Cheif Economist for the California Association of Realtors, Leslie Appleton-Young, presented up-to-date San Francisco, Bay Area and California real estate market data yesterday at a meeting in Marin which I attended. Her data was intriguing to me because of my earlier column in The Castro Courier (see earlier posting). Ms. Appleton-Young went into great detail on the segmented market. She referred to the huge hit the lower end of the market has taken and so far the luxury market (defined as approximately $1million or more) has stayed flat. The forecast according to Ms. Appleton-Young for the luxury end of the market is that it is just now starting a correction which will take up to 1.5 – 2 years before reaching its trough (see my earlier remarks). And, this correction is anticipated to be in the range of 15% – 20%.
My “on-the-street” experience bares out a correction on the luxury end of the market in San Francisco of around 10% – 15% already. Ms. Appleton-Young makes the point of saying that you cannot have two disjointed segments of the market where the lower end has taken a hit of around 50% statewide without there being some pain felt in the upper luxury end of the market, especially given all the other aspects of the current economy that she detailed quite well, i.e. unemployment, state budget issues, federal stimulus issues, you name it…
So as I had mentioned in my column, this downward pressure is creating a tremendous buying opportunity for those seeking luxury properties. The low end of the market (i.e. $500k and less) in most sub-markets around the Bay Area is sitting with around a 3 month supply of housing which is considered “below normal” due to the huge correction in pricing which has brought out investors and buyers alike. Watch out for something similar is coming for the luxury end of the San Francisco, Bay Area and statewide real estate market too because it is sitting with a 13 month inventory. Wow! That really puts it into perspective considering a normal market is thought to have about a 6 month supply of housing. As Ms. Appleton-Young stated, “prices are sticky on the way down, however, more luxury end homes will be sold because the owners will no longer be able to carry them.”
Internationally, this appears to be the same thing I witnessed while on the island of Bonaire, N. V. in the Caribbean. I spoke to Mark Van Hooten at REMax Paradise Homes (www.bonairehomes.com) in Kralendijk, Bonaire who was helpful with information on the local market. He comfirmed that the low end of the market is strong and while he didn’t admit the luxury real estate market is suffering internationally on Bonaire it appears from our driving tour of the island that the greatest number of listings are luxury homes. This small Caribbean real estate market is mirroring our San Francisco market. I’ll have more on San Francisco’s market and other national and international destinations in upcoming postings. Hope you enjoy the video.
All the Best,
Lance[wpvideo BsTPLaLE]
