Let me start out by saying that it's VERY hard to draw hard conclusions from the nine transactions that have closed since the first of October.
Some good news--No major banks have failed in the last few weeks. Several of the largest lenders have recently implemented foreclosure moratoria (maybe not good news for someone hoping to pick one up next month). Open houses are seeing more visitors these last two weeks. The number of homes going into contract in the East Bay Hills has increased over the last several weeks. Four homes are pending in Piedmont; three went into contract within 19 days on market and two of these are scheduled to close after just two or three weeks in escrow. Zoom zoom zoom. I heard NPR do a story this a.m. wondering if the market is turning. Moreover, we're now seeing loans in the over-$729,500 realm for well-qualified buyers purchasing homes with sizeable downpayments--not the case for the last couple of months!
The numbers say that:
1. Nine homes have sold since 10/1, compared to 16 in the same window in '07, 11 in '06, and 21 in '05. Nothing new there--we knew that the number of sales was down nearly 50% from last year---
2. Those homes that sold, sold quickly--in an average 17 days on market. Buyers are very focused and quick to act when they see value, and sellers aren't taking chances or waiting around. The average price per square foot was about $500, but these were mostly less-expensive fixers--one larger, beautifully located and cared-for home sold for a bit over $700/sf, and for over $2 million. I'm not comfortable suggesting a decline in average prices beyond the 5% or so drop from our late 2005 peak that cropped up in last quarter's numbers.
3. The 25 homes actively seeking buyers have typically been on the market for 54 days and many have seen price cuts. Their current average price is $588/sf (still a tad above last quarter's average for sold homes), but four are hoping for upwards of $800/sf or more. Five are distressed--already owned by banks, or the owner is likely to be short of funds to close, meaning the lender(s) must agree to ''eat'' a portion of the outstanding balance [realtors are required to disclose this fact in the MLS now]. Seven homes have come off the market since 10/1. This is a noticeable increase, and suggests frustrated sellers and/or those who don't have many degrees of freedom for price cuts.
4. While seven out of the nine homes sold recently cost less than $1.5 million; half of the active homes started out at over $1.5 million. Maybe buyers feel more confident in these uncertain times with less expensive purchases or maybe the shortage of financing and anticipated bonuses is taking its toll at the high end.
So, the bottom line is that our market is in much better shape than surrounding areas (85% of newly pending transactions under $500,000 in the ''inner'' East Bay last week were distressed), and serious sellers are still finding serious buyers for their homes along the price spectrum. As households move to reduce discretionary expenses, I imagine we'll see more demand for the great schools that go along with a Piedmont purchase (if you have friends or colleagues thinking about a private school to public school move, ask me for the link and password to my Piedmont Information site. Among many photos, links and factoids, it's got links to all the key PUSD backgrounders as well as a net present value analysis of a Piedmont purchase (with Piedmont schools) vs. an Oakland purchase just outside our borders (and private schools). And of course I'd love to assist anyone you know as they plan an East Bay purchase or sale).
When's a Jumbo Loan a Jumbo Loan?
Don't forget that starting Jan. 1st, loans in our metro area over $625,500 will be considered ''jumbo'' as to rates and terms--the federal agencies will reduce the maximum loan size they are willing to purchase from area lenders by about $100,000 from that emergency/temporary figure of $729,750 established back in July. Organize any refis or new purchases that will need a loan in that $625-$729K range before 12/7 or 12/15 at the latest to make sure the loan closes before the jumbo definition changes!