SAN FRANCISCO – (Sept. 21, 2008) – We certainly had to hang on to both our hats and stomachs this past week – it was quite a ride. Hope you had a big bottle of Dramamine by your side. We experienced financial history in the making. There hasn’t been an intervention like this in nearly 80 years. For the moment, the beast has been tamed. We are back over 11,000 and our retirement accounts are back close to where they were when the week began. Now we will only have to work an extra few years instead of an entire decade.In a two-week period, the U.S. government nationalized Fannie, Freddie and AIG. They let Lehman sink into the annals of defunct investment houses and proposed a $700 billion (really a trillion dollars) bailout of those unwanted assets of banks and other financial institutions. The market embraced this plan with two unprecedented days of buying sprees. Oh, let’s not forget that the Bull became a steer with Merrill Lynch, the former mainstay of Wall Street, being sold to B of A.Will these actions stem the bleeding? The honest answer is: no one knows. The bulls say it was a stroke of genius. The bears say it was a repression – just prolonging the evitable. For the moment, it is a welcome relief from the constant barrage of negative news. A ray of sunshine in the midst of a storm.In my own humble opinion, if we taxpayers are going to bailout out these venerable financial institutions, I think we should demand more than the deal they will cut for these assets. To insure that taxpayers will not bear the brunt of these poor decisions and unethical behaviors, we should receive an annual redemption fee over a ten year period from the future profits of these banks and investment houses. Why should we absorb their bad judgment and fund their future bonuses? Enough of my musings.What effect will this have on the housing market? It is probably too soon to tell, but one scenario would be that it would slow the decline of housing values (which is already occurring) and allow prices to stabilize while providing liquidity to the jumbo (those loans over $729,750) market at affordable pricing. This could in turn give confidence to potential buyers that the bottom is near.What we do know is that unit sales are up over last September. Our numbers are plus 32% over last year for the first 3 weeks of this month. The other side of this is that our average sales price is down by about the same amount. This reflects again that the lower end of the market is the most active.Multiple offer sales are still declining. This is a good sign. In a healthy balanced market most sales are not multiples. We have been spoiled by the crazed markets of 1999-2000 and 2004-2005, which gave rise to the false assumption that the majority of sales should be in multiple offers. This is not reality. The good news is that inventory supplies continue to decline.Another positive is the number of potential buyers visiting open homes. Open house activity is still lively, not in every market, but in most. How about the Piedmont fixer listing priced at $2.150 mil. entertaining 300 visitors. O.K. , not every listing is attracting those numbers, but activity is still favorable as indicated by the following examples: a Crocker Highlands (Oakland) home priced at $789K garnered 70 groups, a Ross 4 bedr. 2 ba. home listed at $1.695 mil. attracted 33 groups, an Inner Sunset (SF) 3bedr./1.5 ba. home priced at $888K was visited by 50 groups, and lastly, a Cole Valley (SF) 4 bedr./5 ba. home listed at $1.2 mil. had 45 parties. These were the big numbers. The majority of open homes averaged between 5 and 25 groups. This is impressive, as in previously down cycle markets we were fortunate to have more than 5 visitors. Demand is still strong, however buying is restrained.The lower end is selling well across the board as prices have dropped substantially. For properties above a million dollars that are selling are those listings in the most desirable areas, showing exceptionally well and are value priced. There is still a great deal of money chasing trophy properties. A $29 million listing in San Francisco sold very quietly.If Paulson’s plan works and banks and other financial institutions are able to torpedo the shoddy assets off their books, dollars could once again flow into the jumbo mortgage market. Lenders won’t be doing the “fog a mirror--no money down loans,” but they will be able to make loans to well-qualified buyers that are being challenged in the current environment. There won’t be a run up on prices, but we could look forward to a balanced, sane real estate market. Buying a piece of property could return once again to its original purpose, which is to provide home and a place to raise a family.Last week took us on a real rollercoaster ride. Check this one out – got the feeling. Make sure to put it on full screen (or is that scream?).Editor’s Note:Avram Goldman is the President and CEO of Pacific Union GMAC Real Estate in the San Francisco Bay Area.