There’s a well known real estate blogger in the mid west who wrote a post a week or so ago in which she disputed the use of the term “recovery” with regard to the real estate market. She really wasn’t being negative, it just doesn’t seem to fit with the reality of her market place. At one point she states

“There won’t be any recovery because recovery implies that it will get back to what it was and that can not happen.”

I think that’s a very interesting point. Is it true? Certainly, we’re not heading back into a market where large numbers of buyers are using zero down, sub prime loans to purchase homes. We aren’t going back to that era…I hope! I think in many parts of this country the devastation that was wrought in the last 5 years was incredibly potent. I’m sure it’s hard to see how it can be possible to become whole again. Clearly, there’s still plenty of folks under water and we have not reached a stage where everybody is in the black again around this area too.

The thing is though, we’re actually seeing homes sell in 2012 for all time high prices. I really think the idea of recovery is one that’s very real if you live in our area. When there’s multiple offers on just about everything it’s sort of hard not to think that recovery is more than just a novel idea. I was around before the big tech boom, during the dot-com early years and all through the meltdown years. This market feels as hot to me as any I’ve seen in 22 years. Maybe it’s not 2004…but it’s close. Maybe it’s not a recovered market but it’s a different and pretty healthy market if you ask me.

One of my favorite things about Foster City, as a realtor at least, is the fact that it’s relatively easy to study comparables. There’s a finite amount of homes and floor plans in this town so I can simply search by square footage and find what these houses have sold for historically. It’s, of course, not exactly foolproof since no two houses are the same. Some are very upgraded and others not so much. Never the less, it’s alot easier studying comps and how the market is doing in Foster City since you have lots of like kind homes. It also makes it very interesting to look at how the 2012 market is evolving. Here’s some examples:

685 Pilgrim was listed for $888,000 a month or so ago. The most ever spent for this 3 bedroom, 2 bath floor plan was $900,000 and I thought Pilgrim was priced high since it needed a roof. What do I know…it got 10 offers and closed at $908,000.

844 Vega was listed for $998,000 also about a month ago and also got multiple offers. The most money ever spent for this floor plan was $1,066,000 in 2005. 844 Vega sold for $1,050,000.

354 Bluefish was listed for $910,000..same time last month. Guess what…it got multiples. The most money ever spent for this floor plan was $1,000,000 in 2005. 354 Bluefish closed at $967,000.

There are others in escrow now that are going to extend this list. It’s an amazing thing that in just a few months the values of these homes are bouncing right back to where they were before the meltdown. I hate to say it, but heard a whole lot of commentary about how we were never going to really recover from the binge that was the subprime era. Dare I say it, I think we’re recovering nicely…thank you. Coming close to and exceeding all time highs in Foster City is really a testimony to how strong this local economy is.

We’ve officially crossed over into a realm of total insanity now. The vast majority of offers that are being accepted have no contingencies of any kind, almost every property is going over asking…often by a bunch and the old rules are being scrapped on a weekly basis. Some of which I wish were not being scrapped too! Here’s some recent examples:

1. A townhouse in Foster City that had no lockbox, no sign an really no marketing except the MLS listing and no open house gets 6 offers on day 4 of the listing. All over asking, the winner with no contingencies.

2. A foreclosure listing in San Francisco gets 27 offers…and 14 of them are all cash.

3. A house in Foster City that’s had no inspections, get’s multiple offers and the listing agent includes a form with the disclosures for buyers to sign prior to presenting their offer that suggests the buyer waives their right to do inspections.

4. The short sale I mentioned last week that suggested the buyer put their 3% deposit in escrow within 48 hours and do their inspections within 10 days…even if it could take the bank 4 or 5 months to approve the short sale.

5. A house in Belmont that looked at offers before any disclosures were given to buyers and also without inspections.

There’s some zaniness going on right now…that’s for sure. I think it’s really imprtant right now to exercise some restraint even though the pressure is clearly on to get a place. Not inspecting a house is crazy and strikes me as a huge liability.

I personally think writing an offer without a loan or appraisal contingency is a competitive advantage for a buyer who’s qualified enough to do it, has enough extra cash to make it work or has a large downpayment. It would certainly go a long way toward winning the home…but its a very risky thing if you don’t have more than 20% saved and certainly it would be a mistake if you are an FHA buyer. I guess the point is…do what makes sense.

So, I went out of town for a couple of days. Not long really, just overnight in Monterey for a real estate conference. I get back and check the Foster City inventory to see how it’s looking and, behold…I see that we have 12 single family homes on the market today. That’s super low from the standpoint of where we usually are (25 to 30 is normal) and I know at least one of them is going to sell in the next day or so. OK, so after I do that I then check the condo/townhouse inventory…and what I see makes me think I did something wrong entering in criteria in the MLS. It said there’s 6 condo/townhouses listed right now in Foster City. Clearly that’s a mistake…so I try again. I reload the MLS website and start the search from scratch. It showed 6 listings again. Six! 6! That’s a single digit. It’s the number 6. Six condo/townhouses on the market in Foster City.

I looked back through all of the market updates I’ve done on this blog since the beginning in 2008. The lowest number I saw was 28 active condo/townhouses. There was 58 once in the last 5 years…mostly though it was around 35 active listings. NEVER in 22 years have I seen 6 though! That boggles the mind!! To make it even more amazing, of the 6, 3 are at the train wreck that’s the Admiralty, 1 is a foreclosure at Marina Point and one is a short sale on Gull. The other one on Comet has been on the market since I was in High School I think. Seriously, 6 condo/townhouses is astonishing! To make it more surreal, there’s 39 pending sales! When new listings come up they’re really going to get some attention…because I promise you that there are more than 6 buyers out there looking at property. The inventory problem this year is really accute and remarkable. Prices are clearly going up and I sure hope that alot more property is on the horizon. Even if it triples that’s not going to be enough. Incredible!

I got an e-mail from a client today who said:

“Reading your posts as of late, it sounds like we’re in a bit of a bubble.”

That’s not the first time I’ve heard this lately. The question is, how long will this bubble last? I personally think it’s going to last awhile. Here’s why:

1. Lots of folks have obviously been sitting on the fence for the last few years. Those folks have been saving money.

2. Population in this area isn’t declining

3. There’s still a finite amount of housing and buildable land around here.

4. The inventory is hilariously, preposterously low

5. The buyers in this market are all well qualified, out of 15 buyers I’ve worked with so far this year only one has less than 20% down.

6. As I see it, we’ll need inventory to at least triple to make a dent in this demand…I’m not sure that’s coming.

7. The major media hasn’t discovered this story yet, when that happens I predict more buyers enter the marketplace (more sellers too!)

Case in point, and this is kind of scary too. The 3 bedroom house at 685 Pilgrim looked at offers today. The most money ever spent on this floorplan was $900,000. This house is listed for $888,000. 685 Pilgrim needs a roof. The same floorplan in far worse condition sold for $775,000 last November. This afternoon they got 10 offers…undoubtedly it went over the all time high. What happens when the next 3 or 4 bedroom rancher comes on the market that doesn’t need a roof? I’m thinking it’s likely it’ll be priced higher than 685 Pilgrim.

I really don’t expect this “bubble” to burst this year. Whatever the case…it sure is a wild ride we’re on!

So far, a fairly large number of homes for sale around here, both condo/townhouses and single family houses have experienced multiple offers this year. Not only your run of the mill 2 or 3 offers but lots and lots of offers! Here’s a list of some of the one’s I’ve been involved with or know of personally lately. There’s the address listed and the number of offers received next to it:

880 Carina FC…6 offers

2619 Cipriani Belmont…11 offers

760 Celestial FC…11 offers

650 Harvester FC…5 offers

42 Commons FC…6 offers

880 Meridian Bay #116 FC…14 offers

335 W. 27th SM….21 offers

844 Vega FC…4 offers

812 Andromeda FC…7 offers

1030 Crestview SC…11 offers

1357 Woodland SC…6 offers

2605 Read Bel…9 offers

3908 Fernwood SM…30 offers

162 Positano RS…12 offers

Like I said, that’s just to name a few. I have no doubt there’s a WHOLE bunch more with similar stories right now. The thing is, writing an offer with this kind of competition is significantly different than writing an offer with just one other competitor or, incredibly, no competition! Consider this a little primer if you’re considering an offer in one of these frenzies. First of all, if you’re thinking about writing an offer at, below or even slightly above the asking price…don’t waste your time. Seriously. If you’re not prepared to go over asking by a fair amount you won’t be in the game at all.  A lender friend of mine told me she wrote an approval for a buyer who offered $40,000 under asking on a listing in San Carlos that got 38 offers. Other than providing comic relief for lots of folks, not much was accomplished by that offer. It’s impossible to say exactly what it’ll take to get a place in this environment, just take your best shot and hope for the best.

Second, seriously consider reducing your terms to the bare bones. If inspections have been done, the winning offer most likely won’t include an inspection contingency. It’s also going to be sold in As Is condition. In many of the most competitive battles the buyer will write an offer with no contingencies at all and be willing to make up the difference themselves if the property doesn’t appraise. This scenario is commonly occurring all over the Peninsula right now…shades of 2004, huh? It really is very thin air up here now isn’t it? Buying a home in 2012 is an experience not for the faint of heart.

Typically, when somebody buys a home they do a study of the comparable value of similar homes in the area to determine what offer to make on it. These comps are usually 6 months or so old (or less). I hear alot of discussion about comps lately and I have to say this…the comps right now are completely irrelevant. Who cares about the comps! Sales comps from way, way back in December 2011 are as relevant as sales comps from December 1990 if you ask me. The market heated up so much about the first of February that everything has changed with regard to value. A very great percentage of new listings are being sold with multiple offers and significant over bids right now…as a result prices are rising. The comps right now don’t matter.

I had a conversation with 2 different clients this week about Jan Majeski’s listing at 844 Vega in Foster City. After doing some study on Redfin and Zillow they were convinced that Vega was priced too high at $998,000. They pointed to the 4 bedroom house at 154 Mira which sold on January 27 and closed at $900,000 as proof that Vega was too high. Here’s how I saw it:

1. Vega is a much better house, significantly more upgraded and, unlike Mira, repaired it’s foundation issue.

2. A similar house on Beach Park, a much busier street, sold for over $988,000 and is in escrow

3. Most importantly, Mira sold just before the market launched into orbit.

As it turns out, Vega got 4 offers and went over asking and closes on April 25. I really can’t imagine the kind of stress appraisers must be under right now. Trying to make things work when you don’t have any comps but have an offer $100,000 over asking and hearing that there was 11 offers on that place must be a tad disconcerting. It’s happening though. I ran a video here a couple of weeks ago of an insane open house on Newell in Palo Alto. That house was on a busy street, had a stoplight right next to it and was listed for $1,395,000. It closed last Friday for $1,900,000. So much for those comps!

Seriously, for right now at least, forget about those comps when writing an offer. Buying a house right now is scary and risky and actually that process is probably worth several more blog posts!

See that townhouse up there? It’s located at 760 Celestial in Shell Cove here in Foster City. Sometime next week it’s going to take off. What I mean is, it’s going to get multiple offers. Because it’s super nice and really upgraded you ask? No…it’s just because there’s no freaking inventory around here. In fact, there’s 10 condo/townhouse listings in Foster City today…astonishingly little! This unit is clean and nice and fairly dated…but who cares. It’s listed for $674,888 and just to give you some history 7 four bedroom units at Shell Cove have sold since January of 2011 ranging in price from $803,000 to $625,000.

In past years it’s been typical to have 35 or 40 condo/townhouse listings on the market at any given time. Again…we now have 10 and if you exclude the small condos at the Admiralty there’s really only 6. Seriously, this property is going to de really well and will be yet another example of the markets abrupt and dramatic turnaround this year.

Do you like Facebook? Does it drive you crazy? My wife Lesley hates it and won’t have anything to do with it…says what she really wants is “face time”. Not shallow relationships online. You’ve heard all that I’m sure. The thing is, no matter how you feel about FB it’s a significant force in our culture now and it certainly is a factor in our local economy. One thing I’m also certain that it’s doing…helping significantly to revive the local real estate market.

I noted, on Facebook actually, today that I’m busier right now than I’ve been in years and that I think the real estate market around here is hotter than I’ve seen it in the 22 years since I’ve been doing this. It’s absolutely insane right now…and I think alot of this energy is coming from Facebook’s IPO. everywhere I turn I hear people speculating about that…don’t you? Since the IPO I’ve seen SIGNIFICANTLY more buyers in the marketplace and multiple offers are the rule right now. Case in point. Today I presented an offer on a house at 919 Woodland in San Carlos. It’s a fixer upper 3 bedroom, 1.5 bath house that was listed for $699,000. My clients came in at $828,000 with a 30 day close and no contingencies of any kind. We weren’t even close. Turns out there were 28 offers! That’s crazier than 2004!

While were at it, I also presented an offer on a short sale at 702 Portwalk in Redwood Shores that was listed for $425,000. There were 11 offers on that place. On a short sale!!

How about in Foster City? Last fall I had a nice townhouse listed at 880 Carina in Isle Cove. It was on the market for 3 months and didn’t sell. All I heard was “The HOA’s are too high”, “There’s only a one car garage”, “The bathrooms aren’t remodeled”. We took it off for the holidays and relisted it again last Friday. Same place…even the same light staging! I had 200 people at the open house on Sunday. We got 6 offers tonight…5 of them went well over the asking price!

How do you explain this? Certainly, the inventory is ridiculously low on the whole Peninsula and certainly interest rates are low…but most of this activity began to really mushroom after Facebook announced it’s IPO. Seriously. It really seems to me that most of the folks out there who’ve been sitting on the fence just got off of it. 28 offers on a fixer in San Carlos? If you’ve been thinking of selling your home…now’s the time.

OK, I’ve seen it be lean before…but this is ridiculous! As of this post there’s 9 whole active single family listings in Foster City and only 17 condo/townhouses. It’s bizarre, I’ve never seen it this lean! There’s 16 pending sales in Single Family and 22 condo/townhouse pendings. If you consider how many of these are problematic, or are short sales…etc then it’s actually even more lean. Who knows why it’s like this right now though. I have no doubt that we’ll soon be seeing more inventory. It just has to happen statistically. In this current climate I’ll bet even eichlers get multiple offers. Amazing! Here’s a new one to watch, just came up today:

269 Avocet listed by Sheryl Fleming of Alain Pinel for $1,179,000. This place is gorgeous…and has no competition! Really nice 4 bedroom house.

632 Matsonia listed by Sylvia Merkadeau of Coldwell Banker for $869,000. This is the Eichler I’m talking about…very nice and shows wonderfully!

While we’re at it….880 Carina, my listing, is coming back on tomorrow at $539,000. The place was on last fall and we took it off. I’m thinking now’s the time…it’s a really terrific unit!