Is the Bottom In Sight?

September 18, 2008 · Lee Ginsburg

The window is open but could be closing soon. The window I am speaking about is “The Window of Opportunity”. In the Bay Area we might be seeing the light at the end of the tunnel. The bottom might be in sight. Why am I saying this? It is economics 101; Supply and Demand. On the Supply side in the Bay Area we are seeing the Supply stabilize or even decrease in certain areas. We are seeing a decrease in the amount of new listings. We are seeing an increase in sales. On the demand side we are definitely seeing a surge. Sales are increasing, activity at open homes is way up, and multiple offers on well priced homes are once again occurring. I recently heard of a Millbrae Open Home with over 100 visitors, a listing in Daly City with 27 offers and a home I believe in Antioch with 82 offers. Why is this happening one might ask? Interest rates in the 5% range, a large amount of Bank owned properties available (sellers with no ties or emotions to the property just plain old dollars and cents) loan programs with as little as 3.5% down payment available, tax benefits, with the decrease in home prices 32% of the Bay Area population can now afford to buy up from 18% in 2007 according to a report released recently by the National Association of Realtors, and an added incentive of tax credit/loan. (http://lginsburg.prucalbayarea.com/admin/index.php?module=Sphere_SiteSettings&action=index&tab=pages&do=edit&page=housingstimulusbill )

The reason I am writing about this now is this week I spoke with 2 large investors one domestic and one foreign looking to purchase single family homes in bulk from banks or home builders. I thought it was important enough for me to spread the word to my clients and friends that the big guys are interested in getting into the Bay Area Real Estate market and maybe you should also. The foreign investor told me his group was not sure if we hit bottom yet but even if we did not it can’t go much further down. Mark Zandi chief economist for Moody’s Economy.com says “I think we’ve seen the worst of it”. Ken Rosen chair of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, agrees and he states “We’ve seen much of the price loss already.” I urge all serious buyers first time and investors to call their favorite Realtor now to discuss their particular market. CAR’s chief economist Leslie Appleton Young has said “They’re able to get into something they never thought was possible a year or two ago.”