Real Estate Winter - A Change of Seasons
"No matter how long the winter, spring is sure to follow." This proverb may well describe the change of season, but perhaps it also best describes the promise of the change in the real estate market.
"No matter how long the winter, spring is sure to follow." This proverb may well describe the change of season, but perhaps it also best describes the promise of the change in the real estate market. Having been through a particularly long ‘real estate winter’, it appears that things may be starting to improve.
Despite formidable world events in Egypt, Libya and Japan and the resulting volatility of the equity markets, the first quarter of 2011 experienced positive trends in many San Francisco Bay Area real estate markets. Properties selling below $1 million, which are over 70% of the closings in the immediate six county Bay Area, are experiencing modest to very favorable increases in units sold. A refreshing trend, which we feel is always a precursor, albeit by twelve to eighteen months, to value/price appreciation.
Most importantly we are experiencing a recovery in our clients’ confidence. We believe this is a result of historic low interest rates, stabilized pricing in our real estate markets and a general feeling that “the worst” is behind us and that 2011 may be a better year than we expected in late 2010.
In Sonoma Valley we have not yet experienced meaningful positive indicators in activity over $1 million. Volume remains light and pricing remains soft. The good news is we have begun to experience a refreshing rebound in units sold in the high end (over $1.0 million) in Wine Country in general (Napa and Sonoma Counties). This activity at the high-end will begin to motivate the “move-up” buyers throughout the San Francisco Bay Area. As a result, we expect more favorable results in our local market segment throughout 2011.
Even in the face of these statistics, the right homes, in the right locations with market based pricing are experiencing multiple offers. This is an indicator of pent up demand and client confidence. Our buyers are anxious to settle into new homes but they are only willing to act (put pen to paper) when the perception of value crystallizes in their mind. Homes with 10% - 12% “pricing cushion” for which to negotiate are finding no one (no offers) to negotiate with. Homes priced within 3% - 5% of true market value are seeing brisk interest and of course those priced at market are receiving multiple offers.
Pacific Union International