Photograph by Paul Myers

Realtor Simin Malek (left) of Coldwell Banker in Los Gatos, worked with seller Marita Mickaell to prepare Mickaell's house for sale. For example, personal photographs were exchanged for art pieces, and flower beds were planted.

Stalled housing market expected to rebound

By Jean Newton

The Sept. 11 tragedy has created unprecedented uncertainty and cast a deep shadow on an already lagging economy, but the real estate market is expected to remain strong in 2001 with a mild dip projected for 2002, according to the California Association of Realtors 2002 forecast.

"The California real estate market stalled immediately following the Sept. 11 terrorist attacks, but has begun to rebound," said California Association of Realtors President Gary Thomas. "We expect home prices to continue to appreciate in 2002, although at a more moderate pace than we've seen this year."

Although sales are decreasing, the median price of a single-family home in California is projected to increase by 6 percent during 2002, after climbing 8.5 percent in the year 2001. Sales of existing single-family homes in California are expected to decline 2 percent in 2002, following a projected 5.9 percent decrease in 2001, according to the association's forecast.

"While home sales will decline next year, 2002 looks like it will shape up as the fifth- strongest year on record," Thomas said. "Southern California will lead the state in sales of existing single-family homes, as the availability of entry-level jobs and continued job growth fuels housing demand. The San Francisco Bay Area has returned to what would usually be considered normal market conditions following the heyday of dot-com IPO buyers, multiple offers and serious over-bidding for high-end properties."

Leslie Appleton-Young, California Association of Realtors' vice president and chief economist, said homebuyers will benefit from continued low fixed and adjustable mortgage interest rates in 2002. "Favorable mortgage rates coupled with the state's ongoing housing shortage also will keep the demand for housing strong and the rate of home price appreciation well above the rate of inflation," said Appleton-Young.

Fixed mortgage interest rates are expected to average 7.2 percent in 2002, up slightly from the 6.98 percent average projected for all of 2001. Adjustable mortgage interest rates are expected to fall from 5.7 percent in 2001 to 5.1 percent next year.

It can be confusing for buyers or sellers to understand what all the numbers and projections mean. Finding a local Realtor to assist in evaluating the current market and determining the best course of action for each individual is advisable when there is such uncertainty in the market. Realtors like Simin Malek of Coldwell Banker in Los Gatos believe the key to today's market is value.

"There are a lot of capable buyers out there, well-educated buyers, who are very cautious. They are taking their time, not making quick decisions, and they are looking for value," said Malek. "Some are asking, 'where is the bottom of the market?' Others see value or feel secure about a purchase, and they will buy."

Malek, who has been in the real estate business for 22 years, tries to educate her clients by asking them questions to help define their choices. What would they lose if they waited to buy? What would they gain if they waited six months? Why are they buying?

"Clients need to examine all the issues. Are they moving because they need larger space, or is this an investment property? Finding a Realtor who can understand your situation and look at your best interests is really important. Maybe this isn't the best time to sell. I advise my clients to look to the long term and make sure to consider their financial situation," Malek said.

There are a lot of buyers looking in the $450,000 average range, said Malek, while homes in the $700,000 and up bracket are selling sporadically. In the lower range, people are looking at condos, multi-unit listings and townhouses in the low $500,000 and $600,000 range. Malek keeps tabs on the market by evaluating the response to her ads and to signs on properties that are for sale.

"Certain properties get more response from signs, and that shows me that people are out there looking. This is a new trend that is quite different from before. People are doing their own legwork. Communication between the agent and the client has changed. The buyer wants us to provide the information, then they want to go look at the neighborhood, digest the information and take their time so they aren't rushed into making a decision," Malek said.

While some buyers know what they want, others are afraid to make a commitment. Malek finds herself doing a lot of handholding and listening. Patience is the best advice she can give to sellers. "A seller must be very patient since the average days on the market has tripled since last year. Staging and marketing are playing an important role in today's market. I've been helping my clients by sending out a whole crew of workers from gardeners to carpet cleaners to get a house ready to sell," Malek said.

Realtor Kathy Stakey of Coldwell Banker in Saratoga agrees that a strong marketing plan is essential. "The days of putting a sign in the lawn and waiting for the buyer to show up are a thing of the past."

Stakey believes that listening to clients and determining their future needs or motivations to help them get rid of uncertainty may save them from ultimately regretting their decision.

"I believe in this market the buyers as well as the sellers must focus on how their future plans are affected by their decision today," said Stakey. "The buyer who gets overly comfortable renting will only net a box of rent receipts in the future. The seller who hesitates about moving to the next location may miss out on an opportunity for moving into the future."

As the market forecast and predictions unfold, both buyers and sellers can get the inside track from local Realtors by checking out the Silicon Valley Association of Realtors website at www.siliconvalley-realtors.org.

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