Here are some highlights for the 38 East Bay Cities that I track:
- Following a dramatic 60% drop at the end of the year, inventory has started its’ seasonal trend upward for the second month in a row gaining 21.5% over the last 30 days. Expecting to follow the trends we saw in the previous 3 years, we anticipate a gradual increase on a month by month basis through spring and summer to occur before finally peaking in the fall months. Inventory levels are slightly less than what we experienced last year at this time. Our monthly supply is now 24 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 24 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), has increased 19.4% over the last 30 days but is less than what we experienced during this time last year by 11.7%. The pending active ratio decreased slightly to 1.38. 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, (1.53). This will change in the coming months as we continue to move towards a more “normal” or balanced market for 2017.
- The percentage of homes “sitting” has begun to decrease. 32% of the homes listed now remain active for 30 days or longer, while 32% stayed on the market for 60 days or longer. This is due more to a clearance of some of the “stale” inventory seen as bargains and new homes beginning to come onto the market. This is about the same level that we saw last year at this time.
- The “distressed” market, (foreclosures and short sales) are no longer a factor representing less than .1% of the market with only .03% of the active listings and .03% 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 Winter. 17 out of the 33 East Bay cities tracked are now at or above their median price “peak” levels with another 12 cities within 20%. That means that only 4 cities are still well below their peaks, falling into the 20% to 30% range. The Median Price for the East Bay has decreased from $645,000 to $610,000 over the last 6 months, also typical for this time of year.
- The month’s supply for the combined 38 city area remains at 24 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is a repetitive pattern that we’ve seen over the past four years.
- Our inventory for the East Bay (the 38 cities tracked) increased to 1,681 homes actively for sale. This is still above the December 2012 low of 1,086 and slightly less than last year at this time of 1,724. 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 increased to 2,323, lower than where we were last year at this time of 2,630.
- Our Pending/Active Ratio is 1.38. Last year at this time it was 1.53. This will be moving towards a more balanced or “normal.” (a ratio of 1 with an equal number of listings and pending sales) as we continue into the new year.
- Sales have decreased from the last (4 month period) now at 6,567 for the 38 cities tracked. This is well below what we saw last year at this time (7,538).
- Sales over the last 4 months, on average, are 1.9% over the asking price for this area down slightly from last year’s 2.5%. This has come down over the past 4 months from 2.1%
Historical Median Price City by City Recovery
How much has the real estate market in your city recovered from their previous Peaks. The graph shows our recovery from each cities peak. As you can see, the most sought after cities have led the way. However, this is a slow process and as buyers become priced out of some of these markets, their interest spills over to the surrounding cities. They too begin to follow the trend up towards recovering.
By Stephen Cho, February 28, 2017
Rent prices this month experienced mixed changes across the nation’s top 100 rental markets. In the top 10 list, about half of the cities’ prices went up while the other half went down. The same behavior follows for the middle tier and bottom tier markets. Overall, the Zumper National Rent Index showed one bedroom units down less than one percent to a median of $1,142, while two bedroom units grew 0.5% to $1,353. Check out the table below to see how prices in your city have changed.
Luckily for Bay Area renters, they will have a little more to be happy about this month as prices for one bedroom apartments have fallen in San Francisco (1.2% to $3,270), San Jose (2.7% to $2,180), and Oakland (5.2% to $2,000).
Top Five Rental Markets
- San Francisco, CAmaintained its spot once again as the most expensive city to rent. Prices dropped again to $3,270 for a one bedroom apartment, marking a 1.2% decrease. Two bedroom apartment prices stayed the same at $4,500.
- New York, NYsaw prices go up this month for both one and two bedrooms, increasing 0.7% and 3.0% respectively. One bedroom rent bumped up to $2,930 while two bedroom rent dipped to $3,420. Prices for both bedroom types are about 10% down since last year.
- Boston, MArent prices dropped 1.3% this month to $2,250 for one bedroom units and grew a slight 0.4% to $2,600 for two bedroom units. Rents for both one and two bedroom apartments are down 1.7% and 1.1% respectively from a year ago.
- San Jose, CAsaw rent prices for one and two bedroom units go in opposite directions this month. One bedroom rents decreased 2.7% to $2,180 while two bedroom rents increased 0.4% to $2,690.
- Washington, DCfound its way into the top 5 this month as it bumped up two spots. One bedroom units went up slightly to $2,010 with a 1% increase. Two bedroom apartments saw a bigger jump of 4.9% to $2,760.
Notable Changes This February
– Oakland, CA experienced some heavy dips in rent this month, kicking it out of the top 5. Rents for both unit types are down a whopping 5% this month. One bedroom units stand at $2,000 while two bedroom units go for $2,470.
DSNews, March 7, 2017
On Tuesday Fannie Mae reported that the Fannie Mae Home Purchase Sentiment Index (HPSI) increased by 5.6 percentage points in February, to 88.3, a new all-time high.
As for the net percentage of those thinking it’s a beneficial time to sell, it increased by 7 percentage points to 22 percent, thus reaching a new survey high.
Respondents who say that home prices will go up increased by 3 percentage points in February, to 45 percent; while the net share of people believing that mortgage rates will go down over the next twelve months remained constant for the third consecutive month at minus 55 percent.
The Americans surveyed who are not concerned about possibly losing their job rose 9 percentage points to a new survey high of 78 percent and those who say their household income is significantly higher than it was 12 months ago rose 4 percentage points to 19 percent in February, continuing the increase from January and reaching a new survey high.
“The latest post-election surge in optimism puts the HPSI at its highest level since its starting point in 2011. Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time homebuyers,” said Doug Duncan, Fannie Mae’s SVP and Chief Economist. “Preliminary research results from our team find that millennials are accelerating the rate at which they move out of their parents’ homes and form new households”.
Some cracks have appeared in the Bay Area’s economy, according to a report that shows weakness in the Santa Clara County and East Bay job markets
By GEORGE AVALOS, Mercury News, March 4, 2017
Cracks have emerged in the Santa Clara County and East Bay job markets as both areas started the year shedding more jobs than they created.
Santa Clara County lost 3,500 jobs while the Alameda County-Contra Costa County area lost 900 jobs in January compared to December, according to seasonally adjusted figures from the Employment Development Department, released Friday. The San Francisco-San Mateo region managed a paltry gain of 400 jobs.
“Silicon Valley’s job engine has downshifted in recent months,” said Scott Anderson, chief economist with San Francisco-based Bank of the West. “That’s a trend we are starting to see across the Bay Area and in California as a whole.”
The Bay Area overall lost 6,800 jobs in January, breaking a string of 66 consecutive months of job gains in the nine-county region. Those job losses were the worst since August 2009, when the region — mired at that time in the Great Recession — shed 9,000 jobs.
The Bay Area’s job-market recovery in recent years means tech companies today are chasing fewer job-seekers and could find it more difficult to find and hire the right people.
“We don’t see a tech bubble that is about to implode,” said Robert Kleinhenz, executive director of research with Beacon Economics. “We see an economy in general and a tech sector in particular that are bumping up against labor-market constraints as we get to full employment. The Bay Area, the nation, Santa Clara County are at full employment. That will slow down hiring.”
“Tech will continue to add jobs in the Bay Area, but not nearly the same number of jobs as we saw coming out of the Great Recession,” Kleinhenz said.
On a brighter note, job markets in the East Bay and San Francisco-San Mateo regions were stronger in 2016 than initially thought. Last year, the East Bay gained 34,300 jobs, 4,700 more than prior estimates, while the San Francisco metro area added 34,400 jobs, which was 12,100 more than initial estimates by EDD economists.
Similarly, California’s economy was more robust than first thought. The Golden State added 356,100 jobs in 2016, which topped the initial estimates by 23,600, according to this newspaper’s analysis of the EDD figures.
California’s jobless rate in January improved to 5.1 percent — the best level in 10 years — compared with 5.2 percent in December, the EDD reported. The last time the statewide unemployment rate was this low was in April 2007, prior to the Great Recession.
“There is no way to know at this point whether the slowdown in January is temporary or a sign of future weakening here,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
By Alex Starace, Redfin, February 28, 2017
The Redfin Housing Demand Index increased 6.5 percent from the previous month to a seasonally adjusted level of 130 in January. This marks the highest level recorded since January 2013, the first month measured by the Redfin Demand Index.
The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.
Compared to December, the seasonally adjusted increase in buyers requesting tours was up 3.2 percent in January, while the seasonally adjusted change in buyers writing offers was up 13.0 percent.
“Soaring stock markets, still low mortgage rates and a steady economy bolstered homebuyers at the start of 2017,” said Redfin chief economist Nela Richardson. “Homebuyers were not just window shopping, they were serious about making offers and getting to the closing table. However, this uptick in homebuyer enthusiasm won’t guarantee strong sales in the coming months. With pending home sales down across the country in January despite strong demand, the lack of supply is a formidable foe for buyers this year.”
Homebuyer demand in January was far above the recent historical average. Compared to January 2016, homebuyer demand was up 22.9 percent, led by a 25.9 percent year-over-year increase in homebuyers requesting tours and an 18.0 percent increase in buyers making offers.
The start of 2017 has brought a notably limited selection for homebuyers, who saw 13.4 percent fewer homes on the market in January than the previous year, with 4.0 percent fewer new listings.
By Diana Olick, CNBC, February 28, 2017
The spring housing market started early this year, not because of higher-than-average temperatures but because of hotter-than-average demand and overheating home prices.
This year may be the starkest example of a post-recession reality that is redefining housing as we know it.
“This spring housing market is shaping up to be another doozy for homebuyers,” said Ralph McLaughlin, chief economist for home-listing website Trulia. “Housing affordability is the key to helping break yet another year of gridlocked inventory, but all signs are showing that homes this spring will be much less affordable than last year.”
Affordability is being hit on several fronts: The foreclosure crisis is over, but it left behind an entirely new landscape for potential buyers. Entry-level homes are scarce because investors bought tens of thousands of them during the crisis and turned them into rentals. The number of single-family rentals jumped to more than 15 million, up from about 11 million in 2009, according to the U.S. Census.
Homebuilders continue to operate well below normal levels because of higher costs and a lack of labor, and thousands of construction workers left the business during the recession, never to return. Builders don’t focus on entry-level homes because the margins are simply too tight, and prices for new construction are also rising at a fast clip.
What’s more, credit is still tight, and the youngest cohort of buyers, the millennials, are delaying marriage and parenthood, the two biggest drivers of home ownership. The shortage of homes for sale has now pushed prices to a 30-year high, according to S&P CoreLogic Case-Shiller. Rising mortgage rates only add to the pressure.
“Home prices continue to advance, with the national average rising faster than at any time in the last two-and-a-half years,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “With all 20 cities [in the S&P/Case-Shiller Index] seeing prices rise over the last year, questions about whether this is a normal housing market or if prices could be heading for a fall are natural.”
Housing demand climbed considerably this year, even compared with last year, as the leading edge of the largest generation finally moves into homebuying and a stronger job market supports them. A monthly demand index from Redfin jumped to the highest level since January 2013, when the index began. Compared to January 2016, homebuyer demand was up 23 percent, led by a 26 percent annual increase in homebuyers requesting tours and an 18 percent increase in buyers making offers.
“Soaring stock markets, still-low mortgage rates, and a steady economy bolstered homebuyers at the start of 2017,” said Nela Richardson, Redfin chief economist. “Homebuyers were not just window shopping. They were serious about making offers and getting to the closing table. However, this uptick in homebuyer enthusiasm won’t guarantee strong sales in the coming months. With pending home sales down across the country in January despite strong demand, the lack of supply is a formidable foe for buyers this year.”
Analysts at Fitch don’t predict when any of these bubbles will burst, but they do point to certain warning signs.
Potential buyers today are facing tough new realities. Some houses are clearly overpriced, and renting is still a better financial option in some markets. Competition is fierce for the best homes, and buyers have to be ready to pull out all the tricks.
By Blanca Torres, SF Business Times, March 7, 2017
Developer Patrick Kennedy wants to go mega with micro-units near the West Oakland BART station.
His firm, Panoramic Interests, has proposed building up to 1,459 small apartments on a roughly 3-acre site at 500 Kirkham St. — a five-minute walk from the train station.
“We want to take full advantage of proximity to BART,” Kennedy said. “We think this would be a perfect place for workforce rental housing.”
Plans call for four buildings ranging from seven to 16 stories that would include “micro-unit” studios as well as two- and four-bedroom units ranging from 160 to 700 square feet.
Multiple developers have tried and failed to build projects on the site for more than a decade. Kennedy has taken an innovative approach to development in the past. He made a name for himself developing apartments in Berkeley, then shifted his focus to micro units starting in 2013 with 38 Harriet St. in San Francisco and is now pushing pre-fabricated housing for the homeless.
In 2015, the firm completed the Panoramic, a 160-unit, micro-unit highrise in San Francisco’s SoMa neighborhood and currently has close to 300 units more in development.
The West Oakland station connects to every line in the BART system, Kennedy said, making it an ideal place for residents who want a “car-light” lifestyle.
“We want to appeal to people whose transportation is walking, biking and BART,” he said.
To move forward, Panoramic Interests must first take over a development agreement between the City of Oakland and TLC, a Roseville-based development firm owned by Jay Timothy Lewis.
The site falls under an area in West Oakland the city has designated for dense, transit-oriented development. The property is owned by Caltrans, which agreed to sell it for $4.3 million.
TLC entitled a 417-unit residential project for the site, but struggled to attract investors to fund the development and buy the site. The firm plans to stay on as an equity partner in the Panoramic Interests project.
By Roland Li, SF Business News, February 12, 2017
A rush of proposals for new Oakland towers could add over 3,000 new residential units to the city’s downtown, representing one of the largest building booms in the city’s history. The projects would transform lowrise buildings and parking lots into a new glass, steel and concrete skyline.
But financing is still difficult to obtain, and only two of the 10 major proposals have set timelines to begin construction: Gerding Edlen plans to break ground on 206 units at 1700 Webster St. by May, and Lennar Multifamily said it plans to break ground on a 254-unit, 33-story tower at 1640 Broadway by the end of the year.
Approved towers at 1900 Broadway and 2270 Broadway are still seeking investors. Other plans are still being reviewed by the city and are in early stages.
There hasn’t been highrise construction in the city since the Grand at 100 Grand Ave. opened in 2008. Such taller buildings require concrete podiums and are more expensive to build than midrise projects with wood frames, which has deterred development. Proposed impact fees for new housing projects could also complicate the economic dynamics of building towers.
City officials support denser housing downtown, which they say will provide much-needed market-rate housing and millions in fees and property taxes to the city.
Mayor Libby Schaaf wants to see 17,000 units of new housing built in Oakland in the next eight years, she said at the Business Times’ 2016 Mayors’ Economic Forecast on Tuesday. “I like tall buildings, especially near transit,” said Schaaf. “Oakland is ready to densify.”
Downtown Oakland highrise pipeline
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By Aly J. Yale, DSNews, February 27, 2017
Distressed sales have fallen yet again, reaching their lowest numbers since September 2007, according to a CoreLogic report released this morning.
Before the crisis, the average share of distressed sales was around 2 percent. According to CoreLogic Principal Economist Molly Boesel, “If the current year-over-year decrease in the distressed sales share continues, it will reach that ‘normal’ 2-percent mark by the end of 2017.”
Cash sales are quickly approaching their pre-crisis numbers. “Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent,” Boesel reported. “If the cash sales share continues to fall at the same rate it did in November 2016, the share should hit 25 percent by mid-2017.”
YOUR FUTURE IS IN DANGER! MAKE CALLS NOW TO STOP AB 1506! – East Bay Rental Housing Association
AB 1506 (Bloom) would repeal the 1995 Costa-Hawkins Act that prevents every city and county from destroying your rental business. The Costa-Hawkins Act prevents cities and counties from forcing you to indefinitely subsidize your tenant’s rent and also allows you to adjust rent at time of move out. Instead, AB 1506 would allow your city or county to:
- END VACANCY DECONTROL. Because of this restriction, rental income will rarely increase which will result in not making energy and seismic safety improvements and forgoing needed maintenance. Obtaining a loan to improve your property would be unlikely because the income stream will not be sufficient.
- Set rent payments on newly constructed housing built after 1995. This will cause a serious set back for rental property owners. The property was built on reliance of being exempt from rent control.
- Set rent payments on single-family homes (YES, SINGLE FAMILY!). Thousands of homeowners that bought modest single-family homes will now be subject to a complex set of rent control mandates including eviction, rent registration and rent reporting.
If passed, this bill will repeal Costa-Hawkins, eliminating all incentives to maintain or improve rental housing. This bill would be a statewide change, punishing small owners even more than now.
Property owners did not cause the current rental housing shortage. Instead, we worked with existing rental laws to provide reasonably affordable housing with less and less income for maintenance and improvements. BUT THIS PROPOSAL IS THE LAST STRAW! We cannot afford to offer the same subsidized rent to subsequent tenants when the original tenant vacates. The numbers just don’t add up to a fair return.
EBRHA encourages all members to speak out about this ‘witch hunt’ against rental owners. Only MORE HOUSING will solve this problem!
If you want to relinquish ownership and control of your property, you do not need to call the legislators listed below.
If you live, work, or own or manage property in Alameda or Contra Costa Counties, please call ALL of the listed Assembly Members IMMEDIATELY and ask him/her to VOTE NO on AB 1506 (Bloom).
Here’s What You Can Do:
- Call all legislators listed below on or before March 14, 2017 (deadline extended)
- Identify yourself and state that you are a member of EBRHA, representing Alameda and Contra Costa Counties
- State the city in which you live, work, own or manage residential rental property.
- Ask the legislator to VOTE NO on AB 1506 (Bloom) and thank the staff for their time. The legislator’s staff will not ask you why you are OPPOSED to AB 1506. They only want to know: the bill number and author; that you are asking the legislator to vote NO; and that you own property or are a constituent in the legislators’ district. That’s it!.
Please call the following Assembly Members:
|Asm. Catharine Baker
|Walnut Creek, San Ramon, Dublin, Livermore, Pleasanton|
|Asm. Timothy Grayson
|Vallejo, Benicia, Martinez, Concord, Pleasant Hill, Pittsburg|
|Asm. Rob Bonta
|Oakland, Alameda, San Leandro|
|Asm. Kansen Chu
|Fremont, Newark, Milpitas, San José, Santa Clara, Leandro|
|Asm. Jim Frazier
|Antioch, Bethel Island, Birds Landing, Brentwood, Byron, Collinsville, Discovery Bay, Fairfield, Isleton, Knightsen, Locke, Oakley, Pittsburg, Rio Vista, Suisun City, Travis AFB, Vacaville, Walnut Grove|
|Asm. Bill Quirk
|Hayward, Union City, Castro Valley, San Lorenzo, Ashland, Cherryland, Fairview, Sunol, North Fremont|
|Asm. Tony Thurmond
|Hercules, Pinole, San Pablo, Richmond, El Cerrito, Albany, Piedmont, Berkeley, Oakland|
|Asm. David Chiu
|Asm. Phil Ting