Luxury Real Estate

Courtesy of: Jim Walberg of Caribbean Islands Realty

Jim Walberg states that all real estate is local, remember? The Bay Area home sales for September were up 8.4%. It doesn’t matter what the National averages are, it only matters what the stats are in our local market. And within our local markets are niche markets. Do you really care about what the statistics are in Kansas City? No. What you care about is what is happening with home sales in the East Bay real estate markets. But, here is the info from September’s home sales anyway. Last month was the largest monthly increase in home sales in the U.S. in the last 26 years! That is great news for our economy. I believe that the reason why September was so robust in home sales was because of the panic that the Home Buyers Tax Credit was ending on November 30^th. ( We now know that Senator Harry Reid is authoring a bill to extend it to April 30, 2010.) The September jump in homes sales revised the projected home sales for 2009 to 5.57 million! “There’s a mini-boom going on in the housing market,” said Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications, a research firm.

Nationally, home sales are up almost 24% from the bottom last January. However, they are still down 23% from 2005. What is still dragging down prices are Foreclosures and Short Sales. Now, this is where we go back to, “all real estate is local”. The median price of homes last month, Nationally, was $174,900, with a bit less than eight months of inventory given the current pace of sales. California’s median home price last month was $251,000 which was down 11% from $283,000 a year ago in September. Back to local…if you look at the East County months of inventory is around ONE MONTH! San Ramon is three months. Dublin is under two months. This confirms that ALL real estate is local.

Who are snatching up homes right now are first time home buyers and investors. They are taking advantage of low interest rates on mortgages, plus the tax credits that have been available the past year. This tax credit has been so important to them that many are adding in a clause to their purchase contracts that states the are able to back out of their purchase if the sale doesn’t close before November 30^th. ( This may be a mute point if the current proposed Senate bill passes in the next week or so.)

Joseph LaVorgna who is the chief U.S. economist from Deutsche Bank stated, “We think the housing market has touched bottom and it is now only a matter of time until home prices stabilize — something that we anticipate to occur in late 2010.” I still believe that the unemployment issue will continue to cause more foreclosures, no matter what part of the country we live in. Zillow.com’s chief economist, Stan Humphries said, “There’s more supply that’s going to come into the marketplace. That additional supply will outpace demand.” So, is the solution the extension of the home buyers tax credit? Some of the analysts are saying the tax credit may not be as critical to the housing market as the real estate industry is suggesting. The chief economist of Nomura Securities stated, “The group has an incentive to talk up the effects of the credit as it is urging Congress to extend it, and it therefore may be exaggerating the credit’s effects.” In fact, the Treasury Department is questioning whether over 100,000 tax credit claims are illegal. There is even a taxpayer application that has been discovered from a four year old. This revelation will not help Congress with their rationale in passing an extension of the tax credit.

However, last month, John Walsh, the president of DataQuick said, “This market may be closer to normal than it was a a half year ago, but it’s still out of kilter, fueled in large part by incentives and the processing of distressed properties. The sales mix is still lopsided, tilting toward the low end, and lending institutions are only making really safe mortgage loans. For those who can buy, there are some very attractive opportunities. But it still looks like a lot of normal supply-and-demand activity has been put on hold until the economy comes back.” What are your thoughts about our local real estate markets?