Temporarily Off Market

I sure have been hearing alot of comments, both here on the blog and elsewhere that expresses the position that our “bubble” here on the Mid Peninsula has burst. Actually there’s been some degree of gloating by some folks who have been predicting it for awhile now. My opinion? It’s too early to tell. “But the DOW’s under 9000 and falling fast”, you say. That’s not the Foster City real estate market. Amazingly, 13 properties have sold in Foster City since September 15. We won’t know if the real estate market has fallen significantly until those places, as well as those sales yet to come in the 4th quarter of this year, close escrow. The fact that these places sold in the midst of this crisis can’t be understated, it’s remarkable. 3/4 of the clients I’ve been working with have moved to the sidelines and are waiting it out. Many are fearful about further financial problems in the overall economy and how that will impact a buying decision right now. Those fears seem reasonable to me this week. Here’s the thing: Sellers don’t appear to have that same fear…and when they do many of them have simply taken their homes off the market.

In the last year 118 properties have come off of the market in Foster City alone either by expiration, cancellation or withdrawal. That’s a pretty significant number. Many of these properties came right back on the market again at a new price (a game realtors play trying to manipulate the MLS), or came back on via a change in real estate agents. The lions share, however, came off and stayed off. What this means is simply that these particular sellers would not entertain a price reduction that would be needed to sell their home and decided either to stay put or to rent the home out and move. In my opinion the presense of all of these off market properties tends to insure more stability in Foster City’s values. Call it an exercise in the free market. Most sellers here have the option of simply staying and getting their price later…it’s yet another indication of how few subprime loans were done here. There’s no “blue light specials” in town…yet.

The tension that we’ll be witnessing in the coming months will be how the presence of reduced numbers of buyers plays on the psyche of these sellers. How many will go off market and how many will reduce their prices…and to what level will those reductions be until they get an offer. At this point though, you won’t be seeing any realtors out on Hillsdale holding those big arrows offering 50% off trying to get people into their open houses. If you see me doing that at somepoint though…stop and say hi!

Comments

  1. I sure hope things turn around for you there.

  2. Jim Minkey says:

    I’m doing just fine David, thanks for caring.

  3. Jim, I just received a nice buyer referral from one of my A+ clients. Wrote an offer today for another client-cash closing in two weeks. The people who are buying now have positioned themselves to be on the winning side. No matter what the rest of the world is doing, they are buying. Priorities have come full circle. We all will be a little bit more careful with our choices now. Buying now is super. Selling is, if you have momentum and cause, The real question is…what is your why?

  4. Jim – Just following up on my post from about 2 months back. Do you still stand by your comments or are you ready to admit I was right? Is it still unclear to you we’re in a housing bubble or have you faced reality?

  5. Jim Minkey says:

    Actually, I think the jury is still out. I haven’t seen any sellers reducing their prices in panic. There has been sales in FC since this all erupted with Lehman on the 15th and it’ll be interesting to see where they close, but this isn’t the stock market where we get to see tangible evidence of reduced equity immediately. I know that you’re hoping for crashing prices here but it’s too soon to tell if it’ll happen or not.

    By the way, have you faced the reality that I was right about 160 Barkentine? It sold right after you bashed it…maybe you should go after some other FC listings?

  6. I’ll give you 160 Barkentine. I’ll be interested to see the final sales price, though.

    But you can’t deny the price drops we’ve seen recently. 350 Staysail 100K, 710 Somerset 100K. I don’t know of any houses sold recently that went for their original asking price. I’m not claiming the market is dead. I’m just saying we reached our peak, and we won’t hit the trough until. . .I’ll be conservative and predict 2010 as the start of a rebound. That means anyone buying now is buying on the way down. Sure, you can do it. But is that the smartest thing to do economically? As you mentioned in your latest post, buyers are hitting the sidelines. Sure, some sellers are going off market, but I can guarantee you that buyers can hold out longer than sellers. That pressure can only result in a one way price move.

    I’ll also document my prediction here that we’re yet to see an additional 15-20% price decline in Foster City. That means decent single family homes will be selling for 700K or less. We can revisit in 6 months and see how that prediction pans out (It might be overly optimistic, I’m tempted to go lower; 500K perhaps).

  7. Jim Minkey says:

    This, honestly, is really fun! If we see 20% reductions in Foster City I’ll buy you dinner at Turtle Bay.

    160 Barkentine closed at $990,000. $1000.00 over asking. (I know, I know…it had taken a price reduction)

    The most money ever spent for 350 Staysail’s floorplan was $1,183,000 last year at 333 Sunfish. Staysail is currently listed for $1,229,921. It was $1,339,931. In all fairness, it does have a very large 10,000 sq ft lot and thus the place, presumably, has more value.

    The most money ever spent for 710 Somerset’s floorplan was $1,300,000. This place started at $1,439,000 and is now $1,338,000. It’s not as updated as the $1.3 place.

    The fact of the matter is that the values of these two houses hasn’t fallen at all. They were both priced too high to begin with and they’re adjusting to reality. If they had been priced at $2,000,000 and were reduced to the level of their last comparables would we say that their values had plummeted 40%?

    Having said all of that, I predicted awhile ago that we’d see 5% reductions this year. I’m leaning to 10% when all is said and done assuming that the fear that we’re living with takes 6 months to subside.

    By the way, what are you willing to offer me if values fall 10% or less?

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