I get at least one call or email a week from an interested Buyer asking about buying when the market "gets better" or assuming that it is already "better" here in the city of San Francisco. Yesterday the California Association of Realtors published an article (found here) about a 27.8 percent drop in sales (not prices) of existing homes, and a drop in prices for entry level homes of 5.1%. Of course, these are State-wide figures. And interestingly, overall, the price of the overall market is still up 2% from last August.
Here in San Francisco I had the mis-fortune of coming in 2nd place against 8 other offers when we bid $101,000 over the asking price of a small 2 bedroom Condo. My Buyer was going to skip getting a loan and pay all cash. Apparently the buyer who beat us out with the "best offer" offered about the same price, but had "non-contingent" financing which meant they were going to get a loan, but would be happy to pay whatever terms they got from the lender... and also "knew" they could get a loan... so obviously they were well qualified... certainly not any where near being a subprime borrower. The winning buyer also did not have any other contingencies... the key one is that they did not request an Inspection contingency... so they were accepting the home "as-is". We were going to inspect, but promised to get our due dilligence done within 5 days... so in 5 days the Seller could be confident we were going to go through with the Sale. Apparently that was too long to wait when he had 8 other offers to choose from.
So... is this going on in the rest of the State? Probably in some areas yes, but clearly NOT in the "entry-level" homes cited by the C.A.R. report since "entry-level" is the majority of the subprime market. Here in San Francisco, with a plethora of "all cash" buyers as well as "non-contingent financing" buyers, no one is worrying about the state of the mortgage market. With no one worrying about mortgages... there can be NO SUBPRIME MELTDOWN IN SAN FRANCISCO!!!
There are probably two reasons for this... one is that there are a lot of people with a lot of money in San Francisco... either their own, or a parent or relative helping them purchase the home. The second reason the subprime market is having little to no effect on San Francisco is that we continue to have far less inventory of homes for sale (supply) than we do Buyers (demand), including Buyers paying all cash.
Now, that's not to say that some segments of our market aren't down... there definitely are certain neighborhoods where homes are sitting on the market, and prices have gone down, but these are not the "quality" neighborhoods and homes that my all cash buyers are even bothering to visit. They want what they want, and they are willing to pay for it. The more expensive the neighborhood... the higher the prices have gone this year. The less expensive the neighborhood, the cheaper it's gotten. It's not weird when you think about it!!!
So.... if you want a "bargain" a "deal" or a "foreclosure" here in San Francisco, you will have to be open to ALL neighborhoods, not just your favorite ones. You can buy a cheap home in the cheapest neighborhoods. Or, better yet, I can direct you to places like Antioch where I just heard of one block where there are 7 foreclosures in a row.... so 1, if not all 7, will be great bargains... but then you have to live in Antioch... or fix and flip in an area where buyers have plenty of homes to choose from, and where apparently the tightening in the mortgage market is having a big effect on "demand".
I love your calls and emails... so please keep them coming... but I'm beginning to sound like a broken record when it comes to the "I'll wait for the market to get better" or "I'd like a foreclosure or a deal". I don't expect the market to go down, and I can only help you with a "deal" if you're very open to what and where you buy.