Market Confusion Continues

This past week was brutal!   Last Saturday & Sunday we had the most traffic ever to come through our open houses.  However, on Monday (MLK Day) foreign stock markets crashed.  On Tuesday the Fed dropped the Prime Rate by ¾ of a point.  And by Wednesday, according to several agents, local buyers were retracting their offers to purchase homes.  Then, at the end of the week, Congress came up with a plan to restore confidence and stability in the market.  Here it is, as reported by the California Association of Realtors reported on their website: “Under the terms of the proposed stimulus package, the conforming loan limit — the maximum loan amount that government-sponsored enterprises like Fannie Mae and Freddie Mac may purchase or guarantee on the secondary market — will be raised from $417,000 to as high as $725,000 in high-cost areas.” 

The Senate has not – and several Senators have telegraphed that they may not – sign onto the plan, however.  More should be revealed on Monday.

The increased “conforming rate” would help our local market by greatly increasing the buyer pool for folks trying to sell their condos or lower-priced homes allowing them, in turn, to trade up into our higher-priced market place.

Are we now experiencing a “buyer’s market”?  No.

We continue to get calls from prospective home buyers who believe that it has become a “buyer’s market” in our area.  In order to give one of our buyer clients some specifics re the current market yesterday, I pulled up all the recent entry-level home sales (up to $1.7m) listed on the MLS in Palo Alto and Los Altos that had sold since Sep. 1st and had a min. of 3bd/2ba.  Here’s what I found:

Palo Alto Los Altos

Total Sold since 9/1/07

42 16

Sold in 14 days or less

32 11

     Median Sales Price

$1.48m $1.59m

     Avg. Percent of List Price Rec’d

111% 104%

Sold in 15 days or more

10 5

     Median Sales Price

$1.41m $1.56m

     Avg. Percent of List Price Rec’d

100% 96%

Current no. of Homes for Sale

28 30

     Avg. no. past 10 years

61 47

The bottom line: demand for homes exceeds supply in this market place.  It was reported this week in the SF Chronicle that in 2007 the Bay Area added 54, 000 jobs.  It’s expected, they said, that at least 15,000 jobs will be added in 2008.  While the housing market nationally and in the wider region of the Bay Area may be the slowest since the Great Depression, the housing market from Menlo Park through Los Altos is very strong; homes sell quickly, often with multiple offers.

Home purchases should always be viewed as a long-term investment (5 to 10 years).  The key to real estate success in our area is selection, not timing.  Get professional help.  Select carefully.

Steve TenBroeck