More on Today’s Real Estate Market
On Tuesday of this week, the Feds slashed the Federal Funds rate and the Discount rate by three-quarters of a percentage point. This move is a positive sign for homebuyers as well as homeowners with adjustable rate mortgages – the cut puts more downward pressure on mortgage rates. Rates have been moving down for several months now and Tuesday’s cut helps to continue this movement. Lower rates increase the affordability of homes. In addition, this week we had an Economic Stimulus Package that was announced from our nation’s capitol which, in addition to cash payouts to most Americans, included plans for a temporary increase in the conforming loan amount. Conforming loans are currently set at $417,000 and, according to various reports from Washington D.C., the plan would increase the conforming loan limit to somewhere between $615,000 and $725,000 in high cost areas - for a specified amount of time. It is this sort of news, especially in the Bay Area where home price medians far exceed the conforming loan limit in many areas, that should motivate more homebuyers to recognize that now may be the absolute best time to get into the market, and to take action sooner rather than later. I encourage sales associates, homebuyers and home sellers alike to contact their respective congressional representatives and lobby for their support for this component of the economic stimulus package.
In other good news, it seems that buyers are still out in droves in many parts of Bay Area and are snapping up excellent deals, and writing offers. There are still challenging micro-markets to be found, but even many of those are seeing an upswing in activity – and the high end market continues to thrive in practically every one of our markets. In Livermore, three different homes priced between $1million and $1.6 million had multiple offers on them. In Novato there is a surge in activity for homes prices above $1million, and the entry level market is also very active. In San Francisco, there were 10 offers on a Noe Valley listing, seven offers on a Colma property that was “a physical disaster” but perceived as a value, and a Potrero Hill home sold for $150,000 over asking. In Menlo Park, the right property “brings the buyers of the woodwork.” Inventory is creeping back up in some areas, creeping down in other areas and stagnant in others.
Open houses continue to be well attended in most areas. An average of 8 to ten groups were seen in Santa Rosa. In Walnut Creek, more than 60 visited a home listed at $750,000. We are even seeing renewed interest and offers coming in on properties that have been on the market for as much as 45 days, and more, as well as for properties that were taken off of the market during the holidays and recently brought back on.
More economic news is forthcoming next week that may also have a positive impact on homebuyers. And if the economic stimulus package is passed quickly, and includes the conforming loan limit increase, buyers will have the ability to snap up some amazing deals – but only if they move quickly.
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