John M. Lee: Real Estate

Confusing Real Estate Market
So we are now two months into the 2007 real estate market and where it is going is confusing. If you read the newspapers and follow the media, the news ranges from doom and gloom to a steady market. But what the media is looking at are 30-60 day old data in terms of sales prices and activity.

I can share with you that since the beginning of the year, buyers have came out of hibernation and are looking at properties and making offers.

There were several properties in the Sunset that received more than 20 offers. There was one that even had 51 offers. I had a duplex for sale in the Richmond and we got 15 offers! All these properties sold for substantially over the asking price. Several properties sold even before it hit the market to buyers who were just scouting around.

There were some properties that could not be sold at the end of last year that went into contract this year. So, is this an anomaly or is this the beginning of the next bull cycle in real estate? We will need to look back at this in a few years to know for certain.

But what we do know is that this is typical of the spring real estate market. We come out of the holidays very low in inventory. Some buyers make decisions to purchase in the new year because of tax reasons or a New Year's resolution. And with an imbalance in supply and demand, available properties get sold at higher prices. Other favorable factors this year include some very nice winter weather with not much rain.

So buyers are out and about looking at properties. Buyers are also feeling more confident that the market is not going into a sink hole. Interest rates have stayed steady at historic lows and the latest job reports show that the Bay Area is still on the positive side of job growth.

The Bay Area leads the state in creating new jobs, much of it coming from the Silicon Valley and San Francisco. Google is expecting to hire 300-400 people for its San Francisco location. And as dollars for biotech research become allocated, we will be the recipient of more jobs. The impact will be felt area wide as many of the new hires will live all over the Bay Area.

The other element that is influencing buyer activity is that sellers are becoming more realistic in their pricing. It is not surprising that the most attractive properties are those priced under current market values, resulting in multiple offers once again.

The advice to sellers is that we are expecting a number of listings to be coming on in the spring market, more than what we currently have right now. The key is to prepare your home for market rather than waiting until you find the perfect home. Because, when you do you will not be in a position to act immediately.

If you are a buyer, it is time to get pre-approved for a loan and to look for the perfect home. Get to know the market and prices, so that when you find the right one, you will know approximately what others will bid for the property and whether or not that price will work for you.

Nobody knows how long this current "hot" market will last. I believe the signs are there for long-term growth, but short-term trends are much more difficult to predict. What we do know currently is that 60-days from now, the media will be reporting on increasing real estate prices and activity. Remember ... you read it here first.

John M. Lee is a top agent at Pacific Union specializing in the Richmond and Sunset districts. If you have any questions in real estate, call (415) 447-6231.