Bay Area REBlog

More great news for real estate!  On July 30, 2008, the President signed the Housing Economic Recovery Act of 2008 into legislation – this supposedly will go a long way in helping to stabilize the housing market and will make home ownership more attainable for many Americans. So what does the government hope to accomplish through this new legislation? 

• Add stability to the market by supporting Fannie Mae and Freddie Mac.
• Help first-time homebuyers with increased loan limits.
• Provide a $7,500 tax credit that is effectively a no-interest loan that is payable over 15 years ($500/year) after the credit is received on the homeowners’ first-year tax return.

The most immediate benefit of this bill is that the temporary increases in conforming and FHA loan limits that were part of the Economic Stimulus Plan, signed earlier this year, were made permanent.  That means that more people can buy more expensive homes without having to pay the higher mortgage rate that is associated with jumbo loans over $625,500, which equates to lower mortgage payments over the life of the loan.

While it’s hard to predict the actual impact on housing sales, this gives hope for the long-term health of our industry.  I don’t expect the elements of this bill to be a major housing stimulus in 2008, but it is good news overall and bodes well for consumers and the real estate industry alike.

For a full look at the provisions outlined in the bill click here.

Now, here’s a look at market activity around the San Francisco Bay Area courtesy of Joe Brown, Coldwell Banker, President Silicon Valley-Monterey Bay-East Bay.

East Bay:  We’ve been hearing a lot about the East Bay’s obsession with REOs.  Well while some bargains can be found in this niche, it is important to underscore that they also come with their fair share of issues.  The REOs are definitely the best deal in town, but the amount of effort and heartache that may go into them require determination and time.  It’s something to definitely consider before you walk down the path of an REO.  We are seeing a lot of REOs in Oakland and West Contra Costa County, many of which are getting two to three offers.  Some of our more in demand East Bay markets continue to feel a shortage of inventory.  To give you an idea of how the Berkeley-area market is fairing there are 2.7 months in Berkeley, 1.7 months in Albany and 3.2 months in El Cerrito.  Good news for the San Ramon Valley.  Inventory in San Ramon dropped significantly this past week and new pending sales rose dramatically.  We haven’t seen that happen during a July (traditionally a slow vacation month) for some time in recent memory. Monterey County:  Steady but slow seems to be the current pace. North Bay:  It is taking longer for buyers to find their own perception of value with such confusing market signals which might explain why buyers are taking longer to make their decisions.  Sonoma County continues at a pretty feverish pace in the entry level market thanks to REOs.  There are multiple offers in this niche but once you rise above the $500,000 to $600,000 market, properties often languish.  In Marin, there is a bit of a traditional summer slowdown for this market, too. As a result, many sellers are reducing their prices in an effort to remain competitive. Peninsula:  Menlo Park remains a mixed bag with lots of multiple offers.  Some multiples don’t even hit the list price while others go way over.  Another symbol that you just can’t predict this market.  Palo Alto inventory remains very low with LOTS of activity at opens which is another great symbol of good things to come this fall along the Peninsula. 

San Francisco:  Vacations continue to take their toll on the City.  Things have simply slowed because clients aren’t in town.  Come late August and September things will certainly bounce back.

Santa Cruz County:  The luxury market continues to drag.  However, prices in the introductory and move-up markets that are priced 5-10% below the last sale in the area are getting attention.  Watsonville continues to be very active with bank owned sales in the market and there continues to be pent-up demand. South County:  The annual Gilroy Garlic Festival really slowed things down for this market.  However, now that the festival is over, sales continue to trend up, especially in the lower-priced REO and entry-level properties.  Many of the REO properties continue to enjoy multiple offers.  Hollister noted that the only sales that they saw this week were REOs, a sign of the times in this market.  This is a good lesson for sellers in this market.  If you need to sell, you need to be competitive with the REOs. Silicon Valley:  Sellers take note:  Buyers are stepping up for the homes that are well presented and well priced.  In fact, this isn’t a bad lesson for every market to embrace.  Overall, the Silicon Valley market is moving pretty smoothly.  Interestingly enough, in Los Altos, the market that seems to be slowest is the condo/townhome market.  Los Gatos shares that the old adage of homes that are priced right and show well and those buyers/sellers who can work through and be patient through the negotiations are moving and finding success in today’s market.  San Jose Almaden concurs noting that the market remains fairly steady and well-cared for properties that are priced correctly often sell fast.

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