The Real Estate Market is CRASHING!

Well, no...not really but did we get your attention? So, what is really going on in the market? Are prices going down? By how much? Are we at the “bottom”? How does the mortgage market effect prices? What IS happening in the mortgage market? What is going on in my local market? We are being asked these questions and many more by our clients everyday.

The purpose of this month’s newsletter is to jump in, present the facts and provide an objective educational perspective on the happenings of this last year and help you define a proper projection for next year. Even if you are not looking to buy/sell right now or not even ready to work with a Realtor, we want to help you understand the real estate market where we all live.

Here’s the net of it from a Statewide perspective: the market peaked in 2004 and 2005. In 2006 there was a 23.6% decline in sales volume (not Sales prices). Sales volume is down 23% for 2007 and is projected to decline 9% in 2008.

When you first hear these numbers it can be astonishing, even frightening (by the way...that is exactly what the media wants). However, when we dive deeper, we find that the sales volume for homes above $1MM declined only 0.5%; it was homes below $1MM that declined almost 24%!

In other words, the high-end market has been barely affected, if at all . For the majority of us living in the bay area, “high-end” means the homes we live in. Also, it’s very important to look at how this effected the statewide median home price; it went UP 2% since last year! ($556,640 Aug 2006 and $558,970 Aug 2007)

So, what is the skinny on home prices in the Bay Area? Here’s the deal...The Bay area is comprised of 9 counties (Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma).

· Every County has experienced an increase in sales prices except for Solano and Sonoma.

· Each County has seen an increase in prices of anywhere from 3%-11.8% (for the specific numbers email us: alyssa@dugganteam.com).

As a general rule of thumb, the areas that have depreciated and may continue to see prices go down in 2008 are ones under the statewide median home price ($558,970), neighborhoods with a high number of non-owner occupied houses, areas that homes all look the same, and areas that experienced a lot of new construction before the peak (e.g. the central valley).

If you are an investor like ourselves you are looking for the homes under market value in good neighborhoods. Rents are going up because of stricter lending guidelines. We see this everyday. In fact we just closed escrow on an investment property and rented it in a week. We had over 20 calls in 2 days just by putting a for rent sign out front. On the flip side, if you are renting now it is a good time to buy since prices are down in many neighborhoods. Call us if you have questions about your pre-qualifying status.

On the other hand, if you are thinking about selling your home, it is important that you are informed of facts like these so you can better determine what your home may sell for before you make a decision.

Call or email us if you need help figuring out this ever changing market or are interested in buying or selling.

Linda Duggan: 925.570.0672
Alyssa Duggan: 650.678.5050
Mike Duggan: 925.570.0671

www.dugganteam.com


Source: Appleton-Young, Leslie. (October 10th 2007). 2008 Real Estate Market Forecast