April 30, 2016 – Real Estate Market Numbers
By Glen Bell (510) 333-4460
I liked Kira Mead’s comments, (of Modern Real Estate) in Sundays SF Chronicle edition of “Sound Off.” I believe it applies to our markets here in the East Bay as well. Here’s her quote it in full When asked What pricing trends have you noticed in your specific market?
“Last fall we saw a small pause that led to a lot of speculation as to whether or not we had hit the top of the market. But spring sales have been strong with competition for single-family homes and properties for first-time buyers being the strongest, especially in the core neighborhoods of San Francisco.”
“Some predictions for summer and fall: Super-desirable properties will still be popular with multiple bids and over-asking closes. Sellers will be pricing their home closer to the price they hope to get as overbids become less of the rule, and offer dates may begin to go away, with sellers willing to accept a good offer when it comes along.”
“If inventory increases, buyers will be pickier than they have been for the last few years, and properties that don’t check all the boxes will have to work harder to stand out. There should be some great opportunities for people who are well prepared, know what they want and are willing to jump in when the right place comes along.”
Love the San Francisco Bay Area? Hate the San Francisco Bay Area? Trying to make sense of the Bay Area Real Estate Markets? What do the experts have to say?
1) “A new study from human resources consulting firm Mercer has found that out of 230 metro areas studied, San Francisco has the highest quality of life for any American city.” (San Francisco ranks No. 1 in U.S. for quality of life, study says), By Riley McDermid, SF Business Times, March 1, 2016
2) “Californians are fleeing the state in unprecedented numbers, and their primary destination is Texas, according to an analysis issued Monday.” (Valerie Richardson of the Washington Times reports, August 31, 2015. Full Story (Texas emerges as top destination for Californians fleeing state).
3) More than a third of Bay Area residents recently polled by the Bay Area Council said they are planning to leave the region, as skyrocketing housing costs, terrible commutes and an increasingly high cost of living make the area very difficult to afford. The figures come from the the 2016 Bay Area Council Poll.
It seems that on the surface, these statements from articles above contradict themselves. However, it isn’t until you read the 3rd article entitled; California job surge could squeeze low- and middle-income workers, By George Avalos, of the Contra Costa Times that it starts to make some sense.
4) “California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low and middle-income wage earners out of the Golden State, a report released Wednesday warned.”
“It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”
“Housing prices are rising at a time when California has experienced an influx of low-wage workers, the Beacon study determined.”
“Over the five years that ended in 2014, the most recent year for which these statistics are available, the number of low-wage workers coming into California increased by 16.1 percent, according to the Beacon research. The number of middle-wage workers rose 11.2 percent, and the number of high-wage workers increased 6 percent.”
“Left unchecked, housing costs could severely hamper the low- and middle-income workers that power our economy.” Perry said.
“The pressure on housing for middle- and low-income workers is particularly acute in the Bay Area, the world capital of the technology industry.”
5) “Gridlock in the mid to low end of the housing market is one of the main reasons for the low inventory,” says Ralph McLaughlin, Trulia’s chief economist and the author of the study. Blame owners, not builders, for housing crunch By Paul Davidson, USA TODAY, March 21, 2016
6) “Two words alone have, rightly, loomed large in discussions about California’s housing market this year: inventory and affordability. A tight supply of homes available for sale has helped to keep strong upward pressure on home prices, which in turn has caused further deterioration of affordability in the state.” C.A.R. News Letter
Here are some highlights for the 38 East Bay Cities that I track:
- Inventory increased by 21.1% in the last 30 days and has doubled, (increased by 100%), since the beginning of the year. Inventory is now at about where we were last year at this time. Our monthly supply is now at 33 days. As a reminder of what we mean by “months supply;” If no more homes come onto the market, and homes continue to sell at the same pace as they have been over the last 12 months, then the “months supply,” (in this case 33 days), tells us that’s how many days it would take to sell the remaining number of homes we currently have available for sale in any given market.
- The number of pendings, (homes that are in contract), increased by 9.6%. That’s less than what we’ve experienced during this time last year. The pending active ratio has decreased slightly to 1.39. This supply and demand ratio signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers. This is at a lower level than we saw last year at this time, (1.60), and this may be an indication of a slight weakness in the market.
- The percentage of homes “sitting” decreased slightly since last month. 31% of the homes listed now remain active for 30 days or longer, while 15% stayed on the market for 60 days or longer.
- The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 4% of sales over the past 4 months.
- Median Price recovery on a city by city is beginning to see a slight increase. This is typical as we approach Summer. 16 out of the 32 East Bay cities tracked are now at or above their median price “peak” levels with another 10 cities within 20%. That means that 6 cities are still well below their peaks, falling into the 20% to 40% range.
- The month’s supply for the combined 38 city area increased to 33 days, roughly about the same level we saw last April, in 2015. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.
- Our inventory for the East Bay (the 38 cities tracked) increased to 2,388 homes actively for sale. This is still well above the December 2012 low of 1,086 but about the same as we were last year at this time of 2,333. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have increased to 3,328, lower than where we were last year at this time of 3,735.
- Our Pending/Active Ratio has remained about the same at 1.39. This continues to favor sellers. We anticipate that it is primarily seasonal and will begin to move towards what is considered a more normal and balanced market as we move towards summer, (a ratio of 1 with an equal number of listings and pending sales).
- Sales are slightly less than what we saw in March based on a (4 month period) now at 6,479 for the 38 cities tracked. This is 2.9% less than where we were last year at this time.
- Sales over the last 4 months, on average, are 3.5% over the asking price for this area.