It seems that every day now, we see more and more properties for sale that are listed as REO (Bank Owned Foreclosures), and/or Short Sales.

Our team, has always run numbers as a means to better understand our markets. We researched the EBRD multiple listings service, following a conversation that we had last night. We were not surprised as to which cities had a higher percentage of REOs.

However, we did not expect the number for the entire San Francisco East Bay area to be this high, 21%. That means that roughly one in five houses that are for sale, are Bank Owned in the East Bay area. The interesting factor is that this number does not include “Short Sales.”

When lenders allow a home to be sold for less than the amount still owing on the mortgage loan, that’s called a pre-closure “Short Sale!”

I think you can see where this is going once you add “short sales” into the mix as well. The competition for many houses for sale in the market are from banks.

Here’s our spreadsheet tracking cities in the San Francisco East Bay Area for Months Supply and REOs. Months supply is the ratio of inventory to sales. It tells us how many months the stock of homes for sale would last, if sales continued at their current rate.

For those living in other parts of the country, we’d love to hear what’s happening in your market. We’ve already heard from one Las Vegas agent, that 20.8% of their listings are REOs or short sales.

Labels: Bay Area Real Estate, Foreclosure, Housing Inventory, Months Supply, REO, Short Sale

What's in store for real estate in the Bay Area for the coming year? Most in the real estate industry agree that it will get worse before it gets better. However, predictions vary among our "experts." What are we in store for in 2008? When will prices begin to recover? Hear what some of them are saying.

"Don't count on market rebounding in '08, experts say." - Marni Leff Kottle of the San Francisco Chronicle.

"A real recovery in the housing market is probably at least a year off," said Robert Kleinhenz, deputy chief economist for the California Association of Realtors.

California Association of Realtors's forecast for 2008; sales volume will continue to fall, 9% in 2008, as will the median price of a home, at 4%. Take a look at the 2008 California Housing Market Forecast presentation by Leslie Appleton-Young, Vice President and Chief Economist for the California Association of REALTORS® (C.A.R.).

"The best guesstimate most can come up with these days on a residential housing recovery is that 2008 will be more than half over before housing prices even stabilize. Right now, it's anybody's guess as to when they will start to grow positively." - Ryan Fuhrmann, an article printed in The Motley Fool.


It may take until the end of 2008 or beginning of 2009 for the market to hit bottom, said Mark Zandi, chief economist at Moody's Economy.com.

"But the one thing that economists and real estate agents seem to agree on is this: As bad as it may get in the Bay Area, the region is weathering the downturn in the real estate market much better than most other places."

"The housing market is fairly strong in the vast majority of the Bay Area," said Ken Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley. "It's slipping a little, but it's not the free fall you have in some parts of the country."

"When you look at the rest of the state and even the rest of the country, the Bay Area has held up quite well," said Larry Klapow, president of Coldwell Banker's San Francisco Bay Area region. "The market has shown incredible resiliency." - "So Long, '07"

"Builder's expect recovery in second half" - Jessica Saunders, East Bay Business Times.

"At least two builders expect to see some recovery in the East Bay housing market in the second half of 2008, but another expert thinks it will be 2009 before demand and supply balance out."

"Once we get through the credit crunch, and buyers realize the world didn't end, they will come back," said Scott Menard, SummerHill Homes' chief operating officer, who predicts the market will continue down through at least the first quarter. "Next year will probably be a bit of an adjustment year."

Which brings us to the question; Will 2008 be a good time to invest in real estate? See what a recent survey showed taken by the East Bay Business Times. 60% say that now is a good time to buy! Read their comments as to why.

Labels: Bay Area Real Estate, CAR, East Bay Business Times, Fisher Center for Real Estate, Ken Rosen, Moody's Economy, Real Estate Cycles, San Francisco Chronicle, The Motley Fool

In an era of falling prices, asking too much might mean your house will sell for less.

If you're thinking of putting your house on the market soon, then I think you'll be interested in taking a look at this article by Kathleen Lynn. Read the entire article HERE.

"Realtors often warn sellers about the danger of overpricing a house. Now they have evidence to show skeptical clients: research by Jeffrey Otteau, a New Jersey appraiser."

"He found that in a market where prices are declining, sellers who "test the market" with a high price usually end up with a lower price than those who price realistically."

Otteau, of Otteau Valuation Group, studied about 4,500 home sales that took place in the first half of 2007.

"He looked at houses that sold in less than a month, and found that they had a median asking price of $599,900 and sold for almost full price - a median of $599,000. When he looked at houses that lingered on the market for more than a month, however, he found that they were priced higher - at a median of $634,900 - but actually sold for less, a median of $585,000. The median is the point at which half the sale prices are above and half below.

"With a high price, the house stays on the market as buyers ignore it in favor of lowered-priced competitors. In an environment of falling prices, a house that sells three months from now is going to command a lower price than one that sells today."

"Houses that are priced right are selling," said Otteau. "Overpricing extends days on the market and guarantees that you will sell your home for less in a declining market."

"Otteau said pricing a house a little below the competition not only catches the buyer's interest - it also reassures them that they won't kick themselves later for overpaying if, as expected, home prices drift lower in 2008."

"Agents should aim to underprice the competition."

"You can't just try for a higher price because you really want it," he said. "The way to get a higher price is to create a sense of urgency by setting a lower price."

Labels: Bay Area Real Estate, Housing Market, Median Home Price

"The housing market is soft. Hard times for some can mean opportunity time for others. Could now be a good time to step into the housing marker and pick up a bargain?" Dian Hymer of Inman News asks.

Her conclusion; "There are good buying opportunities in the current market for well-qualified buyers. Just make sure that you pick your bargains carefully." Read her entire article HERE.

Lew Sichelman, United Media Feature, speaks about how most would-be buyers have taken themselves out of the market until prices "hit bottom."

That could be a mistake for those who plan to stay in their new home for quite awhile. "The common wisdom is that if the house of your dreams comes along, go for it. After all, it may not be available six months from now. As long as you remain in the house, any further drop in prices will be offset by rising prices down the road."

If you look at home prices over the past 40 years, there is a very predictable cycle: Home prices increase for several years, are followed by a slight price drop and then stay flat for the next few years. You can see this pattern on a graph. Although they vary somewhat by location, they usually follow the same pattern.

Lew Sichelman states; It's tough to know the precise moment when prices stop falling and start rising once again. It's not even easy to spot a trend reversal. "If it was so easy to find the bottom," Markstein,(a senior economist with the NAHB), said, "we'd all be millionaires."

He goes on to say that "there are telltale signs that smart buyers can look for, evidence that the housing market has finally firmed and is about to rebound."

His key vital signs include;

Existing Home Sales
Building Permits
Mortgage Defaults
Foreclosure Sales
Mortgage Rates

You can read in detail about his five keys to look for HERE.

There are a few sources that can help your with you research. Your knowledgible realtor of course. DataQuick has some of the most up to date news and statisitics on housing markets. CAR, California Association of Realtors, is another good resource. Inman News always has good articles on Real Estate. On a national basis, you can visit NAR, the National Association of Realtors.

Labels: Bay Area Real Estate, CAR, DataQuick, Housing Market, Inman News, NAR, Real Estate Cycles

"The term mortgage meltdown has become so common -- on television, in headlines and even casual conversations -- that you might assume that this is a tough time to get a mortgage."

"But the reality is different: Mortgage money is plentiful, most mortgage products remain unaffected by troubles in the subprime segment, and interest rates for 30-year fixed-rate loans remain in the low 6 percent range for people with reasonably good credit. Even interest rates on loans of more than $417,000 have fallen after spiking during the summer." - Kenneth Harney, Nation's Housing

The main change during the past several months, said Ted Grose, president of 1st Mortgage Advisors in Los Angeles, is that "the products that allowed people to buy houses they couldn't afford have disappeared."

"Larger mortgages, which always have carried higher rates than loans eligible for purchase by Fannie Mae and Freddie Mac, have recently been in the low 7 percent range, down from the 8 percent and higher levels of a couple of months ago."

"Nonetheless, say lenders and brokers, there is a widespread and persistant belief by consumers that the entire mortgage market is in crisis."

"Other than subprime and high LTV (loan-to-value) stated-income" programs, Jim Brown, chief executive officer of Veteran Mortgage said, "we've got pretty much everything now that we did before. We've got a lot of outlets."

"Most lenders and investors are quick to note that while mortgage money is plentiful, underwriting standards are stricter than they were a year ago."

"Similarly, FICO score standards generally are higher than a year ago, stated-income mortgages with no verifications are hard to find, and major investors are on the prowl for anything hinting at fraud."

"Lenders are especially wary of excessive "layering of risk" - combining low down payments with marginal FICO scores and high-to-income ratios - in markets where prices are falling."

"A major legislative development under way on Capitol Hill could expand consumers' range of good mortgage choices even further."

Read the entire Article HERE.

Labels: Bay Area Real Estate, Fico Score, Interest Rate, Jumbo Loans, Mortgage Lenders, San Francisco Chronicle, Subprime Loans