They had a party on Wall Street when the Federal Reserve lowered the fed funds and the discount rate by a half percent. What did it do for the housing market? Answer ????? Although the stock market swings widely when the Fed makes major moves; the housing market does not react in the same way. The swings are more elongated. It takes months (or sometimes longer) to move directions. The mortgage markets always anticipate a move in rates and with the recent move by the Fed rates dropped a bit under 7% for jumbo loans. How much lower will they go is anybody’s guess. There is money available for jumbo loans not in the quantity it once was, but certainly enough for current demand. The only thing that has changed is that it is taking longer for approvals and lending criteria has tightened. So what---we have been in a very loose lending environment for 2-3 years. The pendulum has swung back to a normalcy. This is positive for the market as it will prevent against future overheating of prices.
Momentum has picked up since the end of August. Not a huge lift, but certainly moving in the right direction. The number of multiple offers has slowed; still 40% of our offices had at least one multiple offer transaction. The Lamorinda (Lafayette, Orinda and Moraga) area did see a doubling of sales this week compared to last. San Francisco also seems to be picking up speed.
Buyers are still looking for the right property and when the find it, they move quickly. In Larkspur a 1200sq. ft. home priced at $917,000 received 7 offers and went substantially over the list price. In San Francisco, a Central Richmond 3 bedr. 1 ½ ba. home listed at $1.295 received 2 offers and went slightly over asking and in Mission Dolores at two unit building priced at $1.525 mil. garnered 3 offers and went 8% over asking. A pre-emptive offer was accepted on a $2.5mil. Marin property before it hit broker’s tour. The upper end is doing just fine. A unique Piedmont listing priced at $7.8 mil. sold in the first week with 3 buyers circling and one quickly going into escrow.
Buyers are waiting for the newest hot properties. Most open home traffic was tepid. This is particularly true for listings that have been on the market before Labor Day. The best of the new listing inventory coming on after Labor Day experienced heavy traffic as exemplified by a new SF Marina listing that had a 100 groups or a new Mill Valley listing priced at $1.569 mil. being attended by a also 100 groups or the SF Glen Park listing seeing 125 visitors over a two day period.
The buyer demand has not subsided. However, their willingness to make offers has slowed appreciably except for the best priced and staged properties. It is like the tide is out and we are waiting for the tide to rise once again. It won’t be a tsunami. But until buyers feel confident in the economy, the housing market will be in a period of inertia. As with any market, the best time to buy is when others are not. Those buyers that dive in will be rewarded in the long term as sellers are more willing to negotiate and give favorable terms.
Most offices are showing an increase of activity during the second week of Sept. If this activity continues we could see a good solid fall market. The next two reports should give us a good sense on what kind of a note the year will end on.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment