Market Flash  October 2007

Time to Take Advantage

Intro: The fall season, a time which beckons change, is here.  For eager home buyers and sellers wishing to make a change before the New Year, now is the time to take advantage.  Despite what is being reported in the news media, real estate in Northern California remains a strong investment and the opportunities are out there.  Interest rates remain steady and the demand for well-priced homes remains strong.  Read on. 

Statistics:

Statewide: C.A.R. reported the median resale price of a single-family detached home in California for August as $588,970, a 2% increase over the revised $577,300 median for August 2006. The August 2007 median price increased 0.5% compared with Julys revised $586,030 median price.  Sales activity year-over-year decreased 27.8%, which is less than last August.  Unsold resale inventory in August was sufficient for 11.8 months, compared to  we said 6.8 months a year ago, CAR claims 5.9 months now  of a year earlier. Median number of days till sale was 56, up from 51 a year earlier. 

Bay Area: August median price, at $655,000, is down a sliver for the month, up a respectable 4% for the year. Sales activity is down 25% for the year, about mid-pack.  Alameda and Contra Costa counties are holding their medians well.  They remain two of the more affordable counties in the Bay Area, with lots of attractive entry-level and move-up housing.  Marin Countys huge jump in median, together with the decline in sales of over a third since last year, points to lots of top-end and all-cash purchases.  Monterey County median leads this months pack for month-to-month, but activity is down almost 38% for the year.  Napa, Sonoma, and Solano Counties are showing declines in both median and activity.  Some of this may be attributable to a very weak second-home market.  San Benito Countys roughly 9% decline in median puts it near the middle of the pack.  San Francisco Countys median price continues strong and its year-over-year decline in sales, at less than 14%, is actually the smallest dip for this month.  We suspect that cash purchases, and purchases by overseas buyers, are playing a role here as they are in Marin.  Santa Clara Countys median price took a slight leap between March and April and since then has been in the range of $713,000 to $720,000, which may be able to hold in the face of generally weak medians; sales activity is down almost 35% from last year.  Santa Cruz Countys $669,500 median has dropped from last months $720,000, near its historic high.

Sacramento/Capitol Region:  Five zip codes  Granite Bay, part of Auburn, and three areas of Sacramento  had improved medians for August.  In sales, Loomis more than doubled year-over-year; Granite Bay was the only community to show an increase in both sales and median; Shingle Springs and parts of Roseville, Sacramento, and Rocklin also posted better sales.  El Dorado and Placer Counties are holding their own while Sacramento County continues to experience declines in its median, both month-over-month and year-over-year. 

Interest Rates*: Thirty-year fixed rates are 6.82% nationally, but edging up on 7% in California; other statewide figures are 6.59% for conforming 15-year fixed and 6.21% for conforming 5/1 ARM. 

Inventory: Still plentiful in many areas throughout Northern California.  As usual, San Francisco and the Peninsula could always benefit from an increased selection of homes. 

Overall Assessment:  Bank on inventory (in many areas), emphasize curb appeal and staging.  Gently discourage bargain-hunting  yes, prices have cooled in many areas, but sellers still want acceptable return on investment.  Understand that qualifying for a loan may be a collaborative process.  Be ready to match property to prospect carefully, especially with overseas or out-of-area buyers.  Remember, and encourage your clients to remember, that a residence is a long-term purchase and that finding the right one is well-rewarded effort.  If you take advantage of available information and experience, you can still make sellers and buyers  and yourself  happy.

*Area interest rates are reported to be as follows:

Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of October 1, 2007, the 30-year fixed with one point is 6.75%, the 15-year fixed with one point is 6.25% and the 5/1 ARM with one point is 6.375%, on non-conforming loans of $500,000.