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EVERYBODY LOOK WHAT’S GOIN’ DOWN – AND UP!

Intro: Welcome 2009! As we begin this new year, it’s only fitting that we look ahead to what may be in store for us in real estate. It’s still hard to know what to expect, and harder still to know what we might get. This doesn’t make sense—do you understand what this means?. So, how can conscientious sellers, buyers and Sales Associates find advantage in a difficult and intractable market? Read on.

Statistics:

Statewide: The median resale price of a single-family detached home in California for November was $285,680, a decrease of 5.3 percent from October and almost 42 percent from November 2007. Unsold resale inventory in November was sufficient for 6.9 months, a steep decline from 15.3 months a year earlier. Also, median number of days till sale was 44, a welcome improvement from last year’s 63.

	Median Price November 2008	% Change in Median from October 2008	% Change in Median from November 2007	% Change in Sales from October 2008	% Change in Sales from November 2007
Alameda County	$355,000	-4.05%	-38.26%	-26.20%	78.79%
Contra Costa County	$260,000	-7.14%	-50.10%	-26.48%	89.40%
El Dorado County	$335,000	-13.55%	-20.29%	-24.52%	15.44%
Marin County	$625,000	4.21%	-28.73%	-27.50%	-19.89%
Monterey County	$260,000	-3.74%	-49.51%	-23.47%	167.21%
Napa County	$403,000	0.75%	-28.04%	-31.01%	21.92%
Nevada County	$346,500	-5.07%	-22.13%	-37.60%	-17.89%
Northern California	$306,940	-1.03%	-13.44%
Placer County	$328,750	2.73%	-14.94%	-18.90%	5.36%
Sacramento County	$185,000	-5.13%	-35.93%	-20.84%	81.98%
San Benito County	$273,250	3.11%	-34.47%	-20.00%	73.33%
San Francisco Bay	$350,000	-6.67%	-44.36%	-24.39%	12.27%
San Francisco County	$648,000	-7.03%	-20.44%	-30.88%	-33.96%
San Mateo County	$581,000	-5.22%	-24.55%	-25.54%	-11.25%
Santa Clara County	$446,000	-6.11%	-36.74%	-26.43%	5.74%
Santa Cruz County	$386,500	-15.84%	-42.70%	-31.10%	-2.59%
Solano County	$230,750	-3.55%	-36.78%	-20.95%	111.99%
Sonoma County	$310,000	-6.06%	-32.97%	-26.08%	44.59%
Yolo County	$254,500	-8.78%	-28.31%	-12.95%	56.00%

Alameda County: Sales had leapt since September, but drifted down to levels similar to mid-2008. Median has declined smoothly and steadily for the last 12 months and now stands at $355,000. But, we’re beginning to think that regional recovery will improve this situation.

Contra Costa County: It’s not unusual for numbers to drop from October to November and this year was no exception. Median, at $260,000, has been dropping without a break since June 2007 when it hit its historical peak of $600,000. Much of that discrepancy is explained by foreclosure sales at 63 percent.

El Dorado County: November sales dropped to the levels of April and may take a while to get back to 200. Median, after staying more or less level for nine months, dropped $50,000 between October and November. But, the year-over-year decline of $85,000 is better than most counties have experienced.

Marin County: One of only four counties whose median increased month-over-month, recovering a substantial chunk of its September-to-October decline. But the year-over-year loss of roughly $250,000 is mid-pack and sales have fallen from about 250 in July to about 150 in November. Sales may be held back by the percentage of foreclosure resales, which is one of the region’s lowest, but this slower month is somewhat of a surprise.

Monterey County: Since its recent high of $515,000 a year ago, median has declined by about half. Until recently we could take comfort from the fact that, as rapidly as median was falling, sales were rising—nearly quadrupling in an unbroken streak since January. But between October and November, sales fell by 100. Given this market’s bias toward second homes, we may see real improvement when warm weather returns.

Napa County: The last big correction in Napa’s median was between September and October. Then, October-to-November saw a little uptick, containing year-over-year loss to about $150,000. But, like many counties, sales returned to May levels in November. Again, good weather may supply the tonic that this market needs.

Nevada County: Nevada County has stumbled, but we hope only briefly. Median year-over-year has fallen by about $100,000. If the median is going to fall by so significant a fraction, hopefully the county’s sales pick up the slack.

Placer County: As usual, just a little more robust than its neighbors. Sales at 472 have lost ground from the 600s of this summer, but they’re still a bit better than last November’s 448. Median is actually up month-over-month, and has only lost $60,000—about 20%—year-over-year. Placer County seems to be riding out the storm and will probably show a surge of purchasing and refinancing as soon as credit loosens up.

San Francisco Bay: Median has fallen to about half of its historical peak in June and July 2007, retreating to levels not seen since 2000. Almost half of residential sales are of foreclosed properties. With a correction over so broad a market, we’d at least like to see sustained sales activity.

From the low of 3,586 in January, Bay Area sales spurted quickly to 7,178 in June, then stayed in a narrow band between about 7,200 and about 7,600 until October. Then November saw a drop to 5,756. Sales are still up roughly 12% year-over-year, but we’d have to say that the market is not booming at the moment. There’s still plenty of pent-up demand, held back primarily by the external constraint of tight credit. We’re hoping that even slight improvement in the economy will restore optimism to buyers.

San Francisco County: The most notable aspect, looking back over the year, is median seemed to be on a roller-coaster ride. It started at $814,500 a year ago, then fell to the $730’s-$740’s over the winter. It recovered to just below $800,000 in May, but was down to $700,000 in September and below $650,000 in November.

But of all counties we track, San Francisco has the most saw-toothed sales graph. In our records, the low points have been January 2006 (450), February 2007 (375), and January 2008 (262).  These contrast with spring and summer highs in the 600s or even 700s.  So, if we figure that November's 282 is on its way to another January or February low, we can look for a rapid bounce-back.  Let's hope for 550 to 570 in April or May 2009 and cross our fingers.

Sacramento County: The interesting aspect of Sacramento’s numbers is the slides in median. Down $100,000 since last November, it has been roughly cut in half since the historic high in February 2007. But, month-to-month sales have declined only 20 percent, which is far less than most. Year-over-year sales have risen more than 80 percent—from last November’s 1,154 to this November’s 2,100. No, those aren’t the numbers we saw this summer, but sales have held up better than they have in some of the smaller counties.

San Benito County: Fighting a holding action at the moment, like so much of the Capitol Region, but median managed a slight recovery from October. Sales, not quite double those of a year ago, are triple that of last winter. The rural and outlying counties will need pa06 (450), February 2007 (375), and January 2008 (262). These contrast with spring and summer highs in the 600s or even 700s. So, if we figure that November’s 282 is on its way to another January or February low, we can look for a rapid bounce-back. Let’s hope for 550 to 570 in April or May 2009 and cross our fingers.

San Mateo County: Median has slid to $581,000—not as bad a slide as July-August, but below $600,000 for the first time in our records. Sales aren’t the lowest we’ve seen, but they’re down about 12% from last November’s 391. Like other blue-chip counties, San Mateo is waiting for easier credit.

Santa Clara County: After spending much of this year in the 1300’s-1400’s, sales have declined to 1013. That’s better than the 958 of a year ago, but an improvement of less than 6 percent puts Santa Clara toward the back of the activity pack. Unfortunately, median has dropped almost $200,000 since late spring. Silicon Valley, after all, is prone to extreme reaction when the economy softens.

Santa Cruz County: A slide in October-November has median down now to $386,500. Sales, after briefly poking its nose above 200 retreated to 113 in November, almost identical to the 116 of a year earlier. Coastside is a lovely place and hopefully an upturn in the market will dispel the clouds that seem to be looming overhead.

Solano County: Looking better than some. Median, down about 37% for the year, is on the same level with Alameda or Santa Clara. After a long rise, sales activity has suffered a sharp correction of about 21% for the month. But even with that, activity is more than double what it was last November. Solano is also this month’s highest proportion of foreclosure sales at 63.6%.

Sonoma County: Sales have given back some, but not much, of the big rise that occurred between March and April. Median is at $310,000 – a far cry from the recent peak of $532,500 in June 2007. Unfortunately, it may duck under $300,000 before it gets better. Again, warmer weather once it comes may improve the situation.

Yolo County: Yolo sustained a median of about $300,000 for most of the year and we had great hopes that the figure could stay there. But the current $254,500 represents a loss of $100,000 year-over-year. At least a jump of 56% in sales from November to November puts Yolo in some healthy company.

Interest Rates*: To those who thought we’d never see 5% on a 30-year fixed again—guess what? It’s happening! Bankrate.com gives current 30-year fixed as 5.17%, 15-year fixed at 4.84%, and 5/1 ARM at 5.77 percent. Apparently we’re getting used to the world turned upside down. As for rates going lower, we’ve seen offers scrawled on whiteboards of 30-year fixed at 4.75% and 15-year fixed at 4.375%. If the story stopped there, we’d be in paradise.

*Area interest rates are reported to be as follows:

Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of January 9, 2008, the “Agency Jumbo” rates are as follows: 30-year fixed with one point is 5.00%, the 15-year fixed with one point is 4.75% and the 5/1 ARM with one point is 6.625% for loan amounts up to $500,000.

Overall Assessment: We continue to rely on the presumption that a prospect can qualify for a loan. There’s plenty of inventory in most neighborhoods, although to gain access to a lot of it, you will need to know your way into and around foreclosed properties. Just remember—these are hard times full of hard decisions, but if you remain educated, you will likely find yourself a step above of the rest.

NANCY DICKEY, CRS 

510.967.6603 (Direct)

510.339.4791 (Fax)

©2008 Coldwell Banker Real Estate LLC. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC.

An Equal Opportunity Company. Equal Housing Opportunity. Owned and Operated by NRT LLC.

MARKET WATCH FOR AUGUST  4th -10th

Provided By: JOE BROWN, President, Coldwell Banker Silicon Valley-Monterey Bay-East Bay 

There are a lot of things challenging our market right now: traditional August slowdown, vacationing clients (and Realtors) as they soak up the last of the summer heat before school begins and, in some markets, limited quality inventory to generate buyer interest.

But though the media won’t begin reporting on this for another six to eight weeks, we are starting to see signs of a turnaround in the market. Open houses are well-attended. Buyers are finally coming off the fence and making offers. Princeton Capital is reporting an increased number of pre-approvals and mortgage applications. We’re really starting to see a surge of activity in several of our markets. Some markets are seeing the surge based on REOs while others are simply seeing it thanks to the old law of supply and demand—limited inventory = increased buyer demand. For example, Palo Alto continues to struggle with limited incoming inventory for the second consecutive week. Menlo Park continues to see dwindling inventory with limited incoming listings. Parts of the East Bay is also struggling with lower inventory and the City is seeing limited supply in the upper tier, where, if we had more to sell, we’d sell ‘em!

Many of our Agents, based on buyer feedback at open houses, are expecting that the Fall will provide us with a pretty healthy upswing. A lot of buyers—especially first time home buyers—are finally starting to come to the realization that this is one of the best buyer’s markets of our generation and they’d like to take advantage of it. Some are even hoping to do so before the year’s end so we may expect to see a healthier Fall than in recent years which will certainly be a welcome breath of fresh air for all of us.

Obviously only time will tell, but based on what I am hearing in the marketplace, I am definitely hearing the buyer buzz and it is exciting.

We’ll have to see how it all plays out but until then, let’s take a look at this week in real estate:

• East Bay—The REO market continues to drive a large portion of the East Bay. The entry level market is flooding with activity with many REO properties going into multiple offers. Though prices are down in much of the East Bay, units are up and it is keeping our clients and Agents busy with activity. Interestingly enough, the high end is starting to pick up in Blackhawk and Alamo. Walnut Creek is reporting the same with two listings over $1 million selling in just a week. A trend or an anomaly? Only time will tell but we’ll certainly put these affluent markets on our radar to see how they pan out over the next several weeks.
• Monterey—With vacationers heading home in this largely second home market and the traditional slow August upon us, Monterey is entering a bit of a sleepy phase. This week the entire region only opened five escrows so we’re definitely in the middle of the Monterey summer doldrums. REO activity remains strong in the entry level market but overall, this is shaping up to be a slow month for the entire region.
• North Bay—The North Bay real estate market is about as diverse as its culture. Sonoma County continues to thrive in the entry level thanks to the REO phenomena and yet their mid-level and upper-end is very quiet. Nearby Marin County is seeing its blend of unique activity. The upper-end in this market continues to see limited inventory and there are quite a few buyers who want to act but just can’t find the right property. The lower-end continues to thrive—though you have to put “thrive” in perspective considering one San Rafael listing sold this week. It was originally purchased in 2004 for $480,000 and it sold this week for $275,000. Value? Sign of the times? Probably a little bit of both. But definitely worth sharing to give both buyers and sellers alike a reality check.
• Peninsula—A mixed bag. From one city to the next you can have a completely different vantage point. Just look at Redwood City which is reporting that buyers continue to sit on the fence “waiting to see” what is going to happen next in the market. Half Moon Bay reports another slow week but does note that Agent activity, buyer showings, open house activity and office walk-ins are all showing an increase—another good sign that we’ll see a strong Fall. On the flipside, the remainder of the Peninsula is looking pretty strong, falling short only in the area of inventory where limited inventory is calling for shortened unit sales. This week Burlingame reported two foreign investor sales with one property selling for $2.8 million and another for $9.8 million. With the value of the U.S. dollar decreasing, we will most likely begin to see a surge in foreign investors in the Bay Area. My guess is that this is just the beginning of this trend.
• San Francisco—The City is seeing a surge of activity in the upper-end. TRI is reporting that nine of the 16 ratified offers were over $1 million and four were over $2 million. The Market Street office concurs with this upper-end discussion noting that it had four ratified offers this week on properties that were in the $700,000 to $2.3 million range and all four had four offers each. Not bad!
• Santa Cruz—Activity has slowed after a fairly active July. Agents are reporting that open house activity has been steady although buyers continue to be skeptical about the market. Sellers continue to be reluctant to adjust prices to a level that will attract offers. Once in escrow, buyers want to continue to negotiate and are not hesitate to walk so our sellers need to be prepared. How much you want to push an issue will depend on how bad you want that sale to go through.
• Silicon Valley—Though buyers are out there, vacations or staycations are causing a bit of a lull in the market. Nearly the entire market reported decreasing or steady inventory. But to be honest, it’s no surprise and we certainly expect it this time of year. REOs continue to be a driving force for much of the entry-level market in Silicon Valley and this seems to be where much of the pulse of the market remains. One interesting note this week was from our in-house statistician (aka Los Altos First Street Manager), Fred Hibbert. In his weekly statistical report he shared that we currently have 1,964 pending sales of single family homes in Santa Clara County and 596 pending sales of condos and townhomes. Fred noted, “This is quite remarkable considering that this time last year was close to 900 pendings of SFRs and 330 pendings of condos/townhomes. We now have nearly double the sales! Wow!”
• South County—We’re seeing very little change from week to week in this market. REOs continue to dominate the sales charts. Much like its Sonoma County counterpart—another outlying, more affordable market—the entry level, ROE market thrives while the mid-level and upper tier sits. We’ll more than likely continue to see this for at least a few more months as we continue to dwindle the inventory.

As you can see, though we don’t yet have statistics to write home to mom about, there are some strong and definite signs of improvement with Fall shaping up to be a bright spot for our market.

Statewide: The median resale price of a single-family detached home in California for January was $430,370, a decrease of almost 10% for the month and about 22% from January 2007. Unsold resale inventory represented a 16.8-month supply, compared to 7.6 months (CAR’s figure) for the same period a year ago. Median number of days till sale was 72 in January, up from 69 a year ago.

Alameda County: January’s 494 sales were about a quarter as many of March 2007’s recent peak of 1,840. Median was in the vicinity of $600,000 from the summer of 2006 to the fall of 2007 and since then has dropped off.

Contra Costa County: After a drop between December and January, sales are about half of what they were a year ago. Median, although robust in the first half of 2007, has been falling since June and is now under $500,000 for the first time since late 2004.

El Dorado County: Median rose through $400,000 in the fall of 2004 and reached its record, so far as we know, of just over $525,000 in the spring of 2006. For most of the time since then, it has orbited around $450,000, but this month it is under $400,000 for the first time in three years. Sales had a little boom in the summer of 2007 but are now back at pre-2005 levels.

Marin County: And still the champion! High median for the month, month-over-month and year-over-year. Sales reached a peak of 481 in April 2005 and have declined since to about a fifth of that level currently.

Monterey County: The current median is $450,000 and sales have fallen by roughly a third since July (as far back as our Monterey sales numbers go) but they are still not far below the recent average.

Napa County: Napa sales have been declining since the summer of 2006. Median meanwhile has been oscillating between $550,000 and $650,000 for years and we will have to see what spring will bring.

Nevada County: Not doing badly for a rural county, since its current median is less than $100,000 below its historic record. Sales, which were 125 as recently as October, were 55 in January.

Placer County: Really wild sales. In the low 200s a year ago, then again as recently as September, but in the interim jumping into the 300s, 400s, even 500s. Erratic numbers do not entirely mask the fact that this is one of the few counties whose activity seems aggressively healthy. Median meanwhile has declined from a record of $515,000 to the current $360,000 – but it has taken two and a half years to do it, without any jagged surprises.

Sacramento County: Median is currently $250,000. Monthly sales at just under a thousand are not spectacular, but they are significantly better than they were last January.

San Benito County: Data Quick did not give us January figures for this county. Sales have been bouncing between the high teens and the 30s for the last year and right now they are at the low end of that.

San Francisco Bay: Spring and summer monthly sales were 7,000 to 8,000; in September, they declined to roughly 5,000 and stayed there for awhile; now in January they have declined again, to about 3,600. After staying above $600,000 for over two years, regional median is currently at $550,000.

San Francisco County: Sales for this county have shown a hectic collection of peaks and valleys as far back as we go, but 262 for January seem to be about half the recent historical average. Median, though, has fallen less than 1% year-over-year and is less than 4% below the three-year average; the typical San Francisco County buyer is probably well-off and may be international, and we have always thought that sales here can depend on a reliable core of cash (or at least high-down-payment) customers.

San Mateo County: January sales of 237 were down by more than half year-over-year. Median is down more than 10% year-over-year and 11% from the two-year average.

Santa Clara County: Sales in January were 628, less than half of 1,607 a year earlier; not great until we look at January 2006 with 335, or January 2005 with 423. Santa Clara monthly sales are constantly bouncing between a few hundred and somewhere over 2,000, so in context, they are typical. Median meanwhile has lost about 5% year-over-year and, perhaps more to the point, about 8% from the two-year average…not bad.

Santa Cruz County: Now what is this about, with the same county showing both the steepest drop in median and the best – or, well, "least bad" – decline in sales month-over-month? Clearly Santa Cruz will bear watching, as is often true. Median has lost almost 20% from the two-year average and sales are down to double digits.

Solano County: Sales at just over 200 are down from 500 in January 2007. Median meanwhile has shed 20% compared to the two-year average.

Sonoma County: Average sales in this county have been about 500 for years and even a year ago, 463 was "pretty typical." Two hundred and twenty-three for January is a correction for Sonoma and the median has declined $80,000 year-over-year.

Yolo County: The median is down almost $90,000 from a year ago and over $100,000 from the two-year average. That said, sales are showing a glimmer, up about a third year-over-year and only about 10% below historical average.

Sacramento/Capitol Region: Regionwide, communities with 10 or more sales have seen an average decline of 13% in activity and 23% in median, year-over-year. In January 50 zip codes made our sales cutoff and of those 15 showed increased sales – these days, in context, that is a big number – with the top seller being North Highlands at 72% increase year-over-year. Other gainers were Antelope, Tahoe City, Rio Linda, Lincoln, Rancho Cordova and parts of Elk Grove, Sacramento and Woodland (but there were trade-offs as we might expect: high sales were generally paired with declines in median, so that North Highlands, for example, saw its median drop by almost half). Medians overall were less reassuring than sales, with four increases: two zip codes of Sacramento, one of Auburn and Granite Bay. One zip code of Sacramento (95864, largely an upscale area) gained 38% in median but sales were cut in half.

Interest Rates*: 30-year fixed, 5.90%; 15-year fixed; 5.27%; 5/1 ARM at 5.03% is showing an awfully big discount from 30-year fixed, since not long ago the two rates were almost comparable (remember how we kept complaining?). Nonconforming loans are obviously a different story with 30-year fixed at 6.88% and 5/1 ARM at 5.68%. Rates were headed for the sky for most of January, but the new pegging of the Fed funds rate at 3% – including, bear in mind, the biggest single cut in the history of the rate, 75 basis points in one swoop – will let lenders keep loan rates attractive.

Inventory: Once more with feeling: "In many areas, inventory now and probably for the rest of this year, simply does not have to figure into deliberations." True last year, true now.

Overall Assessment: Last year we said, "Loans are easy to get and cheap, bargains are plentiful, and those who buy now may reap the rewards of their good luck for years or decades." Let’s edit that for the new reality: With the conforming loan limits increased through the end of 2008 and bargains almost everywhere, those who buy now will enjoy the comfort of a roof over their heads and a historically strong, long-term investment. A home is an asset and the comfort and security that it brings offers incomparable stability to an entire household. Those wishing to buy a home owe it to themselves to consider the long-term benefits – there may be no time like the present to act.

NANCY DICKEY, CRS

510.967.6603 (Direct)

510.339.4791 (Fax)

nancy.dickey@cbnorcal.com

camoves.com/nancy.dickey

*Area interest rates are reported to be as follows:

Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of March 10, 2008, the 30-year fixed with one point is 7.25%, the 15-year fixed with one point is 6.375% and the 5/1 ARM with one point is 6.625%, on non-conforming loans of $500,000.

©2008 Coldwell Banker Real Estate LLC. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC.

An Equal Opportunity Company. Equal Housing Opportunity. Owned and Operated by NRT LLC.

TOTO, I DON’T THINK WE’RE IN CALIFORNIA ANYMORE

Intro: Just as Dorothy took Auntie Em for granted, so may we have taken for granted the fruitfulness of the market a couple years ago. But, we’ve survived a tornado of falling prices, foreclosures and increased inventory over the past year, and the dust is beginning to settle. As things continue to improve, we’re starting to see the world in Technicolor again and the yellow brick road to prosperity is just off in the distance. It’s been a long journey, but we’ve learned to appreciate just how good we had it and we now realize…there’s no place like home.

Statistics:

Statewide: The median resale price of a single-family detached home in California for June was $368,250. That’s a decrease of about 38 percent from June 2007 and just over four percent for the month. But, unsold resale inventory represented a 7.7-month supply, compared to 10.1 months for the same period a year ago. Median number of days until sale was 49 in June, down slightly from 52 for June 2007.

County Statistics: (Med = median, Ac = activity, MOM = prior/this month, YOY = prior/this year)

Alameda County: Just months ago, Alameda County hit its highest median in our records. Since then the median has decreased by $175,000. But increasing affordability may be bringing homes within reach of highly solvent first-time buyers, since sales almost tripled between January and April and have held at roughly 1,200 ever since. This county is well stocked with homes that are attractive, well situated and affordable. It is poised for recovery!

Contra Costa County: Within a year, sales have gone from more than 1,400, to under 600, and back above 1,400. Still this is a very different market than it was last year. Contra Costa is the only county in the Bay Area that has more than half of its sales as foreclosures and the proportion of bank-owned properties explains the median’s decrease to $375,000 from $600,000 a year ago.

El Dorado County: A star in a modest way! Median has stayed stable since February while sales have almost doubled. Median year-over-year has declined by about $100,000 but, in Northern California’s current market, that’s not a lot. The suburban counties around Sacramento are holding up surprisingly well.

Marin County: Our local “exception to everything” has another high median for the month. Median, which has been oscillating around $800,000 for a long time, is lower than it was a year ago but higher than it was two years ago. Sales, though not immune to the region-wide dip last winter, are shrugging off the impact of tough credit and have recovered to the levels of last August.

Monterey County: Monterey County is one of extreme trends. A year ago the county’s median was at a high of just above $600,000—now it’s below $350,000. But the sales curve shows very much the opposite as totals, which were around 120 last fall, have improved leaps and bounds and were 282 in June. That’s the highest figure in our records. At these prices Monterey is one of the most attractive and relaxed areas in Northern California and must simply be irresistible!

Napa County: Napa’s year-over-year decline in median, about $140,000, isn’t as severe as we find in some neighboring counties. The trade-off is that activity, while it’s recovered from the startling winter freeze, hasn’t quite recovered to last summer’s totals. We’ll be watching the wine country to see if it returns to favor as the general market becomes more stable.

Nevada County: Even if not quite into triple digits, sales are at least back to November levels. Year-over-year median has declined by only $75,000, which is impressive.

Placer County: Continues to surprise! Unlike most areas where minimum sales happened in December or January, this county’s low point came in September. They then took the winter dip, shrugged it off, and headed for the sky as sales have almost tripled for the year! Median year-over-year has declined by about $100,000, but that’s not very steep considering the recovery of the market.

Sacramento County: Though median is below $220,000, sales have recovered strongly – in fact almost tripled year-over-year. Slowly but surely, an influx of first-time buyers is absorbing the looming oversupply of housing that caused such concern in the press last year.

San Benito County: This month, San Benito snags the highest median month-over-month, highest activity month-over-month and highest activity year-over-year. Remember the gloomy days last winter when we were fretting that San Benito’s sales were in the teens? Well, since then they’ve just about quadrupled!

San Francisco County: The least you can say about San Francisco County’s median is that it’s breathtakingly stable. In June of this year, it was $760,000. Its average for the last three years, as far back as our numbers go, has been around $763,000.

San Mateo County: After a substantial slide between November and January, median seems reasonably stable right around $700,000. Sales have oscillated between roughly 300 and 700 for the last year, so the current 461 isn’t bad at all!

Santa Clara County: Sales are recovering from a slight dip in May and are easily double the once low in January. Median has lost $95,000 year-over-year and has been fairly steady since January, but prices here are still high enough that many prospective buyers will face the added hurdle of securing a jumbo mortgage. After all, this county’s fortunes, more than any other’s, are tied to Silicon Valley which is facing some difficult times.

Santa Cruz County: Though median has dropped from $700,000 to $550,000 over the past year, there’s almost always pent-up demand for Santa Cruz County. Its homes have become more affordable and sales have recovered from a troubling low of 82 in March, back into the low 200’s. We’re not worried.

Solano County: Gratifying recovery here! Solano’s sales declined from March 2006 to January 2008, when they bottomed out barely above 200. Since then they’ve picked up smartly and about doubled—hopefully on their way to greater things. Median has declined smoothly at about $10,000 a month for the last year, but as excess inventory is absorbed, we may see this county’s median level off or turn upwards.

Sonoma County: Between last June and this February, Sonoma lost roughly $130,000 in median. Since then, median price has been more stable at right around $400,000. Wine country properties are appealing to a wide variety of prospective buyers and it’s no surprise sales have more than doubled in the last four months. We’ll keep an eye on this situation, which may be revealing itself as a success story.

Yolo County: Coming to the end of this list can be fun because perky, valiant Yolo County is so often a nice surprise. Since January, sales have almost tripled while median has actually increased—a sure sign of meaningful decline in inventory. Yolo comes through for us again!

Interest Rates*: Thirty year fixed is around 6.7 percent, 15-year fixed is slightly above 6.2 percent and 5/1 ARM is heading for 6.4 percent—which doesn’t matter as much as it did because adjustable-rate mortgages are now only about 7 percent of the market. A 5/1 ARM currently saves less than $50 a month compared to a 30-year fixed. Considering it can be almost as difficult to qualify for, we think going the extra mile for a fixed-rate loan is still worth it. Thirty year fixed jumbo is at roughly 7.7 percent—too close to the major psychological barrier at 8 percent.

*Area interest rates are reported to be as follows:

Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of August 7, 2008, the “Agency Jumbo” rates are as follows: 30-year fixed with one point is 6.625%, the 15-year fixed with one point is 6.000% and the 5/1 ARM with one point is 6.375% for loan amounts up to $500,000.

Inventory: In general, inventory is fine. A year ago, most of the sales in California were of homes between $500,000 and a million. Now, most sales are of homes below $500,000 and the high end is shrinking fast. In most counties, foreclosed properties are making a sizable contribution to sales, but in some (like San Francisco) they hardly matter at all. The upshot is that, while this market isn’t tight, availability varies so much by neighborhood that you may or may not have an easy time finding the specific property that you and your prospect would like.

Overall Assessment: With fresh surprises coming from the financial markets, the real estate columns and the international news, readers and listeners who stay informed are likely to have low consumer confidence. Unfortunately, some of your prospects may fall into that exact category. You can reply with the enduring advantages of the current market: increasing affordability, generous inventory and interest rates that are still historically low. We personally would much rather be looking for a new home now than in 1999 or 2000. The Technicolor lining of this market may take some work to find, but it’s there. With some courage, knowledge and a little heart, those who buy now may soon be able to live happily ever after.

An Equal Opportunity Company. Equal Housing Opportunity. Owned and Operated by NRT LLC.

SUMMER IS A-COMIN’ IN

Intro: Spring’s enthusiasm was certainly a relief from the gray, congealed market of last winter. As spring moves into summer, we don’t know quite what to expect—far, far too many factors are in play to encourage confident prediction—but we do know this: those who are prepared will profit most from whatever direction the market does take. Read on.

Statistics:

Statewide: The median resale price of a single-family detached home in California for May was $384,840, a decrease of just over 35 percent from May 2007 and almost 5 percent from last month. Unsold resale inventory represented an 8.4-month supply, compared to 10.7 months for the same period a year ago. Median number of days till sale was 50 in May, almost unchanged from 51 in May 2007.

County Statistics: (Med = median, Ac = activity, MOM = prior/this month, YOY = prior/this year)

Alameda County: Though down from December, median held up for the month of May. This market may be reaching a price point that’s attractive to the general prospect, since May sales almost equaled April’s surprising surge and are more than double the recent low in January.

Contra Costa County: Median lost a sliver this month and continues at less than two-thirds of its recent record in June 2007. Sales are at levels not seen in the last year, driven by sales of steeply depreciated homes in attractive neighborhoods.

El Dorado County: Sales have exceeded the August 2007 peak of 185 and seem poised to crack 200. Median has lost roughly $100,000 in the last year but has more or less stayed stable since the beginning of this year.

Marin County: Sales seem to have shaken off winter doldrums and returned to the level of fall 2007. Some constraint is exerted by the region’s lowest proportion of foreclosure sales, about 6%, and by still-restricted availability of jumbo mortgages. Median has surged to within a hair of $900,000, but we must remember that Marin’s median has been relatively bulletproof in the current crisis; historical low of $750,000 came in January 2006, and since then it’s scarcely been below $800,000.

Monterey County: Median has shrunk by almost half in a year—from $600,000 last June to $350,000 today. But how much of this is depreciation and how much is due to high-end properties not moving the way they once did, we’re not sure. On the other hand, sales are now at their highest point in our records after essentially doubling since January.

Napa County: Sales have recovered from January’s scary low of 37 and are now flirting with the triple-digit levels of last summer.

Nevada County: Sales have a way to go to match last summer’s levels, but have been increasing without pause since January. Median was holding up well as recently as April, but then declined by $70,000 in May.

Placer County: Consistent sales of almost 500 demonstrate a welcome recovery from last September’s 216. Median, after being essentially flat for the last half of 2006 and first half of 2007, has declined steadily for the last year and lost a little over $80,000—possibly converging on a new price stability along with the rest of the Sacramento Region.

Sacramento County: Current median of $225,000 is the lowest we’ve ever seen, but the resulting affordability seems to be provoking a recovery. From a low of 751 in January 2007, sales have nearly tripled as of last month and doubled in the last four months. Perhaps prospects and buyers (largely investors) will push Sacramento out of its slump.

San Benito County: After a recent sharp rise, sales have regained the levels of 18 months ago, though median has fallen by a third in the last year.

San Francisco Bay: The Bay Area enjoyed a $660,000 median all last summer, but has fallen $150,000 since then. On the other hand, sales have risen by 50% since February.

San Francisco County: May sales declined about 20% from an April peak but are still at last fall’s levels, even with relatively few foreclosure sales. Median has been climbing steadily since December and is now, again, happily knocking on the door of $800,000.

San Mateo County: Median is down by about $100,000 in the last year. One figure or the other may improve in the near future, but the market must recover more generally for both to improve at once.

Santa Clara County: Even after a slight retreat in April, sales are double what they were in January. As jumbo loans become more available, this situation will improve further. Median has only dropped by about 10% in the last year.

Santa Cruz County: Sales almost doubled between March and April, then built on that gain in May. But a decline of $60,000 in median for the month means a loss of $180,000 for the year. This county is looking a lot better than it did over the winter and there’s hope it will regain the eminence it enjoyed when the market was hot.

Solano County: Sales have nearly doubled in the last three months, driven by foreclosure resales accounting for almost 60% of transactions. On the other hand, median has declined by a third since March 2007. Like many rural counties, Solano will probably participate strongly in the general recovery when it comes.

Sonoma County: Three months of increases have at least brought the median back above $400,000 and a sustained increase in sales has brought activity back to the levels of last summer. Sonoma, together with Solano and Contra Costa counties, is an affordability champ for the region this month. (And incidentally, Sonoma city took CAR’s Most Improved Median in May with a 61% improvement year-over-year.)

Yolo County: Yolo’s loss of over $110,000 in median for the year makes it look superficially like a lot of other counties—but exciting things are happening in the shorter term; since January, sales have doubled while median has actually increased. Happily, this county will have its share in the greening of greater Sacramento.

Interest Rates: 30-year fixed, 6.26%; 15-year fixed, 5.78%; 30-year nonconforming, 7.32%. A spread of more than 1% between 30-year fixed and 30-year jumbo underscores the difficulty of finding loans appropriate to California’s coastal markets. 5/1 ARM is exactly the same percentage as 30-year fixed, which is one reason (the other being borrower wariness about resetting loans) that the proportion of new 5/1 ARMs in the market is dropping.

During the third week in June, Freddie Mac was deeply concerned that if rates rose even slightly on conforming loans, sales would slow drastically as prospects had less incentive to look for bargains. Since then, pressure has eased as 30-year fixed has backed off about 20 basis points, but we all know that’s only a breather. Affordability in Northern California is still so fragile that if inflation—or, for that matter, Federal Reserve conservatism—kicks rates higher, the market’s current guarded optimism may collapse again. Cross your fingers.

Inventory: What you see is what you get. Availability now is unpredictable depending not only on location, but on the type of buyer (first-time, move-up, rental property, overseas) who may be interested in the specific area. Foreclosures are flooding some neighborhoods with properties, but hardly touching others. Overall, inventories still won’t be one of major concern, but they’re bound to figure into calculations more than they did six months ago.

Overall Assessment: Optimism feels so good and for the first time in months, we’re feeling optimistic! Bargains abound, especially in areas away from the coast. The Bay Area’s average monthly mortgage amount has shrunk by 30% since its recent peak two years ago. Thirty year fixed mortgage rates were inching up for a while, but now seem to be retreating towards 6% rather than lunging for seven. In many parts of Northern California, for the first time in years, an attractive home can be called affordable. Right now buyers may be facing a very brief opportunity to purchase a home that will suit them for a very long time.