Ever feel like the current market is like a roller coaster. Well, it is.  Just when you thought things were settling down, General Electric reduces its profit forecasts and the stock market drops a bit over 2% in a day. A number of banks preceded that good news earlier in the week with freezing equity lines because they believe real estate values have gone down. I know they heard a few choice words from customers who spent good dollars obtaining those equity lines of credit without ever using them.

Housing inventories have been shrinking in the Bay Area since the end of the year in spite of the significant fall off of sales from last year. Prices overall have been steadying and in the case of San Francisco rising. Potential demand is still brisk as evidenced by open home activity. This reporting period is no exception.  A 3 bedr./2 ba. home listed at $799K in Berkeley had a 150 parties through its open house. A 4 bedr./2ba. upper Rockridge listed at $1.150mil. was visited by 90 buyers and a 5 bedr. home in Piedmont listed at $1.499 mil. had 80 visitors.  These examples are the top end, however most open homes are experiencing between 10-40 buyers. Lest we not forget, California we is still falling behind buyer demand by about 90,000 new units per year.  Many areas in the Bay Area have no more room to grow. 

We don’t have a real estate problem here---we have a financial and consumer confidence challenge.  Whether the economy is in a recession is not the question. Most consumers today believe we are in one. That is why consumer confidence is at its lowest point since the early 80’s. Add that to the continuing liquidity issues in the banking community and you have little, if any growth.

Buyers want and need to buy. The concern is when will the economy bottom out. Until they feel that it is, there will be a reluctance to move forward. What amazes me is that there are still buyers out there that are moving forward in spite of the uncertainty. In fact, during this reporting period we have seen a pick up of sales activity in Marin, San Francisco and parts of the East Bay (Berkeley, Rockridge and Lamorinda).

Multiple offers have diminished and many of them are going at list price or slightly under list.  There are exceptions like the SF Corona Hts. 3 bedr. 2.5ba. listed at $1.055 mil. that received 6 offers and went significantly over full price. In Lafayette home priced slightly under $3mil. garnered 2 offers in the first week on the market. The winning offer was all cash with a quick close. There is still wealth out there that feels real estate in the Bay Area still has value.

The mantra continues that sellers need to realistically price their homes, do all necessary repairs and stage their homes before bringing them to market. It is the only way to insure they have a credible chance to sell their homes in a reasonable period of time.

Buyers still have the opportunity to find exceptional values and sellers who are willing to negotiate in the current environment. Like windows, opportunity periods open and shut.

Yes, it is a special week. On Tuesday the government celebrates its favorite holiday. That’s right---April 15th.  In honor of the IRS I give you George Harrison playing with Eric Clapton in 1991.  Enjoy!!

http://www.youtube.com/watch?v=uYiLoSPTknw&feature=related

Copyright 2008 Pacific Union Real Estate Group, Ltd. All rights reserved.