Exploring Silicon Valley Real Estate & Community Life
By Alicia Lanier, REALTOR
I will be on vacation until January 2, 2009, and will resume my blog in the New Year. I hope and believe that 2009 will be a more positive one for each of us!
Meanwhile, I wish you and yours a jolly holiday season and invite you to click on Happy Holidays for my special musical greeting for you.
Here’s the final Weekly Marketwatch for 2008 from Joe Brown, President of Coldwell Banker Silicon Valley-Monterey Bay-East Bay:
DataQuick News has released its November report which unveiled some pretty expected numbers. Among them:
The median price paid for all new and resale houses and condos combined in the nine-county Bay Area fell to $350,000 last month. That was down 6.7 percent from $375,000 in October and down a record 44.4 percent from $629,000 in November 2007. (The median price in Santa Clara County fell 34 percent to $450,000 from $678,000 in November last year.)
The 9-county November median sale price stood at its lowest since it was $350,000 in September 2000. It was 47.4 percent below the peak median of $665,000 reached last year in June, July and August.
The median fell on a year-over-year basis for 12 consecutive months, yanked lower by several factors: price depreciation; a shift toward more sales in the less-expensive inland markets; slower high-end sales; and buyers’ preference for lower-priced foreclosures.
A total of 5,756 new and resale houses and condos closed escrow in the region last month. That was down 24.4 percent from 7,613 sales in October but up 12.3 percent from 5,127 sales in November 2007.
As expected, the allure of foreclosures continued to drive sales in affordable inland markets. Last month 47.6 percent of all homes that resold in the Bay Area had been foreclosed on at some point in the prior 12 months, up from 44 percent in October and 10.1 percent a year ago.
At the county level, foreclosure resales last month ranged from 10 percent of resales in San Francisco to 63.6 percent in Solano County. In the other seven counties, November foreclosure resales were as follows:
Also in the news this week, the Federal Reserve met Tuesday and decided to cut a key short-term interest rate to a record low range of zero to 0.25 percent, from the previous 1 percent. According to USA Today’s December 17, 2008 article Fed cuts interest rates to near zero to combat economic recession, “The move sent stocks soaring as the Dow Jones industrial average surfed 4.2% and broader indexes jumped more than 5 percent after the central bank said it would accelerate its use of nonconventional tools to stimulate the economy, like buying mortgage-backed securities or Treasury notes.”
Soon after the Fed announced the cut, U.S. 30-year mortgage rates dipped, too. According to Reuters.com’s December 16, 2008 US 30-year mortgage rate dips after Fed cut, “The average interest rate on a 30-year fixed mortgage dipped to 5.01 percent on Tuesday from 5.06 percent a day earlier, Zillow said. A week ago, the rate was 5.29 percent.”
There is much discussion that before long we will see mortgage rates at 4.5% which could spur a great deal of positive attention for our industry. If the Treasury does in fact lower the rate, present homeowners who want to refinance would be able to do so at a historically low rate. According to the Wall Street Journal, “up to 34 million households would be able to do so, at an average monthly savings of $428—or a total reduction in mortgage payments of $174 billion. This is a permanent reduction in payments and is thus likely to spur appreciable increases in consumption.”
As I’ve said before, 2008 was nothing short of a wild, wooly, heart-pounding rollercoaster ride. From a real estate perspective, I think we’re all glad this ride is over. What will 2009 bring us? Only time will tell but I tend to agree with the California Association of Realtors which predicts that we will see a continued increase in sales with projections at a 12.5 percent annual increase in ’09. CAR also predicted, “The market will continue to experience large year-to-year decreases in the coming months before leveling out in 2009…The statewide median price will further decline by 6 percent in 2009 to $358,000.”
We may or may not be out of the woods. But even if we aren’t, we are very close. Over the next several months, real estate will be gaining a great deal of attention as the government works to correct the housing sector. As our politicians work to do so, we as consumers can focus on the silver linings:
It will be interesting to look back at this Weekly Market Watch a year from now to see how things have changed. Will we be out of the woods a year from now? Will these tough economic times be a thing of the past? All we can do is hope and continue to move forward, keep our heads held high and keep our eye on the prize.
I’d like to take this opportunity to wish each of you very warm and happy holidays. The past year has certainly been a challenging one for our nation but I am excited about what the coming year has in store.
I hope you enjoy your holidays and I wish you and yours a very happy New Year.
See you in ’09!
JOE BROWN, President, Silicon Valley~Monterey Bay~East Bay
By Alicia Lanier, REALTOR
Last week with its Thanksgiving holiday was certainly a time of bounty and blessings. Even the stock market steadily pushed skyward for several consecutive days on its roller coaster ride of the past few months – before taking another precipitous plunge again yesterday. In either case – stocks up or down – on almost a daily basis, I run into someone who wants to talk real estate and, especially, wants to know how “the market” is doing.
Just in case you’ve been wanting to ask that question of a REALTOR, here’s a FAQ (Frequently Asked Questions) to give you some guidance:
1. “How is the market?”
Most REALTORs get this question almost every day. If you were to rely solely on what you read in the paper or see on TV, you’d think the housing market was in the tank. However, the fact is that 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, our country cannot be fixed without first fixing the housing sector. Real estate should be gaining a great deal of attention over the next several months. Whether that attention comes in the way of tax benefits, home ownership credits, subsidies or interest rate stabilization, or something else, the leaders of our country will need to look at correcting the housing sector. Couple that with the possibility that we may be on the brink of a turn-around and our industry may be headed in the right direction.
Another critical factor to consider is that regardless of the state of the economy, people always need to buy and sell homes. Births, deaths, marriages, divorces, job relocations and other important life changes trigger the buying and selling of real property. These life changes don’t stop because the economy slows down; as such, no matter what state we are in, in this country, real estate will continue to be bought and sold.
Real estate is not simply an investment. It’s not a stock. It’s not like owning a bar of gold. Real estate is where we live. It’s where we build memories. It is where we raise our family.
For 90% of Americans, they’re not selling their house today. They’re not selling tomorrow. Instead, if history is any indicator, their home should increase in value. My guess is that if we were able to jump ahead 10 years from now, we’ll be looking at this market as a thing of the past—a time when we all probably should have been buying a lot more real estate.
2. “Is now a good time to buy?”
Assuming that you have a job and are relatively financially secure, it’s probably one of the best times to buy in decades. For many people, now is an amazing time to buy real estate. There remains a lot of inventory in most markets. And sellers are generally motivated. Just look at our market. Why are so many people buying homes? In many instances, these buyers are buying now because they believe that five years from now they’ll be the ones we’re all talking about at dinner parties, saying ”I wish I had done the same thing.”
Are you looking in today’s market? Has the worst of times passed? We really can’t be sure but if you are able to weather the storm, there may not be a safer port than real estate. If you wait, you may not be able to afford to buy 3-5 years from now.
3. “Is it a good time to sell?”
If you don’t need to sell, don’t. My job is to advise my clients and I can truly say that if you don’t need to sell, now isn’t the best time. But, if you have to sell (whether you are relocating, you can no longer afford your home, etc.), I do have some tips:
To put things in perspective, last month about 1,200 homes sold in our countywide market. What does that tell us? People are buying. People are selling. But buyers are looking for value and if you are selling you must position yourself right to gain the attention and interest you need.
Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally. Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634
