2008 Market Update - A July Snapshot Of East Bay Real Estate!

Jim Walberg’s perspective on the status of the East Bay real estate markets - what do the statistics really mean today?

In my lifetime, there has never been a real estate market like the one we are experiencing in the East Bay today! The dynamics of this market are incredibly complicated with global factors impacting all aspects of our community. Some of the most critical of these factors are:

The mortgage melt down! There have been almost 300 national lending institutions close their doors in the past year because of creating irresponsible mortgages - almost giving money away to anyone who could fog a mirror. Greed and avarice were key factors for the mortgage industry for the past several years. It is now payback time for the irresponsible lenders.

The world price of oil! Who would have ever dreamed that oil prices could be manipulated by speculators and world events, such as Iran shooting off missiles this week. Because of this one event oil prices skyrocketed. It cost Iran $5 a barrel to get their oil into storage tanks. It is in their self interest to create instability in the world so a barrel of oil costs $150, instead of $30 on the open markets. They are making BILLIONS of dollars a day. Who would have ever dreamed that what is going on with oil would so dramatically impact the economic health of our national economy, and our local housing markets?

The world currency markets! Who could have imagined that the world currencies are so much more valuable than the U.S. dollar today? Euros - 60% higher; British pound - 100% higher: Swiss Franc - 40% higher; Canadian dollar - 4% higher. The U.S. is the shopping center for the world because EVERYTHING is on sale for them that has a price connection to the U.S. dollar.

Lack of consumer confidence! Consumers today are in a state of PANIC and FEAR as to what is happening with soaring expenses. It cost the SUV owners almost $100 for a tank of gas. The cost of fuel is causing cost of goods to rise in all sectors. The major airlines and U.S. car manufacturers are losing billions each quarter because of their business models not taking into account the issue of oil prices on their profits.

So, how do all these factors impact the East Bay real estate markets? What are both Sellers and Buyers facing today as they make real estate decisions? What are the trends that should be paid attention to in our East Bay micro-markets? Here are some of my thoughts. Sellers need to have their homes in turn key condition and priced for value or they will sit on the market for months. Home pricing and appraisals ARE being impacted by short sales and banked owned properties. Months of inventory used to be the statistic that told us if it is a Buyers market or a Sellers market. Today “months of inventory” is so mingled with short sales and bank owned properties that it is now not a correct indicator as to what type of market we are in. So, forget months of inventory, we are in a BUYERS market today!

The current market statistics are so confusing right now because of all of the above factors. How about three months of housing inventory in Brentwood and over 20 months of inventory in Blackhawk Country Club! Dublin’s months of inventory is half of Danville’s. Antioch had 254 sales in June and Pleasanton had 61. Are you getting a better picture of the chaos in how to intepret what in the world is going on in our micro-markets. June Pending sales in the East Bay are up 4%, and months of inventory in the East Bay dropped 7% in June.

Here are some of my conclusions. In some communities the majority of their sales are bank owned or short sales. This is creating huge opportunities for first time home buyers, move-up and move-down buyers, and investors. Because of the current economic climate a very confusing time has been created for Buyers and Sellers. Hire the best Realtor you can find to guide you through the current East Bay real estate “mine field”. Until next time…

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