Here in Los Altos, the market has really picked up starting in early May. Consumer confidence came back as the stock market rallied, the sun came out, flowers bloomed and sellers got more realistic about pricing. Buyers responded by buying up homes faster than they are coming on the market, mopping up inventory.

In June, there were more homes in contract in Santa Clara County than were for sale. The majority are under $500K, but the buying frenzy has moved into the mid-priced homes up to $1.5M. Buyers are finding themselves in multiple offer situations in some cases, with a homes in Los Altos and Palo Alto occassionally receiving over ten offers. . . . What year is it again?!?

Even this new market activity is being regulated by loan availability. I wish I could remember the name of the banker who said that “the lending pendulum has swung to stupid” last week. He is in Nebraska and was saying he can’t do loans now that his father would have happily done in the 1950’s. Home buyers in the dreaded jumbo market are having to provide tremendous documentation and larger down payments, which are softening the market with inflection points at $1.5M (20% down), and $2M (25% down). Over $2M, you need to bring $600,000 in cash, which is a decent chunk of change, especially if you are in the tech industry these days.

Yesterday, I had the pleasure of spending the afternoon at this lovely home in Oak Valley in Cupertino. It is a beautiful home with views and a sparkling pool, priced at $2,348,000. That is at the top of the Cupertino market, but upper-mid range for south Los Altos, which the neighborhood borders. I had plenty of company, as there were a lot of visitors, most of whom are in the market to buy a home, not looking for decorating ideas. The majority had seen the house online, so they knew the size and price before driving over.

Forecasts for the fall market are varying, at best. So don’t believe what you read in the papers, check with your local Realtor. Hopefully, rates will stay low, and we will see inventory continue to be absorbed.

Stay tuned, and thanks for reading . . .

SAN FRANCISCO — The world’s largest drug maker has abandoned plans to move into a new research center in San Francisco’s burgeoning Mission Bay neighborhood. What was hailed last summer by Mayor Gavin Newsom as a “significant win” in the development of Mission Bay is now a loss for the area, which has attracted numerous life science companies in recent years as a result of payroll tax breaks offered by The City.

Pfizer had planned to take up a bulk of a new building on the corner of Third Street and Mission Bay Boulevard. The company negotiated a 15-year lease with the builders, Alexandria Real Estate Equities Inc., and said they planned to move 100 employees there from their South San Francisco office in early 2010. Newsom announced the deal in August 2008, alongside Corey Goodman, the president of Pfizer’s Biotherapeutics and Bioinnovation Center, who said the move would position the center for success. Signs that the deal could be in jeopardy surfaced in November, when Alexandria announced they would be putting two Mission Bay properties on hold, but would not elaborate on the specific sites. Goodman then unexpectedly resigned in April — just months after Pfizer acquired drug maker Wyeth in a $68 billion deal. A spokeswoman for Pfizer, Joan Campion, said the company did notmake its decision based on recent leadership changes, but by analyzing its real estate holdings after acquiring Wyeth. “Economics was a factor,” Campion said. The fate of the building is still unknown. A public relations firm for Alexandria Real Estate Equities did not return calls for comment.

Pfizer drops plans for Mission Bay facility By: Brent Begin [Examiner]

Monterey Service Region

In areas beyond the reach of Redfin agents in the Bay Area, Redfin partners with experienced, local agents whom we have carefully chosen to uphold our standards of customer service, transparency and experience. If you buy or sell a home with a Redfin partner, he or she will provide you with a 15% commission credit at closing, usually worth $1,000 – 2000.

Meet Our Monterey Agents

We put our partner agent applicants through the ringer to ensure that our customers will get great service:

• Interviewed in-person by a Redfin market manager
• Completed at least 15 transactions in your area
• Offered at least three customer references
• Agreed to survey every new client and publish every review
• Paid based on customer satisfaction; removed from the program for bad reviews

	Arleen Hardenstein Serving Monterey Bay Homes Closed: 18+
	Debbie Calhoun Serving Monterey Bay Homes Closed: 19+
	Paul Locatelli Serving Monterey County and Santa Cruz County Homes Closed: 150+

Apply to be a Redfin Partner

Are you a real estate agent with a commitment to customer service and transparency? We’d love to meet you. Become a Redfin partner.

For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. - April data is released in June).

Here are the basic Case-Shiller stats for the San Francisco Bay Area* as of April:

April 2009
Month to Month: Up 0.6%
Year to Year: Down 28.0%
Change from Peak: Down 45.8% in 35 months

The following chart shows the Bay Area HPI scaled such that the May 2006 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the Bay Area HPI was at or lower than it was in the latest data (June 2000).

April’s slight uptick in San Francisco’s HPI marks the first increase of any kind since early 2007.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare the Bay Area’s performance to other areas across the country:

To recap, we have seen the following interventions in recent months meant to boost the housing market:

• $8k first-time buyer tax credit
• 4.5% - 5% mortgage rates
• various moratoriums on foreclosures
• numerous federal programs encouraging loan workouts

The apparent result of this host of actions has been a flattening to very slight upticks seen in the chart above, in a month that is historically one of the strongest of the year for the real estate market. I guess you can color me underwhelmed.

And here’s our final chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Does April’s uptick mark the end of price drops in San Francisco? Personally I doubt it, but we’ll probably have to wait until the fall before we really know for sure.

*[Case-Shiller defines the San Francisco Bay Area as the San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area, which includes all of the following counties: Alameda, Contra Costa, Marin, San Francisco, and San Mateo.]

The following charts show the percent of MLS, FSBO or REO listings that were price-reduced at some point before leaving the market (either sold or removed unsold from the market) in the past 90 days. Cities/towns or neighborhoods in which the number of homes taken off the market was too small to provide believable estimates are excluded from ranking.

For those that are interested, I have uploaded the full data set in Excel format here. The downloadable Excel file also includes charts showing the top ten cities/towns/neighborhoods with the least reduced-price listings.

First up are the top ten cities with the most price-reduced listings:

Of the 128 cities/towns we ranked in the Bay Area this month, 23 had price-reduced ratios of fifty percent or more.

Getting a little more granular, let’s look at the top ten Bay Area neighborhoods for price reductions:

Of the 99 neighborhoods we ranked in the Bay Area this month, 13 had a price-reduced ratio of fifty percent or more. Unlike many of the other markets that Redfin serves around the country, there does not appear to be much of a correlation in the Bay Area between the median price of a neighborhood and the number of price reductions.

The general trend in the Bay Area looks to be heading slightly toward less price reductions, however every city and neighborhood is of course different. Some may be getting softer while others get tighter. Download the full spreadsheet to check where your neighborhood came in.

In the charts below, we have taken all sales data from last month in the Bay Area and sorted it by city/town. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any areas with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel format (xls).

Here are the top ten areas with the largest overall discount:

The overall discount dropped quite a bit in June from our previous update in April, falling to 2.7% from 5.0%.

Here are the ten areas with the smallest discounts:

Of the 49 areas we ranked, just those four came in with average sale prices above the list price.

Here’s an added bonus. The following chart shows the top ten areas with the largest overall discount from the original list price, instead of the final list price:

Walnut Creek remains in the #1 spot, but the discount nearly doubles. Meanwhile, the area-wide discount rate nearly tripled.

Is the area you’re shopping not on either the top 10 or bottom 10? No problem, just download the full rankings in Excel format and hit the “FullSummary” sheet.

Of the 3,089 sales we tracked in the 1-month period, 294 homes (10%) sold for 10% or more off the asking price, while 524 homes sold for 5% or more above the asking price.