Every week we get a great company update from our CEO, Avram Goldman. He's been in the business for several decades and has seen the ups and downs. I thought I would start sharing his weekly report with you. The stats he writes of are strickly Pacific Union sales, but as we are consistantly either the number 1 or number 2 top sales office in San Francisco I think they provide a solid snapshot of the market. Weekly reporting of this may get a little out of hand and I may have to reduce it down to bi-weekly, but we'll see how it goes. Enjoy!
Life is like a see-saw and so is our real estate market. The first few days of May were down and then the week before Mother’s Day was back solidly. The strongest open sale week since the beginning of last July. Even open house activity, in spite of the holiday, was brisk in most areas.
Multiple offer action remains in the plus twenty percent range (22% this reporting period---with 80% of the accepted offers going over full listing price). Yes, there were some other worldly transactions like the 21 offers on a SF Inner Richmond 4bedr./1.5 ba. home listed at $1.049 mil. that went over 25% beyond list price and the Berkeley 3 bedr./1ba home priced at $785K that went significantly over with 7 offers. They are the exceptions, but given the current state of the market pretty remarkable.
Still the majority of sales are not in that category. Clearly 80% of transactions have a single offer. Negociation is the key to success in the current environment. Negotiations are many times long and arduous. Buyers and sellers have to manage their expectations. Given the volume of negative media exposure buyers have the mindset that sellers should be giving their homes away, while sellers still long for the days of bring me the gold. For the most part homes are not worth what they were in 2005, but neither are they worth what they were in 1999. I do believe sellers are being more realistic about current values and buyers are beginning to realize that this may be the best time to strike a deal.
The operative word is patience. If each party is willing to continue to communicate we are finding that the chance of a sale is greatly increased. Many sales are now taking weeks to put together. Negotiations can extend through the escrow period due to issues that arise out of inspections. Again issues can be resolved if cooler minds prevail.
Although consumer confidence has taken a beating and fuel and food costs keep rising, there is a glimmer of positive news leaking out of the media. A Wall Street Journal article from May 14th showing that the recession is not a sure thing. In fact, Jay Bryson of Wachovia said just a few months ago we were on the edge of the abyss---now there are a several figures that would indicate that the economy could skirt a recession. Wachovia projected a 90% chance of recession just a month ago. Now they have it pegged at 45%. In a recent WSJ survey of economists showed a 60% chance of recession compared to a month ago at 90%. We are not out of the woods. We could still be in for a protracted period of sluggish growth. However, like I noted last week, the tremors have lessened and it is time to focus on recovery.
This story coupled with the latest figures on unemployment in the Bay Area could bode well for sales in the third and fourth quarters. For those of you who missed the new figures the SF Metro area that includes SF, Marin and San Mateo counties added 700 jobs in April and unemployment fell to 4.2% down from 4.4%. The San Jose Metro area added 1100 jobs fell to 5.2% down from 5.5%. Although the Oakland Metro area lost 1500 jobs, unemployment numbers still fell to 5.3% from 5.5%. The Bay Area has been more resilient than the rest of the state which stayed steady at 6.2% in April.
This may explain why we are still seeing strong numbers of buyers in the market place because of the strong employment numbers. Buyers are still slow to move until they see more consistent positive signs of recovery. These signs will come in time as indicated by the article that is attached. In the meantime buyers have a unique opportunity to negotiate exceptional values.
Speaking of see saws how about The Moody Blues singing about see saws. This should take you back a few years---how about 1968. Enjoy!