday. Frankly, I think the reports received from our offices each week, and from talking to all of those hardworking Coldwell Banker Sales Associates in the field, should be what’s making the headlines in our newspapers instead of DataQuick’s latest monthly statistics. We are actually working with buyers and sellers and understand our local markets.  We comprehend the intricacies of the various communities and neighborhoods we work with, and we actually know what’s happening out there.  Quite simply, they don’t know what we know about the market TODAY.  They can only report on what closed last month based on transactions that began 30 to 90 days prior.  We need to continue to remind our buyers and our sellers that what they see in the newspaper today is a reflection of the recent past – not necessarily a snapshot of the current market and certainly no prediction of the future.  Yes – it’s been a challenging market overall as of late, but we see definite signs of improvements that just aren’t reported anywhere else.

Here’s something current that I haven’t read about – we’re seeing a drop in month’s inventory in virtually every county in our area.  We’re seeing an increasing number of homes going into contract.  We’re seeing open houses in most areas that continue to teem with buyers anxious to take advantage of the low rates and plentiful selection.  We’re seeing a boost in the number of first-time buyers who don’t have to sell an existing home in order to make their purchase. Were seeing investors snap up great deals on REO and foreclosure properties.  We’re seeing high-end homes selling off-market - meaning that they sell without ever hitting the MLS - often with multiple offers and well over the asking price, (this also means that DataQuick won’t account for those homes in its statistics for sales and median prices next month).

In Petaluma, six different open houses received more than 30 attending groups apiece.  Pleasanton and Fremont have begun offering Bank Owned Property Tours and they are being met with huge success.  Open house attendance is up for the third consecutive week in Santa Rosa and Sebastopol. In Berkeley we saw multiple offers on a well priced listing. Danville sold a 2 million + property in less than a week. In Pleasant Hill a broker’s open that was supposed to close at 2:30pm stayed open until 7pm in order to accommodate the vast amount of walk-in traffic.  A Martinez open house had more than 50 attendees.  A Noe Valley listing had over 100 groups pass through it.

A Portola Valley home listed at $2.5 million had more than 100 groups through its open house and sold with three offers.  80% of Menlo Park sales were multiple offers.  In San Francisco a fixer in Hayes Valley sold for 20% over asking and multiple offer situations are once again becoming the norm.  The Market Street office notes busy opens on Sundays and on Thursday nights, and that homes that have been on the market for months are selling now.

Clearly, our government is taking the essential steps to allow the markets to recover in a way that stimulates the economy, keeps interest rates affordable, and helps buyers, sellers and investors alike.  At the time of writing this, we are waiting for a possible full 1% cut from the Fed. And again, we see the beginnings of the positive aspects in our San Francisco Bay Area markets on a daily basis.  Our continued optimism is grounded in what we see today, and in the eager eyes of our buyers and sellers.

Have a great week!

HOUSING CRISIS OR OPPORTUNITY?

Historically, Real Estate Has Been a Solid, Long Term
Investment

Looking at the last 40 years of real estate in California, we have seen very few times in which real estate values have dropped. In fact, according to the California Association of Realtors, since 1970 the real estate market in California has only dropped seven times, six times under 3.7% and only once at 4.5%. On the contrary, our market has seen remarkable growth. In 1970, the median cost of a singlefamily home in California was $26,000. Today, 37 years later, homes have seen a 2,165% increase, now selling for
$588,970.

Historically, Sonoma County Has Enjoyed Even Stronger
Success

According to the California Association of Realtors, in 1990 the median price of a single-family home in Sonoma County was $174,022. Today, just 17 years later, that same single family home is selling for $597,826 - a 244% increase. Certainly in recent months we have seen a shift from a seller's market to a buyer's market but that switch was necessary to continue a healthy flow of exchange amongst buyers and sellers.

The bottom line is that our economy couldn't maintain the double digit increases we saw in home prices in 2003 and 2004 without seeing a shift. If we continued to see an upstream of that magnitude we would nearly eliminate the first-time home buyers which could potentially drastically
hinder our economy. Shifts in our market are what keep our economy running smoothly.

Is Now the Time to Buy?

Now may be the time to buy: mortgage rates remain low (certainly by historical standards), prices have stabilized and there is a large selection of homes to choose from.

Certainly it makes a more exciting news story for journalists to dwell on the negative, but for smart consumers it is definitely more economically advantageous to seize opportunities as they present themselves. And this market may offer some tremendous opportunities.

While no one can predict the future, if history is any indication, then real estate over the long run will continue to be a solid investment. And that's good news for everyone - buyers, sellers and the real estate industry.

If you are ready to make an informed and educated decision about real estate, please contact me today. I would be happy to help you.

TARA POLLEY, GRI, ABR, Realtor
Coldwell Banker Office
707.535.8837 (Direct)
707.799.2004 (Mobile)
tara4home@aol.com
www.WelcomeHomeSonoma.com

SOURCE: California Association of REALTORS®

COLDWELL BANKER
Weekly Market Watch

Oct 15, 2007

Reports this week indicate that, in many areas, our more than 560 open houses were seeing steady streams of visitors, and buyer interest is up.  There are slower spots around the Bay Area to be sure, but for every slow spot, there is another that is seeing exceptional activity.  As I keep saying, real estate is a local industry.  The trends, numbers, statistics and "facts" we read about tell a regional story, but that story isn't indicative of market conditions in specific locations, neighborhoods and communities.  There are cold spots with high inventory levels, and there are hot spots where competition to buy a home is fierce.

The reality is this – the increased median prices that are reported in most areas are affected by the fact that, in those hotter markets, the prices have barely dropped, if at all.  In addition, homes in the $2 million plus range are selling quickly and over asking price.  There is a wide variety of homes available in several areas of the East and North Bays at bargain prices waiting to be snapped up.  In San Leandro, we're seeing condominiums now available for under $300,000.  In San Francisco and the Peninsula, sales activity is down because inventory is down – people are hanging on to their long term real estate investments in those areas.

It is nice to see that both buyers and sellers are starting to change their perceptions and recognize the localness of our real estate industry. Today's consumer is best-served by being an educated consumer. Those interested in learning more about how to navigate current real estate conditions – and how to take advantage of the buyer's market and historically low interest rates – should start that education with a LOCAL real estate professional instead of relying solely on the area newspaper or real estate blog. There are bargains to be had and now is the time to take advantage of them.

Refreshing, isn't it, to note that listing inventory reported by our offices is steady almost across the board?  Sales activity is also reported as being overwhelmingly steady.  Keep in mind that when the combination of price, location and condition are in alignment, boom, a house sells.

Have a great week!

Brought to you courtesy of :

TARA POLLEY, GRI, ABR, Realtor
Coldwell Banker
707-799-2004 Mobile 

It’s Time to Take a Deep Breath

By Ben Stein
THE NEW YORK TIMES
September 9, 2007
http://www.nytimes.com/2007/09/09/business/09every.html

Who would ever have dreamed that credit could be so thrilling? And yet tremors and shivers over credit, and especially over subprime mortgages, have led to some real panic in the financial markets, and rings of fire in the ventricles of the coldest-hearted financiers.

Despite the oceans of ink that have been written on this subject, it seems to me that a few points have rarely been made, and may be worth making now.

IT WASN’T ALL BAD
The subprime mortgage industry apparently helped some people either get into homes or stay in their homes. Yes, it was far from an unmixed good, as we have seen in vivid hues lately. But because of these mortgages, many thousands of Americans who would otherwise not have their own homes now have homes. (Much of the recent subprime mortgage activity was about refinancings, but not all.)

Owning your own home is generally considered the bedrock of the American dream, so this is a good thing, both socially and individually. Walking into your own home, seeing your own dogs waiting for you there, is a major blessing.

The percentage of those who have defaulted is still fairly small, possibly 10 percent to 15 percent of subprime loans, and maybe less. (And subprime mortgages are very roughly 10 percent to 15 percent of mortgages.) That means that the experiment with granting loans to less-qualified buyers worked to a point. I guess — as I have said before — that there was a reason these loans were called “subprime.”

The lending system, however, did go too far in the direction of laxity. Obviously, there should have been tighter standards at the lower end of the borrowing scale. “Stated” income (in other words, “unverified”) and “no doc” loans were probably not a great idea, except for borrowers who were well known to the lender or already had documents on file. There was excessive eagerness to put borrowers into these loans, and now we are all paying the price for the immense fees that the subprime lenders garnered.

This is what we economists call an externality: a cost associated with the transaction that is borne by society in general, not just the parties to the transaction. That cost will be whatever government programs are enacted to bail out borrowers in trouble — while those who lent the money get away pretty much scot-free.

THERE’S PLENTY OF BLAME TO GO AROUND
There has been major dishonesty about mortgages at every level. Subprime issuers in many cases did not tell borrowers what their full costs were going to be, especially when the interest rate reset. This will clearly become a problem, although we cannot yet measure its impact.

The bundlers of subprime debt into collateralized debt obligations did not always tell the buyers of this stuff — especially the foreign buyers — just how risky this paper was, and now the buyers are suffering. (The amounts at risk because of defaults, though, are generally small compared with the capital of the banks in question.)

Alas, there is a long tradition of the United States not telling foreign lenders just how dicey certain loans are. It goes back to the 19th century and American borrowings from Europe for railroads, bridges, canals and farmland. Caveat emptor. Caveat lender.

Today, some of the foreigners send us their toys with lead paint and we send them our bonds with (sometimes) toxic default rates. This isn’t a good thing, but it’s the way the world works. There are a lot of scammers out there. Foreign lenders have every right to be concerned about American standards of truthfulness and disclosure.

But what is often overlooked is that many borrowers, people who look at themselves in the mirror every morning, lied like madmen to get their mortgages.

Years ago, I spoke to a gathering of mortgage sales representatives. Their tales of buyer fraud were almost unbelievable. These salespeople were pretty aggressive themselves, and I wondered how many borrowers would wind up in tears from what they did. But their customers — so I was told — would say anything, sign anything, to get a loan.

The human animal is often dishonest, and if it takes telling a few fibs about income and money in the bank to get into a house, many people will do it. My only point here is that it is not just the big boys whose lies and entrapments got us into trouble. Plenty of ordinary citizens played along.

IT’S GOING TO TAKE TIME
Real estate crashes do not end quickly. Realtors have a rule: there are no soft landings. Residential real estate is like a huge ship. Once it starts moving, it’s hard to stop. Once it slows down, it’s hard to make it speed up again.

We lucky citizens of sunny Southern California have been through some hair-raising real estate crashes since I moved there in 1976. The worst started in the spring of 1990 (just as I closed on my not-at-all-lavish Malibu home). Prices did not recover for a good eight years. That was harrowing, but there is a lesson here: real estate crashes are not like stock fluctuations, in which the market can lose 10 percent in a month and gain it back a few months later. In many cases, real estate takes a long time to turn around.

There is a good side to this, too. Namely, the time to buy real estate is when it’s down. Now, or some time close to now, buyers will be able to find real bargains. In time, maybe a long time, prices will recover and a new peak will be reached. But when everyone is crying the housing blues is the time to buy. Bargain hard. In many regions, sellers want to hear any offer right now.

GOD BLESS THE FED
We should be thankful indeed for the Federal Reserve. I know that some strict disciplinarians want to let the markets go through hell and let borrowers and investors suffer. Except for the possibility that this could provide them with some sadistic glee, I don’t see the point.

A few weeks ago, the markets were in a genuine panic. The traders were erupting with fear in some cases, and with greed as they went short in other cases. If the Fed had not stepped in to supply liquidity and confidence — and to send these overtired traders to their rooms for a time-out — there could have been real problems. Innocent people could have been terribly hurt.

We are lucky to be at a stage of capitalism when we have a Federal Reserve, led by Ben S. Bernanke, and Alan Greenspan before him, that will stop a hysterical market meltdown that is not based on fundamentals. The free marketeers may want to see suffering. Let them watch a boxing match. There is no reason for the innocent to be impoverished because traders panic. I know that the Fed’s rescue mission saved some rich people from distress, too. It’s a small price to pay for keeping the economy on an even keel.

THIS IS A BIG BOAT
“There is a lot of ruin in a nation.” This is from the greatest of all economists, Adam Smith. There is especially a lot of ruin in a nation with the economic power of the United States. I get to the point of laughing when I read doom-saying articles in the business sections of newspapers or watch Jim Cramer on CNBC.

Yes, there are real problems: housing, mortgage defaults, losses at financial firms, rot in hedge funds. But over all, things will be fine. Unless there is a genuine dollar crisis or a devastating recession (very unlikely), things will work out. This economy is very big and very solid. It cannot be derailed for long by anything we have seen lately.

If I were the editor of the business section for just one day, I would run one immense headline: “Everything Is Going to Be Fine. Go Back to Work.”

Ben Stein is a lawyer, writer, actor and economist.