Quarterly Newsletter update q2 2010

Hi Everyone,

Welcome to my quarterly (Q2 2010) San Francisco real estate update.  Here’s where I keep you posted on the SF market (stats below), and also remind you that I (someone you know and trust) am here to help you and yours with any real estate need!  I am among San Francisco’s Top 100 Realtors, I am #1 or #2 in my neighborhood depending on the week, and am ready to put my expertise to work for you.

FACING HEADWINDS
In Q1 of this year we began to crawl out from under the wreckage of 2008 & 2009.  The message from Q2 2010 is we’re not out of the woods yet.  The Dow remains volatile, the home buyer’s tax credit expired, and doubts about Europe’s economy increased. As President Obama puts it, our economy is recovering but “facing headwinds.”  The economy is definitely still going through ups and downs, trying to regain its footing.

The housing market appears to be improving somewhat, but, like the economy as a whole, it’s a slog.  According to one housing market analyst: “The housing glut and foreclosures will drive the national Case-Shiller index (S&P/Case-Shiller Home Price Index of 20 major housing markets) down another 6% to 8%, with [housing] prices bottoming in 2011.”

Home prices rose 0.8% in April compared with March and were up 3.8% from a year ago, according to the index.   The strongest rebound has been in California, where S&P tracks three major markets. San Francisco prices jumped 2.2% month-over-month and are up 18% year-over-year, more than any other city in the 20-city index.  San Diego prices rose 0.7% compared with March and 11.7% since April 2009. Los Angeles prices rose 7.8% over the past 12 months, and 0.7% in April. The biggest loser over the past 12 months has been Las Vegas, down 8.5%. Prices rose there 0.3% there month-over-month. Only two cities saw values fall during the month. Miami prices fell 0.8% for the month, which pushed the city into negative territory for the year at -0.5%. New York dropped 0.3% month-over-month and is off 1% year-over-year. (Source: CNN Money)

But that generally positive data from April was heavily influenced by the federal home buyer tax credit.  We have seen the expiration of that credit take its toll across housing markets, and it’s hard to say without the credit how much of a “rebound” the US housing market is actually seeing.

THE VIEW FROM DOWN HERE…
What I am seeing in San Francisco is that the economic uncertainty is still having a major impact on the housing market. And, vice versa. Despite the fact that San Francisco has one of the strongest housing markets in the US and one of the most diverse economies, on the ground here, the market is still very property and neighborhood specific and quite fickle.  With well prepared, well-priced properties in desirable locations moving well — even quickly — and sometimes for over the asking price.  If there is any glitch with the property — priced too high (not perceived to be a value to buyers), less desirable location, too much work to do before move-in, or a combination of the above — the property will linger on the market, and likely sell for below it’s asking price.
THE CONDO CRUNCH
To further understand what’s happening in SF’s housing market, I ran some numbers.  Looking at January of 2009, a low point in the economy/housing markets, to June of 2010, I wanted to find out sales prices and inventory trends in San Francisco.  On average, during this time period, single family home prices have risen 9%, inventory has increased 28%, the days a home stays on the market has decreased by 9%, and the average price per sq ft has remained unchanged.  This paints the picture of a market that is stabilizing.  Unfortunately the condo market appears to still be finding it’s ground.  On average, during this time period, condo prices have decreased by 5%, inventory has increased 59%, days on market has decreased by 5%, and the average price per sq ft has decreased by 1%.  There is definitely more condo inventory on the market these days, and condos have taken a much bigger hit than the single family home market — some fantastic condo deals to be had right now.  The data from the end of the year will also be telling, as there will be no tax credit stimulus to factor in.  (For more on this data, graphs/charts, check my website www.JessicaBranson.com).
WHEN SHOULD I SELL?
Still, one of the most pressing questions I get is: “When should I put my house on the market?  Now or wait?”  Unless we’re talking about the only bad months to sell in SF (August, Nov, Dec), my answer right now is: Now — if you want to or must trade up, downsize or relocate.  Single family home prices are low but no longer going down, inventory is low, interest rates just went down again (!), and buyers have realized it’s a good time to buy.  If you can prepare your house well to sell, and can be realistic about the price, the time is now.

However, I have different advice for sellers who can afford to wait, who are not trading up to a better home/relocating, or who have little or no equity:  For you, now might not be the time. Our market is fickle and very property specific right now.  We are only *just* coming out of this recession – housing prices are going up (even if selling a home doesn’t get easier facing possible inflation/higher interest rates). If you have no compelling reason to sell right now, then why would you?

DON’T “BANK” ON IT

What can I say?  Lenders and appraisals have been a section in each of my newsletters for the past year or two.  The banks are squeezing everyone.  Borrowers, appraisers…  In most of the transactions I see, where loans are involved, the lender manages to throw a wrench in somewhere — at the appraisal stage taking $ off the value that just doesn’t make sense, asking for documentation that slows the process down, etc.  It is the nature of the beast right now.  Realtors have to stay on top of the process, the mortgage broker absolutely matters, and sellers and buyers expectations must be adjusted to allow for some lending hiccups.

GET IT WHILE YOU CAN
Rates are really low.  Depending on the specific buyer and situation – Purchase and loan amount up to $729,750 30 year fixed Rates as low as 4.75% @ 0 points; 5/1 ARM  3.625% @ 0 points.  For jumbo purchases (loan amounts over $729,750) 30 year fixed rates as low as 5.375% @ 0 points; 5/1 io  4.375% @ 0 points. Rates subject to change daily depending on the market. Refi rates are about .125% higher.  (Source: Lorianne DaLuz with Bank of America SF).

FROM A Q2 CLIENT
Here’s an email I received from a client whose single family home sold very swiftly this June — 3 offers in less than a week:  ”Well done, Jessica! Thank you again for your fine work. (As our next door neighbor said: “congrats for the fastest sale known to man”).
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As always, please don’t hesitate to call with any real estate question, big or small, or just to catch up.  If you want to know how much your place is worth in today’s market, recommendations for contractors, painters, gardeners, mortgage brokers, where to get the most bang for your buck in your remodel, and etc. give me a call.   I’ll continue to keep you updated.  Thank you for your continued support & HAPPY SUMMER!

–Jessica Branson

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