Oakland Berkeley real estate trends in rates and inventory

Expect surges in Housing Inventory. With the foreclosure moratorium finally lifted, Notices of Default are up, and Notices of Trustee Sales are WAY up. For example, Notices of Trustee Sales were up over 300% in Contra Costa County in July (compared to last year), and they were up almost 200% in Alameda County. This should result in a sizable increase in the number of listings coming to market this fall.

One more thing:

The New York Federal reserve purchased $20.4B in Mortgage Backed Securities in the latest week bringing the total to approximately $742B since the program began back in January. Home loan rates have stayed historically low during this period in the 4 3/4% to 5 1/2% range. We can't drive home the point enough that rates are going eventually higher - With September upon us, there is only a few months left in the Fed Bond purchase program - hopefully you are seeing the opportunity in rates that may only last just a few more months.

Something else to consider in the not to distant future, while the Fed is scheduled to purchase Mortgage Backed Securities (MBS) through the end of the year, they are only purchasing Treasuries through the end of October. The reason the Fed is buying long-term Treasuries is to maintain the spread between the 30-year Treasury and MBS. Once the Fed stops buying Treasuries, their yields should rise...and that would force yields on mortgage rates to move up so they can stay competitive and attractive.

Oakland, Berkeley, Real Estate: Mortgage Rates snap shot

It is important to point out that“positive” economic news, like improving industrial production or improving employment statistics, usually pushes interest rates higher. Positive reports send signals to the market that the economy is improving and that the Fed may back off from its support of the bond market. I want to remind you that when you see positive reports, you can expect interest rates to rise in most cases.

There is one positive report, however, that does not send rates upward, and that is what we received on Friday. Inflation appears to remain under control. CPI (Consumer Price Index) numbers came in on Friday, indicating prices were flat in July. In addition, the CPI has dropped almost 2% over the last year – the most since 1950.

Summer Heat

Right now in the many different East Bay Markets we are seeing consistently that well priced homes are getting multiple offers. It doesn't seem to matter if they are traditional sales, REO's or short sales. Even with rates going up investors and first time buyers are seeing this as a golden opportunity. And it is! We've rolled back prices, in some cases, 20 years! My office sold a liveable house in Oakland for 36K just a little over a month ago. The difficulty right now is for FHA buyers who have little downpayment. they just can't compete in many cases as iinvestors often with all cash offers snatch up these properties. Yet for the patient buyer there are opportunities. You just have to have your ducks lined up and be ready to pull the trigger without hemming and hawing. This year I've helped two clients purchase homes before they ever went on the Multiple Listing Service. The benefit is that in these cases there was no competition and we were able to buy two very good homes, One, a three bedroom 1 bath Mediteranean in Berkeley for under 375K and the other a 2 bedroom one bath in North Oakland with a studio for 300K.

Est Bay Real Estate Market is Hot!

Since early April I have been seeing property after property selling with multiple offers. Just yesterday we offered on a nice house near Berkeley bowl. there were 7 offers on it and the accepted bid went way over the list price. My listing at 1716 Dwight Way which closed at the beginning of this month had multiple offers and went for 22K over our list price. The climate for buying is very strong. There are low interest rates, tax credits, and low prices. the lack of good inventory is driving prices back up in many areas as competition for htese houses is great. I'm noticing also that REOs (bank owned foreclosures) are in most cases receiving multiple offers and in many cases it takes all cash to purchase them. those buyers who I'd like to see be able to take advantagte of this market in many cases are not given the opportunity because of the competition from all cash offers from investors and from abroad. FHA loans in these instances don't stand a chance. The word is that banks are holding back on a lot of inventory so there should be another wave of REOs hitting the market sometime this summer. This may present the opportunity for first time buyers that we've been waiting for. In the meantime if you are planning on buying be aware that you'll probably face competition. and if you are selling, in some areas the market, though not what it was in 2005 is nevertheless stronger than most people think.