The Goldman Report- Weekly Bay Area Marketing Report

The Bay Area forecast is loaded with microclimates. Meaning that as usual San Francisco is still bright and sunny, Marin, Alameda, and Contra Costa are cloudy with breaking sunshine, while Sonoma and Napa are still rather cloudy. Even within each county we find areas that continue with rain storms mixed with bright sun. You can even find a rainbow or two.

The overriding theme is plenty of buyers circling, with many still trying to figure out the long term weather pattern. The majority of homes open for the first time are attracting ample crowds of between 10-40 potential home owners. The best and most attractive listings are drawing numbers in the high double to triple digits, like the Piedmont 3 bedr./3 ba. home that was visited by 140 guests and the SF Noe Valley listing priced at $2.095 mil. that garnered over 200 buyers. Buyer traffic drops off significantly after the first open home as buyers are constantly looking for the newest eye-catching listing. Usually the only exception is when a property has a noteworthy price reduction.

Those that are jumping in are doing so with gusto. Nearly 30% of our transactions during this period were involved in multiple offers (29% to be exact). The majority of these transactions are drawing between 2-4 offers and selling at asking or 2-6% over list. There are exceptions such as the Noe Valley listing in SF priced at a bit under $ 1 mil that did go over by 10%. The upper end of the market is still healthy in San Francisco and appears to be coming back in Marin. As evidenced by the multiple offer on a $4 mil. home in Tiburon and another Marin listing at $3.9 mil. that also went into escrow. Contra Costa is also seeing resurgence in their upper end where a $2.075 mil. home in San Ramon sold. The Oakland/Berkeley area is seeing a different pattern where listings between $1 – 1.5 mil are selling, but those over that level are being more challenged. Napa and Sonoma are experiencing the bulk of their activity in the lowest and highest ends of their market. As you can see, the weather is quite variable.

The majority of buyers are still lacking a sense of urgency. However, buyers do know value and when they see it; do not hesitate to make their move. Volume of sales was well off last year comparing first quarter 2007 to first quarter 2008. The pattern changed in April, where in a number of counties open sales were actually up over 2008. This is a positive trend if it holds for May and June.

We will continue to see volatility in our market, just as we have seen in the stock market. Inventories continue to shrink and new home building has pretty much come to a standstill in the Bay Area. At the same time buyer demand is increasing. At some point the pressure will have to release itself. Although this time it should come in a measured release rather than with hurricane force as it did in 1999/2000 and again in 2004/2005.

I am attaching two articles that acknowledge that the worst is behind us and that the repair has begun. One is by a hedge fund manager, Cyril Moulle-Berteaux and the other by George Soros the billionaire investor. These articles are significant because they are the first national articles that are beginning to look at recovery rather than continuing to dwell on the rubble in the rear view mirror. We will still experience the on-going fall out from the sub-prime debacle, but like after shocks from an earthquake they do diminish over time.