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October Bay Area Sales Edge Upward

Wednesday, November 22, 2006

October Bay Area sales picked up as sellers adjust to the market transition and conditions for buyers improve. The market should be more balanced between buyers and sellers by early spring, according to a forecast released at the recent National Association of Realtors Conference and Expo in New Orleans.

"Overall home-price gains will be modest," said David Lereah, NAR's chief economist, in a statement. "Home sellers are becoming realistic about current market conditions and are now offering more competitive pricing, in addition to some incentives or concessions — especially to help first-time buyers."

Lereah said, "Sellers are flexible now and mortgage interest rates are near historic lows. We now have the most favorable market for home buyers in several years, and most sellers — who've been in their home for a normal period of home ownership — are still seeing very healthy returns on their investment."

Following a correction in home sales and prices in 2006, existing-home sales are expected to "coast" at roughly the same level next year, although there will be some additional decline in the new-home market, according to the 2007 NAR forecast.

Existing-home sales, expected to fall 8.6 percent to 6.47 million this year — the third-best performance on record — are projected to be essentially even in 2007 with a 0.6 percent decline to 6.43 million. New-home sales, likely to drop 16.8 percent to 1.07 million in 2006, are forecast to fall another 8.7 percent next year to 975,000, largely due to a significant reduction in construction by builders.

Silicon Valley Association of Realtors® Board Director Brian Bernasconi, who is with Alain Pinel Realtors in Los Gatos, reported Santa Clara County's housing market is doing well, especially in the Los Gatos area.

"We're seeing lots of positive things going on economy-wise, there are still properties receiving multiple offers and homes are still appreciating. The market, especially here in Los Gatos, is starting to heat up again," Bernasconi said.

Home sales in October 2006 more than doubled in Los Gatos compared with September 2006 sales, according to statistics from RE InfoLink, the multiple listing service for Santa Clara County and four other California counties. The multiple listing service reports 33 single family homes were sold in Los Gatos during the month of October, up from 14 in September. Fourteen homes sold in the Los Gatos Mountains area in October, up from six in September 2006.

Santa Clara County as a whole experienced slight to modest increases in sales and median home price in October 2006, compared with the September 2006 figures. Home sales were up in Campbell, Los Altos Hills, Los Gatos, Los Gatos Mountains, Morgan Hill, Monte Sereno, Palo Alto and Sunnyvale. Palo Alto and Monte Sereno showed increases in both home sales and median price in October, compared to the previous month's figures. Other cities whose median home price increased in October included Cupertino, Los Altos, Morgan Hill, Monte Sereno, Mountain View, San Martin and San Jose.

RE InfoLink reported 892 single family homes were sold in Santa Clara County in October, up from 887 the prior month. The median home price in Santa Clara County was at $775,000 in October 2006, up from $769,000 in September 2006.

"Properties are definitely selling," said Alice Ogasawara, a Realtor with Realty World in Saratoga. "If you are in certain locations, you are still getting multiple offers, but today's market is only for serious buyers and sellers, as well as seasoned real estate professionals."

Ogasawara explained that sellers need to get realistic and it takes an experienced and knowledgeable Realtor to get sellers to realize the price of their property is too high compared to a year ago; in some cases, it could mean pricing their home $50,000 to $70,000 less than what their neighbor sold their home for a year ago - despite additional improvements a seller has made.

"Improvements create desirability in a buyers' market, but they do not convert or change the price," said Ogasawara.

Like Bernasconi, Ogasawara also has a positive outlook about Silicon Valley's economy.

"Just look at the traffic flow, the many cars on the road compared to just a year ago," said Ogasawara. "More people are going to work; the economy is doing well. Now is the perfect time to buy as interest rates are low and they will most likely continue to be this way till early next year. I believe prices will rebound next year. They may not be where they were, but they will definitely rebound."
 
NAR predicts the median existing-home price nationwide should increase 1.9 percent for all of 2006 to $223,700, then another 1.7 percent next year to $227,500. The 30-year fixed-rate mortgage is projected to average 6.4 percent in the fourth quarter and then rise to 6.6 percent by next spring. The unemployment rate for 2006 is likely to average 4.6 percent, edging up to 4.7 percent next year. Inflation, as measured by the Consumer Price Index, is forecast at 3.4 percent this year and 2.3 percent in 2007, while growth in the U.S. gross domestic product is expected to be 3.3 percent in 2006 and 2.7 percent next year. Inflation-adjusted disposable personal income should grow 3.3 percent this year and 3.5 percent in 2007.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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