Glen’s SF East Bay Area Real Estate Market Update, November 30, 2017

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November 30, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 

Zillow_10.17

 

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 began its usual seasonal trend upward. Typically, we see a steady increase on a month by month basis to occur before finally peaking in September. This year has taken a slightly different course. Inventory has been fairly flat over the summer and fall months fluctuating slightly up and down. We did see a decrease in the available housing inventory since last month. However, we are 24% below where we were last year at this time. That’s concerning considering last year was a very “tight” market. There was an 11.5% decrease in pendings compared to the previous month, (October). Our monthly supply is now 21 days. Last year, our months’ supply at this time was 30 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 21 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), decreased in comparison to last month, but is still below where we were last year by 16.5%. The pending active ratio increased to 1.57. This compares to last year at the same time of 1.44. 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.
  • The percentage of homes “sitting” has increased slightly with 48% of the homes listed now remaining active for 30 days or longer, while 26% stayed on the market for 60 days or longer. This is lower than 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.

Months_Supply

  • The month’s supply for the combined 38 city area is 21 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, of 30 days. However, this year the inventory level on the graph is shallower.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) is now at 1,547 homes actively for sale. This is still above the December 2012 low of 1,086 and well less than last year at this time of 2,028 or (22% 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 2,433, but lower than where we were last year at this time of 2,911 or (16.5% lower).

Pendings_Active_Ratio

  • Our Pending/Active Ratio is 1.57. Last year at this time it was 1.44.

Sales

 

  • Sales have decreased slightly from the last (4 month period) now at 8,981 for the 38 cities tracked. This is slightly higher than what we saw last year at this time (8,836).
  • 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. Also, on average, homes are closing in fewer days than before. It seems that inventory is still being gobbled up but at a slightly faster pace than is being replenished. Inventory seemed to flatten out over the summer and fall months and remains at a lower level when compared to last years numbers.
  • Sales over the last 4 months, on average, are 4% over the asking price for this area, greater than what we saw last year’s at this time, 2.8%.

Glen's Numbers pg 1

Glen's Numbers pg 2

 

Recent News

 

Bay Area home prices rise by double digits year-over-year, again

By Kathleen Pender, SF Chronicle, December 6, 2017 

The median Bay Area home price rose 10.9 percent to $765,000 in October from the previous October, the third consecutive month it posted a double-digit year-over-year gain.

The October median price was up 2.6 percent from September but 1.3 percent below the region’s all-time high of $775,000 set in June 2017.

Those sales closed before the House introduced a bill on Nov. 2 that would strip away some tax benefits of homeownership. Many in the real estate and housing industry say that bill, which passed the House Nov. 16, and a somewhat different one that passed the Senate on Friday would bring down California home prices.

Still Climbing

In a press release, California Association of Realtors President Steve White called the House bill “a direct attack on California housing and homeownership. Eliminating the incentive for people to buy homes and raising taxes on hundreds of thousands of California homeowners only puts the American dream further out of reach.”

The big jump in Bay Area home prices last month was mainly a result of “low inventory, affordability constraints and market disruptions caused by the destructive and deadly North Bay wildfires that began in early October,” CoreLogic spokesman Andrew LePage said in a press release.

The impact of the fires and tax bills will be more strongly felt in coming months.

Both tax bills would eliminate the federal itemized deduction for state and local income or sales tax and limit the property tax deduction to $10,000 per year.

Under the House bill, homeowners could deduct interest on up to $500,000 in debt used to buy or improve a primary residence. Today they can deduct interest on up to $1 million in mortgage debt used to buy or improve a first and second home. That would not change under the Senate bill, but both bills would eliminate the deduction for up to $100,000 in home-equity debt not used to buy or improve a house.

Both would also extend the holding period needed to qualify for the capital gains tax exclusion — up to $500,000 for married couples and $250,000 for singles — break on a primary residence. House and Senate leaders are trying to reconcile those bills and hope to pass a final one by Christmas.

Will the GOP tax bill lower home prices in California?

An updated look at how the current tax overhaul plans will impact housing

By MARISA KENDALL, Bay Area News Group, December 4, 2017

As Republicans worked Monday to reconcile conflicting versions of their tax plans, a prominent group of realtors is warning that both the Senate and House proposals will slash home prices and values in California and beyond.

The proposed cuts to real estate-focused tax deductions could cause prices in the Golden State to drop between 8 and 12 percent, leading to a loss in home value of between $37,710 and $56,550 for the typical home owner, according to the National Association of Realtors, which continued to oppose the bills as Republicans moved closer to a final plan over the weekend.

While a price drop may sound like good news to Bay Area residents bemoaning the region’s soaring housing prices, the trade group says plummeting prices could bring new troubles — including a reluctance to sell that could further squeeze an already tight supply of homes. The strain is expected to be greatest in regions like the Bay Area, where home prices are already high.

“The tax incentives to own a home are baked into the overall value of homes in every state and territory across the country,” association president Elizabeth Mendenhall wrote in a news release over the weekend condeming the proposed tax overhaul. “When those incentives are nullified in the way this bill provides, our estimates show that home values stand to fall by an average of more than 10 percent, and even greater in high-cost areas.”

Affordable housing advocates also worry the tax overhaul will gut California’s efforts to house its low-income residents.

It’s not yet clear what the final tax plan will look like. Republicans still have plenty of work to do to iron out the differences between the House and Senate proposals. They reportedly expect to pass a final version before Christmas.

So how would the tax proposals affect our housing market?

One of the key provisions is the mortgage interest deduction — the tax break homeowners get for the interest paid on a mortgage. Under current law, homeowners can deduct interest on purchases of up to $1 million for a primary residence and one other home, plus an extra $100,000 for equity debt. The Senate bill would keep the former cap in place, but eliminate the equity debt deduction, Forbes reports. The House plan would grandfather in existing mortgages, but would cap new mortgages at $500,000. In addition,  homeowners would get no deductions for a secondary residence.

Halving that deduction cap could impact as many as half of Californians who have a mortgage, according to the National Association of Realtors. Last year 49 percent of housing units with a mortgage were worth more than $500,000. Homeowners who claimed the mortgage interest deduction saved an average of $3,070, the association said.

Another controversial housing-related item in the tax proposals is the capital gains provision. Under current law, homeowners can exclude up to $250,000 (or $500,000 for married couples) in capital gains on the profit from the sale of a home — if they have lived in the house for two of the last five years. Both the House and Senate proposals would change that — homeowners must have lived in the house for five of the past eight years to qualify for the savings.

Last year, 13 percent of homeowners in California had lived in their home for between two and four years, meaning they won’t be eligible for that tax exclusion, according to the National Association of Realtors. Some housing experts worry the GOP tax plans will encourage Bay Area homeowners to stay put instead of selling, exacerbating the region’s housing shortage.

Both the House and Senate tax plans would also cap the property tax deduction at $10,000.

A recent White House analysis of the tax proposals attempted to put homeowners’ fears at ease. Last month, researchers with the Council of Economic Advisers estimated a “muted” drop of less than 4 percent in housing prices as a result of proposed changes to the mortgage interest deduction. Meanwhile, the researchers wrote, the rate of home ownership may rise “modestly.” The researchers noted that while itemized tax deductions would be reduced under the proposals, the standard tax deduction would be increased.  The current standard deduction of $6,350 for single tax payers would jump to $12,000, and the deduction of $12,700 for married tax payers would jump to $24,000.

Bay Area accountant on tax reform: ‘It’s almost malpractice not to talk to clients about leaving California’

By Mark Calvey  –  San Francisco Business Times, Dec 7, 2017

Tax reform under consideration in Washington that would eliminate the deduction for state income taxes could spur more wealthy Californians to move to low-tax states.

California’s status as having one of the highest levies on income already makes a move out of state a frequent point of discussion between the wealthy and their financial advisers. But the loss of a federal deduction for state income taxes paid will only provide more evidence that high-income taxpayers could be better off moving to Texas or another state with less burdensome taxes, Edward Hanley, a principal at San Francisco accounting firm Shea Labagh Dobberstein, told the San Francisco Business Times.

Asked whether he’s had conversations with any of his clients about leaving the Golden State, Hanley responded, “Yes. All of them. It’s almost malpractice not to talk to clients about leaving California.”

Several of Hanley’s clients are looking at possible moves out of California when they retire in five to 10 years, with Washington state and Wyoming among the destinations often under consideration since the two states are among the seven with no income tax. (The other states with no income tax are Alaska, Florida, Nevada, South Dakota and Texas.)

Many of California’s wealthy own businesses or real estate, so they can save millions in taxes by moving to Texas or Florida before selling those assets.

Wealthy individuals, as with companies, are often more mobile than lawmakers realize.

Some California tax preparers say they’re having painful conversations with clients about how much more tax they’ll pay under tax law changes now under consideration.

Hanley said he’s advised many of his clients, who aren’t subject to the Alternative Minimum Tax, to be prepared to pay their California income and property taxes this month, rather than waiting till they are due next year, to avoid the risk that payments made next year for 2017 taxes owed become a non-deductible expense in 2018.

On Thursday, San Francisco-based Paragon Real Estate Group took a closer look at Census data tracking migration to and from California in 2016. The report highlighted that more California residents are moving to other states than other states’ residents are moving into California, although that can be hard to believe for Bay Area residents finding their favorite restaurants and roadways increasingly crowded.

Paragon noted that foreign immigration into California has more than offset state residents leaving for other states, so the Golden State’s population has been rising.

But President Trump’s efforts to stem immigration may “dramatically curtail foreign influx numbers into California and the Bay Area in 2017 and subsequent years,” Patrick Carlisle, chief market analyst at Paragon, said in his report on Bay Area demographics.

“Secondly, changes to the tax code currently contemplated by the Republican-dominated Congress — the deductibility of mortgage interest costs and local and state taxes in particular — would almost certainly make living in the Bay Area, which already has either the highest or close to highest cost of living in the country, more expensive for many residents, but also increase the cost difference in cost of living between it and other parts of the country,” Carlisle said. “This could exacerbate the outflow of companies and residents to lower-cost states.”

Carlisle says the outflow of residents breaks into two groups: Those relocating for jobs in lower-cost states and those moving after retiring, often cashing out of California’s pricey housing market to help make their golden years shine.

Fewer immigrants coming to California from other countries coupled with more people leaving the state “might have substantial ramifications for state and local economies and housing markets,” Carlisle warned.

Home prices nearly doubled in this surprising California city

Prices shot up 92 percent over the past five years

By MARISA KENDALL, Bay Area News Group, December 3, 2017 

As home prices skyrocket across the state, there’s one California city where they’ve shot up more than anywhere else in the U.S. — nearly doubling in the past five years.

No, it’s not San Francisco, San Jose or Oakland. It’s not even in the Bay Area.

It’s Stockton, the Central Valley community twice dubbed America’s “most miserable” city by Forbes Magazine because of its high rates of housing foreclosures, unemployment and violent crime.

The jump in home prices in Stockton and neighboring Lodi — up about 92 percent over the past five years — is dramatic evidence of the ripple effects of the Bay Area’s tight housing market and the increasingly out-of-reach cost of living here. As people flee San Francisco and Silicon Valley in search of cheaper housing — heading to places like Stockton, Oakland and Sacramento — prices in those second-tier markets are rising.

“There’s flight away from areas where it’s expensive, to areas where it’s relatively cheap,” said Andrew Leventis, deputy chief economist at the Federal Housing Finance Agency, which first noted Stockton’s dramatic rise. “It would be just incredibly improbable if that wasn’t driving up prices in the west by some magnitude.”

The federal agency analyzed housing markets in the country’s 100 largest metropolitan areas. Oakland came in second, boasting an 86 percent jump in prices, according to the report released this week. Sacramento, also a major destination for Bay Area expatriates, is number six, seeing its home prices climb 74 percent.

The San Francisco/South Bay area is high on the list too, coming in at number four with a 77 percent increase — far above the national average of 35 percent.

Cities where home prices are soaring

Of the country’s 100 largest metropolitan areas, these saw the biggest increases in home prices over the past five years:

  1. Stockton/Lodi — 91.94 percent
  2. Oakland/Hayward/Berkeley — 85.71 percent
  3. Las Vegas/Henderson/Paradise — 85.21 percent
  4. San Francisco/Redwood City/South San Francisco — 77.07 percent
  5. Seattle/Bellevue/Everett — 74.66 percent
  6. Sacramento/Roseville/Arden/Arcade — 74.03 percent
  7. North Port/Sarasota/Bradenton, Florida — 72.5 percent
  8. Riverside/San Bernardino/Ontario — 70.82 percent
  9. Cape Coral/Fort Myers, Florida — 70.1 percent
  10. West Palm Beach/Boca Raton/Delray Beach, Florida — 69.19 percent

Source: The Federal Housing Finance Agency 

 

Seasonal chill cools rents in hot Bay Area apartment market

By LOUIS HANSEN,  Bay Area News Group, December 1, 2017

Apartment prices in the Bay Area dipped last month, but renters, don’t breathe a sigh of relief — analysts expect prices to continue to climb in 2018.

Rental market watchers noted slight declines in apartment prices in November, attributing it to routine seasonal swings in a month where fewer people are searching for housing.

The Bay Area remains home to the highest rental prices in the country, with San Francisco topping the charts with a median price of $3,050 per month for a two bedroom, according to rental website Apartment List. A typical two bedroom in San Jose listed for $2,550 in November, while a similar Oakland pad went for $2,170.

“Even when rents dip a little bit, they’re still more than twice the national average,” said Sydney Bennet, a researcher for Apartment List. Nationwide, apartment prices fell in two-thirds of the major cities last month, she said.

Prices fell month-to-month in San Jose, San Francisco and Oakland, but still have shown a net rise over the last year. Prices in the East Bay dropped 1.4 percent, while San Jose rents fell about 1 percent, according to Apartment List.

The hottest market this year has been Sacramento, as Bay Area residents flee high prices for more affordable housing. Rent prices have increased almost 10 percent in the last year. But Bay Area escapees can still find better deals in Sacramento, where the median price for a two bedroom was $1,190 a month.

“Jobs are a big factor for rent growth in the whole area,” Bennet said. Apartment List researchers expect prices to climb in 2018, she said.

Nationally, rents have risen about 2.7 percent in the last 12 months. California has led the way, averaging a 4.3 percent increase.

A report by real estate website Zumper also found dips in San Francisco, but monthly increases in San Jose and Oakland. The website tracks apartments in the U.S. and Canada.

Zumper analysts also are bullish on demand for Bay Area apartments, as new apartments are being built across the region. “I don’t think the tech market is going to slow down any time soon,” said spokeswoman Crystal Chen.

Looking for relief from Bay Area prices? Zumper found rents sliding in Pittsburgh, Pennsylvania, Durham, North Carolina, Buffalo, New York, and Milwaukee, Wisconsin, although a check of the weather forecast might be in order before moving.

These Real Estate Trends Will Be Game-Changers in 2018

By Cicely Wedgeworth | Realtor.com, Nov 29, 2017

We’re almost there: the long-awaited home stretch of 2017. And quite a year it’s been! Already, we can’t help imagining what developments next year might bring to the wild world of U.S. real estate. So we asked our realtor.com® data team to give us the inside scoop. The team sifted through historical real-estate data and other major economic indicators to come up with a realistic forecast of just what might be in store next year.

And it looks like a sea change is brewing.

From housing inventory to price appreciation to generational and regional shifts, these are the top trends that will shape, and reshape, real estate markets in 2018. Buckle up! It’s going to be quite a ride.

Game-changer no. 1: Supply finally catching up with demand

After three years of a crushing shortage of homes for sale, the realtor.com economics team is predicting that the shortfall will finally ease up in the second half of 2018.

“The majority of the year should be challenging for most buyers, but we do expect growth in inventory starting in the fall,” says Danielle Hale, chief economist for realtor.com.

That’s a potentially transformative development for many would-be buyers who’ve been frustrated in their search for a home that meets their needs—and their budget.

“Once we start to see inventory turn around, there is plenty of demand in the market,” Hale says.

Although for-sale housing inventory is expected to stay tight in the first quarter of the year,  reaching a 4% year-over-year decline in March, if it increases as predicted by fall, that will be the first net inventory gain since 2015. Markets such as BostonDetroit, and Nashville—all of which recently made it onto our monthly list of the nation’s hottest real estate markets—may see inventory recover first.

Bullish construction is the engine that’s turning this ship around, bringing new homes to the market and creating opportunity for people to trade up into new homes.

“It’s adding inventory instead of just shuffling people around in existing homes,” Hale says.

But those itching to buy a starter home may have to be patient for a while longer.

“We expect the relief to start in the upper tiers, and it will make its way down to the lower tiers,” Hale says. Specifically, most of the initial inventory growth will be in the mid- and upper-tier price ranges, $350,000 and up.

As the market eases, home prices are expected to slow to 3.2% growth year over year nationally. But again, it’s the higher-priced homes that will be appreciating less. And even slower appreciation still means that prices will continue to rise.

“Overall, prices are expected to increase, and we’re expecting to see more of that in lower-priced homes,” Hale says. “It will get a bit worse before it gets better for buyers of starter and midprice homes.”

Game-changer no. 2: Millennials starting to come into their own

The housing market in 2018 will continue to present challenges for millennials—sorry, all of that student loan debt isn’t just going to disappear—but there are some bright spots on the horizon for these millions of Americans.

Millennials seem to be having more success at taking out mortgages on homes at varying prices, and not just starter homes, Hale says.

“They’re at that point where they’re seeing their incomes grow, and that will help them take on bigger mortgages,” she says. That’s because of both the overall strong economy and their own career development.

And as the largest generation in U.S. history reaches that sweet spot in their 20s to 30s when they’re settling down and starting families, they’re particularly motivated to buy. Millennials could make up 43% of home buyers taking out a mortgage by the end of 2018, up from an estimated 40% in 2017, based on mortgage originations. That 3% uptick could translate into hundreds of thousands of additional new homes. As inventory starts to rebound in late 2018 and in years to come, first-time home buyers will likely make up an even larger share of the market.

They probably shouldn’t wait too long to buy, either—mortgage rates are expected to reach 5% by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization.

Game-changer no. 3: Southern homes selling like crazy

When it comes to home sales growth, bet on Southern cities to beat the national average in 2018. We’re especially looking at you, Tulsa, OKLittle Rock, ARDallas; and Charlotte, NC. Those markets are expected to see 6% growth or more, compared with 2.5% nationally.

The South has been luring corporations and individuals to its balmy cities with its low costs of real estate, and living in general. The resulting strong economic growth and strong household growth, combined with an accommodating attitude toward builders, is setting the stage for an accelerating boom in homeownership, Hale says.

As soon as there are more homes to sell, these places will be selling strong.

Game-changer no. 4: Tax reform (maybe)

The Republican Party’s proposed changes to the tax system could change everything—but with both the House and Senate versions in limbo, the jury is still out on this one.

If a version of tax reform does pass with the current provisions affecting real estate, Hale says she would expect to see fewer home sales and declining home prices. However, it would be the upper price tiers that would likely be affected the most, in areas with expensive homes and high taxes, such as coastal cities, especially in California.

 

Oakland’s housing pipeline gushes after years of drought

By Roland Li  –  San Francisco Business Times, Nov 30, 2017

For the first time in eight years, cranes have arrived in downtown Oakland.

Three residential highrises are under construction. Collectively, they will add over 1,000 new housing units to the city’s core, replacing an empty lot, a parking garage and small office building. Three more residential towers are approved and could break ground by next year. Another dozen are in the pipeline.

It’s the city’s biggest building boom in decades with over 3,600 units under construction. Although activity is primarily concentrated downtown, there are also projects moving forward in Temescal, West Oakland and East Oakland.

It’s a boom that took years of economic shifts to materialize after Oakland’s home prices and rents shot up. Those soaring prices made both wood-frame and concrete highrise construction profitable enough to attract new developers.

Carmel Partners is among those newcomers. Last month, Carmel started construction on a 634-unit tower that will be the city’s second-tallest building. It’s San Francisco-based Carmel’s first Oakland project and replaces a garage a block from the 12th Street BART station.

Dozens of other investors have come to Oakland for the first time: The Blackstone Group is funding over 400 new apartments developed by partner CityView that are under construction in the Broadway-Valdez district. Vancouver, Washington-based Holland Partner Group has two approved highrises in downtown Oakland.

Longtime builders are also still active in Oakland: Signature Development Group has started construction on the first market-rate building at Brooklyn Basin, the city’s largest master development with 3,100 waterfront units. SunCal also has approvals for 918 for-sale townhomes at the former Oak Knoll hospital site.

Madison Park Financial has a new plan for nearly 400 units in East Oakland, but the veteran Oakland developer has been pickier about additional deals.

Rising construction costs have been a barrier, as well as new impact fees and the cost of connection to water from East Bay Municipal Utility District, which can hit tens of thousands of dollars per new unit.

espite rising costs, bigger developers are able to get large projects underway. A block from the 19th Street BART station, Lennar Multifamily Communities and its contractor Build Group Inc. are laying the foundation of 1640 Broadway. The tower will have 254 apartments.

Previous owner Joe Hernon proposed the project in 2000, but never got it off the ground. In 2015, Lennar pursued the project.Being one of the first new towers was a challenge.

“A lot of investors want to see the proof of concept,” said Tyler Wood, Lennar Multifamily development director.

But there hadn’t been a new residential highrise built in Oakland since 100 Grand St. in 2009. Lennar looked at rents downtown and concluded it was viable to build tall.

“You kind of extrapolate — this is what’s happening in the city. It’s performing quite well. There should be an appetite,” said Wood.

Lennar is targeting rents in the low $4s per square foot, or over $3,000 per month for a 750-square foot unit. Pricing is higher than Oakland’s older highrises and less than rents in new San Francisco towers. Wood declined to disclose the project’s budget. Bay Area highrise projects typically cost over $500,000 per unit to build and design.

 

Go West: Projects are finally rising in long-neglected West Oakland

By Roland Li  –  San Francisco Business Times, Nov 30, 2017

Every weekday, hundreds of thousands of riders pass through West Oakland’s BART station on their way to San Francisco. Only a handful get off.

Despite the station’s central location, the neighborhood doesn’t have many jobs outside of the hulking U.S. post office and the adjacent Port of Oakland. It’s primarily a residential area, with single-family Victorians now selling for over $1 million.

That may change. Two massive development plans could replace parking lots next to the BART station with housing and office towers, along with new shops and plazas. Another half-dozen midrise housing projects are under construction or approved in West Oakland. It’s the boldest vision to transform the area since the 1950s and 1960s, when government-sponsored “urban renewal” devastated what was once a vibrant retail strip on the very same blocks. Homes, jazz clubs and restaurants were demolished to make way for BART, the post office and a new highway that bisected an established community.

The projects are still years away from becoming reality, but they’re evidence that developers are focusing on West Oakland as a place for high-density housing and office space, and that the city supports this push. Developers say the neighborhood’s central location in the BART system and abundance of empty lots make it a strong candidate for dense growth. The proposals are moving forward as Oakland’s rents have hit record highs of $1,930 per month for a one-bedroom and over $50 per square foot for Class A office space, according to brokerage data. That makes new highrise construction more financially viable, developers say.

 

Will the Oakland hills get 200 homes and a charter school? 

By Antoinette Siu  –  San Francisco Business Times, Nov 29, 2017

Developer The Pacific Cos. is proposing 200 affordable housing units and a charter school in the Oakland hills.

A shuttered Ace Hardware store currently sits on the site at Foothill Boulevard and 68th Avenue where Pacific Cos. wants to build the housing and a K-8 charter school for 550 students. Eagle, Idaho-based TPC has developed seven other charter schools throughout Arizona, California, Minnesota and Texas. TPC subsidiary Strategic Growth Partners is led by former Aspire Public SchoolsCEO James Wilcox.

TPC has completed more than 150 multifamily and charter school projects in the West, many of them in California. Mike Kelley, business developer at TPC, said the company is still identifying the tenant for the charter school. It’s possible two of Aspire’s current schools in the area will consolidate and move to the new space, he added.

The company just proposed a similar project with housing and a charter school in San Jose. It also sold an apartment community at 955 South First St. in San Jose earlier this year and built workforce housing at the Mayfair Court Apartments at 65 McCreery Ave. in San Jose.

The Oakland development would be 100 percent affordable: All units will have a rent cap at 60 percent of the area median income. Rents would be limited to $1,174 for a one-bedroom, $1,408 for a two-bedroom and $1,627 for a three-bedroom.

While still in the early stages, Oakland City Council member Desley Brookswelcomes the additional housing.

“There are no elevations, engineering or construction drawings; and there are approvals that still need to be obtained. That said, as with many jurisdictions, Oakland needs more housing,” Brooks said.

Construction would take about 16 months, said Kelley. Developing a school alongside housing has its advantages, he said. “By doing this co-location model, we get affordable housing. It’s very difficult to find housing for families and for teachers to live where they work,” Kelley said.

It’s also easier to finance building both at the same time, he said, without having to ask for a lot of subsidies from the city of Oakland. “By bringing them together, leveraging the different sources individually, it allows for something like this to happen,” Kelley said.

 

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

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

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Glen’s SF East Bay Area Real Estate Market Update

October 31, 2017

Zillow_Statistics

 

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 began its usual seasonal trend upward. Typically, we see a steady increase on a month by month basis to occur before finally peaking in September. This year has taken a slightly different course. Inventory has been fairly flat over the summer months fluctuating slightly up and down. We did see a decrease in the available housing inventory since last month. However, we are still well below where we were last year at this time by 22%. That’s concerning considering last year was a very “tight” market. Pendings were somewhat steady with a slight decrease from September. Our monthly supply is now 30 days. Last year, our months’ supply at this time was 39 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 30 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), decreased slightly in comparison to last month, but is still below where we were last year by 15%. The pending active ratio increased to 1.33. This compares to last year at the same time of 1.22. 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.
  • The percentage of homes “sitting” has increased slightly with 42% of the homes listed now remaining active for 30 days or longer, while 22% stayed on the market for 60 days or longer. This is lower than 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.

Months_Supply

 

  • The month’s supply for the combined 38 city area is 30 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, of 39 days. However, this year the inventory level on the graph is shallower.

Active_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) is now at 2,065 homes actively for sale. This is still above the December 2012 low of 1,086 and well less than last year at this time of 2,653 or (22% 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 2,749, but lower than where we were last year at this time of 3,233 or (15% lower).

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.33. Last year at this time it was 1.22. 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 fall and winter months.

Sales

  • Sales have decreased slightly from the last (4 month period) now at 9,203 for the 38 cities tracked. This is slightly higher than what we saw last year at this time (9,029).
  • 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. Also, on average, homes are closing in fewer days than before. It seems that inventory is still being gobbled up but at a slightly faster pace than is being replenished. Inventory seemed to flatten out over the summer months and remains at a lower level when compared to last years numbers.
  • Sales over the last 4 months, on average, are 4% over the asking price for this area, greater than what we saw last year’s at this time, 3%.

Glen's_Numbers_Pg_1

Glen's_Numbers_Pg_2

Recent News

 

GOP tax proposal would gut affordable housing, state officials say

By KATY MURPHY,  Bay Area News Group, November 3, 2017

SACRAMENTO — Less than two months after California passed hard-fought bills to build more subsidized rental housing for the poor, affordable-housing advocates are reeling from a federal tax-reform proposal that could grind that momentum to a halt and wipe out an existing program that created roughly 20,000 such homes last year.

The GOP tax proposal, if passed in its current form, would take away tax exemptions that generate $2.2 billion annually for affordable housing construction in California. For context: The recession-era elimination of state redevelopment funding in 2011 — a move widely criticized as devastating to affordable housing — amounted to losses of roughly $1 billion per year.

“This is definitely a red alert for California,” said Matt Schwartz, president and CEO of California Housing Partnership, a San Francisco-based nonprofit housing organization. “The time is now for anybody who cares about our continued ability to produce affordable rental homes to engage.”

California had expected to build roughly 90,000 affordable housing units as a result of a $4 billion statewide housing bond — pending voter approval in November 2018 — and money from a bill by Sen. Toni Atkins, D-San Diego, which levies a fee on certain real-estate transactions.

That number would be cut in half under the tax proposal, officials say.

Like other states, California relies heavily on federal tax breaks to finance affordable housing projects. The GOP tax proposal would eliminate tax-exempt private activity bonds — which helped subsidize the construction of 20,000 affordable homes statewide last year — to help offset the cost of a lower corporate tax rate.

The plan could sharply curtail California’s efforts to help those who have been hit hardest by the housing crisis: seniors, and poor and disabled people. As details emerge, affordable housing advocates and developers are scrambling to mobilize opposition to an obscure-sounding tax policy with far-reaching, real-life implications.

“The newly released House Tax Reform bill would be catastrophic for affordable housing in California,” wrote Tia Boatman Patterson, executive director of the California Housing Finance Agency, in an alert sent Thursday to a handful of colleagues and groups, calling for “all hands on deck.”

Proponents of the tax reform plan say it will simplify a hopelessly complex tax code. And, because it would eliminate state and local deductions — another provision that has Californians howling — such a policy would discourage states like California from hiking taxes in the first place, argues state Sen. Jeff Stone, R-Murrietta.

“While some Californians will be adversely affected by an elimination of the deductions that currently exist for state and local taxes paid,” he said in a statement Friday, “a bigger question arises: Why don’t we just lower the tax burden on California’s hard working families in the State to offset the impact that comes with the removal of federal deduction for state income taxes?”

Stone was not available to address the proposal’s affordable-housing implications on Friday, and his office said staffers were still reviewing it.

The proposal could hurt affordable-housing financing in two ways: first, by eliminating a key tax credit, and second, by making the tax credits preserved under the federal proposal less valuable.

As the corporate tax rate drops, experts say, the tax burden will automatically lighten, giving investors less of a financial incentive to buy the credits, which are used to help pay for the costs of building a subsidized home.

Sen. Jim Beall, the South Bay Democrat who carried Senate Bill 3, which put the affordable-housing bond on next year’s ballot, said the proposal “will hurt thousands of California families, seniors and vets.”

“Giving big tax cuts to wealthy corporations at the expense of middle-income and low-income families who cannot afford to buy a home or rent an apartment is cruel,” Beall said in a statement to this news organization. “I urge Californians to contact their congressional representative about this bill and tell them to leave the Low-Income Housing Tax Credit and New Market Tax Credit programs untouched.’’

Carolina Reid, assistant professor of city and regional planning at UC Berkeley, said the proposal would be “absolutely devastating” for the state.

“California, with the housing package, was taking such a leadership role in addressing the housing crisis, and that can be completely undermined by these federal efforts,” she said. “It’s really troubling.”

California’s high taxes, costly housing mean trouble under GOP tax plan

By Kathleen Pender, SF Chronicle, November 2, 2017 

People who live in high-tax states with high housing prices would fare worst under the tax bill released by House Republicans Thursday.

Analysts are still poring over the details and crunching the numbers, but in general, “the bill is a large cut for businesses and a smaller tax cut for individuals,” said Howard Gleckman, a senior fellow with the Urban-Brookings Tax Policy Center.

The impact on individuals “will be very idiosyncratic. It depends on where you live, the makeup of your family, how you make your money,” Gleckman said.

A large family in a high-tax area with expensive housing would likely pay higher taxes than they do now. A working-class household in Peoria, Ill., depending on the family size, “may do pretty well,” Gleckman said.

The bill would cut the top corporate tax rate to 20 percent from 35 percent, and condense the number of individual tax rates to four — 12, 25, 35, and 39.6 percent. Today there are seven, ranging from 10 to 39.6 percent. However, the top tax rate would apply to taxable income over $1 million for married and $500,000 for single filers. Today it kicks in around $470,000 for married and $418,000 for single filers.

The bill would almost double the standard deduction to $24,000 for married couples and $12,000 for single filers, which means far fewer people would itemize deductions. However, large families could fare worse because it also would eliminate the personal exemption ($4,050) they can deduct for each member of the household, including college kids and adult dependents. Instead, it would increase the child tax credit to $1,600 from $1,000 for each child 16 and younger. It also would create a new “family credit,” equal to $300 for each parent and adult dependent, but this would expire after five years.

People in high-tax states could pay more. Today, if they itemize, they can deduct either state and local income or sales tax. California has the nation’s highest income tax rate at 13.3 percent.

People who itemize their deductions could still deduct their property taxes under the bill, but only up to $10,000 per year. Today there is no limit. If you bought a new California home for roughly $900,000 today, your state and local property taxes would be about $10,000 a year.

However, under current law, people who are subject to Alternative Minimum Tax get no benefit from the state and local income and property tax deductions. The bill would eliminate the AMT, taking the sting out of the loss of those deductions for those people.

What's_New_Tax_Plan

 

The proposal would cap the mortgage interest deduction on new home loans. Today, homeowners can deduct interest on up to $1 million in mortgage debt used to buy, build or improve a first and second home, plus up to $100,000 in other mortgage debt (such as a home-equity loan used to buy a car). For existing mortgages, those rules would not change. But starting Nov. 2, if you took out a new loan, you could only deduct interest on up to $500,000 in mortgage debt on a principal residence and no interest on new home-equity debt.

The bill also would make it a little harder to shield capital gains tax on a home. Today, you can exclude up to $250,000 in capital gains ($500,000 if married) when you sell your house, as long as you have owned and used it as your primary residence for at least two of the past five years. The bill would change this to five of the past eight years.

The bill kills most tax benefits for higher education, including deductions for student loan interest and tuition and fees and the Lifetime Learning and Hope Scholarship credits. It retains the American Opportunity Tax Credit and extends it, albeit by half, for students taking a fifth year of college.

In a major change, profits from partnerships, sole proprietorships and other “pass-through” entities would be treated like business income and taxed at the top rate of 25 percent. Today it’s taxed like ordinary income at rates up to 39.6 percent. The bill includes complex “anti-abuse” provisions designed to prevent employees from becoming self-employed just to reduce their taxes.

The 429-page “Tax Cuts and Jobs Act’’ would almost double the estate-tax exemption to $10 million per person and kill the estate tax altogether after 2023.

It retains the Medicare surcharge on investment income and ordinary income above certain limits and the deduction for contributions to 401(k) plans. Cutting the latter has been suggested as a way to offset the cost of the plan, which is estimated at $1.5 trillion over 10 years.

Some surprises buried in the fine print: You would be able to make contributions to a 529 college savings plan for an unborn fetus, the tax credit for adoptions would be eliminated, and churches could make political statements, said William Gale of the Tax Policy Center.

The taxation of alimony would change for people getting divorced in the future. Today, the person getting the alimony claims it as income and the payer gets to deduct it. In the future, alimony would not be taxable or tax-deductible, putting it on the same footing as child support payments, Gale said.

Nicole Kaeding, an economist with the Tax Foundation, said the “vast majority” of Americans would get a tax cut under the plan. People who now claim large deductions for state and local income and property taxes and mortgage interest might not.

The bill’s author, Kevin Brady, R-Texas, said that a family of four making $59,000 a year would save almost $1,200.

Gene Sperling, who served as the principal economic policy adviser for Presidents Bill Clinton and Barack Obama, said in a new conference that the plan fails the test of “fiscal sanity, fairness and moral authority.” He criticized it for permanently cutting taxes for businesses and wealthy individuals, but providing smaller tax cuts for low- and middle-income families and making some of them temporary.

President Trump endorsed the tax plan and said he wants it passed by Thanksgiving.

Zillow tells first-time homebuyers: Buy now before prices jump even higher

By Svenja Gudell, SF Business Times, Novemeber 9, 2017

With home prices still expected to rise in the next year, real estate information company Zillow is advising prospective first-timers: Buy now.

For many first-time homebuyers, the biggest factor in being able to buy a home is amassing the down payment. Some people save for years to patch together enough money to put down for a home in the Bay Area, one of the most expensive home markets in the country.

But waiting too long can be more expensive than taking the plunge now, Zillow found in a recent analysis.

“Sky-high rents and rising home prices are putting first-time buyers in a bit of a catch-22,” said Svenja Gudell, Zillow chief economist, in a statement. “A renter who saves for another year to reach a larger down payment may find that the home they love today is outside their budget a year from now.”

Borrowers are generally encouraged to make a down payment of 20 percent of a home’s purchase price. Those who put down less usually have to buy private mortgage insurance and may face higher loan rates as well.

At the same time, prospective buyers aiming for the 20 percent benchmark might not ever make that goal if prices rise faster than savings rates. The majority of first-time buyers — 59 percent — put down less than 20 percent for their down payments, according to Zillow research.

That is especially true in the Bay Area, where prices are already high that annual increase of a few percentage points can translate into home prices ballooning by tens of thousands of dollars.

Here are some examples:

For San Francisco, Zillow projects a rise of 1.3 percent, or about $11,538 to an average of $876,938 in September of 2018. A 20 percent down payment would be $175,388 — or $2,304 more than you would have put down the year before. That means $192 more in savings each month.

Nationwide, prices are expected to go up by $6,275 to an average price of $208,975 in September of 2018 that would require a $105 bump in savings per month for prospective homebuyers gearing for a 20 percent down payment.

Overall, home-ownership rates are inching downward, especially for the younger generations who tend to stock the nation’s pool of first-time buyers.

The main barrier for many would-be buyers is the high pricetag of a home, which in turn requires a higher down payment, according to a study published in May by Apartment List, a San Francisco-based rental listings site.

“Millennials in many of the nation’s large metros will need at least a decade to save enough money for a 20 percent down payment on a condo. Millennials in San Francisco, San Diego, Los Angeles, Austin and San Jose each face a wait of at least 19 years,” the study found.

Would-be buyers need not lose all hope — it is still possible to buy a home with less than a 20 percent down payment, Zillow states in its 2017 Consumer Housing Trends Report.

“Today’s low mortgage rates make it so a monthly mortgage payment is still likely to be lower than a monthly rental payment in many markets,” the report states. “Buying may not be as far out of reach as many think.”

After long wait, massive Oak Knoll housing project approved

By DAVID DEBOLT, East Bay Times, November 8, 2017

OAKLAND — After so many years of starts and stops, some would be forgiven for thinking the former Oak Knoll Naval Hospital would remain a ghost of its past, nothing more.

But the Oakland City Council on Tuesday evening ended the long wait over the site’s fate by voting to approve the construction of 918 townhomes and houses at the former military hospital above Interstate 580. The project will represent one of the largest developments in the city recent years, in terms of acreage.

Spread over 187 acres, the proposed development includes 72,000 square feet of retail property, 67 acres of open space, biking and walking trails, a restored creek and art installations.

Bay Area rents still a struggle for residents

By LOUIS HANSEN, East Bay Times, November 9, 2017

Nearly half the renters in the Bay Area struggle to meet high housing costs, despite an influx of wealthier workers into the market, a new survey found.

A study by Apartment List, a rental website, found nearly 1 in 4 renters in San Jose, San Francisco, Oakland and surrounding areas were severely cost burdened, spending more than half of their income on rent. About half of Bay Area renters are considered economically burdened, spending over 30 percent of their paychecks on shelter.

But the region’s record-setting housing prices are forcing high wage earners into the rental market, too. Real estate agents and researchers say wealthier clients in the Bay Area are choosing to rent because they can’t afford to buy. Even well-paid young tech workers are finding it hard to break into a housing market where the median single family home price is $775,000.

“Rents are out of control. Everybody knows that,” said David Hunt, operations manager for property management company WA Krauss. But few prospective renters have trouble meeting income qualifications for their 450 rental properties around the Bay Area, Hunt said.

“There’s a lot of money here,” he said.

Average rents have continued to surge, growing up to five percent over the past year in some cities. In San Jose, a one-bedroom goes for $2,050 and two bedroom for $2,570. In Oakland, the typical one bedroom costs $1,780 and a two-bedroom costs $2,240. And in San Francisco, the average rents are $2,450 for a one-bedroom and $3,080 for a two-bedroom, according to Apartment List.

The survey is the latest to spotlight the housing pinch on renters in Silicon Valley. Researchers at UCLA found that nearly 80 percent of residents in the San Francisco metro area earning under $50,000 are spending more than 30 percent of their income on rent.

The Apartment List study considered income and rental costs when calculating an index of affordability. Among the top 100 metro areas in the country, San Jose was ranked at 51 and San Francisco at 30 for affordability, reflecting the Bay Area’s strong economy and higher salaries.

But that doesn’t tell the whole story, Bennet said. Lower income renters have been forced to leave the region for cheaper cities and states, she said. Others are leaving apartments to return to family homes.

California and Florida have the highest percentage of renters paying more than 30 percent of their paychecks for shelter. Los Angeles and Miami ranked near the bottom of the index for affordability.

The study also found the share of cost-burdened renters has soared over generations. Just one-quarter of U.S. residents paid more than one-third of their income to rent in 1960; that percentage is now nearly 50 percent.

Among the most affordable places to live include Ogden, Utah; Pittsburgh and Kansas City, according to the survey. Several California cities were deemed the least affordable for renters, including struggling metro areas of Oxnard and Fresno.

Jeff Barnett, vice president of Alain Pinel Realtors, said the Bay Area rental market has flattened out recently, but still stretches the budgets of many new residents. Rental prices are so high, he said, that some families may be better off reaching a bit to buy a starter home or condo.

“You have to be a little more creative, and save a little more money,” Barnett said. “It’s one of the most beautiful places in the world, but we pay for it.”

 

Home prices expected to soar in North Bay fire zone as Bay Area costs grow

By Kathleen Pender, SF Chronicle, October 27, 2017 

A shortage of homes for sale combined with strong demand continued to push up Bay Area home prices last month, and the situation is only going to get worse in the North Bay when those displaced by the wildfires seek new housing.

The inventory shortage is statewide but “particularly acute in the Bay Area,” the California Association of Realtors said in a news release.

On Friday, CoreLogic reported that the median price of new and existing single-family homes and condos in Bay Area hit $739,000 in September. That was up 13.7 percent from September 2016, the largest yearly gain for any month since January 2014. It was down 0.1 percent from August, reflecting a normal seasonal slowdown.

Anther_Leap

It’s too early to know what impact the Wine Country fires, which started Oct. 8 and destroyed an estimated 8,800 structures, are having on home prices and sales in the North Bay. The CoreLogic report reflects transactions that were recorded in September.

Bay Area hammered by loss of 4,700 jobs

Lack of affordable housing strangles hiring efforts

By GEORGE AVALOS, Bay Area News Group, October 20, 2017

For the second straight month, the Bay Area lost thousands of jobs in September, making it the worst month for employment locally since February 2010.

The setback for the local economy comes as the crucial holiday shopping and hiring season draws near, and contrasts with a strong hiring picture statewide.

The Bay Area’s job losses stem from two distinct phenomena: Some employers are slashing positions, and others are unable to hire. Some economists attribute this second problem to structural barriers posed by skyrocketing housing costs. The lack of affordable places for workers to live appears to have hobbled the region’s ability to fill jobs as briskly as in prior years.

“Housing is the chain on the dog that is chasing a squirrel,” said Christopher Thornberg, principal economist and founding partner with Beacon Economics. “Once that chain runs out, it yanks the dog back.”

Overall, the Bay Area lost 4,700 jobs last month. While some smaller metropolitan areas in the region had job gains, employers shed 1,300 jobs in Santa Clara County, 1,700 in the San Francisco-San Mateo region and 2,600 in the East Bay, seasonally adjusted figures from the state’s Employment Development Department show.

The September losses, combined with 2,400 job losses reported by the EDD for August, paint an unsettling picture and lend credence to the assessment from a growing number of experts that the Bay Area’s job growth has begun to slow dramatically.

“The slowdown is real,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “There were times this year we thought that job losses here and there were just temporary. But the slowdown is a fact. It’s happening.”

The lack of housing also makes it tough for employees to live near their workplaces, forcing many into lengthy commutes on roads choked with traffic. Some prospective employees decide they’d rather not bother.

“The economy in the Bay Area has pushed up against the physical limits of a lack of housing and a lack of places for workers to live,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at University of the Pacific.

Over the 12 months that ended in September, the Bay Area added 50,400 jobs, a 1.3 percent increase in total payroll jobs during the one-year period.

By comparison, that’s less than half the growth of 2016. Bay Area job growth was 2.9 percent in 2016, 3.7 percent in 2015, 3.4 percent in 2014 and 3.5 percent in 2013, this news organization’s analysis of the EDD figures shows.

The Bay Area’s employment struggles contrasted sharply with statewide job trends.

California added 52,200 jobs in September, and the statewide unemployment rate remained unchanged at 5.1 percent, the EDD reported.

Despite the Bay Area’s increasingly sluggish picture, experts said Friday that the region doesn’t seem to be headed into a protracted downturn or outright contraction.

 

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

Glen’s SF East Bay Area Real Estate Market Update, September 30, 2017

East_Bay_Banner

Glen’s Numbers: SF East Bay Area Real Estate Market

September 30, 2017   By Glen Bell   (510) 333-4460

Zillow_August_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 began its usual seasonal trend upward. Typically, we see a steady increase on a month by month basis to occur before finally peaking in September. This year has taken a more uneven course. We did see a modest increase in the available housing inventory since last month. However, we are still well below where we were last year at this time by 24%. That’s concerning considering last year was a very “tight” market. Pendings were steady with little change from August. Our monthly supply is now 33 days. Last year, our months’ supply at this time was 45 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 30 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), remained relatively even in comparison to last month, but is still below where we were last year by 12.3%. The pending active ratio decreased to 1.21. This compares to last year at the same time of 1.05. 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, (1.05).
  • The percentage of homes “sitting” has decreased slightly with 37% of the homes listed now remaining active for 30 days or longer, while 19% stayed on the market for 60 days or longer. This is lower than 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 remains at $700,000 over the last 4 months, up from last year at $645,000, an 8.5% increase.

Months_Supply

  • The month’s supply for the combined 38 city area is 33 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, of 45 days. However, this year the inventory level on the graph is shallower.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) is now at 2,340 homes actively for sale. This is still above the December 2012 low of 1,086 and well less than last year at this time of 3,079 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 remained relatively flat at 2,832, but lower than where we were last year at this time of 3,228 or (12.3% lower).

Pending_to_active_ratio

  • Our Pending/Active Ratio is 1.21. Last year at this time it was 1.05. 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 decreased slightly from the last (4 month period) now at 9,607 for the 38 cities tracked. This is slightly higher than what we saw last year at this time (99,412).
  • 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. Also, on average, homes are closing in fewer days than before. It seems that inventory is still being gobbled up but at a slightly faster pace than is being replenished.
  • Sales over the last 4 months, on average, are 4.1% over the asking price for this area, greater than what we saw last year’s at this time, 3.3%.

 

 

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Recent News

 

S.F. real estate is the most ‘overvalued’ in the U.S., according to banking giant

By Emily Landes, SFGate, October 6, 2017

Don’t call it a bubble. San Francisco’s real estate market is merely “overvalued,” according to a new report from UBS.

The financial services firm’s annual Global Real Estate Bubble Index says that, even amid rising prices, the relatively high incomes in San Francisco make buying a home here “relatively feasible.”

However, San Francisco is still the most overvalued city in the U.S., according to the report, which points out that prices here have outpaced the nation as a whole by 260 percent over the last 40 years. Los Angeles was a close second. But other expensive American cities, like New York and Boston, were deemed “fair-valued,” while Chicago continues to be “under valued,” the only financial center on the list to get that designation.

UBS says Toronto is at the greatest risk of a housing bubble, followed by Stockholm, Munich, Sydney and Vancouver. Amsterdam also joined the bubble club, after being merely overvalued in 2016. “Real house prices of those metropolises within the bubble-risk zone have climbed by almost 50 percent on average since 2011,” according to the report. “In the other financial centers we looked at, prices have risen by roughly 15 percent. This gap is grossly out of proportion to the differences in local economic growth and inflation rates.”

Brown signs housing bills: ‘It was a big challenge, and we’ve risen to it’

By John Wildermuth, SF Chronicle, September 29, 2017 

Surrounded by a crowd of Democratic mayors and legislators Friday morning, Gov. Jerry Brown signed a wide-ranging package of 15 bills designed to bring some relief to the statewide housing crisis.

Enthusiastic housing advocates and business leaders also joined the governor for the outdoor bill-signing ceremony in a pocket park at Hunters View, a new mixed-income housing development on the hills of Bayview-Hunters Point in San Francisco.

“This is the biggest bill-signing I’ve ever seen, and it’s because it deals with something as basic as shelter,” the governor said. “It was a big challenge, and we’ve risen to it this year.”

But the governor also stressed that many of the problems the new bills are designed to ease were caused by the same local and state officials now cheering the improvements.

Things like tough zoning restrictions, requirements for clean air and green energy, multiple rules for construction and a variety of other laws dealing with housing are all good things in themselves, he said. But they combine to build up red tape that can make it harder to build affordable housing, he argued.

“All these rules were passed by people like you, and they’re all good stuff,” Brown said. “But I’ve always said too many goods can create a bad.”

But that didn’t dampen the excitement of people delighted to see the state recognizing the need for dramatic measures to deal with the state’s growing housing problems.

“There is no corner of the state that doesn’t need affordable housing,” said Tim Frank, director of the Center for Affordable Neighborhoods in Berkeley. “There’s no silver bullet to deal with the state’s housing crisis, but this is a big first step.”

The Legislature passed the 15 bills in the housing package on the last day of the session two weeks ago.

One of those bills, SB2 by state Sen. Toni Atkins, D-San Diego, creates a permanent source of funding for affordable housing.

The permanent funding is estimated to generate $200 million to $300 million a year through a $75 to $225 recording fee on real estate documents and some property transactions, not including home sales. Most of the money goes to local governments to build housing, make existing housing more affordable and create permanent or temporary shelters.

The bill was a priority for advocates who said the state needed to create a permanent source of funding to begin to replace $1 billion a year in lost redevelopment agency money.

A Public Policy Institute of California survey released Wednesday found that less than half of adults support the fee, though 64 percent of those polled said they favor building more housing in their cities.

Voters will decide next year whether to approve a housing bond. SB3, by state Sen. Jim Beall, D-San Jose, will ask voters to approve $4 billion in general obligation bonds to build rental housing for low-income families and to fund other existing housing programs. The bond will set aside $1 billion for the state’s veteran home-loan program, which would otherwise run out of money in 2018.

Among the other bills signed was SB35 by Wiener, which pushes reluctant cities into approving housing projects. Dozens of cities opposed the measure, arguing that it undermined local land use decisions.

SB167, by Sen. Nancy Skinner, D-Berkeley, will make it harder for local governments to deny housing projects.

AB1505, by Assemblyman Richard Bloom, D-Santa Monica, will allow local governments to require developers to set aside a certain percentage of affordable rental units in new construction.

Realty group fears Trump tax reform would hurt California homebuyers

By GEORGE AVALOS, Bay Area News Group, September 29, 2017

California’s largest group of realty agents has warned that a Republican tax-reform proposal would erode the attractiveness of buying a house in the Golden State — but economists pointed out Thursday that these effects could also cause a dip in home prices that have skyrocketed.

California Realtors Association President Geoff McIntosh suggested the Republican plan to eliminate state and local tax deductions, such as property taxes, could hurt California and its housing market.

“The average California homebuyer could end up paying $3,000 more a year in taxes under the proposal,” McIntosh said in an emailed statement.

Only homebuyers who choose to itemize deductions would be affected if the reform plan strips away their ability to deduct property taxes on their federal returns.

Even if the tax reforms are approved and ultimately make home buying less attractive, that could also bring potential benefits for buyers, some economists said Thursday.

“There are several variables, but it would reduce home prices,” said Fred Foldvary, a lecturer in economics at San Jose State University. “Right now, home prices are propped up by implicit subsidies, such as deductions for mortgage interest, property taxes, and other tax benefits. All of these puff up the value of residential real estate.”

Experts said it all comes down to the basic rules that govern economics.

“It’s supply and demand,” said Annette Nellen, a professor of accounting and taxation at San Jose State University. “If the demand for housing drops, the prices of homes could drop.”

The negative impacts from lost tax deductions, however, would primarily affect those in higher income-tax brackets, Nellen said.

Christopher Thornberg, a founding partner and economist with Beacon Economics, agreed that home prices could drop. Yet he questioned how noticeable the decline might be, considering how dramatically home prices have risen in California, especially in the hyper-expensive Bay Area.

“The drop in home prices as a result of the loss of the property-tax deduction would be 0.5 percent,” Thornberg estimated. “You have to put that in the regular context of a market where home prices are going up very rapidly.”

Home prices have been rising in the Bay Area, depending on the region, at anywhere from 7 percent a year to about 15 percent a year. That means any tax-reform fallout that might tend to reduce home prices could be tough to notice, Thornberg said.

Over the 12 months that ended in August, the median price for all Bay Area home sales, new and resale, rose 11.6 percent, according to Irvine-based CoreLogic, a real estate data and analytics company.

“The tax reform proposed by the Republican leadership will eliminate the incentive for people to buy homes, shrink the middle class, and raise taxes on hundreds of thousands of California homeowners,” McIntosh said. “Any change that would make home buying less attractive will be detrimental to the housing industry and the nation’s economy.”

President Donald Trump and Republican legislative leaders, however, believe the tax reforms and cuts would spur the nation’s economy, help create jobs, slash corporate taxes and make it easier for businesses to undertake investments.

A portrait of housing NIMBY-ism in California

By KATY MURPHY, Bay Area News Group, September 28, 2017

As poll after poll finds that housing costs are driving Californians to pack up and move, a new survey paints a detailed portrait of the anti-growth mindset that has been widely blamed for the short supply of homes underlying the problem.

What the survey found surprised veteran pollster Mark Baldassare: Nearly two-thirds of adults in California — and 70 percent in the Bay Area — favor building in their cities to meet the need.

“Obviously we asked this question because Californians are so often associated with NIMBY-ism, Not in My Backyard, but maybe because we’re at such a crisis point with housing costs that so many people recognize that it’s a problem — and for so many people it is a problem for them,” said Baldassare, president and CEO of the nonpartisan Public Policy Institute of California, the San Francisco-based nonprofit that conducted the poll.

But some Californians are more willing than others to accept that new housing development down the road: Renters were far more likely than homeowners to favor growth — 73 percent versus 55 percent. The poll also found sharp political, economic and racial divides. Republicans, for instance, were more likely to oppose new local development than support it.

While the majority of white Californians — 53 percent — said they were in favor of more housing, they were less likely than any other racial or ethnic group to get behind local building. A similar difference surfaced between Californians over and under 55, with younger residents showing stronger support. And middle-income and affluent residents were less likely to approve of local development than the poor.

The statewide survey asked Californians about everything from single-payer health care to fears about a North Korean strike to immigration issues. But it also delved deeply into the affordable-housing crisis gripping the state and NIMBYism in California, finding that 49 percent of Bay Area residents and 44 percent of Californians statewide had “seriously” considered moving because of their housing costs. The poll also asked people of various regions, ages, household incomes, racial and political backgrounds whether they favor more housing in their neighborhoods to meet the need.

Tellingly, only 2 percent of those surveyed responded that the housing supply in their communities was adequate, and 64 percent of adults and 59 percent of likely voters said they would support building more homes.

Sonja Trauss, a San Francisco resident who last year co-founded the political nonprofit YIMBY (Yes In My Backyard) Action to promote housing density, noted that higher income, white and older residents are more likely to be homeowners — and therefore feel less urgency about new development than renters like her.

“It makes perfect sense,” she said. “If you’re a homeowner, you already have housing security. No one can make you move. More housing doesn’t benefit you. You already start out with `Why do I need this?’

“This is why we have such a skewed process for building housing and we don’t build enough,” she added. “Homeowners are the people who write letters and make phone calls and show up at council meetings. And they’re the ones that run for office.”

Such frustrations spurred lawmakers this year to pass a number of bills to coax or force cities and counties to build their share of housing, in some cases adding teeth to existing law.

But Maureen Gilbert, a retired teacher who has lived in North San Jose for 25 years, said she has the opposite criticism of her city officials: She feels they are too eager to build without properly accommodating the influx of new residents. She said traffic is miserable, even on the side streets near her condominium — and it seems that every patch of open space is being gobbled up by developers.

“I understand that there is a need for housing,” she said, “but it so disrupting the communities in which this high-rise development is happening.”

Report: To cut housing prices 10 percent, California needs 20 percent more units

By Peter Fimrite, SF Chronicle, September 27, 2017

It could take decades and cost billions to build enough housing to make even a modest dent in home prices in the Bay Area and across the state, a team of economists reported Wednesday.

The quarterly UCLA Anderson Forecast casts doubt upon efforts in San Francisco and surrounding communities to lower the cost of living, suggesting that investments far beyond what is contemplated would be needed to stop folks from paying exorbitant prices for wallpapered shoeboxes within a scooter’s distance of San Francisco Bay.

Jerry Nickelsburg, director of the UCLA forecast team, said it would take 20 percent more housing to achieve a 10 percent reduction in prices. Such a reduction throughout California would bring costs down roughly to 2014 levels, he said, citing figures provided by the Legislative Analyst’s Office.

An increase of 20 percent would, by all accounts, be a daunting task. Starting in 1980, it took 30 years for Los Angeles and San Francisco to increase housing stock that much, according to a study by the legislative analyst.

California needs to build 180,000 units of housing a year to keep up with demand, but falls 80,000 units short, according to Gov. Jerry Brown’s housing department. Catching up to the demand, the department said, would cost an additional $26 billion.

“In California, we are building 100,000 new homes for the whole state,” Nickelsburg said. “So, to make a significant dent requires a very large commitment by the state to build lots of housing.”

The issue has beleaguered Bay Area politicians and residents as housing shortages have pushed median prices of homes into seven figures in many areas and added gridlock to the roads as workers are pushed farther from their jobs. Surveys show that wide majorities of Bay Area residents view affordable housing as one of the region’s most critical issues.

A poll by the UC Berkeley Institute of Governmental Studies found that 51 percent of Bay Area voters have considered leaving the area as a result of rising housing costs.

Brown declared in his recent budget summary that about half of all California households are spending more than 30 percent of their income on housing costs, while nearly one-third — about 1.7 million households — are spending more than 50 percent.

A central problem is that building housing that meets affordability standards costs an average of $332,000 per unit, with San Francisco construction costs soaring well above the norm, topping out at $591,000 per unit.

Gov. Brown is now deciding whether to sign 15 bills passed by the state legislature that seek to spur affordable housing development, address homelessness and tackle rising housing costs.

In his report, Nickelsburg looked at what Sacramento is doing to mitigate the crisis and concluded that current legislative action “will not do much to alleviate the high cost of living in California in the near term.”

To fill the gap, he said, cities will have to target construction for certain segments of society, as San Francisco did recently when it committed a plot of land and $44 million in public funds toward building affordable housing for teachers.

“If one takes the position that affordable housing in San Francisco is not going to happen anytime soon — and I think that is accurate — then the political decision has to be made that there are certain individuals, because of their characteristics or employment, who you want to provide access to housing,” Nickelsburg said.

Another way to lower prices would be to expand the area in which people can live and still reasonably commute to work. One way to do that, he said, would be to hurry and build the long-planned bullet train between San Francisco and Los Angeles.

“The way to look at this is that the demand for housing in the Bay Area is not just people living in the Bay Area, but all of the people in California, the United States and internationally who want to live in the Bay Area,” he said. “You need to build a large number of new homes in the Bay Area to drive down the price in any significant way.”

How sky-high housing costs make California the poorest state

By Matt Levin, CALMatters, September 27, 2017

California leads the nation once again in a statistic no state wants to boast about.

When the cost of living is factored in, the Golden State has the highest poverty rate in the country. More than 20 percent of its residents struggle to make ends meet, according to recently released Census figures. That’s nearly 8 million people.

Unfortunately for Californians, this year’s poverty numbers are not an aberration. The Census began releasing state-by-state results for its “supplemental poverty measure” in 2011, in an attempt to improve upon the outdated and heavily criticized official poverty statistics.

In the less sophisticated “official” measure, a family of four in San Francisco or Los Angeles or San Diego faces exactly the same poverty threshold—$24,339 annually—as a family in rural Mississippi. That’s despite the fact that you can rent a three-bedroom, two-bathroom 1,200-square-foot house in Horn Lake, Mississippi, for the same price ($850 a month) as half a living room in the Bay Area.

California has been the poorest state in the nation under the vastly more sophisticated “supplemental” poverty measure since the alternative statistic was created (Mississippi is poorest under the old measure). It’s not even really that close: Florida has the second highest rate, at 18.7 percent.

Part of the reason California tops the list year after year is a byproduct of how the supplemental poverty measure is calculated. It’s a three-year moving average, so year-over-year changes can’t swing a state’s poverty rate one way or another all that much.

The Census uses data dating to 2011 to calculate the cost of living, so even the improved poverty rate could be underestimating how big a drain housing has been on California’s poor. The biggest jumps in housing costs—like those we’ve seen in Sacramento and other mid-size California cities in recent years—typically apply to a relatively small percentage of renters finding new apartments. But ask any California renter whether they’d rather be paying 2011 rents or 2017 rents, and they’ll ask you for the keys to the DeLorean as soon as possible.

What exactly is the role of housing in California’s poverty problem? There are a couple ways to answer that question, none perfectly satisfactory.

One method: What would poverty look like if everyone in California had cheaper rents?

Researchers at the the Public Policy Institute of California, which has developed its own California-specific alternative poverty measure, tried to simulate an answer to that question. Researchers there ran a model of the state’s poverty rate with every Californian bearing a cost of living similar to that in Fresno County, where a family of four making about $25,000 would not be considered poor.

The result?

The overall poverty rate drops dramatically (from about 21 percent to 14 percent), with nearly 2.4 million Californians lifted above the poverty line. The effect is most pronounced among children, who are disproportionately likely to live in higher-cost regions of the state. The child poverty rate drops nearly 8 percentage points—about 717,000 kids—once the cost of living is lowered.

Relocating every poor family in the state to Fresno is, well, not a practical policy consideration. And housing subsidies for low-income families currently make only a small dent in the poverty rate, at least compared to some other safety-net programs.

(Advocates for the poor argue that’s a great reason to dramatically expanding housing subsidies).

New poll shows 65% of Bay Area respondents think housing affordability is a ‘serious problem’ — and half of Californians have mulled a move

By Riley McDermid, SF Business News, Sep 20, 2017

A new poll from UC Berkeley has found that 65 percent of Bay Area respondents rank housing affordability as an “extremely serious” problem facing the region right now, while over half of Californians surveyed told pollsters they’ve considered moving elsewhere.

The study from UC Berkeley’s Institute of Governmental Studies polled 1,200 California registered voters throughout the state from Aug. 27 to Sept. 5 in both English and Spanish. It found that 56 percent of respondents had considered moving from their current location — and one in four of those said they’d mulled moving out of California entirely.

More locally, 65 percent of respondents from the Bay Area said they believe housing affordability is an extremely serious problem, with 63 percent of local respondents saying they support some form of rent control implemented. That number climbed to 68 percent when asked of Los Angeles-located residents.

Perhaps most telling for the state’s future? Most of the respondents who said they’d considered moving either locally or out of state are renters between the ages of 30 and 39, an age group considered prime contenders for buying homes and raising families.

The poll also finds early backing for a multi-billion-dollar statewide bond that has been proposed for the November 2018 general election ballot to help finance the construction of more low-income housing in California,” UC Berkeley said in a statement. “When asked how they would vote if such a bond were to appear on next year’s ballot, 51% say they would favor the bond, while 27 percent would be opposed. Another 22 percent were undecided.”

It’s not your imagination: Bay Area congestion has gotten even worse

By Riley McDermid, SF Business News, Sep 20, 2017

Traffic congestion on the Bay Area’s freeways surged 10 percent last year, a new report from the Metropolitan Transportation Commission (MTC) released this week has found.

The MTC found that about one third of the worst congestion, defined as time spent in traffic going at or under 35 miles per hour, is happening in Alameda County. Overall, weekday traffic congestion has leapt 80 percent in the Bay Area since 2010, the agency said, and almost all of it is related to commuting issues region wide.

“Eight of the top 10 most crowded commutes are routes to or from the Bay Bridge or Silicon Valley,“ MTC Chair and Rohnert Park Mayor Jake Mackenziesaid in a statement. “The good news is that this shows the continuing strength of the South Bay and San Francisco job markets. The bad news is that it shows how hard it is to balance where the region’s job centers are located and where comparatively affordable housing can be found.”

Here are the 10 worst commutes designated by the MTC:

  1. Northbound U.S. 101 and eastbound Interstate 80 from the I-280 interchange in San Francisco to the Bay Bridge’s Yerba Buena Island Tunnel
  2. Westbound I-80 from State Route 4 in Hercules to Fremont Street in San Francisco
  3. Southbound U.S. 101 from Mountain View to San Jose
  4. Northbound I-680 from the South Mission Boulevard/State Route 262 interchange in Fremont to Andrade Road in Sunol
  5. Northbound I-880 from Mowry Avenue in Fremont to Winton Avenue in Hayward
  6. Southbound I-280 from Foothill Expressway in Los Altos to downtown San Jose
  7. Eastbound I-80 from West Grand Avenue in Oakland to Gilman Street in Berkeley
  8. Northbound I-680 from San Ramon to Pleasant Hill
  9. Eastbound State Route 24 from Oakland to Walnut Creek
  10. State Route 4 from Morello Avenue in Martinez to Port Chicago Highway in Concord

 

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

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

August 31, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 

Zillow_July_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 began its usual seasonal trend upward. Typically, we see a steady increase on a month by month basis to occur before finally peaking in September. However, for the first time since 2012, we saw a very small decrease in our inventory during the late spring and summer months, April through August, with a decrease of 5.5%. Last year we had a 26.8% increase over the same time period. This probably is in part due to an increase in sales but without the normal replenishment of inventory through added listings. Pendings went down for the third month in a row, by 7.3% for June through August (unusual for this time of year) but obviously due to the tight inventory levels. Inventory levels are 30.6% less than what we experienced last year at this time. Our monthly supply is now 30 days. Last year, our months supply at this time was 45 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 30 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 4.4% over the last 30 days and is less than what we experienced during this time last year by 12.5%. The pending active ratio decreased to 1.34. This compares to last year for the same time of 1.06.. 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, (1.34). 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 42% of the homes listed now remaining active for 30 days or longer, while 21% stayed on the market for 60 days or longer. This is about what we saw last year at this time. Normally with such tight inventories, we would think that just the opposite would be true, that less homes would be sitting especially with an increase in sales. Perhaps, buyers are being more selective and homes are also still being snapped up at a quicker pace than last year. The same houses may be sitting but with such a tight inventory they became a greater percentage of what’s left.

 

  • 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 remains at $700,000 over the last 4 months, up from last year at $645,000, an 8.5% increase.

Months_Supply

  • The month’s supply for the combined 38 city area is 30 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, of 45 days.

Actives_&_Pendings

 

  • Our inventory for the East Bay (the 38 cities tracked) is now at 2,102 homes actively for sale. This is still above the December 2012 low of 1,086 and well less than last year at this time of 3,029 or (30.6% 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 2,816, also lower than where we were last year at this time of 3,218 or (12.5% lower).

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.34. Last year at this time it was 1.06. 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 9,896 for the 38 cities tracked. This is slightly higher than what we saw last year at this time (9.541).
  • 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. Also, on average, homes are closing over in fewer days than before. It seems that inventory is still being gobbled up but at a slightly faster pace than being replenished.

 

  • Sales over the last 4 months, on average, are 4.3% over the asking price for this area, slightly greater than what we saw last year’s at this time, 4.0%.

Numbers_Page_1

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Recent News

 

Bay Area housing shortage worsens

July sales mark lowest in years as prices jump

By Kathleen Pender,  San Francisco Chronicle, August 30, 2017

The Bay Area housing shortage showed no signs of abating in July, as the number of homes sold fell by 17.3 percent from June and by 2.6 percent from July of last year, according to a CoreLogic report released Wednesday.

Sales typically fall from June to July as house hunters and real estate agents head off on vacation, but the average drop-off since 1988 has been only 6 percent. The number of homes sold last month was the lowest for a July since 2011. CoreLogic attributed the sharp slowdown to “a tight inventory and waning affordability.”

Near_a_Ceiling

Meanwhile, the median price paid for a home in the nine-county region last month was $758,000, down 1.6 percent from a record $770,500 in June, but up 9.1 percent year over year. The report includes new and existing single-family dwellings and condos.

Vacations also cause prices to dip from June to July; the long-run average is a 0.2 percent decline. For buyers, the slightly larger-than-average price decline last month will provide little solace.

Only 21 percent of households in the Bay Area could afford a median-priced home in the second quarter, according to the California Association of Realtors’ affordability index. That’s down from 25 percent in the first quarter. The index estimates the percentage of households that have the minimum income needed to buy an existing, median-priced single-family home with a 20 percent down payment at prevailing mortgage rates. It does not include condos, which tend to be cheaper than single-family homes.

Vacations also cause prices to dip from June to July; the long-run average is a 0.2 percent decline. For buyers, the slightly larger-than-average price decline last month will provide little solace.

By the association’s reckoning, a Bay Area buyer would need $179,390 in annual income to buy the median-priced home.

Home prices are soaring because the region’s supply of new housing is not keeping up with demand, which is fueled largely by job growth, especially in high-paying technology jobs.

However, even at tech companies, most employees are not making enough to buy a median-priced home, Katie Ferrick, director of community affairs at LinkedIn, said at a housing conference in San Francisco last week sponsored by the Center for California Real Estate and Bay Area Council. At LinkedIn, the “vast majority” of workers are not making $179,000, she said.

The state’s least-affordable county is San Francisco, where only 12 percent of households could afford the median-priced home in the second quarter. But it has been worse. In 2005, when incomes were lower and mortgage rates higher, the index was 8 to 9 percent. Its recent high was 29 percent in early 2012.

Finding an entry-level home in the city is getting nearly impossible, according to a study out this week by the San Francisco Association of Realtors.

Last month, there were only 140 homes and condos in the city listed at less than $758,000, it said. In July 2014, there were 367 homes listed below $758,000. Over those three years, the average household income for a family of four in San Francisco rose 15.7 percent, but the median home and condo price rose 25 percent.

“The most competitive price point is the single-family home under $1.5 million,” said Drew Wilkerson, an agent with Vanguard Properties. Last week, he filmed an episode of the HGTV show “House Hunters” with a couple searching in that price range in San Francisco.

His clients had written three previous offers before buying a three-bedroom, 1.5-bath place in Merced Heights for $1,090,000. The couple, who have two young children, both work full-time, but not in tech. Like many first-time buyers, they got help with the down payment from parents, Wilkerson said.

One of the homes they visited was 415 Amazon Ave. in the Excelsior district. The home has two bedrooms, two baths and 1,155 square feet. It’s listed at $899,000. Traffic at two open houses last weekend “was absolutely constant,” said listing agent James Belisle, also with Vanguard. On Sunday, “there were 10 people waiting to get in at 2 o’clock.”

Most of the housing — both rental and for sale — being built in the Bay Area is either below-market rate or high end. People who earn too much to qualify for the former and too little to afford the latter are often forced into “mega commuting” or “driving till you qualify,” Carol Galante, faculty director at UC Berkeley’s Terner Center for Housing Innovation, said at last week’s conference.

A package of bills aimed at easing the state’s housing shortage could come up for a vote in Sacramento this week. But none is aimed at what Galante calls the “missing middle.”

One would create a new recording fee on certain real estate documents to fund low-income and affordable housing. One would ask voters to approve $4 billion in bonds, mainly for low-income rental housing but also for the state’s veteran home loan program, which could help middle-income vets, Galante said.

The third “basically requires that localities streamline their development-approvals process for communities that aren’t meeting their regional needs formula,” Galante said in an interview. This could open the door for some middle-income housing, but it applies to a very limited range of projects.

Galante said middle-income buyers and renters don’t have the same type of advocacy groups that champion low-income housing.

Of course, any new housing — high or low end, for sale or rent — eventually will relieve pressure on middle-income buyers.

Galante and other speakers at the conference said the state should do more to overcome the barriers to development erected at the local level, such as utility and impact fees.

Because Proposition 13 limits property tax increases, local governments put much of the cost of providing services on developers, which discourages new housing. The state also should consider creating incentives for housing by redistributing sales and property taxes and transportation dollars for communities that are meeting their goals, she said.

Are we headed for another housing collapse?

By Pamela Gwyn Kripke, New York Post, September 2, 2017

When an average $1 million home goes on the market in Santa Clara, Calif., it can reel in 20 offers. Quickly, and without batting an eye.

“As long as high-tech companies keep bringing people here from all over the world and paying them, high prices will continue,” says Brett Burns, a broker with San Jose-based Climb Real Estate. “If Google uprooted and set up shop in Texas, maybe that would make a big splash, but I don’t see a plateau as long as demand keeps getting fed.”

Median home prices across the nation have been increasing with gusto, though perhaps not at levels as staggering as San Jose’s median price tag of $1,183,400. In the second quarter of 2017, prices jumped by 6.2 percent compared with the same period in 2016 to an average cost of $258,300, according to the National Association of Realtors. While trends diverge profoundly from place to place — for all sorts of economic, geographical and lifestyle reasons — a good many of the nation’s metropolitan locales have experienced record appreciation. Coupled with inventory that is 9 percent lower than it was in 2016 and income that has not kept up with prices, the natural post-recession question arises.

One decade after the biggest housing collapse in America’s history led to a global recession, could we be facing another crisis?

“Not happening,” says Burns, adding that the 2007 housing crash “was based on lending practices which have since been cleaned up.”

Many industry experts agree. The subprime mortgages that targeted borrowers with less-than-perfect credit and led to financial turmoil 10 years ago do not play a role in today’s real estate market.

“When you talk about a bubble, you think of people being really exhilarated and excited and prices going way up. We don’t see that now,” says Annie Cion Gruenberger, who has been a New York City broker with Warburg Reality for 28 years. “We have a very positive market, but a targeted market of smart buyers.” So, what do high price tags and low supply mean, if not economic catastrophe?”

The 2007 collapse spooked home builders so much, they didn’t want to build anything but high-end properties. That drove up house prices and made it harder for people to buy starter homes.
Meanwhile, the market was split into two halves: Places such as Las Vegas, where development was overstretched and unsustainable, and which is still struggling to bounce back; and places such as Portland, Ore., and Silicon Valley, where NIMBY regulations limit how much construction can happen, meaning fewer homes available to buy. As a result, there’s a real lack of housing where the jobs are.

While cities such as Seattle, Denver, San Francisco and Austin show double-digit spikes in house prices, cities such as South Bend, Ind., Baton Rouge, La., and Atlantic City report dwindling numbers. On average, 87 percent of the 150 housing markets tracked by NAR experienced rising prices in 2016, up from an average of 75 percent in 2014.

In areas that were hard hit by the housing bubble, current market trends vary, and not all of the data is rosy. In Tampa, Fla., thousands of homes have been lost to foreclosure during the past decade. Today, the city appears to be recovering. It has the fourth-highest population growth in the country, adding 61,000 residents last year, according to the US Census. Tampa’s July unemployment rate was 4.1, reports the Bureau of Labor Statistics, and the median house price is $244,500, which is just about the national average.

In the extreme case, there is Vegas, which suffered the highest foreclosure rate in the country following the housing crash. Though sales and prices have been edging back, thousands of people are still reeling. Those who borrowed against their homes or bought at the height of the market may not see a return on their initial investment. Some still owe more than their homes are worth, 15 to 20 percent by some estimates. Add to the mix a 6.4 unemployment rate and low-selling homes owned by investors, and a full recovery seems a tall order.

Tightest_Markets

In total, about 64 percent of Americans own their own homes, compared with 68 percent a decade ago. “I feel very fortunate to be able to afford our house,” says first-time buyer Greg Johnson, 30, of the property he and his wife, Molly Blank, 28, recently purchased in Seattle, where he works at a nonprofit bioscience research organization and she works at the University of Washington, Seattle. “We both really enjoy where we work and would rather not have to change our employers and work for a big company, or live in a different city, to be able to afford a house.”

One problem prospective buyers face is that there aren’t enough houses out there for everyone who wants one. (Among these home seekers are the so-called “Boomerang Buyers” who are getting back into the market after post-recession trepidation.) This low housing stock drives prices up. In some cities, prices, even at the low end of a market where inventory is most scarce, are unaffordable for first-time buyers. (In the higher end of the market, there are houses to sell.)

Thirty-two percent of home sales today are going to maiden purchasers, compared to 40 percent, historically, says the NAR. Typically, this buyer is 32, earns $72,000 and pays $182,500 for a home. A two-income couple pays $208,500, on average.

In certain areas, potential young homeowners, even with such salaries, have to forego equity and continue to rent. But in places such as San Jose, first-time buyers have enough money to buy even overvalued property in the lower swath.

“The job market is now good for millennials,” says Ken Fears, NAR’s Director of Regional Economics and Housing Finance. “Competing with investors for homes at a low price point is easier. Some millennials have access to credit and to inventory, and mortgage rates are low. It’s improved, but not great.”

Seattle, like San Jose and numerous other Northern California cities, draws this age group to its high-paying high-tech jobs. “They want to live close to downtown where their offices are, and first-time buyers can do that. They can afford $700,000 to $1 million on a starter home,” says Heather Dolin, broker with Seattle- based Windermere Real Estate. But competition for these homes is fierce, with just under a month’s supply of inventory available in the metro area. “Three to six months is considered a balanced market,” says Dolin.

It would seem that the way to stability, then, simply requires more homes for people to buy. But houses are not a typical commodity. New ones can’t be produced from scratch, quickly and inexpensively, on an assembly line. Old ones can’t be made available when the market wants them to be. There are many reasons why inventory is low, most of which can’t be changed.

Most_Expensive_Markets

NAR’s Fears points to a number of trends: First, homeowners are staying in place longer, limiting the number of existing homes for sale. Low unemployment rates are keeping them from leaving town in search of work. High home prices are inspiring them to remodel rather than relocate within their communities, if they want a different kind of house. First-time buyers who can afford it might buy a home that can accommodate two kids instead of one, precluding a move a couple years after their purchase. Grandparents are staying put to live near their kids, rather than fly off to retirement far away.

Second, new construction is still springing back from the 2008 recession. Home builders have had a hard time keeping up with population growth since then, in most cities. “There was a high cost for dealing with regulation, a high lumber tax on Canadian framing lumber, a decline in the labor pool,” says Fears. But the construction industry has shown signs of life. In July, according to US Census Bureau and Department of Housing and Urban Development data, housing completions were 8.2 percent higher than they were one year ago, though 6.2 percent lower than they were in June.

Even when they do build, developers are restricted by urban planning and geography, in certain states more than others. In Portland, Ore., cities are required by state law to form an urban growth boundary around its perimeter, controlling expansion onto farm and forest lands.

“Since about 2009, a lot of areas inside the boundary have been dormant,” says Victor Bulbes, broker with Keller Williams. “Builders have been reluctant to get back in the game.”

The Portland metro area, like other Western cities, is popular, with a record low 4 percent unemployment rate and stable population growth. Since 2010, the city has grown 8.3 percent, according to US Census data.

Lifestyle preference also drives the market.

In Denver, where the number of available houses has plummeted in the last seven years from 12,000 to 2,000 and median prices grow by around 9 percent annually, most people want to live in the urban core, says David Schlichter, Denver-based broker with Keller Williams’ The Schlichter Team.

“There is definitely plenty of land here, at the base of the mountains, next to the foothills. There is some development in the outskirts, but where people want to be, in the city, there is only finite space.”

From 2012 to 2015, with the exception of 2014, Denver experienced double digit price appreciation.
“It will taper off,” says Schlichter. “You can’t have that in perpetuity because at some point, another city becomes more attractive. Now, there are way more people moving here than leaving. Each week, I get a call from someone from the Bay Area who is fed up. Here, houses are half the price. To them, this is paradise.”

Still, lingering fears from the past housing bubble and a present-day crisis in London, where astronomical prices mean young buyers are entirely locked out of the property ladder, are stoking concerns that market growth in the US could one day become unsustainable.

In March, William Poole, a senior fellow at the Cato Institute, wrote a column for cnn.com, pointing to concerns about the country’s two biggest mortgage lenders, Fannie Mae and Freddie Mac. “In Freddie’s 2016 Annual Report, the agency says 36 percent of its obligations are ‘credit enhanced,’ meaning they carry mortgage insurance of one sort or another, which is typically used for weaker mortgages,” Poole wrote. “If these weak subprime mortgages begin to fail in large numbers, so also will the insuring companies.”

Jonathan Miller, a real-estate analyst at Miller Samuel, is unmoved by such arguments. He says the average buyer today has an average credit score “well above 700. They are some of the highest average credit scores in history.” He added that any subprime failures would be offset by the quality of most American borrowers being “unusually high.”

For now, Schlichter in Seattle agrees. “Barring some calamitous event, I don’t feel that our local economy is threatened to the point that a bubble is about to burst,” he says, then added: “But we have a highly unpredictable president, and everything could change with a tweet.”

California’s housing crisis – it’s even worse than you think

By THE DAILY BREEZE & MATT LEVIN, CALMATTERS – Mercury News, August 28, 2017

Half the state’s households struggle to afford the roof over their heads. Homeownership-once a staple of the California dream – is at its lowest rate since World War II. Nearly 70 percent of poor Californians see the majority of their paychecks go immediately to escalating rents.

This month, state lawmakers are debating a long-delayed housing package. Here’s what you need to know about the scope of one of California’s most vexing issues:

Just how hard is it to buy a home in California?

Hard. Really hard. Both compared to how hard it is in other states, and how hard it was for previous generations of Californians to buy homes.

While it’s always been more expensive to be a homeowner in California, the gap between us and the rest of the country has grown into a chasm. The median California home is now priced 2.5 times higher than the median national home. As of 2015, the typical California home costs $437,000, easily beating the likes of Massachusetts or New York (only Hawaii had more expensive houses).

Despite relatively low mortgage rates, exploding housing prices have caused California’s homeownership rate to dip significantly. Just over half of California households own their homes-the third lowest rate in the country, and the lowest rate within the state since World War II.

It’s not just housing prices that are affecting homeownership rates. Studies have found that student debt loads, rising income inequality and changing housing preferences among younger Californians are also at play.

Rents didn’t dip during the recession, and now are soaring

Rental costs across the state are some of the highest in the country. While listed housing prices dipped dramatically in the wake of the Great Recession, rents in California remained relatively stable before soaring in recent years in hot markets.

Across the state, the median rental price for a two-bedroom apartment is about $2,400, the third highest in the country. But statewide figures water down how absurd the situation is getting in urban coastal markets, where the vast majority of Californians live. The median rent for a two-bedroom apartment in San Francisco reached more than $4,000 this year.

“It may cost more to live here, but they pay you more”

That’s somewhat true – median earnings for Californians are higher than the national average, and are significantly higher in certain regions like the Bay Area with tremendously pricey costs of living.

But on average, income over the past two decades has not kept pace with escalating rents

The problem here is not just housing. Income inequality and wage stagnation in California also hinder low and moderate-income households’ ability to pay for a home.

But in certain markets, even extremely high incomes aren’t enough to blunt the cost of housing. In San Jose, where the current median income is nearly $100,000, renters can still expect to pay 40 percent of their monthly income on rent, according to an analysis by the real estate data firm Zillow.

Cities are being gentrified – as is the entire state

It’s difficult to measure things like “gentrification” and “displacement”-when the arrival of higher-income, higher-educated residents in a community results in the expulsion of longtime lower-income residents. But there’s little question change is happening rapidly across many California cities.

Researchers at UC Berkeley found that more than half of low-income households in the Bay Area are at risk of, or already experiencing, gentrification. It’s not just lower-income communities bleeding households-higher-income neighborhoods are losing their lower-income members as well. And in places like the Boyle Heights neighborhood of Los Angeles, gentrification protests have exposed escalating tensions between longtime Latino residents and new, predominantly white arrivals.

Where are these low-income people going? Increasingly, out of state.

From 2000 to 2015, the state lost nearly 800,000 residents with incomes near or below the poverty line. Nearly three-quarters of those who left California since 2007 made less than $50,000 annually. The leading destination for California’s poor? Texas.

Rising rents are causing more homelessness

Housing costs are just one factor in the complex tangle of reasons people become homeless. California actually has fewer people experiencing homeless now than it did a decade ago. But there’s little question rising rents are linked to more Californians living in cars, shelters, and on the streets-especially in the greater L.A. area.

While the vast majority of states saw a dip in their homeless population between 2015 and 2016, California saw an increase of about 2,400 people, according to statistics compiled by the U.S. Department of Housing and Urban Development. California accounts for about 12 percent of the nation’s population, but more than 20 percent of the nation’s homeless live here.

Recent numbers from Los Angeles County, where the number of people experiencing homelessness grew 30 percent over the past two years, have prompted cries for more eviction protections and rent control. Zillow recently estimated that a 5 percent increase in rent would result in an additional 2,000 homeless Los Angelinos. In 2016 rents grew an average of 4 percent there.

Millennials, mom and dad, and avocado toast

Nearly a decade removed from the depths of the Great Recession, and 38 percent of California’s 18 to 34-year-olds still live with their parents, according to U.S. Census data. That’s roughly 3.6 million people-more than the entire population of Chicago.

Again, housing costs are not the only thing keeping junior from moving out. Student debt loads, disappearing labor markets, and delaying marriage are also contributing to the trend. We’ve seen no thorough analysis yet on how California’s abundant avocado toast supply may be keeping millennials confined to their nests.

It’s a statewide problem

The extremes of the state’s housing crisis are concentrated in the Bay Area and greater Los Angeles, but the challenge is truly statewide. A widely-cited reportby the consulting firm McKinsey Global Institute found that in every metropolitan area in the state-from Fresno to Palmdale to Salinas-at least 30 percent of residents could not afford local rents.

The intense pressures of housing costs in coastal urban centers are spilling into inland cities. While San Diego, San Francisco and L.A. top the list of toughest rental markets in the country, cities like Sacramento and Riverside recently have experienced the largest year-over-year increases.

The housing crisis has major repercussions for the economy

Big business is also feeling the pinch of California’s housing crisis.

The McKinsey Global Institute found that housing shortages cost the economy between $143 billion and $233 billion annually, not taking into account second-order costs to health, education and the environment. Much of that is due to households spending too much of their incomes on the rent or mortgage and not enough on consumer goods.

Even the attractive salaries and lavish perks of Silicon Valley struggle to overcome the local housing market, as young tech talent flees to the relatively inexpensive climes of Austin or Portland. Nearly 60 percent of Los Angeles companies in a recent University of Southern California survey said the region’s high cost of living was affecting employee retention.

It won’t be getting better anytime soon

The state estimates that it needs to build 180,000 homes annually just to keep up with projected population growth and keep prices from escalating further out of control.

Unfortunately, for the past 10 years, the state has averaged less than half of that. In no year during that span did California crack the 100,000 barrier.

There’s fierce debate over how long it takes low-income residents to benefit from the construction of new market-rate housing – a renter on the wait list for housing vouchers won’t take much comfort in the luxury condos being built in downtown Oakland or Los Angeles. While California faces an affordable housing gap at nearly all but the highest income levels, the low-income housing shortage is most severe.

According to the nonpartisan Legislative Analyst’s Office, helping just the 1.7 million poorest Californians afford homes would cost $15 to $30 billion a year. The Los Angeles Times estimated that the three marquee bills considered by lawmakers this month would provide less than 25 percent of that total.

This is an excerpt of the project “Californians: Here’s why your housing costs are so high.” For the full report, go to calmatters.org. CALmatters is a nonprofit, nonpartisan media venture explaining California policies and politics.

If GOP scales back the mortgage interest deduction, Californians would be hit hardest

By Jim Puzzanghera, Los Angeles Times, August 27, 2017

C.A.R. Summary:

For decades, the home mortgage interest deduction has been one of the most sacred of cows in the U.S. tax code. Now, Republicans crafting legislation to overhaul the federal tax system and cut rates are considering placing new limits on the home mortgage interest deduction. And thousands of Californians could feel the pain.

Making sense of the story:

  • Homeowners now are allowed to deduct interest paid on as much as $1 million of mortgage debt. Congressional Republicans and White House officials are looking at reducing the limit to $500,000, which would lead to billions of dollars more in federal revenue every year.
  • Homeowners still would be able to deduct interest on the first $500,000 of a mortgage, but would lose the deduction for interest paid on any amount above that level.
  • Most Americans would not be affected by such a change, either because they own their homes outright, their mortgages are less than $500,000, or they don’t have enough deductions to file an itemized tax return.
  • But in states with high earners and pricey real estate, reducing the mortgage interest deduction would force hundreds of thousands of homeowners to pay more taxes.
  • The California Association of REALTORS® estimates if Congress were to move forward with a cap on the mortgage interest deduction for loan amounts up to $500,000, a quarter of California’s home sales would be impacted, and those home buyers would end up paying more in taxes. And for those in Southern California, nearly one-third would be affected.

Why 83 percent of Bay Area renters say they plan to leave

By Riley McDermid, SF Business News, August 21, 2017

A new study has found that 83 percent of Bay Area renters say they plan to leave the region, with two-thirds of those saying the high cost of living here will be the factor that pushes them out.

The study, conducted by housing site Apartment List, polled 24,000 renters in 50 metropolitan areas nationwide.

“Often, young, educated workers flock to these expensive metros to work for a few years after college or graduate school, but don’t plan to settle down permanently,” the survey found. “Additionally, the rising cost of living may be putting additional pressure on renters to move out of coastal metros.”

That cost of living remains a particularly intense factor in the Bay Area, where 63 percent of renters polled said it would be the main thing to spark their move elsewhere. After that, 13 percent cited the area’s jobs as a reason to leave, while only 10 percent said the commute time would be a reason to move out of the Bay Area.

The study underscores a number of similar findings, including a 2016 poll by the Bay Area Council that found that more than a third of Bay Area residents 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.

Overall, the poll painted a gloomy picture for the Bay Area, with 22 percent of those who answered saying high housing costs are their biggest concern, followed by traffic at 17 percent and cost of living at 9 percent.

 

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

 

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%.

Glen's_Numbers_Pg_1

Glen's_Numbers_Pg_2

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

Glen’s SF East Bay Real Estate Market Update, June 30, 2017

June 30, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 

Zillow_May,_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 to June, only a modest 5%. Last year we had a 20% increase over the same time period. Pendings went down slightly by 5% (unusual for this time of year). Sales, however, took a huge jump up in numbers leading us to believe that there were more homes that came onto the market over the last month but that they got “gobbled” up quickly due to the high demand. Inventory levels have increased by 88% since the beginning of the year. However, our increase last year during the same period was 140%. 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 18.4% less than what we experienced last year at this time. Our monthly supply is now 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), has decreased 5% over the last 30 days but is less than what we experienced during this time last year by 12.8%. The pending active ratio decreased to 1.30. 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, (1.18). 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 36% 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 slightly higher than what 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 .02% 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. 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 increased to $775,000 over the last 4 months, also typical for this time of year but dramatically up from last year at $631,000, a 22.8% increase.

Months_Supply

 

  • The month’s supply for the combined 38 city area remains at 33 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.

Active_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) is now at 2,339 homes actively for sale. This is still above the December 2012 low of 1,086 and less than last year at this time of 2,864 or (18.4% 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 to 3,056, lower than where we were last year at this time of 3,372 or (9.4% lower).

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.30. Last year at this time it was 1.18. 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 9,093 for the 38 cities tracked. This is slightly greater than what we saw last year at this time (8,812) or (3.2% more). However, this increase over last month was a whopping 40.2%. It took us 4 months (February through June) last year to get the same kind of increase we saw in just one month this year.

 

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 6.4% over the asking price for this area, greater than what we saw last year’s at this time, 4.6%.

Glen's Numbers 6.30.17 Pg 1

Glen's Numbers 6.30.17 Pg 2

Recent News

 

Housing woes, labor shortages might “disrupt” Bay Area economy, forecast says

By GEORGE AVALOS | Bay Area News Group, July 12, 2017

 

The Bay Area job market faces disruption from a lack of skilled labor and skyrocketing home prices that could throttle the region’s booming economy, according to Beacon Economics forecasts released Tuesday.

Job growth has slowed in the Bay Area’s three biggest urban centers. In Santa Clara County, the East Bay and San Francisco alike, employers simply aren’t hiring as briskly as they did in recent years, the Beacon economists said Tuesday in an assessment of regional economies in California.

“We could grow at a faster pace, but growth is being constrained by a lack of affordable housing and a lack of skilled labor,” said Robert Kleinhenz, an economist and executive director of research with Beacon. “These factors are having a disruptive effect on the job market.”

“These regions, having seen many years of very strong job growth, are now shifting into a slower pace of growth,” Kleinhenz said.

The technology sector will continue to expand, but Beacon said tech jobs will grow at a more robust pace in the East Bay compared with the other two major urban centers in the Bay Area.

The problems the region faces are difficult but not impossible, said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.

“This could absolutely disrupt the growth surge in the Bay Area economy,” Levy said. “The problems are solvable, but if we don’t fix this, they will cut into growth.”

Many workers face grinding commutes of well over an hour to get to the major employment centers in the Bay Area. One economic expert warned that this could unleash a talent drain from Alameda County and Contra Costa County.

“We are losing some of our best talent in the East Bay to Santa Clara County and San Francisco,” said Darien Louie, executive director of the East Bay Economic Development Alliance for Business. “They live in the East Bay and they are commuting to Silicon Valley and San Francisco because those areas have a greater density of tech companies.”

But the job crunch and housing woes have battered more than just high-tech employees, Beacon and other experts noted.

“Lower-wage wage workers simply cannot afford to live here, adding more strain to an already tight labor market,” the Beacon report stated in its separate outlooks for Santa Clara County, the East Bay and the San Francisco-San Mateo metro area, a warning that also applied to California generally.

The woes of lower-skilled workers shouldn’t be ignored amid the current housing and traffic crisis, experts said.

“We still need restaurants, hotels, dry cleaners, entertainment venues, and we are really hard pressured to get the employees for that because they have to commute so far to get to work,” Louie said.

Bay Area rent increases leave wage gains in the dust

By GEORGE AVALOS | Bay Area News Group, July 12, 2017

 

SAN JOSE — Wage gains have fallen far behind skyrocketing costs for housing, a gap that’s emerged despite a robust job market in recent years, according to a report released Monday.

The housing-wage gap highlighted by the report from the Silicon Valley Institute for Regional Studies suggests that it is becoming increasingly difficult for residents in the Bay Area to keep up with the cost of owning or renting a home.

Over the five years that ended in 2016, wages in the Santa Clara County, San Mateo County and San Francisco areas have risen by an average of 2.8 percent a year. Over the same stretch, the cost of rental housing has jumped by an average of roughly 9 percent annually, the report by the Silicon Valley Institute stated.

From 2011 to 2016, the median wage in the three counties rose by a total of 14 percent, while the median apartment rent rose by a cumulative 45.2 percent, reported the regional institute, a unit of Joint Venture Silicon Valley.

“The one constant trend and continuing threat is insufficient housing construction and high housing costs,” said Stephen Levy, the economist who prepared the report for the Silicon Valley Institute.

From 2007 through 2017, the three-county region added 80,300 residential units, but the economic group determined that 138,100 residential units were needed to actually keep pace with the population growth in the area.

From 2012 through 2016, the Santa Clara County, San Mateo County and San Francisco region added 100,000 jobs a year. But by May of this year, the annual pace of job gains had slowed drastically to 40,000 jobs.

“Though job growth slowed, the area’s housing shortage became still more pronounced,” the Institute for Regional Studies stated.

The Cost of a Hot Economy in California: A Severe Housing Crisis

By ADAM NAGOURNEY and CONOR DOUGHERTY, NY Times, JULY 17, 2017

 

SACRAMENTO — A full-fledged housing crisis has gripped California, marked by a severe lack of affordable homes and apartments for middle-class families. The median cost of a home here is now a staggering $500,000, twice the national cost. Homelessness is surging across the state.

In Los Angeles, booming with construction and signs of prosperity, some people have given up on finding a place and have moved into vans with makeshift kitchens, hidden away in quiet neighborhoods. In Silicon Valley — an international symbol of wealth and technology — lines of parked recreational vehicles are a daily testimony to the challenges of finding an affordable place to call home.

The extreme rise in housing costs has emerged as a threat to the state’s future economy and its quality of life. It has pushed the debate over housing to the center of state and local politics, fueling a resurgent rent control movement and the growth of neighborhood “Yes in My Back Yard” organizations, battling long-established neighborhood groups and local elected officials as they demand an end to strict zoning and planning regulations.

Now here in Sacramento, lawmakers are considering extraordinary legislation to, in effect, crack down on communities that have, in their view, systematically delayed or derailed housing construction proposals, often at the behest of local neighborhood groups.

The bill was passed by the Senate last month and is now part of a broad package of housing proposals under negotiation that Gov. Jerry Brown and Democratic legislative leaders announced Monday was likely to be voted on in some form later this summer.

“The explosive costs of housing have spread like wildfire around the state,” said Scott Wiener, a Democratic senator from San Francisco who sponsored the bill. “This is no longer a coastal, elite housing problem. This is a problem in big swaths of the state. It is damaging the economy. It is damaging the environment, as people get pushed into longer commutes.”

For California, this crisis is a price of this state’s economic boom. Tax revenue is up and unemployment is down. But the churning economy has run up against 30 years of resistance to the kind of development experts say is urgently needed. California has always been a desirable place to live and over the decades has gone through periodic spasms of high housing costs, but officials say the combination of a booming economy and the lack of construction of homes and apartments have combined to make this the worst housing crisis here in memory.

Housing prices in Los Angeles, San Francisco, San Jose and San Diego have jumped as much as 75 percent over the past five years.

The bill sponsored by Mr. Wiener, one of 130 housing measures that have been introduced this year, would restrict one of the biggest development tools that communities wield: the ability to use zoning, environmental and procedural laws to thwart projects they deem out of character with their neighborhood.

It is now the subject of negotiations between Mr. Brown and legislative leaders as part of a broader housing package intended to encourage the construction of housing for middle- and lower-income families that is also likely to include the more traditional remedy of direct spending to build more housing units.

This is not the first time this state has sought to prod recalcitrant local governments to build housing. Mr. Brown tried to push through a measure to force communities to build more affordable housing around a year ago. That effort, like most in recent years, faltered in the face of opposition from local officials, homeowners and environmentalists, who often see these kinds of measures as enriching developers while threatening the character of some of the most visually striking parts of this state, along the coast and in the mountains.

“It’s giving developers a great gift and not giving residents and voters a chance to cast their opinions about what happens in their own neighborhood,” Helene Schneider, the mayor of Santa Barbara, said of Mr. Wiener’s new bill.

But the worsening housing crisis here has created a political environment where prospects for a state housing intervention appear more likely than ever.

“We’re at a breaking point in California,” Mr. Wiener said. “The drought created opportunities to push forward water policy that would have been impossible before. Given the breadth and depth of the housing crisis in many parts of California, it creates opportunities in the Legislature that didn’t exist before.”

The debate is forcing California to consider the forces that have long shaped this state. Many people were drawn here by its natural beauty and the prospect of low-density, open-sky living. They have done what they could to protect that life. That has now run up against a growing generational tide of anger and resentment, from younger people struggling to find an affordable place to live as well as from younger elected officials, such as Mayor Eric M. Garcetti of Los Angeles, who argue that communities have been failing in what they argue is a shared obligation.

For the past several decades, California has had a process that sets a number of housing units, including low-income units, that each city should build over the next several years based on projected growth. Mr. Wiener’s bill targets cities that have lagged on building by allowing developers who propose projects in those places to bypass the various local design and environmental reviews that slow down construction because they can be appealed and litigated for years.

The bill applies only to projects that are already within a city’s plans: If the project were higher or denser than current zoning laws allow, it would still have to go through the City Council. But by taking much of the review power away from local governments, the bill aims to ramp up housing production by making it harder to kill, delay or shrink projects in places that have built the fewest.

It is hard to say exactly which projects might benefit if the various bills were passed, since it’s impossible to know which projects local governments might reject in the future. But there are various examples where it might have pushed a development along.

And Proposition 13, the sweeping voter initiative passed in 1978 that capped property taxes, has made things worse: It had the effect of shrinking the housing stock by encouraging homeowners to hold on to properties to take advantage of the low taxes.

“California is a beautiful place with great weather and a terrific economy,” said Issi Romem, the chief economist with BuildZoom, a San Francisco company that helps homeowners find contractors. “To accommodate all those people you need to build a lot, and the state’s big metro areas haven’t since the early ’70s. To catch up, cities would need to build housing in a way that they haven’t in two generations.”

Coastal cities — which tend to have the worst housing problems — have the most scarce land. Still, economists say, the high cost of all housing is first and foremost the result of a failure to build. The state has added about 311,000 housing units over the past decade, far short of what economists say is needed.

“Cities have proven time and time again that they will not follow their own zoning rules,” said Brian Hanlon, policy director of the San Francisco Yimby Party, a housing advocacy group. “It’s time for the state to strengthen their own laws so that advocates can hold cities accountable.”

Still, few elected officials are eager to risk community anger by forcing through construction that would, say, put a 10-story apartment building at the edge of a neighborhood of single-family homes. That has turned California into a state of isolated and arguably self-interested islands.

“We have cities around California that are happy to welcome thousands of workers in gleaming new tech and innovation campuses, and are turning a blind eye to their housing need,” said Mr. Chiu.

In the Bay Area, the explosive growth of the tech industry has led to escalating rents, opening a tough debate over gentrification and brutal commutes for workers. “Cities that deny housing are contributing to skyrocketing rents, unfair evictions and homelessness,” said Lori Droste, a member of the Berkeley City Council.

The measure has raised considerable opposition as well, including from lawmakers who argued that letting state take power away from local governments strips communities of the ability to control the fundamental character of their own neighborhoods.

“More and more people are becoming well aware that we have a housing affordability crisis on our hands,” he said. “The issue is just reaching critical mass with the Legislature and the public.”

Chinese investor behind San Francisco office tower bets on Berkeley housing

By Blanca Torres, East Bay Business News, July 20, 2017, 

Danville-based Blake Griggs Properties teamed up with a big Chinese investor to buy an 84-unit apartment development site in Berkeley.

The investor is Gemdale Properties and Investment, an affiliate of Gemdale Corp., one of the largest real estate companies in China.

The Berkeley site, located at 2035 Blake St., is slated for a five-story building with 1,350 feet of ground floor retail.

Gemdale was drawn in by the project’s location, near the busy intersection of Shattuck Avenue and Dwight Way, which is walking distance to the University of California, Berkeley and downtown Berkeley.

“The large student population, increasing enrollment and lack of on-campus housing provides a built-in demand generator,” said Jason Zhu, chairman of Gemdale USA, in a statement.

The project is the first Berkeley development for Blake Griggs, a prolific East Bay developer working on an $800 million portfolio including a transit village at the Walnut Creek BART Station.

The developers expect to break ground on the Berkeley project this fall.

Foreigners are snapping up a record number of US homes

By Diana Olick, CNBC,  July 19,2017

Foreign purchases of U.S. residential real estate surged to the highest level ever in terms of number of homes sold and dollar volume.

Foreign buyers closed on $153 billion worth of U.S. residential properties between April 2016 and March 2017, a 49 percent jump from the period a year earlier, according to the National Association of Realtors. That surpasses the previous high, set in 2015.

The jump follows a year-earlier retreat and comes as a surprise, given the current strength of the U.S. dollar against most foreign currencies, which makes U.S. housing even more expensive. Apparently, the value of a financial safe-haven is outweighing the rising costs

Foreign sales accounted for 10 percent of all existing home sales by dollar volume and 5 percent by number of properties. In total, foreign buyers purchased 284,455 homes, up 32 percent from the previous year.

Half of all foreign sales were in just three states: Florida, California and Texas.

Chinese buyers led the pack for the fourth straight year, followed by buyers from Canada, the United Kingdom, Mexico and India. Russian buyers made up barely 1 percent of the purchases.

But the biggest overall surge in sales in the last year came from Canadian buyers, who scooped up $19 billion worth of properties, mostly in Florida. They are also spending more, with the average price of a Canadian-bought home nearly doubling to $561,000.

“There are more [baby] boomers now than ever before. It’s the demographic,” said Elli Davis, a real estate agent in Toronto who said she is seeing more older buyers downsize their primary home and purchase a second or third home in Florida. “The real estate here is worth so much more money. They all have more money. They’re selling the big city houses that are now $2 million-plus, where they went up so much in the last 10 to 15 years, so they’re cashing in.”

Despite the anti-immigrant rhetoric from the Trump administration, especially about building a wall between the U.S. and Mexico, nonresident buyers from Mexico were undeterred. Mexican buyers nearly doubled their purchases by dollar volume from a year earlier, coming in third behind China and Canada.

“You could easily make the point that perhaps their uptick was wanting to buy now before new immigration policy was in place,” said Adam DeSanctis, economic issues media manager at the National Association of Realtors.

Exclusive: Developer wants to build large apartment project next to East Bay BART station

By Roland Li, East Bay Business News, July 13, 2017 

Developer Westlake Urban is close to approval on 197 apartments at its San Leandro Tech Campus, as a decade-long effort to build next to the BART station gains momentum.

The City Council will vote to potentially approve the housing project at 601 Parrot St. on Monday. The project requires a plan change in the San Leandro Tech Campus, which is approved for up to 500,000 square feet of office space but no housing.

Sunny Tong, Westlake Urban managing director, was optimistic that the project would win approval. “Staff is very supportive,” he said. “It’s smart growth. We’re putting housing next to employment.”

As the Bay Area’s economy has boomed, more office tenants and residents have sought locations near public transit hubs, and BART owns 200 acres of land that could be transformed into new buildings. But growth has been uneven, with some stations seeing hundreds of new housing units, while other projects are still frozen.

San Leandro’s transit-oriented development strategy around its BART station was approved in 2007, but the recession delayed new construction. San Mateo-based Westlake Urban initially had approvals for 700 housing units, but switched the plan to office space. It’s now seeking to build a portion of that housing.

If approved, Tong hopes to break ground on the seven-story housing project in the spring of 2018 and open by early 2020. The budget is $75 million to $80 million. TCA Architects designed the project.

Oakland has a chance to do it right as tech grows in the East Bay, Kapor exec says

By Alisha Green, East Bay Business News, July 17, 2017

With soul-searching up and down the Peninsula about the harassment and lack of diversity in the tech sector, there might be a beacon just across the Bay for how things can improve.

Oakland can be a proving ground for a more diverse, equal tech sector. That’s what Lilibeth Gangas is working to make it in her role as the chief technology community officer at the Kapor Center for Social Impact.

There were an estimated 6,150 tech workers in Oakland in 2015, according to the Oakland Metropolitan Chamber. That’s around 3.4 percent of the total jobs in the city. Tech accounts for around 11 percent of employment in San Francisco, by comparison.

Tech’s presence is growing quickly in Oakland, though: About a third of the tech jobs there were created within the last three years, according to the city, and the number of tech jobs has been growing by at least 10 percent each year for the last few years.

“Oakland has the right ingredients,” Gangas said. “It couldn’t be a better test case. We have diversity that is organic, and that diversity right now is being challenged and changing because of the folks that are moving in and the gentrification.”

 

Oakland housing developers are on edge after spate of apartment fires, but determined to keep building

By Blanca Torres and Roland Li, East Bay Business News, July 10, 2017 

On Friday morning, John Protopappas’ phone started ringing around 6 a.m. with the first of about 40 calls.

Everyone, including Oakland Mayor Libby Schaaf and California Governor Jerry Brown, a former Oakland mayor, was asking the same question, said Protopappas, a longtime Oakland developer: “What the heck is going on in Oakland? Why can’t this be stopped?”

They were calling about the fourth East Bay construction fire in less than a year that ravaged a partially built apartment project. This time it was Wood Partners’196-unit Alta Waverly project at 2302 Valdez St. in Oakland. As of Friday afternoon, fire officials haven’t determined whether the Alta Waverly fire is suspicious, but arson investigators are on the case.

 

The recent surge in fires, including two at the same 101-unit Holliday Development project in nearby Emeryville, has housing developers on edge. But developers are determined to continue building homes in a city that they say is supply-starved.

“It’s got to stop,” said Protopappas of the recent fires. He is CEO of Madison Park Financial, a prolific Oakland-based housing developer that is building 162 apartments, one of four Oakland projects it owns under construction, less than a mile from the Wood Partners site.

Protopappas said the fires are suspicious because they have all started in the middle of the night and burned quickly. Investigators said the second fire at Holliday’s project was arson and have offered a $100,000 reward and released video camera footage of a suspect.

Protopappas and another veteran Oakland developer, Mike Ghielmetti of Signature Development Group, have increased security at their active construction sites. Holliday Development hired two armed guards and installed 12 security cameras after the first fire, but it didn’t prevent the second. Fire officials said on Friday that Wood Partners also had security.

Construction fires, “make all of us very nervous in the community building business,” said Protopappas. “It’s appears that there is a group or individual that is out to destroy progress in the city of Oakland.”

Here are 5 East Bay cities pulling in major VC money

By Riley McDermid, East Bay Business News, July 3, 2017,

Tech blog TechCrunch has put together a list of nine East Bay cities that are magnets for startup funding, as venture capitalists look outside Silicon Valley and San Francisco for booming places to put their money.

TechCrunch’s first installment of its two part series names five East Bay cities that “punch above their weight” in attracting venture capital. Here’s their list so far:

  1. Fremont: TechCrunch names this city of 230,000 as a major attractor of venture capital, citing well-known corporate residents like Tesla Motors, Lam Researchand Solyndra as solid anchors for the local startup scene. It’s also attracted around $600 million in venture capital since 2014 and has scene that funding go to multiple sectors including tech, biotech and energy.

“The largest funding recipient, flexible display maker Royole, is actually a multi-national startup, with major operations in both Fremont and Shenzen, China,” TechCrunch reports. “Other heavily funded startups include GlassPoint Solar, a developer of solar steam generators, and Shockwave Medical, in the medical device space.”

  1. Hayward: TechCrunch says the $490 million that this East Bay city has pulled in over the last three years from venture capitalists means it has received more startup funding than Portland and about three times as much as San Antonio. TechCrunch says that engine of growth means Hayward is becoming less of a place that people commute from than one people commute to.

“In recent years, the majority of Hayward’s venture funding has gone to biotechnology companies, like Arcus Biosciences, a developer of cancer therapies that raised a $70 million round in September, and MicuRx, which develops antibodies to treat drug-resistant infections,” TechCrunch reports. “Hayward is also making inroads as an energy startup hub. Primus Power, a provider of utility-scale battery storage, is there, as is Alphabet Energy, which is developing technology to convert waste heat to energy.”

  1. Pleasanton: Dubbed the “home of HR software,” venture capitalists have showered this city with $300 million since 2014, TechCrunch estimates, as funding has poured in for well-know companies like WorkDayand Oracle-acquiredPeopleSoft. That tide may be turning, however, as new funding rounds have turned to the energy and biotech sectors, with local startups Fulcrum Bioenergy and 10x Genomics raking in millions.
  2. Oakland: Oakland’s close proximity to San Francisco has been a boon to this East Bay city, TechCrunch says, as the “The City” has continued to be home base for a litany of startups. Overall, Oakland has attracted $500 million in VC funding over the last three years, a figure that makes it about even with its much smaller neighbor Emeryville. The startup money in Oakland is going largely to food startups like Blue Bottle Coffeeor Revolution Foods, but venture capitalists have also been staking other companies in Oakland in areas like software, health care and ecommerce.
  3. Emeryville: TechCrunch estimates Emeryville, too, has grabbed about $500 million in startup funding since 2014, as marquee-name tenants like Pixar and Leapfrog continue to give the area household name recognition. But the tiny city’s footprint is extending to other sectors as well, convincing VCs that it has more to offer in the startup arena.

“Among startups, large funding recipients are a mix of life sciences and tech. Zymergen, a synthetic biology startup, is the biggest funding recipient, with $170 million in venture funding to date, and Bolt Threads, which has raised $90 million to develop man-made fabrics based on the properties of spider silk, is among the highest-profile VC-backed companies,” TechCrunch reports.

Redfin files to go public, seeking $100M

Seattle tech broker also announces iBuyer program, Redfin Now

BY CAROLINE FEENEY, Inman, July 6, 2017

Seattle-based tech brokerage Redfin has filed to go public, today registering its S-1 with the Securities and Exchange commission and pricing its initial public offering (IPO) at $100 million.

The real estate company, led by CEO Glenn Kelman, offers traditional real estate services alongside lower commissions and innovative technology, allowing it to sell homes for more money and with a higher success rate than traditional agents, Redfin says. It launched in 2004 and began offering homebuying and selling services in the Pacific Northwest starting in 2006 and sprawling across the U.S. over the last decade for a total of 80 markets.

This step is a test for not only Redfin, but other innovative real estate business models to see whether the public markets will hold up their private investor valuations. If successful, it could free up more investment capital.

No online residential real estate company has filed to go public since Zillow (2011) and Trulia (2012).

In the public filing, Redfin also brags about a series of accomplishments including:

  • Helping customers buy or sell more than 75,000 homes worth more than $40 billion through 2016
  • Gaining market share in 81 of its 84 markets from 2015 to 2016
  • Drawing more than 20 million monthly average visitors to its website and mobile application in the first quarter of 2017, 44 percent more than the first quarter of 2016, making it the fastest-growing top-10 real estate website
  • Earning a Net Promoter Score, a measure of customer satisfaction, that is 32 percent higher than competing brokerages’, and a customer repeat rate that is 37 percent higher than competing brokerages’
  • Selling Redfin-listed homes for approximately $3,000 more on average compared to the list price than competing brokerages’ listings in 2016.

In 2014 Redfin scooped up the neighborhood-information site Walk Score, which offers extensive neighborhood data, along with ratings on the walkability, bikeability and public transit access of individual communities. Its other tech products include Book It Now, an on-demand home tour service and a website feature called Shared Search for collaborative home hunting.

 

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

Glen’s San Francisco Real Estate Market Update, May 31, 2017

May 31, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 

Zillow_-_April

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 continues its’ seasonal trend upward. However, for the first time since 2012, we did not see a monthly increase in our inventory from April to May. Pendings did go up by 10.8%. This leads us to believe that there were more homes that did come onto the market over the last month but that they got “gobbled” up quickly due to the high demand resulting in no inventory level gains. Inventory levels have increased by 79% since the beginning of the year. 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 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), has increased 10.8% over the last 30 days but is less than what we experienced during this time last year by 12.8%. The pending active ratio increased to 1.42. 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 about what we saw last year at this time, (1.43). 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 34% of the homes listed now remaining active for 30 days or longer, while only 15% stayed on the market for 60 days or longer. 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 .02% 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. 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 increased from $617,500 to $640,000 over the last 4 months, also typical for this time of year.

Months_Supply

  • The month’s supply for the combined 38 city area remains at 33 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.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) remains about the same at 2,226 homes actively for sale. This is still above the December 2012 low of 1,086 and less than last year at this time of 2,525 or (11.9% 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 increased to 3,156, lower than where we were last year at this time of 3,619 or (12.8% lower).

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.42. Last year at this time it was 1.43. 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 slightly increased from the last (4 month period) now at 6,485 for the 38 cities tracked. This is than what we saw last year at this time (7,474) or (13.3% less).
  • Sales over the last 4 months, on average, are 4.8% over the asking price for this area down slightly from last year’s 4.6%.

Glen's_Numbers_Pg_1

Glen's_Numbers_Pg_2

Recent News

 

Tour the little-known California ‘micro-hood’ that’s suddenly the hottest housing market in America

Melia Robinson, Business Insider, May 14,2017

Bushrod, Oakland, a small enclave across the Bay from San Francisco, was named the hottest neighborhood of 2017 by real estate site Redfin.

The accolade might come as a surprise to Bay Area locals, in part because there’s not much to do in Bushrod. We bet few could find the three-block-wide micro-neighborhood on a map.

It’s the first time an Oakland neighborhood has made one of Redfin’s “hottest neighborhoods of 2017” lists. The site based the ranking on increases in internet traffic to listings in specific neighborhoods. Bushrod homes typically sell in under two weeks at 115% of the listing price.

 

America’s Hottest Real Estate Markets in May 2017

By Cicely Wedgeworth, | June 1, 201, Realtor.com

Temperatures are rising as spring winds down, but there will be no lazy lolling on the beach for would-be home buyers this summer, judging by the state of home buying in the U.S. in May.

Driven by an ever-scarcer supply of available homes, prices for residential real estate reached new heights in May—and homes were scooped swiftly off the market by a lucky few among the hordes of wannabe buyers, according to new data from realtor.com®.

“With a record number of home buyers out there, this is officially the most competitive, fastest-moving spring housing market in decades,” said Javier Vivas, manager of economic research at realtor.com. “Following a furious start to the season, the median days on market for homes on realtor.com in May is the lowest since the end of the recession, and marks the first time that 1 in 3 homes is selling in under 30 days nationally.”

“The lack of affordable inventory remains a critical issue, particularly for a growing number of first-time home buyers and millennials lining up for starter homes and urban dwellings.”

So where in the U.S. are things the craziest—those places where homes fly off the market the fastest, and buyers are up all hours, clicking on listings? When we pulled together this month’s list of the hottest markets in the country, the top markets were a one-two punch for the Bay Area, with San Francisco (including nearby Oakland and Hayward) at No. 2 and Vallejo, just to the north, at No. 1.

Meanwhile, San Jose, a perennial No.1 on this list, slid to the ninth spot, its lowest ranking in months. It’s a volatile housing market out there.

In overheated market, East Bay buyers throwing all-cash offers at homes

By Janis Mara, Berkeleyside, June 9, 2017,

As buyers strive to land a home in the East Bay’s overheated real estate market, a surprising number are throwing all-cash offers at the limited number of homes for sale, according to newly released data.

Nearly a quarter of all the home sales in Berkeley — 23.2% — were all cash between November 2016 and April 2017, according to real-estate brokerage Redfin. Given that the median sale price for a Berkeley home is around one million dollars, that’s a lot of cash.

Moreover, 26% of all Contra Costa County sales, and 16.5% of Alameda County sales, were all cash in the first quarter of this year, according to data from property website RealtyTrac.

“The all-cash offer is really being driven by the competition between buyers over properties because of the low inventory,” said Marion Henon, co-owner and broker at Marvin Gardens.

“Low inventory” refers to the fact that there is a dearth of homes on the market, a condition that has existed for at least four years.

All_Cash_Purchases

Because so many buyers are competing over so few properties, bidding wars are common, and buyers are adopting all sorts of ploys to get their offers accepted. Offering all cash gives buyers an advantage because it eliminates risk and saves time for the seller.

It can even be possible to close in as little as five to 10 days instead of the customary 17-30 days, Krueger said.

“There are not as many things to deal with. You don’t have to get an appraisal,” the branch manager said.

Krueger is referring to the fact that when a bank loans a buyer money for a mortgage, the bank requires an appraisal to make sure the amount it’s loaning is equal to the home’s value.

That not only takes time, but if the appraisal is below the price the buyer is offering, the buyer could end up stuck with the difference, and might even have to call off the deal.

Agents said the majority of the all-cash buyers are concentrated at the upper end of the price scale, variously described as higher than $1.2 million or $1.5 million.

Who are the people paying cash?

Which gives rise to the question: Who are the people who have upward of $1 million in cash to throw at a house?

“They work in the tech industry and make six figures,” Flores said. “I sold a Piedmont property and the person who bought it was under 30. He paid $1,350,000. It was part of his bonus. An annual bonus might be enough to pay off a million-dollar house in full.”

Grubb said, “From the millennial side, it comes from tech. But it’s not only the tech industry. On the baby boomer side, there is so much equity. Boomers have a tremendous amount of equity in their homes and  in many cases, they’re inheriting money from their parents.”

Also, living parents or grandparents may make gifts to their children for a house purchase, Grubb said.

Anita Becker, a Pacific Union real-estate agent, said she is seeing making the move from the city across the bay. “There are also folks who are cashing out their property in San Francisco and moving to the East Bay for more space or better schools. They have started their family and are getting out of their (San Francisco) condo and selling it for $1.5 million.”

In some cases, the buyer will offer cash to land the sale, then take out a loan after escrow closes.

“We just did a loan for the CEO of a tech company. He bought his house in Albany in the $1.3 million range. We did it all in cash, and we immediately put a loan on it after it closed. It’s a typical strategy,” Krueger said.

“He did not want to put all his cash in the house. He had already been pre-approved for a loan. It’s a good strategy if you have the means to do it,” Krueger said.

Rose said, “You can get a private bridge loan, which is just a privately held fund that’s managed through a local loan broker, to float you enough cash to buy the house.”

Though the interest rate is high, it enables the buyer to make an all-cash offer, then take out a conventional mortgage after the sale, she said. This is not a common strategy.

She noted, “I’ve been a Realtor now for almost 30 years and this is the third super-hot cycle I’ve been through, but this is the first time this all-cash phenomenon has happened.

“Real estate industry customs are changing all the time. In the 1980s you would just get pre-qualified for a loan, meaning that if everything you told the loan broker on the phone is true, you’ll probably get a loan. Then it evolved into being pre-approved. That means they have run all your credit reports, the loan is a slam dunk.

“Now it’s evolved into, ‘We’ll do better than being pre-approved. We’ve got the money right here.’”

Who’s Powering the Housing Market? Surprise! It’s Millennials

by HERB WEISBAUM, NBC News, June 5, 2017

Millennials are growing up, settling down and looking to buy a house — for the extra room and the investment opportunity.

Millennials were the largest group of home buyers (34 percent) for the fourth consecutive year, according to NAR’s 2017 Home Buyer and Seller Generational Trends study. By comparison, baby boomers were 30 percent of buyers.

“That myth that millennials don’t want to own things is not true,” said Jeremy Wacksman, chief marketing officer at the Zillow Group. “Millennials are not just starting to buy homes; they’re powering the housing market.”

“Millennials have been fairly slow to get into the market, but we are seeing an uptick in millennial buyers this year — which is a good sign, because as home values rise, we want a wider number of people to participate in this housing recovery,” said Lawrence Yun, chief economist at the National Association of Realtors (NAR). “There’s a pent-up demand and as the economy continues to improve, we expect to see more people in their early thirties, adults who are still living with their parents — clearly not their idea of the American dream — begin to look for their own housing units.”

Research done by the National Association of Homebuilders found that more than 90 percent of millennials say they eventually want to buy a house.

“Home ownership is very much at the center of what they want to do in their lives,” said Rose Quint, NAHB’s assistant vice president for survey research. “They see the challenges, but home ownership is still front and center one of their major goals.”

Homes With Blue Bathrooms Sell for $5,440 More Than Expected

BY ALEXA FIANDER, Zillow, June, 1, 2017

For-sale listings with cool, neutral wall colors sell for more money, according to Zillow analysis.

A fresh coat of paint in the right color may help sell a home for more money.

Homes with rooms painted in shades of light blue or pale blue/gray can sell for as much as $5,440 more than expected, according to a new Zillow report.

Zillow’s 2017 Paint Color Analysis looked at more than 32,000 photos from sold homes around the country to see how certain paint colors impacted their sale price on average, when compared to similar homes with white walls.

Curious what colors may help you sell your home for more? See below for the full results of the 2017 Paint Color Analysis.

Blue kitchens

Homes with blue kitchens, often found in soft gray-blue, sold for a $1,809 premium.

Light blue bathrooms

Homes with light pale blue to soft periwinkle blue bathrooms sold for $5,440 more than expected.

Brown living rooms

Turns out homes with light beige, pale taupe or oatmeal-colored living room walls sell for $1,926 more than expected.

Cadet blue bedrooms

Homes with light cerulean to cadet blue bedroom wall colors can come with a $1,856 premium.

Slate blue dining rooms

Homes with slate blue to pale gray blue dining rooms also sold for more money — $1,926 more on average than homes with white dining room wall colors.

“Greige” home exteriors

A home’s exterior color may also have an impact on its sale price. Homes painted in “greige,” a mix of light gray and beige, sold for $3,496 more than similar homes painted in a medium brown or with tan stucco.

Navy blue front doors

For a pop of color, homes with front doors painted in shades of dark navy blue to slate gray sold for $1,514 more.

Selecting the right paint color is one of many factors that may affect why a home sells faster or for more money. Walls painted in cool neutrals like blue or gray have broad appeal, and may be signals that the home is well cared for or has other desirable features.

Some colors may actually deter buyers. Homes with darker, more style-specific walls like terracotta dining rooms sold for $2,031 less than expected. However, a lack of color may have the biggest negative impact as homes with white bathrooms sold for an average of $4,035 below similar homes. Zillow’s full report can be found here.

Sellers can also consult Zillow’s Owners Dashboard to see in real time how their listing is performing compared to similar ones on the market.

Wells Fargo economist sees Bay Area’s rising costs, congestion ‘crowding out growth’

Mark Calvey, SF Business Times, June 6, 2017

The San Francisco region is a national engine of economic growth and job creation, but years of good times may be catching up with the Bay Area as traffic congestion gets worse and home prices soar higher, said Wells Fargo Senior Economist Mark Vitner.

“The pace of job growth has cooled across the Bay Area,” Vitner told those attending Tuesday’s San Francisco Chamber of Commerce Update SF breakfast. “Years of rising costs and growing congestion are crowding out growth.”

San Francisco has accounted for 4.5 percent of the nation’s economic growth since the recession ended in 2009 even though the metro area only accounts for 2 percent of the national economy, Vitner said.

But the cooling is modest. Vitner estimates that the entire Bay Area will create 70,000 jobs this year, which is not a seasonally adjusted figure. That compares to 82,000 jobs created in 2016 and 85,000 new jobs in 2015.

“Job growth will be slower than last year, but it’s not much of a deceleration,” Vitner said.

Perhaps more stunning is his noting that more people are leaving San Mateo and Santa Clara counties than are moving in, reflecting the region’s high cost of living. Some long-time California residents are cashing in their home equity to move to less expensive parts of the country, the Orange County Register reported.

Last week LinkedIn said its latest data shows the number of workers moving to the Bay Area plunged 17 percent since February. The number of workers arriving in the Bay still exceeds the number moving away.

“San Francisco has seen employment growth moderate over the past year but is still adding jobs at a much faster pace than the nation,” Vitner said. “Hiring is up across all key industry sectors, led by a boom in construction projects.”

San Francisco’s home price hits new record: $1.5 million

By Roland Li, SF Business Times, June 6, 2017

San Francisco’s median home price reached a new record of $1.5 million in May, according to sales data analyzed by brokerage Paragon Real Estate Group.

San Francisco is now over six times the average U.S. home price of $245,000. It is the most expensive major city in the U.S. for both home prices and rents. The median price has soared by 50 percent since 2013, when it hit $1 million.

Good Walk Scores have SF buyers, renters running to homes

By Kathleen Pender, SF Chronicle, June 3, 2017 

When Anu Sharma and her husband Vishwa Chandra were house hunting in San Francisco this spring, they would only consider neighborhoods with a Walk Score of 90 or above.

Walk Score is a company and scoring system that rates cities, neighborhoods and individual addresses on a 100-point scale based on their distance to places like grocery and retail stores, bars and restaurants, schools, parks, entertainment spots, banks and post offices.

Because of the way it’s constructed, it favors urban areas over suburban and rural ones, and its popularity has grown along with the preference for city living among many Millennials and empty-nesters.

“We have a car, but (almost) never use it,” said Sharma, who takes BART to her job with a health care startup in the East Bay. Her husband, a management consultant, travels four days a week and usually takes Uber to the airport.

ecause he’s gone so much, “I need to be where something is sort of happening, not feeling like I’m stranded on an island somewhere,” Sharma said. She wants a lifestyle where she can walk the dog, meet up with a friend after work and get to know the neighbors. “If I just wanted a nice house,” she said, she’d move to the suburbs.

Sharma and Chandra, both 37, are waiting to close on a condo in Hayes Valley, where the Walk Score is 97.

Walk Score started just seven years ago, but its ratings have become a staple on real estate websites such as Redfin (which purchased Walk Score in 2014) and Zillow. These sites typically include each home’s Walk Score along with other neighborhood information such as school ratings. Many rental listings also cite Walk Scores.

Real estate agents often mention them in their ads and flyers. “We put them in when they score high, 80 or more,” said Julie Gardner, a Realtor with the Grubb Co. in Oakland.

Zillow searched all homes that appeared on its website in 2016 and discovered that 2.3 percent of Bay Area listings used the words “Walk Score,” “walkable” or “walkability” in their descriptions. Nationwide, only 0.5 percent of listings used them.

Not surprisingly, the terms show up most frequently in cities with high Walk Scores. They landed in 8.9 percent of listings for homes in San Francisco, 8.4 percent in Albany and 7.4 percent in Berkeley. These cities have average Walk Scores of 86, 80 and 81, respectively. The terms appeared in only 0.3 percent of listings in San Jose (average score 51).

“Walkability is a huge factor for a lot of buyers,” said Ruth Krishnan, an agent with Paragon Real Estate in San Francisco. But what’s walkable for some might not be for others. “I ask clients, ‘What is walkable to you? Walk downstairs to get coffee? A two-minute walk? Or a five- or 10-minute walk?’”

Certain amenities mean more to some buyers than others. Piedmont “doesn’t have a high walkability score, but the majority of people are moving here so their kids can walk to school,” Garner said. The Piedmont Walk Score is in the low 50s.

The formula does not account for sidewalks, hills, climate or crime rates — which could be big considerations for some buyers and renters. That explains why Nob Hill, Russian Hill and Telegraph Hill — home to some of San Francisco’s steepest streets — have scores of 96 to 98. And why the Tenderloin — hardly a stroller’s paradise, especially at night — is rated 99. The Bay Area’s only neighborhood with a perfect Walk Score of 100 is Chinatown.

The city’s lowest-rated neighborhood is Treasure Island (Walk Score 36), followed by McLaren Park (38), which is nice if you like trees and views but not so great for walking to brunch.

“We are not trying to measure how pleasant an area is,” Walk Score spokeswoman Aleisha Jacobson said. The formula simply awards points based on the shortest distance to the greatest number of establishments.

Walk Score also calculates bike and transit scores. It makes money by licensing its scores to other websites; to researchers, government agencies and businesses that use it a variety of ways, and on its apartment-rental site.

Among cities nationwide, New York has the highest average Walk Score (89) followed by San Francisco (86).

In the Bay Area, 18 of the 20 most-walkable neighborhoods are in San Francisco. The other two are in Oakland — downtown and Koreatown-Northgate.

According to Redfin research, homes with higher Walk Scores command higher prices. In San Francisco, a one-point difference equates to a difference of $3,943 on a $950,000 home. In Oakland, the difference amounts to $1,735 on a $523,000 home.

In Oakland and Berkeley, “It’s all about the Walk Score,” said D.J. Grubb, president of the Grubb Co. “Twenty years ago, everyone wanted to move from Alameda to Contra Costa County. Now, people want to stay in Oakland. I have a lot of people leaving the Oakland Hills and buying condos in a more urban corridor. The Millennials are trying to buy that house as well. It has two audiences, the Baby Boomers and Millennials.”

For this reason, “the flatlands are out-appreciating the hill area, without question,” Grubb said.

Workers moving to Bay Area plummets almost 20%, driving skills shortage

By Gina Hall, SF Business Times, June 2, 2017

Fewer workers are moving to the Bay Area than in the past, further exacerbating the scarcity of skilled workers for in-demand fields.

The total number of workers arriving in the Bay Area still exceeds the number of workers fleeing the region, but net number of new arrivals has fallen 17 percent since February, according to June data out from LinkedIn. By comparison, Seattle saw a net migration increase by 2 percent over the same period.

The growth of other job hubs is largely to blame for the decline in workers coming to the area. Cities such as Seattle, Portland, Denver, Austin and Charlotte are offering exciting career opportunities with much cheaper cost of living.

Seattle, Portland and Austin gained the most workers from the Bay Area in the last 12 months. For every 10,000 LinkedIn members in the Bay Area, 4.14 workers moved to Seattle in the last year. The migration dropped the Bay Area from No. 10 to No. 12 on LinkedIn’s list of cities gaining the most workers.

So who’s still moving into the region? Workers from other pricey cities. The Bay Area gained the most workers in the last 12 months from New York City, Boston and Chicago. For every 10,000 LinkedIn members in the Bay Area, 5.67 workers moved here in the last year from New York City.

Workers coming to the area are flooding the regional marketplace with tech skills. Per LinkedIn’s data, the top 10 most abundant skills in the Bay Area include: Perl/Python/Ruby, integrated circuit design, cloud computing, mobile development, software development, C/C++, Java, scripting languages, network administration and web programming.

But many non-tech career areas are feeling the brunt of the drop in net migration, with skills such as healthcare management and education among the most scarce in the Bay Area.

The Mountain View-based career networking site defined scarcity as a scenario “when employer demand for a certain skill exceeds worker supply of that skill.” To find that, LinkedIn compared the skills listed on profiles of its members in the Bay Area who were hired in the past 12 months to skills listed on profiles of all LinkedIn members in the region. (You can see what the most scarce skills are in the gallery above.)

Jobs data could signal shortage of qualified workers to hire, By Josh Boak|AP, June 2, 2017

WASHINGTON — Are employers starting to run out of workers to hire?

A hiring pullback reported in Friday’s U.S. jobs data for May raises that prospect. The economy added just 138,000 jobs, which was still high enough to help cut the unemployment rate to a 16-year low of 4.3 percent. With the recovery from the Great Recession having reached its eighth year, hiring is gradually weakening.

“It’s definitely becoming an increasing problem for businesses — finding qualified workers,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The pool has diminished considerably.”

Companies are now choosing from among a smaller pool of applicants, especially for those who have the education or skills they need.

“Given reports that job openings are near all-time highs, it suggests that businesses are struggling to fill these positions,” said Beth Ann Bovino, U.S. chief economist for S&P Global Ratings.

Contributing to the trend has been the continuing retirements of America’s vast generation of baby boomers. In addition, companies are increasingly seeking workers with college degrees or specialized know-how — construction experience, for example, or a background in machine automation. As they do, the less-qualified are finding it harder to land work, and some have grown discouraged and given up their searches.

“After the recession, we saw employers hire people with higher levels of qualifications, and it seems like that habit has stuck through the recovery,” said Cathy Barrera, chief economic adviser at the jobs firm ZipRecruiter.

Historically, declining unemployment tends to lead to strong pay raises. So far, that hasn’t happened broadly across the economy. Average hourly earnings have risen a middling 2.5 percent over the past year.

 

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

Glen’s San Francisco Real Estate Market Update, April 30, 2017

April 30, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 Zillow_March_2017

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 continues its’ seasonal trend upward for the fourth month in a row gaining 18.8% over the last 30 days and 79% since the beginning of the year. 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 30 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 27 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 7.5% over the last 30 days but is less than what we experienced during this time last year by 14.5%. The pending active ratio decreased slightly to 1.28. 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, (1.39). 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 with 29% of the homes listed now remain active for 30 days or longer, while only 14% 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 .02% 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. 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 increased from $617,500 to $640,000 over the last 4 months, also typical for this time of year.

Months_Supply

  • The month’s supply for the combined 38 city area remains at 30 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.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) increased to 2,222 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 2,388. 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 2,847, lower than where we were last year at this time of 3,328.

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.28. Last year at this time it was 1.39. 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 spring and fall.

Sales

  • Sales have slightly increased from the last (4 month period) now at 6,495 for the 38 cities tracked. This is about the same as we saw last year at this time (6,479).
  • Sales over the last 4 months, on average, are 3.4% over the asking price for this area down slightly from last year’s 3.5%.

Recent News

Bay Area home sales and prices heat up in March

By Kathleen Pender, San Francisco Chronicle, April 27, 2017

If March is, as some real estate agents say, a bellwether for the spring and summer home-buying season, then it could be a hot one in the Bay Area.

The median price paid for all new and existing homes and condos sold in March was $709,000, up 6.2 percent from February and up 9.1 percent from March of last year, according to CoreLogic. The year-over-year increase was the highest for any month since January 2016.

Home sales typically pick up between February and March, as real estate’s busy season gets under way, but this year’s increase was bigger than usual.

Bay_Area_Prices_SFC

One caveat, though, is the weather.

The relentless rain might have depressed activity during the winter. Year-over-year sales were down almost 10 percent in December, flat in January and down 2.4 percent in February. Sales that might have taken place during the winter could have been pushed into March, LePage said.

Sales and prices were up month over month and year over year in almost every Bay Area county. One exception was San Francisco, where the median price was down 5.2 percent since February and down 4.3 percent since March of last year. Sales were also down about 5 percent year over year, but up 44.5 percent from February.

San Francisco’s numbers have been volatile because of a building boomlet, mainly of luxury condos. Developers generally begin selling units long before construction is completed, but sales are not recorded until the building is ready for occupancy and buyers close escrow. So sales often close in clumps.

In San Francisco, only 68 new homes and condos closed last month, compared to 107 in March of last year. And their median price dropped to $939,000 from $1.15 million last year. Resale condo sales and prices also declined year over year, though by much smaller percentages.

But if you look only at single-family homes in San Francisco, sales were up 7.4 percent year over year and prices were up 4.7 percent, LePage said.

Despite the March rebound, the Bay Area is still plagued by a shortage of homes for sale.

In the East Bay, it’s more common for people who move out to sell their homes. “There is a frenzy of sales in Fruitvale and Jingletown,” she said. “That whole area (of Oakland) is really going to be reinvented in the next five or 10 years. When you drive in an area that was downtrodden and you start to see yoga studios, you know something is up.”

Affordable housing drying up across Bay Area, report finds

By Kevin Fagan, San Francisco Chronicle, May 5, 2017

Skyrocketing rents, shrinking incomes and severe cuts in state- and federal-government support for affordable housing have made it far harder for lower-income Bay Area residents to find a place to live, according to a report being released Friday.

The report looks at rents and incomes in Alameda, Contra Costa, Sonoma and San Mateo counties, and concludes that each is more than 10,000 rental spots short of what it would take for everyone of limited means to find an affordable place to live.

People who earn less than 50 percent of the median income in the four counties must spend more than half of their monthly paychecks on rent, according to the report compiled by the nonprofit California Housing Partnership Corp. and the Non-Profit Housing Association of Northern California. Many economists recommend that households spend no more than 30 percent of their income on rent.

The report, which the groups have released annually since 2014, found that state and federal funding for affordable housing in the four counties has dropped 65 percent since 2008.

Meanwhile, in each county the split between rent and income diverged sharply from 2000 to 2015 — with rent shooting up and income dipping.

Alameda County’s median rent shot up 29 percent and renter income dipped 3 percent.

Matt Schwartz, president of California Housing Partnership Corp., noted that between the elimination of redevelopment agencies in California, decreased federal funding and the expiration of special state housing bonds, California’s spending on affordable housing has gone down $1.5 billion since 2012. The housing shortage has grown rapidly since then, he said.

“I’ve worked on affordable housing in the Bay Area for 20 years, and it has never been like this,” said Amie Fishman, executive director of the Non-Profit Housing Association of Northern California. “The past couple of years have been an absolute crisis.”

There have been 130 bills introduced since December in the Legislature related to affordable housing. The author of six of them, Assemblyman David Chiu, D-San Francisco, said there is extra urgency because President Trump’s budget proposals could cost the state $700 million a year in urban housing and development funds.

One of Chiu’s bills would eliminate the state deduction for mortgages on second homes and use the resultant $360 million a year to create affordable housing.

Chiu said Gov. Jerry Brown had not moved aggressively on affordable-housing funding in recent years. “We need to move on several fronts on this issue, and we need to do it now,” he said.

Gareth Lacy, a spokesman for Brown, said the governor doesn’t comment on pending legislation. But he said Brown is also keen to add affordable housing, and he pointed to $3.2 billion in the governor’s proposed budget that would add such housing for low-income and homeless Californians.

How the East Bay and Peninsula lost $185 million in affordable housing funding over the last decade

Roland Li, SF Business Times, May 5, 2017

Annual federal and state affordable housing funding for the East Bay and Peninsula plunged by $185 million over the last decade, worsening the regional housing crisis, according to new reports.

Alameda, Contra Costa and San Mateo counties collectively had $65.6 million of state and federal funding in fiscal year 2015-2016, a 74 percent drop from $250.6 million in funding in fiscal year 2008-2009.

Alameda County saw a bulk of the loss, with a $115 million reduction, or 74 percent. Contra Costa lost 66 percent in funding over the same period, a difference of $37 million. San Mateo County had 83 percent less funding, a nearly $33 million decline.

The analysis was released by California Housing Partnership Corp., Non-Profit Housing Association of Northern California and East Bay Housing Organizations, using data from the government and the University of California, Berkeley.

Gov. Jerry Brown shut down California’s Redevelopment Agencies in 2012, removing over $1 billion in annual affordable housing funding statewide, and over $100 million in annual for the Bay Area. Federal funding for affordable housing also plunged during the recession, and budget cuts haven’t been restored.

A federal spending package passed by Congress this weeks funds most of HUD’s programs at similar levels to fiscal year 2016.

Counties and cities have raised local money for affordable housing through affordable housing requirements at private market-rate projects and housing bonds. In November, Alameda County voters approved a $580 million bond to fund affordable housing and preservation over the next six to eight years.

“Alameda, San Mateo and Santa Clara voted to tax themselves,” said Matt Schwartz, CEO of California Housing Partnership. “I see local voters saying to the state of California, ‘You’ve shirked your duty. We’ve stepped it up, but you have to meet us halfway.'”

“The status quo is not OK. It’s hurting people’s lives,” said Schwartz. “it’s fundamentally changing the ability of the Bay Area to be inclusionary.

Walters: Why California’s housing problem is getting worse

By DAN WALTERS, Sacramento Bee, May 2, 2017

Capitol politicians — most of them, anyway — are celebrating a multibillion-dollar package of new taxes and fees to shore up the state’s dilapidated transportation network.

Meanwhile, however, they take a lackadaisical attitude on a crisis that’s infinitely more serious than rough roads and congestion — an ever-worsening shortage of housing. And some “solutions” would make it even more intractable.

Soaring housing costs are distressing millions of Californians, forcing them to devote 50 percent or more of their incomes to shelter. It hits the working poor particularly hard, gives us the nation’s highest poverty rate and threatens the economy.

The breadth of the housing gap is shown in a couple of dry statistical reports that Brown’s Department of Finance issued on Monday. One charts California population growth since 2010, and the other shows that housing supply grew only half as much.

California has seen a relatively modest population growth, 2.3 million or 6 percent, since 2010, but has added just 400,000 housing units, a 2.9 percent increase.

The state housing department calculates that we need to add 180,000 new units a year to keep pace with population and replace units lost to fire and demolition. We’re barely building 100,000 new units a year now, and the net is only half of what we need.

In other words, the gap is getting wider every minute. Why? The virtually unanimous conclusion of housing experts is that the reluctance of local governments, particularly cities, to approve new housing projects due to backlash from self-proclaimed environmentalists and not-in-my-backyard activists is a major factor.

The new housing data seem to support that contention.

Los Angeles saw its population grow by 6.5 percent in 2010-17, but its housing stock increased just 4 percent.

Other cities’ gaps were as bad or worse. San Diego: 8 percent population growth, 3.9 percent housing growth. San Francisco: population up 8.6 percent, housing up 5.9 percent. San Jose: 10.7 percent more people, just 5.7 percent more housing. Sacramento: population up 5.7, housing up 1.1 percent.

Nevertheless, Democrats who dominate the Capitol, from Gov. Jerry Brown down, have proposed — but not enacted — only tepid, marginal approaches that would do little to close the gap.

Brown proposed a very mild reform, forcing cities to accept projects that are transit oriented and/or meant for the poor. But he hasn’t pushed very hard and faces opposition from environmentalists and labor unions who don’t want to cut red tape that housing opponents use to thwart projects.

Quite a few other housing bills are floating around the Capitol, including one that would tax real estate transactions to underwrite low-income housing. But none would have a big impact, and some would actually discourage construction, such as allowing cities to enact tighter rent controls, or mandating higher-priced union labor on projects.

It seems that those in the Capitol want credit for trying to alleviate the housing crisis rather than actually doing something to solve it.

The Housing Recovery That Wasn’t

By Ralph McLaughlin, Trulia, May 03, 2017

When it comes to the value of individual homes, the U.S. housing market has yet to recover. In fact, just 34.2% of homes nationally have seen their value surpass their pre-recession peak.

What’s more, the geography of the housing market recovery has been uneven. A full 98% of homes in places such as Denver and San Francisco have reached their pre-recession peaks, in comparison to fewer than 3% of homes in Las Vegas and Tucson, Ariz.

We studied property-level home value recovery nationally and in the 100 largest U.S. metro areas by comparing the nominal value of each home as of March 1, 2017 to the nominal peak value of that home prior to the onset of the Great Recession (Dec. 1, 2007). If the current value was greater than the pre-recession peak, we considered that home to have recovered.

We found that the majority of homes in the U.S. have not recovered to their pre-recession peak, but several markets have either fully recovered, or not recovered much at all.

Our findings include: Nationally, just 34.2% of all homes have recovered to their pre-recession peak value. Among the largest 100 metros, the share of homes that have recovered range from less than 3% in Las Vegas, Tucson and Fresno, Calif., to over 94% in Denver, San Francisco and Oklahoma City. Markets with the strongest income growth between December 2009 and January 2017 – such as San Francisco, Seattle and San Jose, Calif., – have seen the largest share of homes pass their pre-recession peak values, while markets with the weakest income growth – such as Las Vegas, Daytona Beach, Fla., and Worcester, Mass. – largely remain below their peak values. –

More in US Expect Local Home Values to Rise

By Jeffrey M. Jones, C.A.R Newsline – Gallup, May 3, 2017

STORY HIGHLIGHTS

  • 61% expect local home values to rise in next year
  • Highest since 70% in 2005
  • Two-thirds continue to say it is a good time to buy a house

WASHINGTON, D.C. — Sixty-one percent of U.S. adults predict housing prices in their local area will increase in the next 12 months, up from 55% a year ago and the highest Gallup has measured since 2005.

Americans’ optimism about home values continues to recover from where it was after the housing bust and recession. Between 2008 and 2012, only as many as one-third of Americans, including a low of 22% in 2009, believed local housing prices would increase.

By 2013, a majority again held this view for the first time since 2007. This year, the percentage expecting housing-value gains pushed past 60%.

The high point in Gallup’s trend was 70% in 2005, the first year it asked the question and shortly before U.S. home values hit their peak.

These expectations largely mirror what has happened to U.S. home values over the past 10 years, with declines between 2007 and 2011, and increases beginning in 2012 and continuing since then.

In addition to the 61% currently expecting local housing prices to rise, 28% predict they will stay the same and 10% say they will decrease.

Home-value expectations vary by region, with nearly three-quarters of those in the West predicting increases, compared with slightly more than half of Midwestern and Eastern residents. In 2016, some of the largest increases in home values occurred in the Western U.S.

Gallup Poll

Forget the bubble: Is the Bay Area economy primed for a second wind?

Blanca Torres, SF Business Times, May 2, 2017, 

San Francisco’s real estate market shows no signs of slowing down, which means industry insiders are wondering when the good times will come to an end.

No one knows for sure, but David Bitner, head of Americas Capital Markets Research for real estate brokerage firm Cushman & Wakefield, said the party looks to be headed for a second wind.

“Expansions don’t die of old age,” Bitner said last week during a real estate conference sponsored by Eisner Amper in San Francisco. Expansions end from “excesses or triggers,” such as a spike in interest rates, credit crash, political instability or a catastrophic event like Sept. 11, 2001.

Right now, economic indicators such as job growth, consumer confidence and business spending suggest continued growth. Even the election of Donald Trumpas U.S. president, who campaigned on pro-growth economic policies, signals economic growth, Bitner said.

Some people speculate if the economic cycle were a baseball game, the economy would be in extra innings with the possibility of a double header, said Glenn Shannon, vice chairman of Shorenstein Properties, who spoke on a panel at the Eisner Amper conference.

“We’re mindful of the fact this (expansion) has been going on for a long time,” Shannon said. “When you look at fundamentals, there’s not an obvious reason for this thing to break.”

In terms of real estate, investors are still looking for assets to park their capital, Bitner said.

Still, buyers are having a harder time finding properties in core urban areas such as downtown San Francisco, where many desirable buildings have already traded hands, driving up prices. Still, investors are hungry for office buildingsand tech companies continue snapping up office space.

Deals are still happening, but investors are more cautious and careful about how deals are financed, Shannon said.

“If things do turn down in the next one to three years, you’re not highly dependent on succeeding in that unique period,” he said. “You’ve got a business plan and capital structure that’s going to let you hold a fundamentally good asset for the duration.”

Bay Area residents contemplating Sacramento exodus, says report

Very first “migration report” claims some natives have wandering eyes

BY ADAM BRINKLOW , Curbed San Francisco, APR 26, 2017

San Francisco’s 2017 doom and gloom train continues with yet another site releasing a study this week showing that locals in California, particularly in the Bay Area, have developed a wandering eye for homes elsewhere.

The real estate site Redfin released its migration report Monday, showing which cities site users are most frequently browsing homes in—and by extension, which cities they’re most likely to be thinking about leaving.

All told, nearly 20 percent of San Francisco and San Jose Redfin users in the first three months of 2017 (the site combines the regions into one stat) were at least flirting with the idea of a home elsewhere, checking at least ten ads abroad in that time.

That’s not as many as in some other cities. For example, New York’s ratio was 23 percent; Houston’s 25 percent; Dayton, Ohio’s an absolutely alarming 51-plus percent.

But when the site factors in how many—or rather, how few—users in other cities are simultaneously shopping for homes here it gives the Bay Area the highest Net Outflow rating of all of the cities studied.

SF browsers most often had their eye on Sacramento, although Seattle and Portland, Oregon were as usual attractive destinations as well.

This does not mean that 20 percent of San Francisco and San Jose residents are really going to take the plunge and relocate, of course. (It is Sacramento, after all.)

The report considers only Redfin users, albeit with a sample size of 1 million, and not everyone who browses home is really picking up stakes and leaving.

According to the U.S. Census, San Francisco gains far more people than it loses every year (though the most recent figures explore only through 2015), and the city still anticipates a net gain of at least 10,000 new resident per year.

However, this is the third report in less than six weeks suggesting a general regional restlessness.

At the end of March, the Bay Area Council’s annual phone survey of a 1,000 people found roughly 40 percent of the Bay Area considering decamping.

And at the beginning of April, the resume site Indeed reported that nearly 40 percent of Bay Area tech workers on its site were looking for a job elsewhere.

These sorts of survey are usually most helpful when compared with the same benchmark in the past, but in this case this is actually Redfin’s first migration report, though the site plans to release a new one each quarter.

Bay Area rent control movement continues to spread

By Kathleen Pender, San Francisco Chronicle, April 19, 2017 

Rent increases are moderating in the Bay Area, but the rent control movement is not.

Encouraged by some success at the ballot box in November, grassroots efforts to limit rent increases and evictions are spreading to more cities, from San Jose to Santa Rosa.

After a contentious meeting last week, the Pacifica City Council voted 3-2 to approve a temporary rent- and eviction-control ordinance, even though about two-thirds of the 70 people who spoke over the course of nearly four hours opposed it.

Opponents said it was unfair to force landlords to bear the cost of the region’s housing shortage and faulted the city for not creating more affordable housing. Some noted that rent control protects rich tenants as well as poor ones. Many said they were mom-and-pop landlords who invested in rental property for retirement income.

Proponents, including many homeowners, said they hated to see teachers, firefighters and other neighbors forced out because they could no longer afford rent. There were few tenants at the meeting because “there are no renter protections. People are afraid of getting evicted” for speaking out, said Thursday Roberts, campaign manager for Fair Rents 4 Pacifica, which is pushing for rent control.

In the mother of all attempts to expand rent control statewide, a trio of Assembly members from high-rent districts including San Francisco and Oakland introduced a bill in February to overturn the landmark Costa-Hawkins Rental Housing Act.

That 1995 law puts limits on local rent-control ordinances statewide. It exempts multifamily apartments built after Feb. 1, 1995 — and all single-family homes and condos, regardless of age — from limits on rent increases. When tenants voluntarily vacate a rent-controlled unit, landlords can raise the rent to market rates, although future increases are once again limited as long as tenancy is maintained. The law lets cities limit evictions to just causes on all rentals, including single-family homes, regardless of age.

After fierce opposition from the landlord and real estate lobbies, the authors put the bill on hold until next year.

In November, voters approved rent- and eviction-control measures in Richmond and Mountain View but defeated them in San Mateo and Burlingame. In Alameda, voters rejected rent control but approved a landlord-tenant mediation program.

The California Apartment Association, which represents landlords, has filed lawsuits to overturn the Mountain View and Richmond measures. Judges denied its attempts to have them temporarily halted. The association expects a full hearing on the Richmond measure on May 24.

After double-digit increases in 2014 and 2015, Bay Area rents moderated in 2016 and even fell in some cities, including San Francisco. However, they began ticking up again in February and March. It’s possible that landlords fearful of rent control coming to their cities are pushing up rents while they can.

“I don’t think rent-control legislation should limit a good landlord from being a good landlord. It should only limit the bad ones from being bad. I don’t know how they can write the law to make that happen,” she said.

Neither does anyone else.

 

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

Glen’s San Francisco Real Estate Market Update, March 31, 2017

March 31, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

Zillow_Feb_2017

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 third month in a row gaining 11.2% over the last 30 days and 50.7 since the beginning of the year. 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 27 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 27 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 14% over the last 30 days but is less than what we experienced during this time last year by 12.8%. The pending active ratio increased slightly to 1.42. 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, (1.54). 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 increased slightly with 32% of the homes listed now remain active for 30 days or longer, while only 16% 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. 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.

Months_Supply

  • The month’s supply for the combined 38 city area remains at 27 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.

Actives_&_Pendings

 

  • Our inventory for the East Bay (the 38 cities tracked) increased to 1,870 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 1,972. 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 2,648, lower than where we were last year at this time of 3,034.

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.42. Last year at this time it was 1.54. 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 spring and fall.

Sales_3.31.17

 

  • Sales have decreased from the last (4 month period) now at 6,417 for the 38 cities tracked. This is slightly below what we saw last year at this time (6,561).
  • Sales over the last 4 months, on average, are 2.5% over the asking price for this area down slightly from last year’s 2.8%.

Glen's_Numbers_3-31-17_Pg_1

Glen's_Numbers_3-31-17_Pg_2

Recent News

 

It’s a seller’s market again as prices surge across Bay Area and supply dwindles

By Riley McDermid, San Francisco Business Times, April 20, 2017

The housing crunch in the Bay Area is intensifying, after new listings for homes plunged 12 percent from the same period last year and the median home price climbed into double digit increases year over year.

The data come from a new report from the California Association of Realtors released this week. It shows home prices climbing across the entire Bay Area, as well as the rest of the state, as more people look for housing in places with limited housing supply.

“Sales of single-family homes rose 6.9 percent year-over-year in California; in the nine-county Bay Area, the increase was 6.4 percent. Statewide, the median price rose 6.8 percent to $517,020, while the Bay Area median rose a whopping 10.1 percent to $837,720,” the Mercury News reports.

“In Contra Costa County, sales grew by 11.2 percent and the median climbed 6.6 percent to $585,000. In Alameda County, sales were up 5.5 percent and the median jumped 10.0 percent to $833,750,” the paper reports. “These are the numbers for San Francisco: Sales up 12.6 percent, but the median price down a smidgen (-0.4 percent) to $1,350,000.”

Market watchers warned that while those numbers are great for sellers and Realtors, they will continue to worsen the region’s housing crisis and pinch buyers. Higher interest rates could also put a squeeze on the area’s long-term growth.

“[Spring is] off to a good start, as the economic and market fundamentals remain solid for the most part,” Leslie Appleton-Young, C.A.R.’s senior vice president and chief economist, told the paper.

“However, higher interest rates, a dearth of housing inventory, and slow wage growth will continue to have an adverse effect on housing affordability that is putting upward pressure on home prices, and is sure to hamper the market throughout the year.”

You can read C.A.R.’s full report here, with a county by county breakdown.

Blueprint for Bay Area aims to ‘change the dynamics’ of housing crisis

By John King, San Francisco Chronicle, April 15, 2017 

The only way for the Bay Area to become a relatively affordable place to live again is for cities and counties to be more tolerant of different types of housing, according to the draft of a new regional plan.

This could include a requirement that at least 10 percent of new units across the region be affordable and requiring fewer parking spaces in new housing complexes. Some cities might need to increase the amount of housing allowed in areas with ample transit.

“We’re looking at what it would take the region to change the dynamics” that in recent decades have seen the creation of housing lag far behind job and population growth, said Matt Maloney, a planner with the Metropolitan Transportation Commission, which is working with the Association of Bay Area Governments on the document. “The housing crisis right now is what comes at you front and center.”

Known as Plan Bay Area 2040, the draft released this month also spells out spending priorities for what is estimated to be $303 billion in transportation funding during the life of the plan.

Much of the investment would go to projects that have been in the works for years, such as new ferry service and an expansion of “express lanes,” where single drivers pay for the privilege of using carpool lanes. The improvements listed include wider highways in Solano County and a new BART station in the Irvington district of Fremont.

The draft calls this glimpse into the future “particularly disconcerting” and “far off-trajectory.” It also argues that “to truly address affordability and equity challenges, an engaged public and government at all levels will need to act.”

This is where ideas like including affordable units in all new housing developments comes in, or the density boost in areas where the 2013 plan calls for increased growth.

“Our scenario is to try and motivate more growth in areas that local governments already have identified,” Maloney said. At the same time, he acknowledged that the regional agencies can only cajole, not compel. There can’t be a decree to do away with parking minimums across the Bay Area, for instance.

Oakland approves 634-unit tower, city’s largest residential building ever

By Roland Li, San Francisco Business Times, April 20, 2017

Oakland’s Planning Commission approved on Wednesday a 400-foot tower with 634 apartments, a sign that the city’s housing boom is continuing.

The project will transform a downtown two-story parking lot at 1314 Franklin St., a block from the 12th Street BART station, into a 40-story skyscraper.

Robert Merkamp, an Oakland city planner, said the project was the largest single residential building ever approved in Oakland. Other master-planned projects like Brooklyn Basin have thousands of units approved, but among multiple buildings. Approved at 400 feet, 1314 Franklin would be among the tallest buildings in the city.

NEW POLL FINDS THAT 25% OF HOMEOWNERS WOULD ADD AN IN-­LAW UNIT, CREATING 400,000 NEW AND AFFORDABLE HOUSING UNITS

By Bay Area Council – April 12, 2017

SAN FRANCISCO—Amid the Bay Area’s crippling housing crisis, important legislation that took effect in January makes it faster, easier and less expensive for homeowners to build in-law or accessory dwelling units (ADU). SB 1069 authored by Senator Bob Wieckowski and sponsored by the Bay Area Council reduces parking requirements, discretionary permitting, and onerous utility connection fees that previously made in-law units infeasible for many residents.

In the recently released 2017 Bay Area Council Poll, a total of 25 percent of homeowners said they would consider adding an ADU. The Bay Area Council estimates that this could create an additional 400,000 new units—an even greater number than was previously projected when the legislation was signed into law by Governor Jerry Brown.

The poll also found that 76 percent think the region’s housing shortage is threatening the Bay Area’s economy, with 40 percent of respondents considering leaving the Bay Area in the next few years. The Bay Area’s future workforce and talent pipeline of millennials led the way at 46 percent.  Encouragingly, the poll found 62 percent of respondents are in favor of building new housing in their neighborhood, up from 56 percent in 2014.

With the ability to build in-law units quickly and cheaply, the potential for new affordable rental housing in the Bay Area is massive and crucial to reducing the number of students, teachers, nurses, family members, senior citizens, and others being priced out. The expansion of ADUs has been tremendously successful in alleviating housing woes in other cities like Vancouver, which after passing similar legislation over a decade ago, has seen 35 percent of single family homes add a second unit.In Portland, recent efforts by proponents have resulted in an increased pipeline from one per month to one a day.

“Despite overall growing support for building new housing and the enormous potential of ADUs, challenges remain,” said Bay Area Council Housing Committee Co-Chair and Partner at TMG Partners Denise Pinkston. “We are working to overcome resistance in implementing the new law as well as raising public awareness among homeowners about this now more accessible opportunity.” The Bay Area Council is also working with local and national banks to develop a financing tool that ensures loan opportunities are available to construct ADUs for households of all incomes.

“While an important first-step in addressing the monolithic regulatory system that’s fueling the housing shortage, ADUs will not be able to single-handedly meet the monumental demand our region is experiencing. Nor were they intended to,” said Bay Area Council President and CEO Jim Wunderman. “Much bigger and significant statewide reform is needed to reduce regulatory barriers for all housing and build long-term relief.”

The 2017 Bay Area Council Poll, which was conducted online by Oakland-based public opinion research firm EMC Research from Jan. 24 through Feb. 1, surveyed 1,000 registered voters from around the nine-county Bay Area about a range of issues related to economic growth, housing and transportation, drought, education and workforce.

PropertyRadar: No, California is not in a housing bubble

Home sales fall to lowest level since 2008

BY Brena Swanson, HousingWire, April 6, 2017

San Francisco Bay Area home sales plummeted to the lowest of any month since February 2008 as average home prices soared into the millions.

The extreme rise in home prices, however, is not a sign that the housing market is in a bubble and about to pop, Madeline Schnapp, director of economic research for PropertyRadar, explained in a recent report.

Looking at the latest facts for February, San Francisco Bay Area home sales, including condominiums, fell 2.8% from January 2017 and were down 4.1% from February 2016, marking the lowest of any month since February 2008.

And at the county level, sales were down double digits from last year in four of the region’s eight counties, with Marin and San Mateo counties posting the largest year-over-year declines of 13.7% and 12.4%, respectively.

“Double-digit home sale declines in Marin and San Mateo counties reflect their median prices topping $1 million,” noted Schnapp. “It’s no wonder headlines are dominated by stories of Millennial homebuyers wanting out.”

The San Francisco Bay Area February median home price (single-family residence) jumped 7.9% to $750,000, up from $695,000 in January 2017 and up 12.8% from $665,000 a year earlier.

Home prices have increased so much that Schnapp noted, “When we examine heatmaps of home values in the San Francisco Bay Area counties, large swaths are color-coded red, indicating values north of $2 million.”

But all of the surging home prices do not add up to a housing bubble, Schnapp stated.

“It’s a market dislocation caused largely by government policy,” said Schnapp. “A housing bubble requires both an unwarranted surge in prices followed by a massive selloff.”

“A massive selloff — a bubble bursting — is unlikely because a regulatory change in 2009 means that even if consumers default on their loans, banks will now sit on inventory rather than foreclose and sell like they did in 2008,” she continued.

Instead, Schnapp attributed the higher prices to a combination of factors, including plentiful jobs and below-market rate loans that require little down.

The real problem comes down to bad government policy, she said.

“Local, state and federal housing regulations have made it all but impossible for builders to meet housing demand in California’s growing economy,” said Schnapp. “Conceptually, the solutions to California’s affordability crisis are simple, but politically we should expect the current situation to continue for the foreseeable future.”

Housing, traffic woes stoke urge to flee Bay Area, new poll shows

By GEORGE AVALOS, SF Chronicle, March 31, 2017

Choked by traffic and overwhelmed by skyrocketing housing costs, a greater percentage of Bay Area residents than a year ago now say they yearn to flee the region.

In a new Bay Area Council poll released Thursday, 40 percent of the region’s residents said they want to move away in the next few years, a marked increase from the 33 percent who said in 2016 they wanted to leave.

Even worse, the new survey found that young adults are more inclined to leave: 46 percent of millennials want to lead the charge out of the Bay Area in the next few years.

“It turns out that we were wrong about millennial preferences, the stories were wrong that millennials wanted to live in a hyper-urban environment and that it would be OK to raise families in a condo,” said Micah Weinberg, president of the Bay Area Council’s Economic Institute. “Millennials are putting off family formation, but when they have a family, they want what their parents had: a house on a nice lot pretty close to work.”

The departure of millennial professionals to other regions of the country could harm the Bay Area’s economy, the council warned.

“Losing our youth is a very bad economic and social strategy,” said Jim Wunderman, president of the Bay Area Council, a business-sponsored, public policy advocacy organization.

The council polled 1,000 residents across nine Bay Area counties in late January for its annual survey. Those counties included Alameda, Contra Costa, Santa Clara, San Mateo, San Francisco, Marin, Sonoma, Napa and Solano.

Of the residents surveyed, 55 percent said they worried about the general cost of living in the Bay Area while 41 percent picked traffic as a big concern and 39 percent chose housing.

When asked to pick the single biggest problem, 16 percent chose the cost of housing and rent as the No. 1 problem facing the Bay Area, down from 22 percent last year. Thirteen percent picked traffic, also down from 17 percent in the prior poll.

Five percent chose the administration of President Donald Trump as the worst problem facing the Bay Area. The Bay Area Council included that category on its list of potential top problems. Last year, however, the administration of then-President Barack Obama was not included on the council poll’s list of potential top concerns.

With higher-paying technology jobs propping up housing costs, some community leaders worry the region won’t be able to attract a diverse workforce.

“The Bay Area is becoming like New York,” said Russell Hancock, president of Joint Venture Silicon Valley. “People won’t bother moving here unless they are really high earners.”

While many millennials seem particularly displeased by life in the Bay Area, economists with the Bay Area Council see anecdotal evidence that young people want to do something about the region’s woes.

The result could be a kind of “Yes In My Backyard” movement that could ward off the influence of the “Not In My Backyard” anti-growth mentality that has dominated the Bay Area’s political scene for decades, Weinberg said.

Fixing the housing and traffic problems could be essential to retaining young, talented tech workers or millennial employees in any industry, economists said.

“If you can’t attract millennials, you can’t compete as a region,” Hancock said. “But the market is sending powerful signals about the Bay Area. We are creating an affluent community with all kinds of wonderful amenities. This will be an ideal setting for some, but not all.”

Still, some cities have taken big steps forward in addressing their housing shortages. Chief among those, Hancock said, are San Jose, Oakland, Redwood City and Mountain View.

“We’ve got to do something, because more and more, you hear that it’s too expensive, too tough to live here,” Hancock said, “and that the most compassionate thing we can do for a young person is buy them a one-way bus ticket out of town to a place that is less expensive.”

BAC_Poll

Bay Area population growth slows, some counties losing people

By Kurtis Alexander, SF Chronicle, March 22, 2017

The Bay Area may be losing a bit of its luster.

After years of being overrun by new residents drawn by a red-hot economy, the number of people moving out has begun to catch up with the number moving in, new census data show.

In fact, in some parts of the Bay Area — including Santa Clara, San Mateo and Marin counties — already more people are leaving than arriving, according to the estimates released Thursday, which cover the period from July 1, 2015, to June 30, 2016. The same would be true in San Francisco if it weren’t for the high number moving in from abroad.

Such a trend has not been seen since last decade’s recession.

“Job growth has slowed, and that leads to a lessening in demand to live in the Bay Area,” said Hans Johnson, a senior fellow at the Public Policy Institute of California who had not seen the new census figures. “But it’s not like we’re having outright job losses or increasing unemployment. That’s not happening.”

The region’s economy, by all measures, is still robust. What’s happening, say Johnson and other demography experts, is that the extraordinary upswing that led California out of hard times last decade, with the tech sector propelling the boom, has become slightly less alluring. At the same time, housing prices have continued to grow, compounding the crunch.

“The key here is being able to afford to live in the Bay Area,” said Johnson. “Jobs and housing are really the primary criteria driving people’s decisions. It’s kind of a balancing act between the two. If jobs predominate, people are moving in. If housing predominates, you have less people moving in.”

S.F. home sales hit 5-year low, and prices are falling

Riley McDermid, SF Business Times, Mar 27, 2017

The sale of single-family homes in San Francisco fell to a five-year low in February, down 4 percent from just the month prior, new data from the Multiple Listing Service for sales in the city shows.

Socketsite reports that the latest sales figures for San Francisco shows only 308 single-family homes and condos were sold in February, a number that is 27 percent lower than sales in the city last February.

“As we noted five months ago, the recorded sales volume in San Francisco was being goosed by contracts for condos in new developments that were signed (‘sold’) many months prior but were closing escrow in bulk as the buildings came online in the middle of 2016. At the same time, signatures on new contracts were down 25 percent in 2016 despite an average of nearly 50 percent more inventory throughout the year and new condo sales dropped to a multi-year low in January,” the housing blog reports.

“And while many continue to finger a ‘lack of inventory’ for the anemic sales trend, listed inventory in San Francisco is running at a five-year high.”

Sales figures for February also showed that the median price paid for homes sold in February was 13.8 percent lower than the record high recorded for the city in April of last year, resting now at $1,120,000, as opposed to the $1.3 million it brought in then.

“Overall, Bay Area home sales dropped 3.3 percent on a year-over-year basis to 4,767 – the lowest February tally in nine years – with a median price of $649,000, which is 4.6 percent higher versus the same time last year,” Socketsite reports.

“Keep in mind that while movements in the median sale price are a great measure of what’s selling, they’re not necessarily a great measure of appreciation or changes in value and are susceptible to changes in mix, as opposed to movements in the Case-Shiller Index.”

California pending home sales dial back, marking weakest February in three years

C.A.R. LOS ANGELES (March 22) – After a solid start to the year in closed escrow sales, low housing inventory, eroding affordability, and rising interest rates mildly pulled back pending sales on a year-over-year basis in February, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

  • Based on signed contracts, statewide pending home sales decreased in February on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 2.6 percent from 113.5 in February 2016 to 110.6 in February 2017, marking the weakest February in three years.
  • For the San Francisco Bay Area as a whole – which has been plagued by a shortage of homes on the market and poor affordability – non-seasonally adjusted pending sales were down year-to-year for the fifth straight month, with every tracked county in the region experiencing a drop in pending sales activity. The Bay Area pending sales index fell 10 percent from 145.2 in February 2016 to 130.6 in February 2017. Santa Cruz and San Francisco counties experienced the largest year-to-year reductions in pending sales of 40.6 percent and 23 percent, respectively. Pending home sales fell 9.2 percent from the previous year in San Mateo County, 7.5 percent in Santa Cruz, and 5.6 percent in Monterey.

 

Confidence in Bay Area economy sinks to lowest level in years, as cost of living pinches and millennials rebel

By Riley McDermid, SF Business Times, Apr 1, 2017

Almost 70 percent of Bay Area residents polled in a recent study said they don’t believe the Bay Area is doing better now than six months ago – and close to half of them say they expect a significant downturn in the area in the next three years.

The data come from a 2017 Bay Area Council Poll, which surveyed 1,000 registered voters from around the nine-county Bay Area from Jan. 24 through Feb. 1. It was conducted online by Oakland-based public opinion research firm EMC Research and asked respondents questions that touched on the region’s hot-button issues of housing, economy, transportation, growth, education and workforce.

“The growing intensity of concern about the Bay Area economy is particularly troubling. Confidence is an important indicator of the direction of our economy, and residents are feeling increasingly uneasy,” Jim Wunderman, CEO of the Bay Area Council, told the Business Time.

“The Bay Area economy is still very strong, but we’ve just come off of two soft months in employment growth and we’re hearing more frequently from employers about how housing and traffic are making it difficult to grow here and attract talent,” he told the Business Times. “We’ve got to get more serious about adding housing and improving the commute.”

This year, housing and traffic topped the list of things respondents said they were most worried about, with 33 percent of millennials citing cost of living as the Bay’s biggest issue, and 65 percent of them saying it ranked in the region’s top three problems. But across all metrics, every group generally felt less economic confidence in the Bay Area than they have in the last four years of surveys.

 

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

Glen’s SF East Bay Real Estate Market Update – February 28, 2017

East_Bay_Banner

Zillow_January_2017

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.

Months_Supply

  • 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.

Actives_&_Pendings

 

  • 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.

Pending_Active_Ratio

  • 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

  • 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%

Glen's_Numbers_2.28.017pg1

Glen's_Numbers_2.28.017pg2

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.

Historical_Median_Price_by_City_2.28.17

Recent News

Zumper National Rent Report : March 2017

By Stephen Cho, February 28, 2017

Zumper_Rents

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).

Zumper_Rent_Price_Index

Top Five Rental Markets

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Zumper_Data

Survey Shows Higher Public Confidence in Real Estate Market

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”.

Job market wobbles in San Jose, Oakland metro areas, sparking economic uncertainty

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.

The Redfin Housing Demand Index Continued Record Climb in January

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.

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.

Redfin_Oakland_Demand_Index

Spring housing already overheating

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.

Developer proposes 1,400 micro-units near West Oakland BART

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.

Map: The Oakland highrise boom could add over 3,000 units downtown

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
To zoom in/out or pan around the map: Use touchpad or scroll wheel on your mouse. (Note: If you’re using Google Chrome, set your browser to 100% by using the Command + or Command – keys)

Downtown_Oakland_Pipeline

Distressed, Cash Sales Near Pre-crisis Numbers

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:

  1. Call all legislators listed below on or before March 14, 2017 (deadline extended)
  2. Identify yourself and state that you are a member of EBRHA, representing Alameda and Contra Costa Counties
  3. State the city in which you live, work, own or manage residential rental property.
  4. 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

(916) 319-2016

Walnut Creek, San Ramon, Dublin, Livermore, Pleasanton
Asm. Timothy Grayson

(916) 319-2014

Vallejo, Benicia, Martinez, Concord, Pleasant Hill, Pittsburg
Asm. Rob Bonta 

(Co-sponsor)

(916) 319-2018

Oakland, Alameda, San Leandro
Asm. Kansen Chu

(916) 319-2025

Fremont, Newark, Milpitas, San José, Santa Clara, Leandro
Asm. Jim Frazier 

(916) 319-2011

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 

(916) 319-2020

Hayward, Union City, Castro Valley, San Lorenzo, Ashland, Cherryland, Fairview, Sunol, North Fremont
Asm. Tony Thurmond

(916) 319-2015

Hercules, Pinole, San Pablo, Richmond, El Cerrito, Albany, Piedmont, Berkeley, Oakland
Asm. David Chiu

(415) 557-3013

San Francisco
Asm. Phil Ting

(415) 557-2312

San Francisco

 

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