January, 2010
January, 2010

INCREASING AFFORDABILITY!

Whew! What a ride! 2009 has now been put to bed. It was a challenging year for many. Late summer and fall sales did pick up nicely in many communities.

Looking back at real estate locally, several things stood out. Affordability continued to climb and bargain hunters were rewarded. Low prices and government incentives helped lots of buyers make a deal. All time low interest rates were also instrumental. Conditions continued to be near ideal for lower end buyers although the lower price ranges have seen lots of competitive bidding for bargain properties. In Concord, for example, there were 522 sales that closed over asking price out of 1104 total closed sales. The upper-end is still in a waiting mode. So many who would be in the upper end are in job markets that are continuing to struggle or have been cut back significantly. Investors who finance upper-end loans are still mostly on the side-lines. However, buyers with 20% or more down and excellent credit are still in the driver's seat.

Average closed sales prices in 2009 were down in each of the 15 local communities surveyed. The large numbers of foreclosures brought out many buyers in the lower price ranges. Concord's prices were down 17% over 2008. Martinez was down 16%. However, some of the upper end communities also finally saw significant over-all drops as prices were compared to 2008. Orinda was down 15% compared to the average closed sales prices at the end of 2008, Alamo down 15%. Blackhawk down 14%, Danville down 11%. San Ramon down 10%.

Lafayette and Pleasanton had fared better in 2008 than any of the other surveyed communities. Closed prices in Lafayette were down only 3% from 2007 by the end of 2008. However, at the end of 2009, Lafayette prices were down 16%. Pleasanton had been down only 2% at the end of 2008 and was down 16% at the end of 2009.

What's Next?

So what's around the corner this spring? There's lots of debate. Will we have a gradually improving market as spring opens where buyers cash in on great prices and low interest rates? Will our depressed job markets and other drains on the economy continue to dampen sales? Will there be another round of foreclosures, even in the upper-end, that will further depress prices? Some are concerned that the Fed will raise interest rates after mid-year and our local markets will become more expensive. We're most likely not out of the woods yet, but we have seen some encouraging signs. So stay tuned here during the coming months. You'll be well informed about our changing local market conditions.