As expected the July 4th week was a bit slower. I am surprised it didn’t come to a screeching halt given all the cheery news from the stock market and the cloud over the financial markets. However buyers still enjoyed going to open homes. Believe it or not a 2 bedroom 1 bath home in Piedmont listed for $875,000 attracted over 200 people. In spite of the holiday weekend many open homes had good traffic. The number of buyers averaged 8-30 groups, with most in double digits.
Multiple offers slowed, but still 20% of my transactions were involved in multiples. All of these coming from the San Francisco and East Bay markets. The majority of multiple offer transactions went over full asking price. The bulk of sales fell under the million dollar price range. This follows the trend in the first half of the year.
There is a great deal of uncertainty in the secondary market which is creating a volatile environment for mortgages. Hopefully with the Treasury now standing behind Fannie Mae and Freddie Mac some stability will return to the markets. The good news for me is that there are a good number of buyers out there with steel in their veins. I am sensing that those in the housing market today, whether buying to live in a home or investors, are feeling that buying property is making better economic sense now than the stock market. I think this is the only reason that the housing market still has a pulse.
I think investors are coming back in the market as home prices have dropped and the rental market has become tighter. Rents have been increasing as the demand for available rental housing has increased. Also with dropping prices housing affordability has increased greatly in spite of rising interest rates.
What the market needs now is a spot of “What if”. The media keeps focusing on the negative---high oil prices---falling stock prices---increasing interest rates---failing banks---the litany goes on. What this does is creates a perception that we are “going to hell in a hand basket”. Yes, the economy is not in good shape, but it is also not atrocious. We still have 94% of the working population employed. Consumer spending is still at reasonable levels. Plus you had to wait three hours to purchase a new I-Phone.
O.K.—let’s play the “What if “game. What if consumers thought the bottom of the real estate market was right now. What if consumers felt that the worst of the banking fiasco was behind us. What if the public realized that things will not be robust, but will bump along through 2009 with the economy picking up steam at the end of 2009. What kind of impact would that have on the economy?
I think the headlines and the pundits have a great deal of influence on how we think---whether it is real or not. It is rocky out there, but not fatal. I remember in past stressful economic times it was difficult to remain level headed, but that is exactly what is needed now. We are constantly sorting for the negative. How about let’s look at a few of the positives. Interest rates are still at historic lows, the vast majority of people are employed. We will need to be more conscience of our spending habits, but it is not the end of the world. We have far too many voices saying “the sky is falling”. The sky is not falling , we are just going through some storms. One of my manager’s said it best with a quote from Maya Angelou “I’ve learned that no matter what happens or how bad it seems today, life does go on, and it will be better tomorrow”. Let’s focus on the “What if”.
