We Are Back! by Alain Pinel
By Alain Pinel
General Manager of Intero Prestigio international
Intero Real Estate Services, Inc.
Please repeat after me: “The real estate market is back!”…..Louder now, please: “The Real Estate Market Is Back!” Yes, business is looking great and healthy again. Are we all finally getting it? Are we finally confident enough to actually relax and enjoy the ride, that is buy & sell without crossing our fingers and stay awake at night after being told that we are now the proud owners of a big mortgage?
This is serious discussion friends. We have been shaken up so bad and for so long by a tumultuous economic ride that many of us are still gun-shy and afraid to fall in love with housing again. All I have been hearing in recent months, is something like “The real estate industry is now great, BUT…” Well, it is great or it is not great. If it is great (and it is – read my lips), forget about the “But” once and for all and get back in the game!
I am not blind or deaf. I know that millions of homeowners are still under-water, unable to sell or unable to buy. The crisis we endured from roughly the end of 2007 to late 2011, has left its marks in many towns of many states. However dramatic it may be, this phenomenon is not new or unique. There are always pockets of distressed areas, country-wide, irrespective of the overall market conditions. I even remember years when the West Coast market was in the tank while the East Coast was enjoying a nice bump in sales and price appreciation… It’s a big country.
If we wait for the business pulse to beat at the same tempo all over the map, we may be in for a l.o.n.g wait. It will never happen. In the meantime, we will miss extraordinary opportunities to benefit from the obvious real estate recovery. Don’t think too much about the reasons to procrastinate, focus instead on the many reasons to jump head first into the good wave.
Whether you read the newspaper in San Francisco, Miami, New York or… You see the same splashing titles: “Hottest housing market in years!” Same photo on the TV screens. Reporters and editorialists specializing in real estate are now the popular guys. Their papers make the front page (Time for them to ask for a raise). The hot zones cover particularly the metropolitan areas of both the Pacific & Atlantic Coasts, where the high end market is substantially fueled by a growing foreign demand.
In the San Francisco Bay Area, a piece of geography of 7,000 square miles, spread over 9 counties and home to more than 7 million people, the median price jumped 30.8% in April, relative to the same month of 2012. The stats, compiled by DataQuick, also show that the April median price, this year, beat the March level by…17%! Lucky (or smart) were those who bought when we told them to.
The counties that benefit the most belong to 2 categories: those which took the deepest plunge during the crisis (Solano, Alameda…) and those which are traditionally the most stable (and pricey) due mostly to the quality of the work environment and what we call the “quality of life”: Santa Clara (heart of the Silicon Valley), San Mateo,… As an example, Solano county, that took a bath over the previous 6 years, gained 36% in a year. As far as Santa Clara & San Mateo, they jumped respectively 25.6% and 32%. Not bad for any 12 month period, won’t you agree?
Much of the appreciation, however, can be attributed to the extreme shortage of listing inventory. A couple of weeks ago, I was checking the number of active listings in Santa Clara county for the same period of 2011, 2012 & this year. Frightening it was. From 2011 to 2012, the number of listings fell more than 50%, while the number of pending sales was nearly identical. This year, the inventory shrunk another 16% or so!
Something has got to give. Since unit sales are limited by the extent of the available inventory of homes, at a time when mortgage money is (still, but for how long?) at bottom levels and the pent-up demand is getting impatient… prices can only go up a bit more. Are the sellers among you listening?