Glen’s SF Bay Area Real Estate Market Update, July 31, 2017

July 31, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

Zillow_June_2017

Here are some highlights for the 38 East Bay Cities that I track:

  • Following a dramatic 60% drop at the end of last year, inventory continues its’ seasonal trend upward. However, for the first time since 2012, we saw a very small increase in our inventory from April through July, only a modest 11%. Last year we had a 36% increase over the same time period. Pendings went down for the second month in a row, by 7% for June & July (unusual for this time of year) but obviously due to the tight inventory levels. Expecting to follow the trends we saw in the previous 3 years, we anticipate a gradual increase on a month by month basis through summer to occur before finally peaking in the fall months. Inventory levels are 24% less than what we experienced last year at this time. Our monthly supply is now 36 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 36 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 decreased 3.1% over the last 30 days but is less than what we experienced during this time last year by 14.4%. The pending active ratio decreased to 1.19. 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 slightly higher than last year at this time, (1.04). 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 increased slightly with 37% of the homes listed now remaining active for 30 days or longer, while 17% stayed on the market for 60 days or longer. This is about what we saw last year at this time.
  • The “distressed” market, (foreclosures and short sales) are no longer a factor representing less than .05% of the market with only .02% of the active listings and .02% of sales over the past 4 months.
  • Median Price recovery on a city by city is beginning to see a slight increase. 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 is $700,000 over the last 4 months, up from last year at $650,000, a 7.7% increase.

Months_Supply_7.31.17

  • The month’s supply for the combined 38 city area is 36 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 normally a repetitive pattern that we’ve seen over the past four years. However, we are well below supplies levels compared to last year at this time, 48 days.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) is now at 2,474 homes actively for sale. This is still above the December 2012 low of 1,086 and less than last year at this time of 3,243 or (24% lower). 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 decreased slightly to 2,944, lower than where we were last year at this time of 3,368 or (13% lower).

Pending_Active_Ratio

 

  • Our Pending/Active Ratio is 1.19. Last year at this time it was 1.04. 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 summer and fall.

Sales

  • Sales have increased dramatically from the last (4 month period) now at 9,243 for the 38 cities tracked. This is close to what we saw last year at this time (9.217).
  • The one factor that has changed this year is that we had a very late start to the spring season due to the heavy amount of rain received compared to very little in the preceding 3 years. The rains more than likely delayed many sellers from putting their homes up for sale early. They simply got a late start because they couldn’t work on the exterior of their homes during this time.
  • Sales over the last 4 months, on average, are 4.5% over the asking price for this area, about what we saw last year’s at this time, 4.4%.

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Recent News

 

Developer aims high for 1,000-unit apartment project in West Oakland

By Blanca Torres, SF Business News, July 28, 2017

Developer Panoramic Interests revised its design for a 3-acre site near the West Oakland BART station to include 1,031 units of “family-size” housing.

The firm originally conceived of more than 1,400 units for 500 Kirkman St., but cut out one-bedrooms and left only two studios to make room for larger two- to five-bedroom units.

“This site will appeal to much larger households because of its proximity in every direction to job centers in the Bay Area,” said Patrick Kennedy, head of Panoramic Interests.

The apartments make use of every square foot without any empty corridors, Kennedy said.

The result is that the building can accommodate more units at a more affordable cost. Rents are estimated to start around $2,500 for a two-bedroom and around $3,500 for a four-bedroom.

“The driving force behind almost all the design decisions is how to provide affordable unsubsidized housing,” Kennedy said. “The greatest unmet need in the Bay Area is entry-level urban housing. There’s a lot of luxury housing being built, but not much for the highly touted missing middle.”

The developer also stripped the amenities down to the bare minimum. That means no gyms, pet spas or chef’s kitchens.

Instead, the complex will feature two parks and two alleys that Kennedy said will function as open-air living rooms with space for eating and gathering. The project will also have about 15,000 square feet of retail and 32,000 square feet of commercial space for small businesses.

Also missing from the design: parking. The site will only have seven spaces for car-sharing and deliveries.

“We think price is the best amenity,” Kennedy said. “We want our residents to participate in the civic life in Oakland and just have an affordable place to live so they can stay in Oakland.”

Exclusive: West Coast landlord proposes tower near Oakland’s Jack London Square

By Roland Li, SF Business News, August 4, 2017

One of the country’s largest landlords is expanding in Oakland with plans for a 294-unit residential tower in the Jack London Square district.

Essex Property Trust (NYSE: ESS) and partner Swenson Builders have proposed the 16-story tower at 412 Madison St., three blocks from the Lake Merritt BARTstation.

“Oakland’s proximity to San Francisco is highly desirable,” said Michael Schall, CEO of Essex. “Given the BART linkage … owning in Oakland is a good thing.”

Schall said it was too early to say whether the project will be rental or condos. There’s no finalized budget.

“It’s one of the great urban areas in the Bay Area,” said Ryan of Oakland. “We certainly want to be part of the resurgence there.”

He said that the developers are in contract to buy the 27,844-square-foot property from the metal recycling operator, Lakeside Junk Dealers Inc. The existing recycling plant will be closed and demolished to make way for the project.

C.A.R. Market Data – Historical County Median Price Graph

CAR_Alameda_Median_Price_Graph_June_2017

Alameda is currently showing a median price on single family homes for June 2017 of $900,00. This is in contrast to the previous low in January of 2012 of $395, 850. That is a whopping 125% gain during that time period.

CAR_Contra_Csta_Median_Price_Graph__June_2017

Contra Costa is currently showing a median price on single family homes for June 2017 of $660,000. This is in contrast to the previous low in January of 2015 of $442,440. That is a whopping 49% gain during that time period.

CAR_Affordability_Index

CAR_Affordabity_Index_Bay_Area

All in the Family: Multigenerational Living Makes a Comeback

By Christine Romero| Realtor.com | Aug 2, 2017

It was the cycle that defined American life for decades. People got married, bought a house, and started a family. The kids grew up, left the nest, and didn’t come back. The empty nesters then downsized to a smaller place to enjoy their golden years. Their kids eventually started families of their own, and bought their own homes. And so it went. Instead of the circle of life within a household, it was more like a straight line.

But in recent years, the line has begun curving again. This entrenched societal pattern is becoming upended in favor of a mode of living that harks back to an earlier era.

Fueled by economic and cultural factors, a growing number of people are moving back in with their folks, or opening their homes to their aged parents. It’s a large-scale change making its impact felt in all corners of the real estate market—and American life itself.

Nearly 1 in 5 Americans is now living in a multigenerational household—a household with two or more adult generations, or grandparents living with grandchildren—a level that hasn’t been seen in the U.S. since 1950. About 60.6 million adults, or 19% of the population, were residing with their family in 2014, according to the Pew Research Center’s analysis of census data, up from 57 million in 2012.

Rising home prices, staggering child care expenses, college debt, longer life expectancies, and the growth of ethnic communities in which extended families traditionally live together are all fueling this shift. And as people become accustomed to this style of living, it’s altering the way they buy and build their homes, and how they plan for the future.

The percentage of people residing in multigenerational homes peaked around 1950, when 21% of households had such an arrangement. But in raw numbers it amounted to only 32.2 million people—a far cry from today’s 60 million-plus.

Data suggest that multigenerational living is more prevalent among Asian (28%), Hispanic (25%),  and African-American (25%) families, while U.S. whites have fewer multigenerational homes (15%).

Continued demographic shifts in the U.S. mean this trend isn’t going anywhere but up. In Asia and Latin America, multigenerational living is widely accepted. For example, an estimated 30% of urban Indian families and 60% of rural Indian families live in multigenerational households, according to a report by the International Longevity Centre Global Alliance. In the U.S., immigrants from those areas are more likely to live in multigenerational households.

Mapped: Check out the pipeline of Bay Area development projects planned near BART

By Emily Fancher, SF Business News, August 1, 2017,

Traffic is choking the Bay Area.

So as the region’s workers suffer through punishing commutes on snarled roads, developers are turning to transit-oriented development as a solution.

More than 100 projects throughout the Bay Area are planned on top of, next to or within blocks of a BART station. These projects — residential, office and retail developments on both private and public land — can command a premium. Despite developers’ enthusiasm and increasing demand, many of these projects have been stuck for years with little movement, as detailed in this week’s cover story.

We’ve mapped nearly every project that’s in concept, proposed, approved or has broken ground within a half-mile of an existing or under construction BARTstation.

The map doesn’t include projects within a half-mile of San Francisco’s BARTstations. Those can be found here by scrolling to the maps at the bottom of the page.

To check out all out coverage of transit-oriented development in this week’s Commercial Real Estate Quarterly focus, click here.

Projects_Map

How Oakland housing developers are avoiding escalating fees

By Roland Li, SF Business News, Aug 7, 2017,

A surge of building permits were filed for large Oakland housing projects in May and June, as developers avoided the escalation of impact fees in July.

Multifamily fees in zone one, which includes downtown and parts of north Oakland, rose from $5,500 per unit to $11,500 per unit on July 1. Projects that filed building permits before then pay the lower fee. The fee will increase to $23,000 per multifamily unit in July 2018, where they will remain pending further legislation. Fees in zone two and three, which include West, East and North Oakland, are lower.

Zack Wasserman, a land use attorney at Wendel Rosen, said the permit activity was a sign of strength for Oakland’s housing market, which is in the midst of a historic boom with more than 3,000 units under construction.

“The momentum is continuing,” said Wasserman. However, he says there may be a “slowdown” next year as more housing is delivered, which could dampen rent growth, and fees increase again.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net