by Broderick Perkins
© 2007 DeadlineNews.Com
Deadline Newsroom – Silicon Valley consumers are more bullish about buying homes in the current soft market than they are about selling and probably for good reason.
With much of the region shaping up as a buyer's market, buyers who can find financing and can afford to buy can negotiate a pretty good deal with relatively low interest rates. If they stay put and ride out the soft market, they'll reap the benefits of the next upturn.
Many sellers braving the market are behind the eight ball, lowering prices, spiffing up the property, offering incentives and otherwise trying to sell without losing the equity gains of the last boom.
It's not surprising then that 45 percent of consumers recently surveyed said it's a good time to buy a home, but only 17 percent had the same sentiment about selling.
When the Survey and Policy Research Institute at San Jose State University polled a random sample of 652 Californians in early October, during its third quarter Consumer Confidence Survey, it found, among Silicon Valley consumers, an equal 45 percent also said it's a bad time to buy a home, but the vast majority, 73 percent, said it's a bad time to sell.
The buy vs. sell answers aren't tallied as part of the institute's broader confidence index, but they do represent sentiments about market conditions.
"I think that it reflects human nature. Sellers are trying to get top price and they know it's tough. Buyers are trying to get the best deal and think they are not going to see huge price decreases or that they are going to be offset by other bidders and higher interest rates," said Colleen Badagliacco, president of the California Association of Realtors.
"People on the sidelines may feel there will be some more softening, but we are in a micro market right now. That the (consumers are evenly) split (on buying) may reflect that," said Badagliacco, also co-owner/broker of RE/MAX Valley Properties in San Jose.
Silicon Valley's home prices continue to rise during the housing market's downturn because a greater share of home sales are in the more expensive, higher-end markets.
"We are having near record low transactions and record high prices. There's a real dramatic split in the market right now," said Richard Calhoun, broker with Creekside Realty in San Jose.
During the boom, everything sold and consumers were again split about buying but so bullish on selling, the numbers were virtually reversed.
Near the peak of the boom, for example, the institute's June 2005 survey revealed 44 percent of consumers thought it was a good time to buy and 45 percent thought it was a bad time to buy. For selling, 75 percent of consumers said it was a good time (the highest percentage since the question was first asked back in January of 2002), while only 13 percent said it was a bad time.
"In the spring of 2005, sellers were in fat city," said Phillip J. Trounstine, institute director.
What a difference a few years makes.
In September this year, the record low 521 existing single-family homes sales were down 38.6 percent from 887 a year ago. Existing condo sales came in at 222, down nearly 42.5 percent from last September, Calhoun reported in his Bay Area Real Estate Market Newsletter, compiled from data from the area's multiple listing service, the Northern California Real Estate Exchange (NCREX) of Campbell, CA.
"There were 571 transactions in February of 2001, going into the 2001 slow down. Next was 586 in October, 1989 which was the month of the Loma Prieta Earthquake (October 17, 1989, preceding a major slowdown). Volume was lower in September 2007, than it was in September 2001 (on September 11, terrorists attacked the nation, preceding another major slowdown)" said Calhoun.
The median price of resale single-family homes in Silicon Valley came in at $850,000, in September, down from record high levels this year, but up 10.5 percent from $769,000 in September last year.
The median condo price was $525,000 in September, also down from higher prices this year, but up 6 percent from $495,000 a year ago, Calhoun reported.
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© 2007 DeadlineNews.Com
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.
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Monday, October 22, 2007
by Broderick Perkins