April 2, 2004

Real estate market continues to sizzle

By Carol Rosen
Editor

The Bay Area housing market continues to sizzle away as low interest rates and a limited inventory of houses spark soaring prices. Houses are selling for as much as 10 percent over the asking price, even more in some affluent neighborhoods.

In March, Fireside Realty listed a three-bedroom, two-bath home with 1,700 square feet in Willow Glen for about $750,000. Joanne Phillips, a local realtor, took a family to view the home on the first day it was listed. Offers were being accepted the following Sunday. Phillips knew that three others would be placing offers.

In order to assure her customers the sale, she followed a path that would ensure the family’s bid was accepted, which it was. First, she showed the family the house when she knew the sellers would be home. This meant that the buyers and sellers would meet, and the sellers, whose family was increasing, would know they were selling to a family that would fit into the neighborhood.

Phillips also insisted they enclose a commitment letter. This piece of paper from the lender to the mortgage broker is a step past pre-approval for a loan and shows sellers just how serious buyers are. The buyers put up a deposit of $25,000 and matched the escrow period the sellers had selected. Along with the offer, Phillips added a copy of the family’s credit report, resumes, a personal letter and a photo of the family. Incidentally, the bid was significantly over the asking price.

“In a market like this, you have to go the extra mile,” Phillips said. Often, sellers will get multiple offers and then the one they accept backs out. Then, they have to go through it all over again. As a realtor, I want to get the seller engaged, so that they know the buyers are serious and will follow through.”

Situations like this are very frustrating for buyers and realtors, added Willie Wright, from Windemere Silicon Valley Properties on Meridian at Willow. Unfortunately, in a situation like this no one wins because the house has to appraise similar to the neighborhood properties.

Both Phillips and Wright said inventories are too low right now. But they didn’t agree on how long the situation might last. Wright thinks that inventories are likely to start growing. Spring, she said, typically is when people decide to move because of school sessions. There could be an adjustment within the next six- to eight-month period, she added.

Phillips however, expects interest rates to remain low for the summer. “The market hasn’t recovered that much, and this valley is not apropos to the rest of the world. The market had been slow for a much longer period of time. It was very slow until January and February.“

Both agree that a rise in interest rates will significantly change the market. Because of the economy, many people are scared to move. Most baby boomers aren’t ready to sell yet. If interest rates rise, the buying population will drop. And, Phillips notes, the buyers are changing. Before the dot com bust every other client was in high tech. That’s changing. Today’s clientele is employed more by service industries such as teachers, consultants and medical personnel.

But right now, everything that’s coming onto the market is selling. For example, Phillips notes that at the end of March, there were 118 pending sales in Willow Glen; there usually are 40. At the same time, 129 single-family listings were available for homes priced from $430,000 to $2.1 million. There were 12 sales in escrow priced under $500,000 and 16 homes priced above $1 million with the bulk of the pending sales between $500,000 and $900,000, she said.

In late March, there were five condos/townhouses for sale, with 25 pending sales and 12 sold all at under $600,000.
Home sales in the Cambrian area, while not as costly as in Willow Glen, also are brisk. For the same period Jan. 1 through late March, 130 houses in Cambrian Park sold with the majority of prices between $475,000 and $850,000. On March 30, 58 homes were for sale with 114 sales pending. Prices for the latter homes ranged from $450,000 to $1 million.