Mortgage interest rates

Jim Walberg’s 2008 East Bay Real Estate Update – 4th Quarter!

There is a mixed bag of critical information for Buyers and Sellers to consider for the 4th quarter.

There are MANY factors that are still mixing together that makes it critical for consumers and Realtors to understand the economics of how these factors will impact their decisions regarding Buying and Selling real estate in the San Francisco Bay Area.  And, as you read my report remember that all real estate is LOCAL!  Here are just a few of the factors that will be impacting the 2008 fourth quarter real estate sales in our Bay Area region.

• Mortgage interest rates have been adjusting downward this past week. The markets believe that inflation is not the BIG factor at this time, even though in August it was at a 27 year high. The biggest inflation factor was the price of oil. The speculation on that commodity has cooled down dramatically bringing gas prices down, therefore lower the inflation rates.
• Short Sales and REO sales are bringing down the median price for homes in the Bay Area. What this means is that appraisers are one of the BIG hurdles when purchasing a home, because in some communities there are so many distressed sales that it is the trend impacting those homes for sale that are not in a distressed condition. For example, communities such as Antioch/Brentwood/Oakley are receiving appraisals on any home sale that are based on a much lower median price trend because of the number of distressed sales.
• Positive reports on the housing markets helped regain some confidence in the past week. Preliminary Growth Domestic Product estimates showed the U.S. economy growing at a surprisingly healthy pace while the Consumer Confidence Index posted its second straight monthly gain. However, here is the catch that needs to be watched. The GDP may be a false indicator because most of this gain is generated from exports because of the world taking advantage of the weak dollar. Remember, on Friday the unemployment figures are now up to 6.1% – the highest in five years. So, the GDP is growing but that growth is not creating new jobs.
• All of the housing sales indicators are showing that we may be getting close to the bottom of housing price corrections. However, there is a wild card that may be showing up soon – pay-option adjustable-rate mortgages may show a dramatic increase in defaults in 2009 after the payment option period expires. This could be the second wave of defaults with most of these in higher priced communities.
• Remember that all real estate markets are local! The national averages do not mean anything in the Bay Area, or any other specific geographic area. The local markets are the real indicator to watch. Within a 25 mile radius in the East Bay the markets are as different as night and day. It even gets more specific by city. Some of the communities that are on fire right now are Danville, San Ramon, Dublin, and Pleasanton. The very large sales activities in Antioch/Brentwood/Oakley are still caused by the Short Sale/REO properties that continue to flood the markets. As much as 45% of the sales in these communities are distressed sales. As opposed to Danville where they are 8%. Do you see how “local” the real estate markets really are?

So, how does a consumer filter all of this information into actions?  If you are a Buyer, lock your loan and buy a house NOW.  If you are a Seller that does not need to sell right now, HOLD.  If a Seller needs to sell their home, then price it aggressively, prepare the home in turn key condition and get it SOLD.  A Seller will only hurt their chances for the best price if they do not pay attention to price and condition.  The longer a home stays on the market the likelihood of getting their expected price will decline.  One last thought for the day…there is no BAD market or GOOD real estate markets, there is just THE market we are in.  We are very effective at turning lemons into lemonade no matter what the economic conditions.  Contact me any time with questions, and I welcome your comments about my real estate market observations.  Until next time.

Mortgage interest rates

East Bay Real Estate – Finally, Great News!

For the first two months of 2008, there is a dramatic increase in home sales!

If Buyers are awaiting the “bottom” to hit the real estate markets in the Tri-Valley and San Ramon Valley, they may have waited two months too long!  Again, remember that all real estate is a local economy, and in some cases actually a micro-economy. There are not only differences within regions of the East Bay real estate markets, there are even micro-economies within zip codes.  What we are noticing is a dramatic increase in opened escrows in the Tri-Valley and the San Ramon Valley!

The real estate reporting firm for the Bay Area is DataQuick. Their statistics for the first two months of 2008 show an increase in sales in all but a very few communities in the East Bay real estate markets! Plus, the median home prices have also increased. One of the most dramatic increases have occurred in Pleasanton with a 128% jump in opened escrows compared the first two months of 2007. “Most encouraging are that the increases we found in units sold, pending sales, and median prices have occurred throughout the southern and eastern portions of the two East Bay counties, and are not limited to the traditionally stronger geographic markets,” said Melrose Forde, the 2008 president of the Bay East Association Of Realtors. “Traditionally, real estate sales activity is seasonal. These market statistics show that we’re moving out of the slow Winter months into the more active buying and selling seasons,” Forde said.

It is obviously too early to see if this is a trend in the East Bay real estate world, but it again demonstrates that the generalizations that are made in the media regarding real estate sales are not the basis a Buyer is to use for their buying decisions.  Remember, all real estate markets are “local economies”.  Another factor that is going to be a key factor is mortgage interest rates.  With the Fed’s interest rate reductions last week in the short term lending world, it will not have a direct effect on consumer mortgage rates. It does have an impact on consumer confidence. And, with the fears of  inflation still lingering, it is expected that interest rates may even rise by one percent by the end of the year because of the inflation factor.

So, the Buyers who are waiting for the “bottom” may want to notice that it may be already here. And, if they want to get the best mortgage rate of the year, today is the day to buy a home in the East Bay real estate markets! Even Sellers need to pay attention to becoming Buyers as soon as possible, so they do not miss out on the real estate opportunities that are currently present. Contact me if you would like to further discuss these trends I am noticing.  Until next time….

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