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Bay Area Homes Sales Down, Prices Up

Bay Area Homes Sales Down, Prices Up

It sometimes takes a while to compose the stats, but the number of Bay Area homes sold in January fell more than usual from December and dropped below the year-ago level for the first time in 17 months. The median sale price rose above last year for the fourth straight month but dipped 8 percent from December as demand shifted more toward foreclosures and less-expensive inland homes.

A total of 4,853 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was down 38.0 percent from 7,828 sales in December and down 3.9 percent from 5,050 sales in January 2009, according to MDA DataQuick of San Diego.

A decline in sales between December and January is normal for the season. On average, sales have dropped 28 percent between those two months since 1988, when DataQuick’s statistics begin.

Last month was the first since August 2008 in which sales fell on a year-over-year basis. January’s 4,853 sales total was 22.5 percent short of the average January tally – 6,261 – since 1988. Sales last month were also the second-lowest for a January since 1995, behind 3,586 sales in January 2007. The peak sales total for a January was in 2005, when 8,298 homes sold.

“The January figures show the market lost some of the momentum it had built up in the second half of ’09, when home buyers rushed to ensure they could take advantage of a tax credit, ultra-low mortgage rates and lower prices,” said John Walsh, MDA DataQuick president.

“It’s difficult to gauge how much of the slowdown stems from a thinner inventory of homes for sale in some areas as opposed to lower demand,” he said. “Whether last month’s relatively weak performance portends any substantial, lasting changes in the market is unclear. One month doesn’t make a trend and, in the past, January hasn’t proven to be very predictive.”

The January sales figures are based largely on deals that were struck during the holidays (late November through early January) and that closed escrow in January. In the Bay Area and across California, the sales data indicate that investors and first-time buyers remained the most committed home shoppers, and that helped skew the sales toward foreclosures and other lower-cost properties.

Sales out of our offices are showing a much different picture for the months of February and so far in March.  Real estate that is priced right in Menlo Park, Atherton, Palo Alto and other areas  are getting multiple offers and many are selling at above listing price.  Once the sales figures catch up, you will see the luxury real estate market showing a change from a buyers market to somewhere in the middle between buyers and sellers market.  If you have your home for sale and it is priced right, the sellers will get offers.  If you are overpricing, it’s a buyers market on your home as the offers will trickle in at lowball rates. SF Bay Area real estate is a good buy right now.

Luxury Real Estate – Inventories Shrinking?

October 30, 2009 Real Estate News No Comments
Luxury Real Estate – Inventories Shrinking?

“THE DEVIL IS IN THE DETAILS…” Or so the famous saying goes. And when it comes to really understanding the various reports and events unfolding in the economy, it’s important to take a look at the details – not just the headlines. Here’s what you need to know.

On the inflation front, the Producer Price Index, which measures wholesale inflation, unexpectedly fell due to a drop in energy prices. While that seems like good news on the surface, keep in mind that next month’s number could climb higher again, as oil and natural gas have both been on a tear higher lately.

In housing news, Housing Starts and Building Permits both came in a bit below expectations, but this may be a sign that builders are exercising some caution – particularly in the face of the $8,000 tax credit for first time homebuyers that is presently set to expire on November 30th. Existing Home Sales came in better than expected – and a whopping 45% of those homes were sold to first time homebuyers – rushing to move in on that credit. Recent studies have shown that many who qualify for this tax credit aren’t even aware of it…so please let me know if you or someone you know needs more information – the clock is ticking!

Additionally, the level of existing homes inventory shrunk to a 7.8 month supply, down from a recent high of 10.1 months in April.

Chart: Existing Home Sales (Supply in Months)

Inventory shrinking...

In other news, 3rd quarter earnings season continues, where companies report their status as of the end of September. While many companies are beating expectations, it’s important to realize that many of those companies achieved better earnings by cost cutting and layoffs, not from increased sales. This is a big disconnect between Wall Street and “Main Street”. Stocks are rocketing higher based on these “positive” reports, but the cost cutting and job cutting measures can only go so far…you can’t simultaneously grow the ranks of unemployment – and then grow your business, hoping for increased sales to those same people who are without jobs.

Last week’s Jobless Claims numbers seem to confirm this as Initial Jobless Claims rose more than expected. In addition, the number of individuals continuing to receive unemployment benefits fell to the lowest level since March, but this is likely the result of people’s unemployment benefits expiring, without them having been able to find jobs.

Also worth noting is the news that ratings agency Moody’s lead analyst, Steven Hess, said that the US needs to cut its deficit or it could lose its “AAA” rating in the next 3 to 4 years, which we have maintained since 1917! Think of all we’ve been through – two World Wars, the Depression, three Wall Street collapses and major terrorist attacks…yet our credit quality has maintained that AAA rating, allowing us to issue debt at the most favorable rates. Hess went on to say that if the US doesn’t “get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy.” And just like on a mortgage when the credit rating gets reduced, interest rates move higher. This will definitely be something we’ll keep an eye on in the months ahead.

After all the week’s action, Bonds and home loan rates ended the week slightly worse than where they began.

My Contact Information

Gary Kurtz
BRE# 01710776

Kathy Kurtz
BRE# 01876966

HOM Sotheby's International Realty
1200 Newport Center Drive, # 100
Newport Beach, CA 92660

949.565.5201 (cell)
949.478.7769 (office)
650.796.5507 (Silicon Valley #)

Contact me now with any questions:

Kurtz Real Estate Group

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