John M. Lee: Richmond Real estate year in review

By all measures, the real estate market in 2009 was dismal, resulting in the lowest amount of sales activity in the past decade as the economic downturn finally hit the San Francisco market.

Median and average prices in the Richmond District were lower than last year, but the light might be at the end of the tunnel as the numbers in the third and fourth quarters showed remarkable improvement over the first two quarters and surpassed those of 2008 during the same period.

The Richmond Home Sales Comparison Table shows the results in 2009 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 2009, there were 135 sales versus 178 for 2008 and 191 for 2007, a decrease of 24 percent from 2008 and a decrease of 29 percent from 2007. This is the lowest number of sales in the Richmond for the past 12 years since I started keeping track of these statistics.

The number of sales decreased dramatically in the first half because of the tight credit market. Banks were focused on bailing themselves out of trouble instead of making loans.

The amount of marketing time needed to sell a home increased to 69 days in 2009, versus 43 days in 2008 and 34 days in 2007, an increase of 26 days or 61 percent from 2008, and an increase of 35 days from 2007. 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 median price comparison shows a 15 percent decrease over last year, as compared to a three percent increase from 2007 to 2008. However, upon analyzing the data further, some of the sales and median price numbers for the second half surpassed those of 2008, suggesting that we are coming out of this real estate slump.

So, how can we interpret this information? Despite all the bad news in 2009, the rise in the unemployment rate, the bailout of major banks, plummeting consumer confidence ratings, and gigantic deficits in government spending, there is some good news as we head into the new year.

By all indicators, the real estate market has bottomed out in most of the country and is starting to move up. The stock market shot up by 60-plus percent from the first quarter, and the unemployment rate has decreased; all indicating that the recession is over and 2010 will be a better year than 2009. I think we have seen the bottom of the market and that we are poised for growth next year!

On the federal level, the Federal Reserve Banks have kept mortgage interest rates low and Congress has extended the $8,000 tax credit for first-time homebuyers and even introduced a $6,500 tax credit for buyers trading up, subject to certain limitations. Inflation is currently under control and the number of foreclosures have slowed due to loan modifications and the government's efforts to keep people in their homes.

However, there is a danger that some of these programs might not work and that we will see more foreclosed homes on the market in 2010.

Locally, the demand in San Francisco and the Richmond District will continue to be good. As I learned throughout my career, San Francisco real estate is desirable and our market tends to rebound very strongly once negative variables are removed. Prices are back to about 2004 levels and should move up from this point. Thus, my prediction for 2010 is that we will have a balanced real estate market, where the negotiating power will be fairly even between buyers and sellers, a continuing shortage of good inventory, and level to slightly up prices. Therefore, if you are contemplating buying for the long-term, or trading up, this will be an ideal year to do so.

John M. Lee was elected as the president of the San Francisco Association of Realtors for 2010. If you have any questions regarding real estate, call him at (415) 447-6231 or e-mail johnlee@isellsf.com.