Perception & the media versus reality

Kelly Zito is at it again today... Quoting her two favorite sources in California, Jon Karevoll from Dataquick and Ed Leamer from UCLA... Quoting from press releases as if she just doesn't have time to get out and see what's really going on in the world. Even the SF Business Times just ran the DQ press release, but they don't pretend that it's journalism.

Then she follows that by under-emphasizing quotes from agents who are actually working in the trenches and who do know a thing or two about what's happening in San Francisco.

I read the press release from Dataquick, and it's got all of the same items as Kelly's article. Only she spins it even further towards her usual doom 'n gloom. And I won't even get into Ed Leamer's comments. He would love to see the world come crashing down around him so he could proclaim that he saw it coming. And when it doesn't he's going to look pretty weak...

So, that said, here's what's really happening in the market right now. Today. From the street.

Yes, there is more inventory. And yes, there are fewer homes selling than in May 2005. That is a function of both interest rates and a perception (somewhat fueled by the media) that the sky might fall, maybe just a little bit, someday. Or so they hope.

But just as Kelly's article says (hidden behind the headlines), prices are still rising. Not dropping... RISING.

So to me, this is a great, balanced market. Just as I've been saying all spring. If you go out and look at what is really happening with the properties that homebuyers really want to buy, you'll see that most of them are selling quickly, and many of them with multiple offers.

The thing to remember about this market is that you really need to understand values and comps when purchasing. If you know that properties have been selling at a certain price/sqft or if you've seen actual units/homes that have sold, and you're writing an offer on another property, you'll be better equipped to write an offer that won't cause you to overpay, and it won't insult the seller.

Then again, insulting the seller isn't always a bad thing. This is part of the 'balanced' market. Sellers CANNOT look at their neighbor's sale from last summer and slap on an additional 20%. But some of them are, and those are the ones who will either suck it up and take what the market will bear, or they will dig in their heels and stay in a property that won't command the price they want.

My read on the market right now is that a property has about two days to get momentum from buyers. If it's presented properly, priced right, and well located, it will get that attention and the sale will likely be very smooth with happy clients on both sides.

If the property is in any way not what the buyers want to see (over priced, poorly located, or poorly presented), you'll end up with a property that sits on the market for a while.

And this is where hiring the right agent (as either a buyer or a seller) comes into play. We're working twice as hard right now to make sure that our listings are going to get the attention they deserve, and we're working double-time to sift through the larger inventory to find the hidden (or obvious) bargains that do exist.

But no, this is not doom 'n gloom. Sorry, naysayers. This is still a good, balanced market where sellers can receive a fair price for a well-marketed property, and where buyers can take an extra few days or a week to see everything in their price range and make an educated decision about their purchase.

Unless of course they walk into one of those properly marketed, staged, and well-priced properties in a great location. Those still have offer dates, still get multiple offers, and still sell very well.

Last week alone we saw 50% of the properties that went into contract among the Zephyr offices selling with multiple offers and 65% of all of the sales were over asking. But there were also 15% of the total properties that sold under asking, too! So there's a little bit for everyone.

It all depends on what you're looking for, how much legwork you're willing to put into the process, and how good your agent is...

And once interest rates level off, I think we'll see another big uptick in buyer activity. Right now, I'm seeing people sitting back a bit while they 'watch' what happens. If we have a couple of weeks of flattening or a message from Bernanke that they're taking a break on interest rates, that's all I think it will take.

Besides, the rest of the economy is still healthy enough to keep people in their jobs and paying their bills. So don't count on a housing downturn in SF just yet.

Three straight days of sensational journalism from Kelly Zito [SFHomeBlog]
Housing market headlines can be misleading [SFHomeBlog]