John M. Lee: Real estate year in review

The real estate market in 2008 finally slowed from previous years, resulting in lower prices and less sales just about everywhere - even San Francisco started to feel the economic downturn.

Median and average prices in the Richmond District were mixed over last year and remained relatively flat. The Richmond Home Sales Comparison Table shows the results in 2008 as compared with prior years. The data was gathered from the San Francisco Association of Realtors' Multiple Listing Service and consists of single-family home sales in the Richmond, Lake, Presidio Heights, Jordan Park, Laurel Heights, Lone Mountain and Sea Cliff areas.

In 2008, there were 178 sales, versus 191 for 2007 and 187 for 2006, a decrease of 6.8 percent from 2007 and a decrease of 4.8 percent from 2006. This is the lowest number of sales in the Richmond for the past 11 years since I started keeping track of these statistics.

The number of sales decreased because of lower consumer confidence, with bad economic news hitting on a daily basis, and owners not selling because they perceived the market as very bad and they did not want to make a large financial decision during this time.

The amount of marketing time needed to sell a home increased to 43 days in 2008, versus 34 days in 2007 and 38 days in 2006, an increase of nine days, or 26.5 percent, from 2007 and an increase of five days, or 13.2 percent, from 2006. This is a substantial change as properties stayed on the market for a longer period of time and agents had to work harder to market and sell them.

The annual average price comparison shows a 3 percent decrease last year as compared to a 7.9 percent increase from 2006 to 2007. The average sales price decreased 3.7 percent during the year, suggesting that home prices held their own in the Richmond area as compared with the rest of the Bay Area, where some areas experienced 40 percent price declines.

So, how can we interpret this information? Despite all the bad news, the battering of the stock market, the rise in the unemployment rate, subprime mortgage problems, major bank failures and plummeting consumer confidence ratings, our home prices in the Richmond area held up extremely well. The reasons for this is because the Richmond is still a desirable area to raise a family, it is convenient to transportation and has all the amenities that homeowners like to have in a neighborhood.

Thus, even during tough economic times, people are staying in their homes, keeping the real estate demand and supply in balance, leading to stable prices.

What is in store for the year 2009? I think it will be more of the same with real estate taking slightly longer to sell, and prices being flat or slightly down. On the national level, the Federal Reserve Bank has been decreasing short-term rates and printing money for the large bailout. We at the real estate industry have been lobbying for part of the bailout money to be used to subsidize new home purchases, in the form of lower interest rates, to stimulate real estate sales.

We believe we will be successful sometime in the first quarter of 2009. Inflation is currently under control; the high number of foreclosures should peak and decrease in 2009; and we are hoping for a stock market rebound.

The good news for us in real estate is that mortgage rates have been steady all year and are anticipated to decrease slightly this year.

Locally, the demand in San Francisco and the Richmond District will continue to be desirable and strong because supply is still ever so limited. As you can see, with the least amount of homes selling in the Richmond annually for the past decade, demand still outnumbers supply. Though we do not see the torrid pace of the peak years, our real estate market is still active and should be fine.

Thus, my prediction for 2009 is that we will have a balanced real estate market, where negotiating power will be fairly balanced between buyers and sellers, a shortage of good inventory and level prices. So, if you are contemplating buying for the long-term, or trading up, this will be an ideal year to do so.

John M. Lee is the president elect of the San Francisco Association of Realtors for 2009. If you have any questions regarding real estate, call him at (415) 447-6231 or e-mail johnlee@isellsf.com.