San Francisco Real Estate - Residential

San Francisco Real Estate Market Update for the week ending July 19, 2009

YOU’VE GOT TO GO THROUGH “LESS BAD” TO GET TO GOOD

It seemed everywhere you looked this week, the media was reporting on some sort of positive indicator relating to the real estate market. For starters, Good Morning America ran a story on Tuesday about the state of the housing market. You can see the interview here: http://abcnews.go.com/video/playerIndex?id=8190034

Liz Ann Sanders, the Chief Investment Strategist for Charles Schwab, and Mike Santoli, Assoc Editor of Barron’s were interviewed. Essentially they both indicated there are enough cumulative signs from indicators to say that things are not only “less bad”, but we are starting to see some pockets of improvement in the housing market. Among the vital signs they said to watch for in calling a recovery are; Index of Leading Economic Indicators, currently up three months in a row; drop in new unemployment claims (the four week average is down 93,000 from the peak, and never before has there been this large of a drop while still being in a recession); and the spread between short term (set by Fed) and long term (driven by the market) interest rates, which is widening. Additionally an opinion was shared that if the Dow stays above 8,000 – this would be a good indicator that we’re on the road to recovery. This week we danced over the 9,000 mark, closing today at 9,171; making it the best July for the Dow in over 20 years.

Our industry was the first to be hit by the economic downturn and if all continues on this path, we will be the first out. We probably won’t see housing numbers start to appreciate across the board anytime soon. What we are seeing right now are signs we typically see at the bottoming-out of a down market. Speculators and investors are competing with first time home buyers. Those individuals are going to continue to gobble up the inventory—both REOs and non-bank sellers at the entry price level. In many metros across the country, there are very low levels of inventory at the low end. I was on the phone this afternoon with the Coldwell Banker president for Arizona. They were hit hard, and early, with foreclosures. He told me that today the Phoenix Metro area has under 2 months supply at their entry level, <$250k – yet a 7 years supply of inventory at their estate home level of $2M+.

Also this week the Standard & Poor’s/Case-Schiller 20-city index was released and in it, home prices in May posted their first monthly increase since the summer of 2006. Prices rose from April in 13 of the metro areas tracked, notably Cleveland, Dallas, Boston and the Bay Area. The news followed reports showing sales of newly built and existing homes rising in June for the third consecutive month. New home construction, though still weak, is the best it’s been since the fall.

Read the entire article here.

posted by SFResidence.com @ 6:32 PM