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%.

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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%

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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

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

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Glen’s SF East Bay Real Estate Market Update

January 1, 2017

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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 with a modest 11.4% gain 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 21 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 18 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 9.4% over the last 30 days and is less than what we experienced during this time last year by 12.9%. The pending active ratio increased to 1.41. 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, (1.50). 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. 43% of the homes listed now remain active for 30 days or longer, while 30% 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.
  • The “distressed” market, (foreclosures and short sales) are no longer a factor representing less than 1% of the market with only .04% 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. This is typical as we approach Winter. 16 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 5 cities are still well below their peaks, falling into the 20% to 30% range. The Median Price for the East Bay has decreased from $650,000 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 21 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) increased to 1,383 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 1,493. 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 1.945, slightly lower than where we were last year at this time of 2,234.

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  • Our Pending/Active Ratio is 1.41. Last year at this time it was 1.50. 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 7,417 for the 38 cities tracked. This is about what we saw last year at this time (7,351).
  • Sales over the last 4 months, on average, are 2.1% over the asking price for this area down slightly from last year’s 2.7%. This has come down over the past 4 months from 3.0%

 

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Recent News

 

The Bay Area is the best market in the country for home sellers, new report says

By Riley McDermid, SF Business Times, February 13, 2017

The Bay Area’s sky-high home appreciation values and limited inventory has made it the nation’s best market for sellers, a new report from Zillow said this week, but the area shows some signs of softening.

“Even though San Francisco is a seller’s market, it has slowed down in the last few months with more price cuts occurring this year versus last year,” Svenja Gudell, Zillow’s chief economist, told the Business Times. “It is still super hot in terms of competition, but not as hot as it used to be.”

To arrive at the rankings, Zillow crunched the percentage of its listings with a price cut by how long listings typically stay on the market. It found that in the San Francisco metro area (which includes the East Bay), 5.4 percent of listings cut their price and homes stay on the market for just 51 days. That’s compared to 7 percent of listing with a price cut that stayed an average of 90 days on the market nationally, Zillow said.

What’s more, the top five sellers’ markets nationwide are all in the Bay Area. Berkeley came in first with zero percent of listings having a price cut and homes spending an average of 41 days on Zillow. That was followed by San Mateo (with 3.8 percent of listings having a price cut and homes spending 45 days on Zillow); Redwood City (3.8 percent and 46 days); Pleasant Hill (zero percent and 49 days) and Fremont (4.1 percent and 49 days).

Zillow said that the ranking underscore that even if there is some correction happening in home values, the region’s residential real estate boom continues to outshine the rest of the U.S.

“Home values in the San Francisco metro are up 4.8 percent over the past year, which is considerably slower than a year ago, when they were rising 13 percent year-over-year,” Gudell said. “Buyers in San Francisco will notice the difference compared to last year, but overall San Francisco still remains one of the most competitive markets in the country.”

The Definitive Housing Market And Interest Rate Forecast For 2017

By Mark Greene, Forbes, February 7, 2017

Active and higher. That’s it, that’s my forecast; housing markets will be active and interest rates will trend higher. The question of course is how active and how much higher, so here you go:

As far as the housing market in 2017, I can say with absolute certainty that people will be selling houses, people will be buying houses and people will be getting mortgages. I am 100% certain of this and you can use this information with ironclad confidence as you tread into whatever housing market dynamics you are contemplating. Mortgage interest rates do not drive or impede housing market activity. People buy and sell houses in all interest rate environments and for a host of reasons that have nothing to do with mortgage payments. Families grow, families shrink, jobs and fortunes change, people get married, people get divorced, this list could go on all night. Interest rates are just part of the equation; they are not the headline determinant.

And interest rates have already telegraphed the near term future trend with a dramatic move north following the U.S. Presidential election. Almost immediately after the votes were tallied, mortgage rates which had been hovering around 3.50% zoomed up to 4.25% and have settled in with this as the current norm. And while the Fed left short term rates unchanged at last week’s meeting, notice has been given that engineered rates will be moving north in 2017.

Should 10-year Treasury yields move to somewhere between 3% to 4%, we will see mortgage interest rates in the 4.75% to 5.75% range.

The U.S. economy has yet to break out and definitively march towards real growth but signs are bullish and bets are being made that robust will be a regular part of the economic lexicon before long.

If the new Administration makes good on plans to lower taxes, reduce regulatory burdens and accelerate job growth, then a more robust economy is inevitable. Lower my taxes and I will have more money to spend and save. Eliminate some of the regulations that make mortgage getting so cumbersome and I can help more people buy homes. Accelerate job growth and more people can spend, save and buy homes. JFK said “a rising tide lifts all boats” and all signs point to a rising tide.

Interest rates have been engineered below market equilibrium forces for over a decade. US economic growth has been suppressed and anemic for so long that we have organically accepted mediocrity as a new norm. The financial markets immediately responded to promised tax and regulatory reforms anticipating accelerated economic growth. Economic growth breeds inflation and rising interest rates is simply part of those mechanics.

The math is simple; more people with jobs and a more robust economy means more people will be buying and selling homes in a higher interest rate environment. So my forecast is that 2017 will deliver a more robust economy, higher interest rates and a more active housing market. You can hold me to it.

California’s housing crisis: It’s a matter of will

By John Diaz, San Francisco Chronicle, February 10, 2017

In one sense, California’s housing crisis is a matter of simple math. This state was not building anywhere close to the number of homes that would be required to accommodate the addition of 300,000 residents a year over the past decade. Demand is greatly outstripping supply, and it’s only going to get worse with the anticipated population growth of 3.4 million by 2025.

So why isn’t that construction happening?

The causes are all political .

There are no inherently evil intentions in the people putting up these barriers. Californians who are fortunate enough to own a home in a comfortable community don’t want to disrupt their good life with newcomers clogging roads, overcrowding schools or overrunning their parks. They worry about the impact of property values.

Taxpayer groups don’t want to subsidize affordable housing. Politicians want to require below-market housing mandates that may or may not have any correlation with a development’s economic viability. Unions demand that any government-promoted housing must require union-level wages. Environmentalists and neighborhood groups want to reserve the right to challenge developments even if they fit within zoning guidelines. No city wants to be told how much it must contribute to the greater good of making its region or its state more affordable.

But add up each of those forces — and the clout that each brings to bear — and it’s clear to see why not enough building is getting done.

So the question arises: Do we have the collective will to change that dynamic, when it results in the nation’s highest poverty rate, our children unable to settle down near us and businesses struggling to recruit and retain workers in a transient economy?

So far, the answer has been no.

Just ask Gov. Jerry Brown, who last year pushed the not-so-radical notion that proposed residential projects that fully complied with local zoning and set aside at list 5 percent of their units for below-market sales should be put on a fast track. Opposition came from various quarters — tenant groups, environmentalists, the League of California Cities — but the true death blow came from the construction trades, which the Legislature’s Democrats dare not cross. Their beef: They wanted any projects that got special treatment to be subject to the equivalent of union wages.

A “prevailing wage” clause is no small deal in construction. A 2005 UC Berkeley study found that such clauses added as much as 37 percent to the price of a unit. It concluded that such union-friendly pacts essentially subsidized construction workers at the expense of low-income buyers. Those requirements work in pricey San Francisco and parts of Los Angeles, but they make projects unattainable most everywhere else.

Brown’s “by-right” plan to streamline housing died last year.

Freshman state Sen. Scott Wiener, D-San Francisco, has come in with a scaled-down plan (SB35) to spur housing construction. It would put the first real teeth in a state process that identifies how much housing each city must provide at each income bracket: Those that are out of compliance would be forced to give fast-track approval to projects that fit their zoning rules.

Asked where he is getting opposition, Wiener said, “You get pushback from everyone.” He has tried to fend off union opposition — at the expense of home buyers — by including a prevailing wage provision.

So it goes in California.

The Legislature also is looking for ways to raise money to subsidize affordable housing, though that is a futile chase:. At an average subsidy of $300,000 a unit statewide — much more in the coastal areas — it would take tens of billions to even come close to meeting the demand. Another fallacy, especially prevalent among San Francisco progressives: The focus should be limited to affordable housing. This crisis is the result of shortages at all price levels.

Gabriel Metcalf, CEO of SPUR, a San Francisco urban planning think tank, said he is struck by the “self righteousness that good liberal Democrats can have” in stopping new housing — and their failure to see the contradiction with their expressed concern for the underclass. “There needs to be a call to (homeowners’) moral conscience to care about other people who do need housing,” he said.

We all need to compromise to preserve the California Dream.

That awakening needs to reach the state Capitol, and city halls everywhere.

Housing Crunch Exacts a Heavy Price on Californians

By Vanessa Rancano, KQED – The California Report, February 1, 2017

California is producing less than half the new homes it needs to meet demand in the Golden State.

In its first comprehensive analysis since the year 2000, California’s Department of Housing and Community Development paints a bleak picture of the state’s housing landscape. While it points to some hopeful developments, the report suggests lawmakers will need to consider serious policy changes if California is going to build the projected 1.8 million new homes needed by 2025.

The Statewide Housing Assessment Report is still in draft form, and its authors are gathering public input at workshops around the state. On Monday a small group of mostly local government representatives and advocates met in Fresno to hear the report’s findings.

“About a third of all California renters today are paying more than 50 percent of their income in rent,” California Department of Housing and Community Development Director Ben Metcalf told the group.

Those paying the largest share of their income for rent and transportation aren’t concentrated in expensive cities like San Francisco — they’re largely living in rural Northern California counties and in the Central Valley.

“We’re seeing home ownership rates at the lowest level they’ve been since World War II,” Metcalf said. And, he added, while just 12 percent of Americans live in California, 22 percent of America’s homeless live here, more than in any other state.

Among the challenges driving the lack of affordable housing is unstable funding, the report finds. Federal allocations for affordable housing declined in California from 2003 to 2015. There just aren’t enough affordable rentals, and even for those who get assistance, Section 8 vouchers can’t keep pace with soaring rents.

The authors also point to regulatory hurdles and land use policies that jack up development costs and delay building.

On the upside, the report finds some positive impact from state and local bonds for affordable housing and permanent housing for the homeless, along with revenue from the state’s cap-and-trade program.

Still, the report suggests there are big consequences resulting from the failure to meet housing needs. When you factor housing in, California has the highest poverty rate in the country. Housing instability affects people’s health and kids’ academic performance. And as people move farther from jobs, long commutes increase pollution.

Overall, the report concludes the lack of housing costs the California economy almost $240 billion a year.

Once they’d heard the findings, the group in Fresno offered input. They discussed special barriers facing disabled communities and highlighted housing issues unique to vulnerable populations.

Ashley Werner, an attorney with the Leadership Council for Justice and Accountability, a nonprofit that helps low-income communities, raised concerns about undocumented immigrants.

“I think there’s a lot of different policy solutions we can put in place to protect them, and protect our whole population,” Werner said. “I think that’s especially important right now.”

Bay Area: Tech job growth has rapidly decelerated

Even with looming layoffs, tech still drives region’s economy

By GEORGE AVALOS, Mercury News, February 10, 2017

Job growth in the tech industry used to zoom like a race car, but these days, hiring by this principal driver of the Bay Area’s economy chugs along more like a family SUV.

The technology industry’s job growth in the nine-county region has dramatically decelerated, according to this newspaper’s analysis of figures released by state labor officials and Beacon Economics. Tech’s annual job growth throttled back to 3.5 percent, or 26,700 new jobs, in 2016. That’s much slower than the 6 percent annual gain of 42,300 jobs in 2015, or the 6.4 percent gain in 2014.

Tech_Jobs

And while the industry’s 3.5 percent growth last year is still a sturdy annual pace, Bay Area technology companies have already disclosed plans to slash about 2,000 jobs in the first three months of 2017.

“You have growth and you have layoffs at the same time in tech,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “You have layoffs because there are several companies trying to make the same products or services. Not all will succeed; some will fail.”

Even so, job growth in technology companies last year far outpaced total job growth of 2.6 percent across all industries in the Bay Area. That indicates the tech sector remains a major engine of the region’s economy.

“Tech will continue to outperform the overall job market over time, even as it goes through structural changes,” said Scott Anderson, chief economist with San Francisco-based Bank of the West.

Bay Area immigrant tech workers are pulling out of buying real estate over Trump visa concerns

By Riley McDermid, SF Business Times, February 8, 2017

Some Bay Area immigrant tech workers are pulling out of buying local real estate over concerns that President Trump’s H1-B visa plan could force them to return to their home countries, local real estate agents report.

The nerves surrounding Trump’s plans for holders of H1-B visas have continued as a series of court cases wend their way through the legal system in an attempt to clarify who will and who will not have freedom of movement in and out of the U.S. H1-B visa holders are also concerned about what would happen to their real estate investments here if they are expelled from the country.

“[It] appears Trump will go after the H-1B visa directly in an attempt to open up more jobs for American workers, according to a leaked draft of a new executive order,” Business Insider reports. “In the hypothetical situation that an immigrant worker gets their H-1B visa revoked shortly after buying a house, they would have to pay between 6% and 7% of the home value in closing costs and transfer tax, a one-time fee imposed on the owner when a property changes hands.”

S.F. rents down more than any other large U.S. city

By Emily Landes, SF Chronicle, February 3, 2017

After years of rents creeping higher and higher, San Francisco is finally seeing real signs of a slowdown with several apartment listing and real-estate data companies noting lower rents and rising inventory. San Francisco rents were down 2.3 percent compared with one year ago, according to AppFolio—the biggest drop in the 20 high-population metros the property management site researched for its recent affordability report.

That’s right: San Francisco rentals are now more affordable than New York, L.A. and Miami, with workers in the South Florida city needing to spend 54 percent of their incomes on rents, versus 46 percent in S.F. The affordability calculations are based on the percentage of average monthly household income put toward the average monthly apartment rent, which is currently around $3,200 for a one-bedroom in S.F. (Check out the slideshow above to see what you can get around that price.)

That average rental cost has not been seen in San Francisco since April 2015, according to apartment market analysis company Axiometrics. It also found that the slowdown happened relatively quickly; the annual effective rent growth was still at 5.7 percent only one year ago. Similar slowdowns can be seen in San Jose, where the market has dropped 2.4 percent compared to a year ago, according to Axiometrics. Rents also dropped in Oakland, though by less than 1 percent.

While Oakland rents may be flattening out, they’ve still risen over 60 percent in the last five years, according to Amalia Otet at RentCafe. “If five years ago Oakland was the go-to place for those priced out of San Francisco, with rents around $1,500 a month in 2011, the huge influx of new people seeking cheaper housing has pushed up rents in the area to record highs,” she said. “Moreover, Oakland is rather timid regarding new apartment construction, with approximately 300 units delivered in 2016.”

San Francisco, on the other hand, added 3,600 new units last year, which all the researchers agree is one of the biggest contributors to the softening in the apartment market. “Supply is finally catching up with demand in the market, so rent growth is starting to slow,” said Nat Kunes, vice president of product management at AppFolio. “It took a few years extra after the recession to get to this point because during the recession construction effectively stopped as renter demand was still growing.”

But RentCafe’s Otet doesn’t believe the rental relief will last long. “Demand for apartment living is still particularly strong in S.F., and the high occupancy levels—measured at 95.6 percent by apartment research firm Yardi Matrix—maintain competitiveness among San Francisco’s renters,” she said.

San Francisco Rent Prices Decreased 4.9% In 2016

By Crystal Chen, Zumper, December 20, 2016

San Francisco ended the year holding onto its position as the most expensive rental market in the nation. After a hot 2015, the median price of one bedroom units in the city has cooled off substantially, down 4.9% since this time last year.

Overall, the priciest neighborhoods seem to have hit a price ceiling that renters are willing to pay and there seems to be a migration of people from the most expensive neighborhoods.

Nation’s 10 hottest real estate markets include San Francisco, San Jose — and Vallejo?

By RICHARD SCHEININ, Mercury News, January 30, 2017

A new national “Hotness Index” is top-heavy with Bay Area real estate markets. No surprise there.

Because of the region’s housing supply (low) and demand from buyers (high, as always), the San Francisco-Oakland-Hayward metro area is No. 1 on the January list from realtor.com, and the San Jose-Sunnyvale-Santa Clara metro area is No. 2.

More of a surprise is that the Top 10 includes several not-so-distant metro areas where homes are still relatively affordable.

We’re talking about Vallejo (No. 3), Sacramento (No. 6), Yuba City (No. 7), Stockton (No. 9) and Fresno (No. 10).

Those markets — less than chic, until recently — are among the 10 hottest in the entire country, according to realtor. com. Its “Hotness Index” identifies where houses are selling most quickly, and which markets are generating the most listing views on realtor.com.

“Buyers who are challenged by affordability are starting to look to the outlying areas,” said Jonathan Smoke, realtor.com’s chief economist. “The average down payment in 2016 in San Francisco and San Jose was $150,000 or more. The average down payment in Fresno and Yuba City was under $28,000. That’s quite a bit of difference in terms of what it takes to become a homeowner.”

He added that the outlying Northern California markets on the list “have median prices that are half or even in some cases less than third of the median prices in San Francisco and San Jose.”

Market Hotness by Zip

Cutting jobs, street repairs, library books to keep up with pension costs

Generous retirement benefits for public safety employees could help push the Bay Area city of Richmond into bankruptcy

By JUDY LIN, CALmatters, February 6, 2017

When the state auditor gauged the fiscal health of California cities in 2015, this port community on the eastern shore of San Francisco Bay made a short list of six distressed municipalities at risk of bankruptcy.

Richmond has cut about 200 jobs — roughly 20% of its workforce — since 2008. Its credit rating is at junk status. And in November, voters rejected a tax increase that city leaders had hoped would help close a chronic budget deficit.

“I don’t think there’s any chance we can avoid it,” said former City Councilman Vinay Pimple, referring to bankruptcy.

A major cause of Richmond’s problems: relentless growth in pension costs.

Payments for employee pensions, pension-related debt and retiree healthcare have climbed from $25 million to $44 million in the last five years, outpacing all other expenses.

By 2021, retirement expenses could exceed $70 million — 41% of the city’s general fund.

Richmond is a stark example of how pension costs are causing fiscal stress in cities across California. Four municipalities — Vallejo, Stockton, San Bernardino and Mammoth Lakes — have filed for bankruptcy protection since 2008. Others are on the brink.

“The truth is that there are cities all over the state that just aren’t owning up to all their problems,” said San Bernardino City Manager Mark Scott.

Increasingly, pension costs consume 15% or more of big city budgets, crowding out basic services and leaving local governments more vulnerable than ever to the next economic downturn.

richmond-pensions-web

Richmond is a racially diverse, working-class city of 110,000 whose largest employer is a massive Chevron oil refinery. Like many California municipalities, Richmond dug a financial hole for itself by granting generous retirement benefits to police and firefighters on the assumption that pension fund investments would grow fast enough to cover the cost.

That optimism proved unfounded, and now the bill is coming due.

City Manager Bill Lindsay insists that Richmond can avoid going off a cliff. Last year, financial consultants mapped a path to stability for the city by 2021 — but at a considerable cost in public services.

The city cut 11 positions, reduced after-school and senior classes, eliminated neighborhood clean-ups to tackle illegal trash dumping, and trimmed spending on new library books — saving $12 million total

City officials also negotiated a four-year contract with firefighters that freezes salaries and requires firefighters to pay $4,800 a year each toward retirement healthcare. Until then, the benefit was fully funded by taxpayers.

“I’ve seen some of my good friends go through it in Vallejo and Stockton, and what we found out during those [bankruptcies] is that your union contracts aren’t necessarily guaranteed,” said Jim Russey, president of Richmond Firefighters Local 188.

Richmond’s consultants said the city had to find $15 million more in new revenue or budget cuts by 2021. Lindsay said the city has been looking hard for additional savings, and the police union recently agreed to have its members contribute toward retirement healthcare.

Looking For A Flip-Worthy House? Must-Haves For Every Room

By Michelle Hainer, Trulia, January 4, 2017

When looking for a return on your investment, keep these things in mind as you scour the market.

While location is key in almost any real estate transaction, that’s not all you should consider when purchasing a property you intend to “flip.” You need to examine the home room by room, looking for potential ways to make it marketable. “Flipping real estate is all about minimizing risk,” says Robin Mathis, a settlement attorney in Fairfax, VA, who flips homes with her husband, Mike Irvin. “It’s not something to go into lightly.” With that in mind, here are some details to mull over before you buy.

Basement and attic: All systems go

Just about every house-flip TV show will tell you that updated bathrooms and kitchens sell houses, but the less glamorous areas are just as important. “Things like electrical, plumbing, HVAC, foundation, roof, windows … these are the things that are more costly to fix or replace,” says Michael Hyne, who has flipped homes for sale in New Haven, CT. If most of these items aren’t in good condition, move on. “Nobody wants to buy a house with a crumbling foundation, even if [it] does have a brand-new kitchen,” he says.

Dining room: Versatility (and utility) is important

It’s a space that will probably be used frequently. You’ll want to have the option to customize it to your clientele. “It helps to know what kinds of families live in the area so that you can tailor your future renovations to your potential buyers,” says Hyne. “You wouldn’t want to do a modern-style renovation and then realize your clients are elderly people looking for a more traditional setup.”

Kitchen: Dream big (but make sure your plan is feasible)

For flips, the kitchen is definitely the heart of the home. Mathis often takes a contractor or home inspector with her to tour properties to make sure her ideas are actually doable. “Non-load-bearing walls are easier and less expensive to remove,” says Hyne, so think about where it’s feasible to knock them out to make a space look and feel more open. Also, consider what can be saved or reused. After all, it’s much more cost-effective to refinish or repaint kitchen cabinets than to replace them.

Bathrooms: Can you add or enlarge them?

“Most people want at least one and a half bathrooms, so think about where you can add one, even if it’s only a half-bath on the main floor,” says Hyne. Keep in mind that freshening up existing bathrooms doesn’t have to be costly. Simply changing the fixtures or other small elements may be all you need. “You can get a brand-new toilet for around $150, and it makes a huge difference,” says Mathis.

Living spaces: What updates and embellishments can be added?

Finishing touches and small updates in foyers, dens, or living rooms can create clean lines (think moldings, light fixtures, and other details), and you may be able to do them inexpensively. “Take a look at what they’re doing in million-dollar homes and then figure out how you can duplicate that in your price range,” says Irvin. He also advises thinking about ways you can make a home unique, which is especially important if it’s in a development where most of the homes have a similar layout.

Living room: Look for hardwood floors

“Refinishing existing flooring is about a third of the cost of installing new,” says Hyne. So, don’t be afraid to peek under that carpet to see what magic (or deflating dose of reality) lies beneath. Use this same logic when looking at the home’s existing finishes. Can dated wallpaper be removed? Will a new coat of paint be a huge improvement? Neutral choices are better, as they allow the home to appeal to a larger pool of buyers.

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

Glen’s SF Real Estate Market Update, December 31, 2016

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Glen’s SF Bay Area Real Estate Market Update

December 31, 2016

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

 

  • Inventory decreased 39% in the last 30 days and by 60% in the last 90 days. A dramatic drop off is typical for this time of year and we have seen this pattern occur over the past 4 years. Inventory levels are close to where we were at the beginning of the last year. Our monthly supply is now 18 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 18 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 26% over the last 30 days and is less than what we experienced during this time last year by 14%. The pending active ratio increased to 1.73. 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, (2.08). 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 from last month. 67% of the homes listed now remain active for 30 days or longer, while 42% stayed on the market for 60 days or longer. This is due more to a shortage of “fresh” new inventory coming onto the market. This is similar to where we were last year at this time.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only .5% of the active listings and .2% 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. 15 out of the 33 East Bay cities tracked are now at or above their median price “peak” levels with another 14 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 $650,000 to $620,000 over the last 4 months, also typical for this time of year.

Montth's_Supply

  • The month’s supply for the combined 38 city area remains at 18 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) decreased to 1,241 homes actively for sale. This is still above the December 2012 low of 1,086 and slightly greater than last year at this time of 1,191. 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 2,147, slightly lower than where we were last year at this time of 2,482.

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.73. Last year at this time it was 2.08. 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 8341 for the 38 cities tracked. This is up 1.6% from what we saw last year at this time.
  • Sales over the last 4 months, on average, are 2.3% over the asking price for this area down slightly from last year’s 3.1%. This has come down over the past 4 months from 4.0%

Glen's_Numbbers_12.31.16_Pg_1

Glen's_Numbbers_12.31.16_Pg_2

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

Recent News

The Renovations That Will Pay Off the Most
for Your Home in 2017

By Judy Dutton, Realtor.com, January 11, 2017

New year, new home improvement projects? Whether you’re dying to update your kitchen, add a half-bath, or kick back on a brand-new deck, it pays off big-time knowing just what kind of return on investment your dream renovation might deliver. And you’re in luck, because Remodeling magazine has just released its annual Cost vs. Value report, which analyzes what you’ll pay for various upgrades—and how much you’ll recoup on that investment when you sell your home.

For this much-read report (which, by the way, is celebrating its 30th anniversary), researchers scrutinized 29 popular home improvements in 99 markets nationwide, polling contractors on how much they charge for these jobs as well as real estate agents on how much they think these features boost a home’s market price. From there, they divided each project’s upfront cost by the home’s resale value; the resulting percentage gives you a sense of how well each particular reno “investment” pays off.

There wasn’t a lot of change between the 2017 report and its 2016 predecessor, with most projects retaining their value.

But what is noteworthy is that the value of pricier projects rose significantly over last year, says Craig Webb, editor of Remodeling. He believes this indicates that the housing market is healthier and more bullish than ever.

“When the market is hot, Realtors® are more likely to give value to more expensive renovation projects, because they expect that the market will stay hot and people will pay the price,” he explains. “When the market is cool, Realtors tend to put less value on those big-dollar projects, because they have concerns about whether the house will get sold in any state.”

Home_Remodel

Forget What You Know: This Year, Sellers May Benefit From Listing Early

By Jonathan Smoke | Jan 13, 2017

Conventional wisdom in real estate holds that sellers should time the market to maximize their price. Why? Because home sales are extremely seasonal: They peak in spring and summer, when prices peak as well. That’s why in most markets, most years, the optimal time to list is in the spring, so that the maximum number of potential buyers view the home.

But we’re in an era in which conventional wisdom is becoming an ever-sketchier concept. So why should real estate be immune from all this topsy-turviness? This year, the conventional wisdom of buying and selling may need to change.

Inventory levels at the beginning of 2017 are at multiyear lows. Sellers now face very little competition.

Likewise, buyer demand is abnormally strong for the off-season. The climb in mortgage rates that started in October and accelerated in November and December has created a sense of urgency among buyers.

The new year is expected to bring more economic growth and even higher interest rates. And with consumer confidence at a 15-year high, buying competition is likely to get fierce.

Not everyone can move up their plans for the spring and summer; but even so, the months of winter and early spring will likely be much busier than usual. Therefore, sellers could benefit less from timing a spring listing for a summer sale this year.

But the most important reason to consider selling early this year is the same reason most people want to sell in the first place: so they can buy again. We estimate that more than 85% of sellers are planning to buy another home. The endgame is not necessarily getting the maximum price on the house being sold, but rather taking the best path to the next home.

When interest rates are moving up, waiting to sell could end up costing more than selling sooner and locking in today’s rates. Waiting to sell could also mean having to wait to buy when there are even fewer homes available.

The biggest challenge to growth in sales this winter and spring will most likely be inventory. That means that the market overall continues to favor sellers. But that won’t last forever. As rates continue to rise, higher financing costs will eventually dampen demand.

If you are thinking of selling and buying in 2017, the early bird may get the worm. And the best new nest.

The average Bay Area buyer must set aside almost two times their annual income to make 20% down payment

By Riley McDermid, SF Business Times, Januuary 13, 2017 

If you want to buy a house in the Bay Area, be prepared to set aside the equivalent of twice your annual income in order to afford a 20 percent down payment on a home.

New data from housing site Zillow found this week that the average homebuyer the San Francisco metro area must fork over 180 percent of their income to put down that recommended 20 percent, in a market where the median price of a home is $824,600.

That adds up to a median down payment of $164,920, with the regional median annual income weighing in at $91,777.

Zillow arrived at the data after crunching their data for national home buying statistics. It found that only buyers in San Jose and Los Angeles must put down similar amounts to buy a home — a sharp contrast to the $38,500 median down payment expected nationally, where the median price of a home is $192,500.

“Saving enough cash for a down payment is a major barrier to homeownership, especially in expensive markets, where a 20 percent down payment can cost nearly $200,000,” Zillow Chief Marketing Officer Jeremy Wacksman said in a statement.

Homebuyers are also likely to find that 20 percent figure impossible to avoid, because putting that amount down qualifies you for the best mortgage rates. That’s become and increasing concern this year as global market wait for the Federal Reserve to enact an expected hike of historically low lending rates.

“While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates. As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table,” Wacksman said.

Zillow also found in its study that 25 percent of first-time homebuyers relay on gifts from family or friends for the cash they need to buy a house. One fifth of homebuyers surveyed said that a down payment is their number one concern.

4 Things NOT to Do When Putting Your Home on the Market

 by Zoe Eisenberg, RIS Media, December 29, 2016

So you’ve decided to put your home on the market. Congratulations! Hopefully, you’ve brought a rockin’ REALTOR® on board to help you list your spot, and together you’ve done your due diligence on what to ask for. As you start checking things off your to-do list, it’s also important to pay mind of what not to do. Below are a handful of things to get you started.

Don’t over-improve.
As you ready your home for sale, you may realize you will get a great return on your investment if you make a couple of changes. Updating the appliances or replacing that cracked cabinet in the bathroom are all great ideas. However, it’s important not to over-improve, or make improvements that are hyper-specific to your tastes. For example, not everyone wants a pimped out finished basement equipped with a wet bar and lifted stage for their rock and roll buds to jam out on. (Okay, everyone should want that.) What if your buyers are family oriented and want a basement space for their kids to play in? That rock-and-roll room may look to them like a huge project to un-do. Make any needed fixes to your space, but don’t go above and beyond—you may lose money doing so.

Don’t over-decorate.
Over-decorating is just as bad as over-improving. You may love the look of lace and lavender, but your potential buyer may enter your home and cringe. When prepping for sale, neutralize your decorating scheme so it’s more universally palatable.

Don’t hang around.
Your agent calls to let you know they will be bringing buyers by this afternoon. Great! You rally your whole family, Fluffy the dog included, to be waiting at the door with fresh baked cookies and big smiles. Right? Wrong. Buyers want to imagine themselves in your space, not be confronted by you in your space. Trust, it’s awkward for them to go about judging your home while you stand in the corner smiling like a maniac. Get out of the house, take the kids with you, and if you can’t leave for whatever reason, at least go sit in the backyard. (On the other hand, if you’re buying a home and not selling, then making it personal is the way to go, especially when writing your offer letter. Pull those heart strings!)

 

Don’t take things personal.
Real estate is a business, but buying and selling homes is very, very emotional. However, when selling your homes, try your very best not to take things personally. When a buyer lowballs you or says they will need to replace your prized 1970s vintage shag carpet with something “more modern,” try not to raise your hackles.

The 3 biggest reasons you can’t sell your home

By Catey Hill, Market Watch, January 12, 2017

So-called “sale fails” are on the rise.

Deals to sell homes are falling through at a faster rate than they were a year ago, according to a report released Wednesday by real-estate site Trulia. which found that Indeed, “on an annual basis, the failure rate has nearly doubled to 3.9% in 2016, up from 2.1% in 2015,” the report revealed. The real estate site looked at all listings that were pulled for the first two months of each quarter from the fourth quarter of 2014 through the fourth quarter of 2016.

Home sale deals fail for three main reasons, said Felipe Chacon, a housing data analyst for Trulia:

1) A buyer can’t get financing.

2) The inspection turns up something bad.

3) The appraisal doesn’t match up to the sale price.

More first-time buyers — many of them young and with lower incomes — are attempting to buy a starter home now. First-time homebuyers made up 35% of sales in 2016 up from 32% in 2015, the National Association of Realtors found. And members of this group is more likely to have trouble getting financing, as they are typically not familiar with the process and may not bring as long of a credit history or as much equity to the table, says Chacon.

Don’t miss: Don’t be afraid to buy a fixer-upper in 2017

Plus, many baby boomers are putting their homes on the market as they downsize and prepare for retirement. These homes tend to be older and thus are more likely to have issues that an inspector will catch, the study concluded. Finally, with home prices climbing steadily, many sellers ask high sums — and many buyers agree to those sums. The problem is that an appraiser might not, and the sale fails.

Of course, most of the time, when a buyer and seller make a deal, it does go through. Sale fails represent just 4.3% of all listed properties. And certain kinds of homes (high-end newer homes, for example) are far less likely to end up in a failed deal than others. Furthermore, buyers whose sales do go through are more likely than in the past to be able to pay their mortgage, thanks to stricter lending guidelines since the Great Recession.

Industry expert: The only thing to fear in 2017 is fear itself, Housing market functioning at pre-crisis norms

BY Kelsey Ramírez, Housing Wire, January 11, 2017

The housing market is improving and in some areas, even back to pre-crisis levels. Now, one expert explains that the only thing to fear in 2017’s housing market is, well, fear itself.

During the past few weeks, the housing market saw an increase in existing home sales at the highest pace since 2007, a decrease in foreclosures and yet more jobs added in an already-full jobs market.

Because of these numbers, one expert, OwnAmerica CEO Greg Rand, explained that there is nothing to fear headed into 2017. The exception, he stated, was that the change in administration is causing some consumers to hold off on making decisions related to home ownership, purchasing and investing.

“I’d have to say that disruption from Washington is the only thing that I could see on the horizon,” Rand said in an interview with HousingWire.

Rand also mentioned the Home Price Perception Index from Quicken Loans, which showed a gap of 1.33% between homeowners estimates of their home value and the appraised price. According to Rand, “When appraisers and homeowners are within two percentage points of agreement on value, that is amazingly good.”

Rand explained that the housing market is behaving normally, and that the market can expect to continue to see these numbers.

Rand joins many other experts in claiming 2017 will be a great year for housing.

“The biggest risk that we have is that somehow people begin to be convinced that the housing market is heading into negative territory when it’s not,” he said.

Here’s why canceled home sales doubled in Oakland last year

BY Riley McDermid, SF Business News, January 12, 2017

Oakland saw its number of home sales canceled at the last minute leap in 2016 from 3.9 to 8.5 percent, real estate site Trulia said this week, as more buyers struggled to seal the deal.

In a new report titled “Sale Fail,” Trulia looked at national data for home sales in 2016 and noted that nationally, sales have been failing at increasing rates, rising to 4.3 percent in the fourth quarter from 1.4 percent during the same period a year prior.

Many areas were immune to that trend — but the Bay Area, with its booming and competitive real estate markets, saw an uptick in buyers walking away from a sale at the last minute.

San Francisco-based Trulia said there were a few common factors in why sales might fall apart during the end of the process. Two common themes? First-time homebuyers and older homes.

“First-time homebuyers have made up 35 percent of sales in 2016 up from 32 percent in 2015, and this is just among successful transactions, according to the National Association of Realtors. Not only are first-time homebuyers unfamiliar with the process, they face unique hurdles,” Trulia notes.

“They don’t bring equity or a credit history from a previous home. Their finances face additional scrutiny. And for those seeking an FHA loan for down payment, there are restrictions on type of home and its amenities.”

Older homes also are much more likely to see their sales fail: As the age of a property increases, so do the chances that it could see a difficult sale. That would particularly hurt areas like Oakland, where white hot real estate markets have pushed even the oldest housing stock onto the market in a bid to find inventory.

“As homes age, the fail rate increases steadily, with homes that are around 50 years old having the highest failed sale rates (i.e. homes built in early 1960s), then declining, in a less uniform manner, as the year built approaches 1900,” Trulia says.

New Year Predictions: What’s on Tap for Real Estate in 2017?

by Louise Phillips , RESMedia, January 6, 2017

The new year is upon us and with it comes new factors which can and will affect real estate throughout the year. Here, New York Power Broker Louise Phillips Forbes of Halstead Property makes her predictions for what real estate will look like on a national scale in 2017, and how you can make the most of it. Keep an eye on the following:

  1. Increased interest rates will be a game-changer.
    While interest rates are still some of the lowest they’ve been in years, they are increasing and will be a motivating factor for buyers early in the first quarter, especially since 95 percent of first-time homebuyers are dependent on financing. Expect them to act quickly and lock-in reasonable long-term loans enabling them to make long-term buys.
  1. The market is not in decline; it is re-setting.
    Nationwide, home prices are forecast to slow to 3.9 percent growth year-over-year, from an estimated 4.9 percent in 2016. The biggest shift will occur in the ultra-luxury market, especially in urban environments with a massive construction boom, where the highly accelerated and unsustainable growth for the past five years lead to inflated asking prices and declining absorption rates. As a result, New York City in particular—a national leader in the housing market—is experiencing a very efficient re-setting of the high-end luxury sector, with values down 25- 40 percent to more realistic prices, establishing a growth pattern that is more in line historically.
  1. Millennials and baby boomers will dominate again.
    These two dominant demographics will power demand for the next 10 years. Both generations are approaching life changes that traditionally motivate people to buy or sell a home. These life-defining changes include: marriage, having children, retiring and becomingempty-nesters. As such, the baby boomers could boost the market with double transactions as both buyers and sellers. Most of them are already homeowners, so they will be looking to sell and downsize to a smaller home, lowering their cost of living to maximize ease of retirement. Baby boomers have the potential to make up 30 percent of buyers in 2017, and being less dependent on financing gives them an advantage to be more successful with closings. Millennials, on the other hand, are more likely to finance and thereby more susceptible to increased interest rates, but they are still expected to make up 33 percent of buyers in the new year.
  1. The Midwest is the new frontier.
    Due to escalating rents and inflated home prices in the coastal cities, millennials are drawn to the Midwestern markets because they have a lower cost of living coupled with tremendous job growth. Midwestern cities claimed 42 percent of the millennial purchase market share in 2016, much higher than the U.S. average of 38 percent.

There is strong affordability in 15 of the 19 largest Midwestern markets, so this trend is expected to continue even as interest rates increase. Strong local economies and population growth will fuel the appeal of these hot markets, so keep your eye on: Columbus, Ohio; Omaha, Neb.; Des Moines, Iowa; Grand Rapids, Mich.; Minneapolis, Minn.; and Colorado Springs, Colo.

  1. Foreign buyers expand their borders beyond coastal cities.
    Whileinternational buyersstill look to New York City, Los Angeles, Miami and San Francisco real estate as a safe haven for their money, escalating price per square foot numbers—an average of $2,400-plus in Manhattan—are pushing them to look in other metropolitan areas nationwide. Cities like Nashville, Tenn.; Charlotte, N.C.; Columbus, Ohio; Chicago, Dallas and Austin, Texas are rapidly grabbing foreign buyers because prices are lower and they can get a better return on investment. Their primary interests are long-term growth opportunities, a luxury lifestyle and security. Moving forward, prime coastal locations will remain strong but the trend of international buyers expanding their searches and taking a serious look at new locations will continue to accelerate.
  1. Consumer confidence will boost home sales.
    With the anticipation of stronger economic and wage growth in 2017, home sales could exceed 6.3 million transactions, a significant increase from 2016. The GDP growth is forecast to be 2.1 percent with a 2.5 percent increase in the consumer price index, while unemployment is expected to decline to 4.7 percent by the end of 2017.

Furthermore, the record-breaking rise and powerful performance of the stock market post-election has fueled confidence and given people the assurance they need to loosen their purse strings. Folks who were hesitant to spend money during a tumultuous and uncertain election year are now ready to put their money to use.

  1. Lack of inventory spurs fast-moving markets. Buyers should be prepared.
    Inventory is currently down an average of 11 percent in the top 100 metropolitan markets nationwide, but with interest rates on the rise, prices may go down slightly. A slowdown in home price appreciation could motivate more property owners to sell, easing some of the inventory crunch. Regardless, in a competitive market, buyers need to be prepared and able to act quickly when they find Home Sweet Home. Build your team early on and don’t lose out on a property because of some unnecessary mistakes that occurred simply because you weren’t organized. Your team should include a real estate attorney, mortgage lender, real estate broker, appraiser and inspector (if necessary).

The five hottest Bay Area neighborhoods for home appreciation are all in Oakland

By Kevin Truong and Riley McDermid, SF Business Times, January 5, 2017

The five hottest San Francisco metro neighborhood housing markets have one major surprising thing in common – they’re all in Oakland.

Real estate website Zillow determined the hottest Bay Area housing markets based on its Zillow Home Value Forecast, which predicts the change in value for properties in the neighborhood over the next year.

Next up is St. Elizabeth, in the middle of Oakland’s Fruitvale district, which is named after the St. Elizabeth Church on 34th Avenue. Zillow estimates home values to increase by 7.4 percent over the next year.

No. 3 is Highland, a small East Oakland neighborhood bordered by San Leandro St. in the West, 22nd Ave. in the South and International Blvd. in the East. Zillow foresees home value growing by 7.3 percent in the area.

Columbia Gardens was the fourth neighborhood on Zillow’s list. Situated in the city’s Elmhurst District, the neighborhood has 7.2 percent forecasted home value growth for 2017.

Rounding out the top five neighborhoods is Lockwood-Tevis, another East Oakland neighborhood, where Zillow projects home prices to jump up 6.7 percent over the next 12 months.

So why Oakland and not San Francisco?

“One reason Oakland has so many hot neighborhoods right now is that San Francisco is so expensive,” said Svenja Gudell, Zillow chief economist. “Oakland is the much-cheaper sibling, right next door. It’s easy to get to San Francisco from Oakland, so a lot of people are probably looking to Oakland for affordability.”

San Francisco itself – while remaining as a very desirable housing market under measures like total home sales and property time on the market – has very little room for value growth due to already sky-high prices.

These benefits have transferred over to businesses and nonprofits that are jumping across the Bay into the city.

“When you look at the competitive cost advantage of Oakland, it’s easy to see why business is moving in,” said Bill Keller, the CEO of Oakland-based Community Bank of The Bay. “With all these new jobs coming in, it’s natural that the real estate values will follow. It’s frankly one of the best deals out there right now.”

Bay Area housing: Is renting or buying more affordable?

By RICHARD SCHEININ, Mercury News, January 6, 2017

In two-thirds of the nation’s busiest housing markets, it’s more affordable to buy a house than to rent.

But in the Bay Area, that’s hardly the case.

Given the rapid appreciation of home prices here, it’s still a better deal to rent in eight of the region’s nine counties — even with the shocking increases in rents over the past few years. Only in Contra Costa County — where homes remain relatively affordable, especially in inland areas — is it more affordable to buy than rent.

Those are the conclusions of a new report that draws on 2016 fair-market rent data from the U.S. Department of Housing and Urban Development and wage data from the U.S. Bureau of Labor Statistics, along with public records for home sales in 540 U.S. counties. The report does not consider long-term financial advantages of home ownership, only what it takes to cross the first hurdle and simply buy a house.

“Home prices have become so high so quickly in the Bay Area that renting has become a better option,” said Daren Blomquist, senior vice president of Irvine-based Attom Data Solutions, which analyzed the numbers and wrote the report. “That’s not to say that renting is affordable, but it’s become a more affordable option in most of the Bay Area counties.”

On top of this, Blomquist added a bleak prediction: “With the prospect of rising interest rates, buying a home is going to become even less affordable than it has been, and I think that’s going to tilt the balance in favor of rent for a lot of people. In the Bay Area, the equation already is favoring renting. But rising interest rates will even further accelerate that trend.”

In fact, rents lately have begun to level off around the Bay Area.

 

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

Glen’s SF East Bay Real Estate Market Update November 30, 2016

East_Bay_Banner

Glen’s SF East Bay Real Estate Market Update

November 30, 2016

 

What’s in store for the San Francisco Housing market in 2017? Here are a few “snippets” from some of the articles listed below under “Recent News.”

“Job growth in San Francisco and the East Bay is slowing from the heated pace of recent years as the region’s high cost of living takes a toll,” Beacon Economics said Monday.

  • Mortgage rates are likely to continue to increase throughout 2017.
  • There will not be any easing in inventory, and affordability will still be a challenge in big markets.
  • The potential is there for a large number of first-time buyers to enter the buying market, but they will face new challenges.

“In general, home values will slow their climb next year,” said Gudell, (Trulia’s Chief Economist). “Currently we’re looking at 6-percent-ish annual appreciation; next year it’ll probably be half that, so a little bit of relaxation there, which will also feed into being more of a buyer’s market by the time we reached 2018.”

“Cities will focus on denser development of smaller homes close to public transit and urban centers.”

zillow_october_sf_market

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

  • Inventory decreased 23.6% in the last 30 days but is still about 1.38 times more than what it was at the beginning of the year. Inventory is slightly greater than where we were 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 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 10% over the last 30 days and is less than what we experienced during this time last year by 11.8%. The pending active ratio increased to 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. This is at a lower level than we saw last year at this time, (1.75), and this may be an indication of moving towards a more “normal” or balanced market combined with the typical late fall/winter slowdown.
  • The percentage of homes “sitting” has increased from last month. 57% of the homes listed now remain active for 30 days or longer, while 32% stayed on the market for 60 days or longer. This may be due more to a shortage of “fresh” new inventory coming onto the market. This is identical to where we were last year at this time.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only .6% of the active listings and 1.6% 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 13 cities within 20%. That means that only 3 cities are still well below their peaks, falling into the 20% to 30% range. The Median Price for the East Bay has decreased from $650,000 to $620,000 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.

active__pendings

  • Our inventory for the East Bay (the 38 cities tracked) decreased to 2,028 homes actively for sale. This is still well above the December 2012 low of 1,086 and slightly greater than last year at this time of 1,887. 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 2,911, slightly lower than where we were last year at this time of 3,300.

pending_active_ratio

 

  • Our Pending/Active Ratio is 1.44. Last year at this time it was 1.75. This is moving towards a more balanced or “normal.” (a ratio of 1 with an equal number of listings and pending sales).

sales

 

  • Sales have decreased from the last (4 month period) now at 8,836 for the 38 cities tracked. This is up 3.4% from what we saw last year at this time.
  • Sales over the last 4 months, on average, are 2.8% over the asking price for this area down slightly from last year’s 3.4%. This has come down over the past 4 months from 4.0%

glens_numbers_11-30-16_page_1

glens_numbers_11-30-16_page_2

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

 

Recent News

 

High housing costs spark Bay Area economic cool down

By Mark Calvey, SF Business News, December 5, 2016

 

Job growth in San Francisco and the East Bay is slowing from the heated pace of recent years as the region’s high cost of living takes a toll, Beacon Economics said Monday.

Beacon said it anticipates job growth in San Francisco to expand in the 1 percent to 1.3 percent range over the next year.

Job growth in the East Bay is also expected to slow to between 1 percent and 1.5 percent over the next year, down from 2.7 percent growth between October 2015 and October 2016.

Beacon’s economists blame the slowing job growth on a familiar culprit — higher housing costs.

The firm sees housing costs slowing the pace of people moving into the region. Plus, the East Bay is approaching full employment at a jobless rate of 4.4 percent, Beacon said. San Francisco is already there.

The East Bay is expected to still be a magnet for existing residents and businesses looking for lower-cost alternatives to pricier Bay Area communities such as San Francisco.

“The influx of highly educated professionals has been a primary driver of growth, but as the rising cost of living in the area chips away at wage advantages, net migration is expected to dramatically decline over the next few years,” Beacon Economics said.

That spells bad news for residential real estate.

Beacon said the San Francisco area rental market “appears to be approaching the end of frenzied growth.” The firm expects multifamily permitting activity will fall by 18 to 24 percent in 2017, as compared to 2016, as “demand for apartments in the region’s pricier submarkets continues to cool.”

Beacon anticipates rising mortgage rates will keep San Francisco area single-family home price appreciation on track for more modest gains of 3 percent to 4.5 percent over the next year.

But in the East Bay, Beacon expects median single-family home prices will gain steam, with appreciation over the next year coming in at 5.6 percent to 6.2 percent.

Beacon Economics said its overall outlook for East Bay real estate is “optimistic,” with residential construction expected to continue at similar levels next year as this year. The firm sees single-family permitting activity actually increasing over the next year.

8 experts predict what the 2017 housing market has in store, What will happen to mortgage rates, affordability, inventory and more

BYAMBER TAUFEN, Inman News, December 6, 2016

 

Key Takeaways

  • Mortgage rates are likely to continue to increase throughout 2017.
  • There will not be any easing in inventory, and affordability will still be a challenge in big markets.
  • The potential is there for a large number of first-time buyers to enter the buying market, but they will face new challenges.

It’s been one unprecedented 2016, between the Brexit vote, the continued persistence of low mortgage interest rates and an election that seemed to temporarily throw markets for a loop.

What will the 12 months encompassing 2017 hold in store for housing?

Inman asked eight different experts to give their take:

  • Steve Cook, editor of Real Estate Economy Watch
  • Doug Duncan, senior vice president and chief economist at Fannie Mae
  • Mark Fleming, chief economist at First American
  • Matthew Gardner, chief economist at Windermere
  • Svenja Gudell, chief economist at Zillow
  • Ralph McLaughlin, chief economist at Trulia
  • Rodney Ramcharan, director of research at University of Southern California’s Lusk for Real Estate
  • Jonathan Smoke, chief economist at realtor.com

Here’s what they told us.

Mortgage rates

We’ve been spoiled with historically low interest rates, which haven’t risen despite threats to do just that over the past few years. No more. “The kind of rates we were getting earlier this year, down to 3.5 percent — those days are over,” said Cook.

“I think in December we’ll see the Fed raising rates and we’ll see more Fed hikes in 2017, and with that, I wouldn’t be surprised if the 30-year fixed mortgage rate hits 4.75 percent,” said Gudell.

“I don’t believe we’ll see any pullback until after the inauguration, but even the best-case scenario suggests that the historically low rates that have been in place for the last few years are firmly in the rear-view mirror,” said Gardner. “My forecast is for the 30-year fixed rate to rise above 4.5 percent by year’s end, and worst case scenario, knock on the door of 5 percent.”

“If income growth picks up, then the rise in interest rates will affect refinancing, but not the home purchase activity. If incomes start to grow more strongly, it probably won’t affect buying as much as refinancing,” Duncan  said.

“Just looking at the pricing data in terms of interest rates, the spike in interest rates should definitely slow things down,” said Ramcharan.

Fleming said that if mortgage rates get closer to 5 percent by the end of 2017, he would expect home sales to decline by about 4 percent from First American’s original projection — or by about 200,000 sales.

At what point would rising mortgage rates start to significantly dampen buyer demand?

“When I’ve looked at this topic historically in the past, what you tended to see was an absolute level that the market reacted to, and in years past that absolute level was closer to 6.5 and 7 percent,” said Smoke.

“But there are plenty of people who believe that because we’ve had a decade of historically low rates that the new threshold for that might be in the mid 5’s or even as low as 5 percent. So if we see them jump more than we’re anticipating, getting into the 5s, then we start to run into that issue.”

Inventory

Housing inventory — or the lack thereof — was a big deal in 2016, and it will continue to be a problem next year, experts believe.

“Historically, you’d want to be much closer to a million homes built or sold, and we’re roughly at half of that, so I don’t think builders are going to have an easy time magically ramping up,” said Gudell.

Inventory will likely fluctuate by market and price point, too. “For people at high ends and expensive properties you may very well see a surge, and the expectation is that tax cuts will come,” said Ramcharan. “Prior to Trump being President-elect, there was a slowdown at the top end.”

How mortgage rates will influence inventory

Because most housing inventory comes from the existing market (as opposed to new construction), what potential sellers decide do in 2017 will have an impact on the market as a whole — and rising mortgage rates might not be great for sales.

Consequently, existing homeowners with low mortgage interest rates might not be able to afford to move into a bigger house if it also comes with a higher rate.

“How do we address the fact that the existing homeowner, the largest single source of housing supply, has a built-in financial disincentive to make that supply move?” asked Fleming. “You’re making that decision to supply as a function of what you can afford to buy, but all else held equal, because you lose that low rate and have to get a new mortgage at a higher rate, you might not be able to buy your own home back from yourself without an increased monthly payment.”

Where’s the entry-level housing?

“The thing that’s missing is entry-level housing available for sale, but also, all of the apartment-building that is going on is all class A properties, which is the most expensive — no one is building class C properties,” said Duncan.

Sellers unwilling to budge

“Household psychology has affected people; they’re willing to take less risk than they were in the past,” said Duncan. “You can see that in the remodeling data. People are staying in place and remodeling their existing homes with a higher probability than in the past.”

“The median tenure in homes is at an all-time high,” noted Jonathan Smoke. “Part of [that] is … the reasons people are purchasing tie into life events.

“Where this can be particularly important is with retiring baby boomers,” he added. “There’s a cohort of baby boomers who might think it’s in their best interest to stay put and make improvements so they can age in place.”

Affordability

A basic economics lesson: When inventory (supply) is thin on the ground, and demand is unchanged, you can expect prices to go up.

“Home construction is at full tilt and it’s still not filling the bill, particularly affordable housing,” noted Cook. “The average price of a new home is increasing still; we’re not serving the mid to lower-tier market with new home construction. So you’re not going to see much relief in affordability.”

“If you’re located in San Francisco, Los Angeles, Seattle, New York or Miami, rising mortgage rates might very well have an impact on you because you’re already stretching your budget as it is to get into a home that you can barely afford at historically low mortgage rates,” Gudell added. “In these places where affordability is already an issue, seeing these small bumps will already have a slight dampening effect, and we’ll see that effect not on all buyers but specifically first-time homebuyers or lower income folks.

The big picture

“We still think affordability is going to be a challenge in some of the largest markets in the U.S. — L.A., the San Francisco Bay Area, the Pacific Northwest — but that said, the U.S. is still a very affordable place to buy a home,” said McLaughlin.

“In general, home values will slow their climb next year,” said Gudell. “Currently we’re looking at 6-percent-ish annual appreciation; next year it’ll probably be half that, so a little bit of relaxation there, which will also feed into being more of a buyer’s market by the time we reached 2018.”

Millennial and first-time buyer trends

The biggest pool of potential homebuyers didn’t make huge strides toward homeownership in 2016 — so what will millennials be doing in 2017?

“Our surveys of the prime first-time homebuying age people suggests a very high, 90 percent-plus, want to eventually own a home,” said Duncan.

“What has tended to be the case is that they’re saying ‘just not right now,’ and that’s driven by the fact that their incomes haven’t risen as far as they need to and they’ve delayed getting married and having a baby relative to prior groups at this age point.”

Bay Area home sales fall, but prices rise

By Kathleen Pender, SF Chronicle, November 30, 2016

Bay Area home sales fell and prices rose a bit in October, but overall it was a quiet month, new figures show.

Bay Area home sales fell and prices rose a bit in October, but overall it was a quiet month, new figures show. However, it was just before Donald Trump was elected president, and mortgage rates jumped half a percentage point.

Anecdotally, real estate agents say some buyers have exited the market since the election because their loan got too expensive, they became unsure of their immigration status or just got cold feet. But so far, no data suggest that the election is having an impact on the local real estate market.

The median price paid for all homes sold in the nine-county Bay Area in October was $675,000, according to a CoreLogic report released Wednesday. That was up 3.8 percent from the previous month and up 6.1 percent year over year. The data include new and existing homes and condos that closed in October.

Year over year, the median price has risen for 55 consecutive months — since April 2012, CoreLogic said. October’s median, however, was 4.9 percent below the Bay Area’s all-time high of $710,000 set in June.

The number of Bay Area homes sold in October fell to 7,505, down 5.4 percent from the previous month and down 1.5 percent year over year. October sales were the lowest in five years and about 11 percent below the historical average for October.

Median prices can go up because of appreciation, a shift in the mix of homes sold toward higher-priced ones, or some combination thereof. In October, there was a definite shift to high-end homes in most parts of the Bay Area, said CoreLogic research analyst Andrew LePage.

This was especially true in San Francisco, where the median price jumped almost 20 percent since September to $1,225,000 in October. The city’s all-time high was $1.3 million, set in April.

less_for_more

This time last year, the market was so hot that some people might have put their homes on the market just to see what they could get. Today, agents “are telling clients to be a little more cautious. Make sure you have your price right,” said Jay Cheng, a spokesman for the San Francisco Association of Realtors. People who list their homes “are convinced they really want to sell.” That makes for fewer listings, and fewer withdrawals.

November Report Looks At Future of Housing Market

By Kendall Baer, DSNews, November 30, 2016

A spike in mortgage rates is expected to decrease affordability for the coming year, according to Freddie Mac’s November 2016 Outlook [1] released on Wednesday.

Sean Becketti, Chief Economist with Freddie Mac, reflected on previous years and described the components that will be affected by increasing mortgage rates.

“Much like in 2013, we expect housing markets to respond negatively to higher mortgage rates—they will drive down homebuyer affordability, dampen demand and weaken home sales, soften house price growth, and slow the growth in new home construction,” he said. “Mortgage market activity will be significantly reduced by higher mortgage rates, especially refinance originations, which are likely to be cut in half.”

Home sales are slated to decline more than 200,000 units from 2016 to 2017. Although new home sales are increasing, it will not be enough to neutralize declines with existing home sales. Potential homebuyers will be forced to deal with high interest rates and increasing home prices.

“Prospective homebuyers, including many millennial first-timers are going to face increased challenges in 2017,” Kiefer said. “Higher mortgage interest rates and higher home prices are putting the squeeze on homebuyer affordability. One positive for millennials is that the robust pace of home price appreciation has lifted many current homeowners out of negative equity. As house price appreciation continues, more and more homeowners may opt to list their home, if they can find a suitable new home. This should help to provide some additional supply of for-sale homes for first-timers.

Low Inventory, Increased Home Value Prices for October

By Kendall Baer, DSNews, November 29, 2016

Zillow’s October 2016 Market Report [1] and Redfin’s October 2016 Market Report [2] analyze and compare a medley of findings and trends that will impact housing in the near future. Industry experts are also predicting a “pendulum shift” in the coming years, according to Zillow.

A shortage of home inventory has resulted in low homeowner morale over the past few months. The Redfin Housing Demand Index decreased by 3.5 percent due to fewer homebuyers touring properties and making offers. The number of homebuyers using Redfin to request tours decreased by 3.7 percent from September, and the number of customers who were making offers on homes declined by 5.9 percent.

Zillow’s October 2016 Market Report predicts that the housing market will veer from the current seller’s market to a buyer’s market by 2018 or 2019. Aaron Terrazas, Senior Economist at Zillow, attributes steady rent growth, building regulations, negative equity, and job growth to this forthcoming adjustment.

“Slower rent growth means that some renters will feel less urgency to buy and easing building regulations, both at the federal level and by local governments, should boost new construction making the supply of homes for sale more plentiful,” he told DS News. “Negative equity will continue to recede allowing the relatively small number of owners still trapped in their underwater homes to move. As job growth shifts away from the pricey coasts toward suburban communities and interior metros, demand will shift toward less supply constrained communities.”

Realtor.com predicts these 5 housing trends for 2017

Millennials, home prices, interest rates

BY Brena Swanson, Housing Wire, November 30, 2016

The housing market is on the edge of 2017. A quick look back on 2016 shows a year filled with thoughts on Millennial homeownershiplow interest rates and drastically low inventory.

Next year doesn’t look like it will be too different, according to the realtor.com 2017 housing forecast.

The report predicts the 2017 housing market will be a year of slowing, yet moderate growth.

As a result, realtor.com said next year’s predicted slowing price and sales growth, increasing interest rates and changing buyer demographics are setting the stage for these five key housing trends:

  1. Millennials and boomers will dominate the market

Although increasing interest rates have prompted realtor.com to lower its prediction of Millennial market share to 33% of the buyer pool; Millennials and Baby Boomers will still comprise the majority of the market. Baby boomers are expected to make up 30% of buyers in 2017 and given they’re less dependent on financing, they are anticipated to be more successful when it comes to closing.

  1. Midwestern cities will continue to be hotbeds for Millennials  

Midwestern cities are anticipated to continue to beat the national average in Millennial purchase market share in 2017 with Madison, Wisconsin; Columbus, Ohio; Omaha, Nebraska.; Des Moines, Iowa; and Minneapolis, leading the pack. This year, average millennial market share in these markets is 42%, far higher than the U.S. average of 38%. With strong affordability in 15 of the 19 largest Midwestern markets, realtor.com expects this trend to continue in 2017 even as interest rates increase.  

  1. Slowing price appreciation

Nationally, home prices are forecast to slow to 3.9% growth year over year, from an estimated 4.9% in 2016. Of the top 100 largest metros in the country, 26 markets are expected to see price acceleration of 1% point or more.

  1. Fewer homes on the market and fast moving markets

Inventory is currently down an average of 11% in the top 100 metros in the U.S. The conditions that are limiting home supply are not expected to change in 2017. Median age of inventory is currently 68 days in the top 100 metros, which is 14%– or 11 days – faster than U.S. overall.

  1. Western cities will continue to lead the nation in prices and sales

Western metros in the U.S. are forecast to see a price increase of 5.8% and sales increase of 4.7%, much higher than the U.S. overall. These markets also dominate the ranking of the realtor.com 2017 top housing markets. 

Zillow’s 6 predictions for the 2017 housing market under Trump

The company speculates that the construction labor workforce may constrict given the President-elect’s immigration stances

BY CAROLINE FEENEY, Inman News, November 22, 2016

Key Takeaways

  • Zillow predicts 2017 will mark a new stage of the post-recession housing recovery and the company expects recent trends to reverse course next year.
  • New-home buyers could face increased building costs if President-elect Trump follows through on his tougher immigration policies, which may worsen the construction industry labor shortage, according to the company.
  • Zillow also anticipates continued but slowed home price growth (3.6 percent over the year), decelerated rent prices, homeowners seeking affordable housing further from urban centers, and an increased homeownership rate driven by millennial buyers.

Zillow’s 2017 predictions

  1. “Cities will focus on denser development of smaller homes close to public transit and urban centers.”
  2. “Moremillennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.”
  3. “Rental affordability will improve as incomes rise and growth in rents slows.”
  4. “Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.”
  5. “The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing — putting them further from adequate public transit options.”
  6. “Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.”

season_listing

As conventional wisdom would predict, spring was the best time to list a home, but just barely. Spring offered the highest likelihood of selling above list price and of selling within 30 days, but winter, the supposed slow season for real estate, was a close second.

Among spring listings, 18.7 percent of homes fetched above asking, with winter listings not far behind at 17.5 percent. While 48.0 percent of homes listed in spring sold within 30 days, 46.2 percent of homes in winter did the same.

While winter can get a bad rap, it’s not a bad time to list a home. “You may have fewer people looking to buy, but those who are looking are serious,” said Michelle Leader, a Redfin real estate agent in Oklahoma City. “Buyers that time of year often need to move, so they’re much less likely to make a lowball offer and they’ll often want to close quickly — two things that can make the sale much smoother.”

The other benefit of listing in the winter is less competition from other sellers. While spring can see a rush of homes coming on the market, homes that list in the winter are much more likely to stand out, said Leader.

Among homes listed in summer and fall, the key goals of selling quickly and for above list price were achieved notably less often. Forty-one percent of autumn listings sold in 30 days or less, and just 14.7 percent sold above list price.

“Autumn is a tricky time,” said Chicago Redfin real estate agent Michael Linden. “Buyers with kids often want to get settled in their new home before the school year starts, so they’ve already closed in spring or summer. And right after you list, the holiday season begins, which can delay the time it takes to close, and causes many buyers to pause their search. The last quarter of the year is just not an ideal time to put a home on the market, particularly if you want full price or a quick closing.”

But, as the numbers indicate, listing at the start of the new year can work to a seller’s advantage. Typically, sellers assume snow and inclement weather in January and February are major barriers to winter home shopping. However, while winter storms can cause a delay or two, most cities known for snow also have effective plowing systems and residents who are comfortable tromping around in winter boots.

In fact, weather seems to have little to do with the seasonality. When broken down by metro, winter and spring maintained their top spots consistently, even across markets with weather as varied as Los AngelesBoston and Atlanta.

_sold_above

_off_market

Methodology

Redfin examined more than 7 million homes listed across 23 metro areas from 2012 through August 2016 to see how many of them went under contract within 30 days and how often they sold for more than their list price. We then grouped the performance of each listing by the season that the home was first listed on the market. We used the astronomical seasons (Winter: Dec. 21 – Mar. 20; Spring: Mar. 21 – June 20; Summer: June 21 – Sept 21; Autumn: Sept 21 – Dec. 20).

The 20 Hottest U.S. Real Estate Markets for November 2016

By Cicely Wedgeworth | Nov 23, 2016

As usual, California markets dominated the list, taking up 11 slots, including San Francisco at No. 1, but eight other states were represented: Texas, Colorado, Indiana, Ohio, Michigan, Massachusetts, Tennessee, and Montana.

Check out the full list:

Rank
(November)
20 Hottest Markets Rank
(October)
Rank Change
1 San Francisco, CA 1 0
2 Dallas, TX 4 2
3 Vallejo, CA 3 0
4 Denver, CO 2 -2
5 San Jose, CA 7 2
6 San Diego, CA 6 0
7 Stockton, CA 9 2
8 Fort Wayne, IN 5 -3
9 Columbus, OH 10 1
10 Detroit, MI 12 2
11 Sacramento, CA 14 3
12 Boston, MA 8 -4
13 Santa Rosa, CA 13 0
14 Fresno, CA 17 3
15 Modesto, CA 11 -4
16 Billings, MT 58 42
17 Nashville, TN 19 2
18 Los Angeles, CA 22 4
19 Oxnard, CA 27 8
20 Colorado Springs, CO 16 -4

What Can Trump do to Further Increase Inventory and Home Sales?

By Ralph McLaughlin, Trulia, Nov 22, 2016
  • While home sales slowly recover to their pre-recession average, tight inventory continues to plague buyers and hold back growth. We encourage President-Elect Trump to focus on policies that encourage existing owners to sell and homebuilders to build, rather than fixating on policies that boost demand.
  • If home sales are to drive up to their pre-recession levels, we’ll need to see inventory continue to pick up, not fall. October’s 10.4% fall in inventory over last year is yet another reminder that the housing market still faces headwinds towards a full recovery.
  • President-Elect Trump could help boost inventory by implementing policies that would encourage investors to sell homes they bought during the foreclosure crisis, many of which are suitable for starter home buyers. Such policies could include a reduction in capital gains taxes for homes sold by investors to owner-occupiers, an increase in tax rates on rental income, or both.

C.A.R. releases its 2017 California Housing Market Forecast

Following a dip in home sales in 2016, California’s housing market will post a nominal increase in 2017, as supply shortages and affordability constraints hamper market activity, according to the “2017 California Housing Market Forecast,”

“Next year, California’s housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” said C.A.R. President Pat “Ziggy” Zicarelli. “The market will experience regional differences, with more affordable areas, such as the Inland Empire and Central Valley, outperforming the urban coastal centers, where high home prices and a limited availability of homes on the market will hamper sales. As a result, the Southern California and Central Valley regions will see moderate sales increases, while the San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.”

“With the California economy continuing to outperform the nation, the demand for housing will remain robust even with supply and affordability constraints still very much in evidence. The net result will be California’s housing market posting a modest increase in 2017,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The underlying fundamentals continue to support overall home sales growth, but headwinds, such as global economic uncertainty and deteriorating housing affordability, will temper stronger sales activity.”

sf_bay_area_car_forecast

Plan Bay Area update calls for 30 percent more housing by 2040

By Kevin Truong, SF Business News, November 18, 2016

The Bay Area is going to need housing to accommodate more than 800,000 additional households in the 30 years to 2040, says the latest update to Plan Bay Area, the controversial regional forecasting document that is used to assign housing targets to cities and counties.

The draft update was approved by a joint committee of the Association of Bay Area Governments and the Metropolitan Transportation Commission Thursday, sketching out the blueprint for transportation and housing growth in the Bay Area over the next quarter century.

The proposed plan calls for 3.4 million households in the region by 2040, representing about a 30 percent jump from 2010 numbers which translates to approximately 820,000 new households. It also represents a 100,000 increase from Plan Bay Area’s 2013 projections.

The plan centers a large portion of the housing growth — around 46 percent — in the Big 3 Bay Area Cities: San Francisco, Oakland and San Jose.

Oakland especially, is expected to see major housing growth, with 241,500 households by 2040, a 57 percent increase from 2010 levels. According to the proposed plan, San Francisco is expected to see 483,700 households by that year, an increase of about 138,000 households.

The majority of new housing, 77 percent, is expected to come in so-called “Priority-Development Areas,” adjacent to transit and job centers.

Major employment growth is also projected in the region, with the number of jobs expected to rise to 4.7 million by 2040 — a 300,000 increase from the 2013 forecast.

Various suburbs in Marin County and the East Bay have chafed at the housing targets assigned to them under Plan Bay Area. They say decisions on how much housing to build should be controlled at a local level in each city, not assigned based on regional needs.

upporters of the plan admitted its shortfalls when it comes to solving the issue of affordable housing availability.

“Housing affordability has been a major point of conversation and the plan bends the curve away from business as usual,” Matt Vander Sluis with the Greenbelt Alliance said.

 

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

Glen’s SF East Bay Real Estate Market Update October 31, 2016

East_Bay_Banner

Glen’s SF East Bay Real Estate Market Update

October 31, 2016

 

“Distressed inventory for sale is virtually non-existent in many of the nation’s hottest housing markets, and when a distressed property is listed for sale in those markets, it often sells quickly and at little or no discount,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “The scarcity of discounted distressed inventory is chasing away cash buyers and other bargain hunters, but it’s certainly good news for home sellers, who nationwide realized the biggest home price gains since purchase in nine years.

“We are seeing the average seller home price gain since purchase start to wane in some of the highest-priced markets where appreciation is beginning to cool, indicating those markets are past their prime as sellers markets,” Blomquist continues. “Meanwhile, there are still a number of buyers markets across the country where a high level of lingering distress and relatively weak demand from owner-occupant buyers provides investors with plenty of bargain-buying opportunities.”

“The lead-up to the election had no impact on home sales or demand; pent-up demand, historically low mortgage rates, relatively strong job creation, and significant demographic tail winds created the best real estate market in a decade,” says Jonathan Smoke, chief economist, realtor.com®. “Because our November elections come at one of the slowest times of the year for sales, it’s unlikely we will see much disruption to the normal seasonal pattern.

Housing, currently, is projected to maintain relatively status quo.

– RISMedia

zillow_september_market_update

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

  • Inventory decreased 13.8% in the last 30 days but is still about 2.25 times more than what it was at the beginning of the year. Inventory is slightly greater than where we were last year at this time. Our monthly supply is now 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 39 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 remained about the same. That’s slightly less than what we experienced during this time last year. The pending active ratio increased slightly to 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. This is at a slightly lower level than we saw last year at this time, (1.32), and this may be an indication of moving towards a more “normal” or balanced market combined with the typical late fall/winter slowdown.
  • The percentage of homes “sitting” has increased slightly from last month. 49% of the homes listed now remain active for 30 days or longer, while 26% stayed on the market for 60 days or longer. This may be due more to a shortage of “fresh” new inventory coming onto the market.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 3% of the active listings and 2.2% 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 $650,000 to $625,000 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 39 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

actives__pendings

 

  • Our inventory for the East Bay (the 38 cities tracked) decreased to 2,653 homes actively for sale. This is still well above the December 2012 low of 1,086 and slightly greater than last year at this time of 2,577. 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 about the same now at 3,233, slightly lower than where we were last year at this time of 3,412.

pending_active_ratio

  • Our Pending/Active Ratio is 1.22. Last year at this time it was 1.32. This is moving towards a more balanced or “normal.” (a ratio of 1 with an equal number of listings and pending sales).

sales

  • Sales have decreased from the last (4 month period) now at 9,029 for the 38 cities tracked. This is down 3.7% from what we saw last year at this time.
  • Sales over the last 4 months, on average, are 3% over the asking price for this area down slightly from last year’s 3.7%. This is down over the past 4 months from 4.4%

glens_numbers_10-31-16_pg_1

glens_numbers_10-31-16_pg_2

Recent News

 

What does President Trump mean for the housing market?

8 ways our new commander-in-chief could affect homeownership for the next 4 years
BY THOMAS MITCHELL, Inman News, November 9, 2016

Political pundits around the country were stunned last night when Donald Trump secured enough votes to beat Hillary Clinton to become the next President of the United States. While supporters from both sides are still reeling from emotions, we woke up wondering what that would mean for real estate.

It’s common for the president to use housing as a vehicle to lead economic recovery, and with Trump being a licensed broker, real estate professionals have been keen to see how his policies would affect them.

“The last time we had real estate dealmakers as U.S. Presidents were founding fathers Thomas Jefferson and George Washington, who loved their property holdings and made sure the U.S. Constitution protected them,” Inman publisher Brad Inman wrote earlier this year. “That was a big deal.”

How will an impending Trump presidency change the real estate market? Here are eight possible outcomes.

Will he use real estate to kickstart the economy?

Trump has used real estate himself as an investment, and although he hasn’t said much about his housing platform, what he has said indicates that he’s interested in boosting homeownership.

Much of Trump’s platform has centered around deregulating the financial market in order to more fully revive it, and that alone could also give a boost to real estate.

What will happen to mortgage rates?

Many different factors affect mortgage rates — they change each day based on what the market is doing — and last night, we saw a little bit of market panic, which can be expected due to an unforeseen event (most polls showed a Clinton win).

However, as of this morning, they have already bounced back a bit.

similar effect was seen post-Brexit, with markets dropping after the unexpected vote to leave the European Union, but a few months later, it’s business as usual again.

The international economy also has an effect on the exchange rate, and there could be some disturbance as the result of an unforeseen event.

“Mortgage rates are falling because investors are seeing safe yields in U.S. mortgage backed securities, reflecting their confidence in the relative safety of the U.S. housing market,” wrote Trulia chief economist Ralph McLaughlin this morning in a statement. “Furthermore, the Fed is likely to delay a December rate hike because of global economic turmoil. Both effects mean short term win for borrowers, and we’ll likely see an increase in mortgage refinancing if rates continue to plummet.”

Could it become easier to borrow money?

One way that a Trump presidency could make it easier for consumers to own homes would be to lower premiums for FHA loans or cutting guarantee fees for Fannie Mae or Freddie Mac.

Neither of those have been specifically mentioned as priorities for his campaign — and Fannie and Freddie present their own problem, as seen below.

Will there be cutbacks in federal programs?

In the 1980s, Ronald Reagan cut back on many federal programs (such as mental health care) in order to trim the national budget.

Some programs, such as those involving affordable housing, might have more of an effect on real estate than others, but Trump has not indicated which programs he would be most likely to target for cutbacks.

“While local and state policies are likely to be unaffected, major programs — such as the Low Income Housing Tax Credit and Section 8 housing vouchers — could be on the table for reform,” said McLaughlin.

What about regulations?

This is something that Trump — and the Republican party as a whole — has been vocal about.

Banking regulations

In July, the party approved its 2016 platform. That platform includes significant changes to the Consumer Financial Protection Bureau (CFPB), and there has been talk of repealing the Dodd-Frank Act, which imposed regulations on lenders, and replacing it and the CFPB with something else.

Loosening regulation on lending could potentially boost homeownership by making it easier for consumers to obtain loans.

Building regulations

In August, Trump also told a meeting of the National Association of Home Builders, “There’s no industry, other than probably the energy industry, that is more overregulated than the housing industry … Twenty-five percent of costs to build a house are regulations. I think we should get that down to 2 percent.”

If construction is deregulated to some extent, this could mean more affordable homes for consumers.

Employer/independent contractor regulations

What happens to the Patient Protection and Affordable Care Act (PPACA, also known as Obamacare) and Occupational Safety and Health Administration regulations is up in the air now.

And if Republicans are successful in getting rid of some or all of PPACA or OSHA, then that could mean lower operating costs for small business, including real estate brokerages. It could also mean that agents are no longer required to purchase their own health insurance as independent contractors if PPACA is repealed or amended.

Will the mortgage interest deduction go away?

Last year, a tax plan that Trump shared specifically and explicitly mentioned that he would preserve the mortgage interest deduction.

Trump’s current plan (more abbreviated than the previous version) does not go into detail about the mortgage interest deduction.

Will there be reforms at Fannie Mae or Freddie Mac?

Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs), are currently under government conservatorship — and although figuring out what to do with the behemoths is bound to be difficult, it’s also likely to fall into Trump’s lap.

The GSEs are projected to run out of funds in 2018, so if we don’t have a plan by the time that happens, we’ll need one.

What about immigration?

This is a big unknown — if Trump does, indeed, tighten immigration policies as outlined in his platform, then the United States could see some softening in markets that rely heavily on overseas investors, who might face additional difficulties or hurdles in purchasing property.

However, Trump’s immigration policy has undergone many changes since he first announced his candidacy, and immigration reform won’t be an easy bill to push through, so it’s difficult to determine whether this will influence the real estate market to any large degree.

Homebuyers Reflect Uncertainty Toward the Market

By Scott Morgan, DS News, November 7, 2016

U.S. homebuyers were overall more pessimistic about the market in October, according to the latest Fannie Mae Home Purchase Sentiment Index[1] (HPSI). The index last month dropped another 1.1 points to 81‒‒the third decrease in as many months‒‒and four of the six components that comprise the HPSI fell during October as well.

“The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today.”

“Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate,” Duncan said. “Furthermore, consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index.”

“Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate,” Duncan said. “Furthermore, consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index.”

Distressed Home Sales Plunge to Nine-Year Low

RISMedia e-News, RealtyTrac, November 12, 2016

Distressed sales—including bank-owned (REO) sales, sales of homes actively in foreclosure, and short sales—accounted for 12.9 percent of all U.S. single-family home and condo sales in Q3 2016. According to ATTOM Data Solutions’ Q3 2016 U.S. Home Sales Report, these numbers are down from 15 percent in the previous quarter and down from 15.9 percent in Q3 2015 to the lowest share of distressed home sales since Q3 2007, when distressed sales accounted for 12.3 percent of all home sales.

The peak in share of distressed sales was Q1 2009 at 43.9 percent of all U.S. single-family home and condo sales.

The report also shows that all-cash purchases accounted for 25.9 percent of all single-family home and condo sales in Q3 2016, down from 27.4 percent in the previous quarter and down from 29.2 percent in Q3 2015 to the lowest level since Q3 2007, when all-cash purchases accounted for 24.3 percent of all home sales.

The peak in share of all-cash purchases was Q1 2011 at 44.8 percent of all U.S. single-family home and condo sales.

“Distressed inventory for sale is virtually non-existent in many of the nation’s hottest housing markets, and when a distressed property is listed for sale in those markets, it often sells quickly and at little or no discount,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “The scarcity of discounted distressed inventory is chasing away cash buyers and other bargain hunters, but it’s certainly good news for home sellers, who nationwide realized the biggest home price gains since purchase in nine years.

“We are seeing the average seller home price gain since purchase start to wane in some of the highest-priced markets where appreciation is beginning to cool, indicating those markets are past their prime as sellers markets,” Blomquist continues. “Meanwhile, there are still a number of buyers markets across the country where a high level of lingering distress and relatively weak demand from owner-occupant buyers provides investors with plenty of bargain-buying opportunities.”

The outcome of the presidential election has called into question prior indicators of an interest rate rise in December, with analysts now expecting the Federal Reserve to keep the key rate unchanged as markets respond to the result. Housing, currently, is projected to maintain relatively status quo.

“The lead-up to the election had no impact on home sales or demand; pent-up demand, historically low mortgage rates, relatively strong job creation, and significant demographic tail winds created the best real estate market in a decade,” says Jonathan Smoke, chief economist, realtor.com®. “Because our November elections come at one of the slowest times of the year for sales, it’s unlikely we will see much disruption to the normal seasonal pattern.

Here are Oakland’s most expensive and most affordable neighborhoods for 2016

By Riley McDermid, SF Business News, November 11, 2016

Oakland remains one of the nation’s most expensive and in-demand cities, but there are still some bargains to be found for renters, new data from real estate tracking site Zumper suggests.

Zumper provided the Business Times with rental data for average one-bedroom in the city for 2016, which showed a shift for demand from Oakland’s most expensive neighborhoods like Central and North Oakland into lower-priced ones nearby, including Lower Hills and San Antonio.

“Whether it’s a migration of residents from the most expensive neighborhoods to the less pricey ones or just general interest from potential Oakland tenants to stay close to the bustling city center without paying as much, this shift seems to be surging the prices in these less expensive areas,” Crystal Chen, a spokesperson for Zumper, told the Business Times.

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Glen’s SF East Bay Real Estate Market Update, September 30, 2016

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Glen’s SF East Bay Real Estate Market Update

September 30, 2016

 

“Next year, California’s housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” said C.A.R. President Pat “Ziggy” Zicarelli. “The market will experience regional differences, with more affordable areas, such as the Inland Empire and Central Valley, outperforming the urban coastal centers, where high home prices and a limited availability of homes on the market will hamper sales. As a result, the Southern California and Central Valley regions will see moderate sales increases, while the San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.”

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

  • Inventory remained roughly the same in the last 30 days but is still about 2.5 times more than what it was at the beginning of the year. Inventory is slightly greater than where we were last year at this time. Our monthly supply remains at 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 45 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 remained about the same. That’s slightly less than what we experienced during this time last year. The pending active ratio remains at 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 at a slightly lower level than we saw last year at this time, (1.14), and this may be an indication of moving towards a more “normal” or balanced market combined with the typical summer slowdown.
  • The percentage of homes “sitting” also remain about the same as last month. 45% of the homes listed now remain active for 30 days or longer, while 23% stayed on the market for 60 days or longer.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 3.2% of the active listings and 2.6% 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 Early Fall. 18 out of the 33 East Bay cities tracked are now at or above their median price “peak” levels with another 11 cities within 20%. That means that only 4 cities are still well below their peaks, falling into the 20% to 30% range.

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  • The month’s supply for the combined 38 city area remains at 45 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

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  • Our inventory for the East Bay (the 38 cities tracked) slightly increased to 3,079 homes actively for sale. This is still well above the December 2012 low of 1,086 and slightly greater than last year at this time of 2,903. 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 about the same now at 3,228, slightly lower than where we were last year at this time of 3,281.

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  • Our Pending/Active Ratio is 1.05. Last year at this time it was 1.13. This is moving towards a more balanced or “normal.” (a ratio of 1 with an equal number of listings and pending sales).

sales

  • Sales are about the same as we saw in the last (4 month period) now at 9,545 for the 38 cities tracked. This is down 5.6% from what we saw last year at this time.
  • Sales over the last 4 months, on average, are 3.3% over the asking price for this area.

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Recent News

Silicon Valley, East Bay gain wealthy households while middle-income dwindles

By George Avalos, Bay Area News Group, October 3, 2016

In today’s Bay Area, what’s the dividing line between those who can make it and those who can’t? A new study suggests it’s a salary level that elsewhere might seem staggeringly high: $150,000 a year.

Silicon Valley and the East Bay are gaining upper-crust households, while middle- and low-income households are dwindling — indicating the region’s income gap is growing wider.

“The Bay Area is becoming like Manhattan West,” said Russell Hancock, chief executive officer of Joint Venture Silicon Valley, which on Monday released the report from its Institute for Regional Studies. “We are seeing many more wealthy people, highly compensated people, living in the Bay Area, and a disappearance of the middle-class segment.”

In the East Bay, the number of households with $150,000 or more in median income increased by 37,700, while those households with incomes below that threshold dwindled by 16,500. Joint Venture Silicon Valley derived the figures from a recently released nationwide set of statistics by the U.S. Census Bureau.

The economic divide in the Bay Area could imperil the region’s economic health, experts warned.

“Our community is not sustainable if we don’t have a healthy middle class and a healthy economy for middle- and low-income people,” said Emmett Carson, founding chief executive of Silicon Valley Community Foundation.

The shifts appear to be a combination of middle- and low-income residents leaving the region — and being displaced by upper-income households in some cases — and middle-income earners jumping into the upper-income bracket.

Rachel Massaro, vice president and senior research associate with Joint Venture Silicon Valley, agrees that middle-income families have enjoyed upward mobility. But she maintained that an even bigger factor is that people in middle-income groups became priced out of the expensive Bay Area and migrated to counties that border the region or to outlying areas such as Solano County or eastern Contra Costa County.

“There are people moving farther away from the Bay Area because they can’t afford to live here,” Massaro said. “People may be keeping their jobs and commuting in. That makes traffic a bigger problem.”

The shrinking middle class has comprised an array of ordinary jobs that Hancock calls community infrastructure employment.

“Teachers, police, chefs, retail clerks, firefighters, health care workers, nurses, office workers, those are all being displaced,” Hancock said.

Bay Area’s 10 most congested freeways (No. 3 is a surprise)

By GARY RICHARDS, Bay Area News Group, October 4, 2016

For just the second time in the two decades that Bay Area freeway congestion levels have been tracked, the morning commute from the East Bay across the Bay Bridge is not the worst. It’s in second place.

The new honor — if that’s the right phrase — goes to the afternoon slog out of San Francisco from Highway 101 to the Treasure Island portion of the Bay Bridge. That 6-mile stretch can take an hour to cover, according to the Metropolitan Transportation Commission annual report, issued Monday.

And the newest hot spot is a stunner: The morning trek from Interstate 680 in East San Jose to Interstate 280 in Cupertino was just another slow drive in 2014, ranking 20th. Last

History shows that in general anything that grows very fast and grows to be very high priced can’t sustain that indefinitely so at some point there will be a time when most people won’t be able to afford prices in expensive markets. Homeowners and potential homeowners would then look to move elsewhere. We haven’t hit that point yet. We are still seeing strong price growth in the expensive markets, but overall in the last few years, that rate has slowed down and we are starting to see other expensive markets over the last year it soared to No. 3.

Overall, the report, which was based on 2015 commute information, showed how widespread that nasty creep-and-crawl traffic has become.

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TOP 10 CONGESTED LOCATIONS 

  1. San Francisco/Bay Bridge, PM eastbound
    (from 101/80 to Treasure Island)
  1. East Bay/Bay Bridge/S.F., all day westbound
    (from Highway 4 in Contra Costa County to 101 in San Francisco)
  1. Interstates 680/280, AM southbound/northbound, Santa Clara County
    (from South Jackson Avenue in San Jose to Foothill Expressway)
  1. Highway 101, PM southbound, Santa Clara County
    (from North Fair Oaks Avenue to Oakland Road)
  1. Interstate 80, PM eastbound, Alameda County
    (from West Grand Avenue to Gilman Street)
  1. Interstate 880, AM southbound, Alameda/Santa Clara counties
    (from Highway 238 to Highway 237)
  1. Interstate 680, PM northbound, Alameda County
    (from Mission Boulevard to Calaveras Road)
  1. Highway 101, AM northbound, Santa Clara County
    (from Silver Creek Valley Road to North Fair Oaks Avenue)
  1. Interstate 880, PM northbound, Alameda County
    (from Mowry Avenue to A Street)
  1. Highway 101, PM northbound, San Mateo County
    (from Woodside Road to Hillsdale Avenue)

Source: Metropolitan Transportation Commission

The Real Estate Investors of Today and Tomorrow

By Kendall Baer, DSNews, October 5, 2016 

Recent findings  from a national survey of U.S. investors by Better Homes and Gardens Real Estate recently showed that confidence and intrigue in real estate investment ranks high, with 89 percent of U.S. investors showing interest in incorporating real estate into their investment strategies.

“To see consumer confidence of this magnitude is very promising,” said Sherry Chris, President and CEO, Better Homes and Gardens Real Estate “Through this research, we’ve discovered that a majority of investors, including Millennials, Gen Xers and Baby Boomers, believe real estate is the best way to diversify an investment portfolio.”

Nearly all of U.S. investors surveyed who have invested in real estate believe their decision has helped them achieve some form of financial success with 52 percent anticipating greater overall financial stability, 51 percent expecting greater long-term net worth, and 45 percent expecting greater monthly cash flow. Additionally, 94 percent of those who have invested in real estate are interested in making a future investment of this kind.

Broken down even further, 84 percent who have invested in real estate indicated that they will make another real estate investment and 2 in 5 plan to do so in less than a year.

For Millennial investors, 96 responded saying they are interested in making a real estate investment, showing greater interest than their Boomer counterparts at 83 percent. Likewise, Millennials are more drawn to personal real estate investments at 79 percent compared to those drawn to commercial investments at 49 percent.

“The aspiration to invest in real estate is there, yet it is up to real estate professionals to explain the fundamentals and help to serve as strategic sources throughout the process,” said Chris. “Our hope is that this research empowers our industry to provide the resources and develop the necessary information to accelerate this opportunity for both current and future real estate investors.”

While the single-family investment and rental market continues to redefine its borders, the investment landscape offers opportunity for many in a volatile marketplace that has often been misunderstood and sometimes fragmented. Navigating this complex and dynamic terrain takes careful planning and strategic partnerships.

What Issues are Lurking Behind Rising Home Prices?

By Kendall Baer,  DSNews, October 4, 2016

Post-crisis housing market fundamentals have been on the side of what most analysts would consider strong for some time now, and housing prices are near or even past their pre-recession peaks in some markets.

With home prices nationwide having appreciated by 6.2 percent over-the-year in August and showing little signs of slowing, affordability is becoming a bigger problem, according to the CoreLogic Home Price Insights report for August 2016 released Tuesday.

The forecast calls for home prices to appreciate by another 0.4 percent from August to September and by 5.3 percent by August 2017, according to CoreLogic. The HPI Forecast is a projection of what home prices based on the CoreLogic HPI and other economic variables.

“Home prices are now just 6 percent below the nominal peak reached in April 2006,” said Dr. Frank Nothaft, chief economist for CoreLogic. “With prices forecasted to increase by 5 percent over the next year, prices will be back to their peak level in 2017.”

How much of a problem is affordability becoming in the face of continued strong home price appreciation?

“Housing values continue to rise briskly on stronger fundamental and investor-fueled demand, as well as lack of adequate supply,” said Anand Nallathambi, president and CEO of CoreLogic. “This continued price appreciation is contributing to a growing affordability crisis in many markets around the country.”

According to Dr, Richard Green, Director for the USC Lusk Center for Real Estate, “We are getting close to the 2006 peak for national house prices, and the most important positive resulting from this is more and more people have equity in their houses again. While it’s certainly positive that more people own homes worth more than their mortgage balances, the recovery in house prices has been uneven and prices remain well below their peaks in many parts of the United States. In fact, when adjusted for inflation, house prices are still nearly 20 percent lower than they were in 2006. It’s also important to note that, unlike the last time around, higher prices reflect higher rents and reflect an increasing affordability problem.”

This is what the San Francisco housing bubble bursting would look like, expert says 

by Riley McDermid, SF Bizjournal, September 29, 2016

San Francisco has the highest risk of any U.S. city of being in a bubble, according a report this week by UBS Group AG. The city is increasingly vulnerable to a pullback that could come from a number of factors, an author of the report says.

The UBS Housing Bubble Index Report 2016 declared the San Francisco housing market to be “overvalued” by crunching metrics that include home price-to-income ratio and changes in the mortgage-to-gross domestic product ratio. It then matched those scores up to historic norms in the area and found that the market is in danger of seeing a correction in residential real price appreciation, as well as a “normalizing” of sales prices.

UBS has joined a chorus of experts who are publicly worrying that the Bay Area, and San Francisco in particular, will see a residential real estate slowdown.

Other experts have chimed in recently on the city’s market outlook.

“In coastal California, and particularly in the Bay Area, we are faced with a paradoxical dilemma,” Selma Hepp, chief economist and vice president for business intelligence for Pacific Union, told the Business Times last week. Tackling “the housing affordability conundrum” will be the only realistic way to keep the Bay Area’s boom times going, Hepp said. What she meant is that we need to bring the price of housing down to keep talent in the region. That talent is crucial to companies continuing to thrive and expand here.

C.A.R. releases its 2017 California Housing Market Forecast

Home sales expected to edge up slightly in 2017, while prices post slowest gain in six years

LOS ANGELES (Sept. 29) – Following a dip in home sales in 2016, California’s housing market will post a nominal increase in 2017, as supply shortages and affordability constraints hamper market activity, according to the “2017 California Housing Market Forecast,” released today by the CALIFORNIA ASSOCIATION OF REALTORS ®’ (C.A.R.) .

“Next year, California’s housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” said C.A.R. President Pat “Ziggy” Zicarelli. “The market will experience regional differences, with more affordable areas, such as the Inland Empire and Central Valley, outperforming the urban coastal centers, where high home prices and a limited availability of homes on the market will hamper sales. As a result, the Southern California and Central Valley regions will see moderate sales increases, while the San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.”

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

Glen’s SF East Bay Real Estate Market Update, August 31, 2016

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Glen’s SF East Bay Real Estate Market Update

August 31, 2016

 

I wanted to start out with a quote from the chief economist, Svenja Gudell, with Zillow on her recent outlook on housing followed by their July Spread Sheet covering the largest cities in the San Francisco Bay area:

“The consistent rise in home values that we’ve been seeing for the past four years nationally masks a number of region-specific trends and shifts that have taken place over the past few months. In most areas, the market is being driven mainly by a strong labor market and tight supply, especially among entry level homes that first time buyers are after. But some markets – especially the red-hot Pacific Northwest – are adding more jobs and attracting more residents, putting the pressure on home values and rents there. The Bay Area and Southern California are still growing at a faster pace than the nation as a whole, but growth rates have come back to earth a bit after several years of rapid growth. And markets in other regions, like the Northeast, just keep steadily chugging along.”

“All housing is local, and as the local economies in individual metros ebb and flow, housing will follow suit. More than at any time since the boom and bust, we’re seeing a housing market that is driven by local fundamentals, and not by national trends.”

zillow_city_by_city_summary

 

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

  • Inventory decreased by 6.6% in the last 30 days but is still roughly 2.5 times more than what it was at the beginning of the year. Inventory is slightly greater than where we were last year at this time. Our monthly supply is now at 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 45 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 come down slightly as well, roughly by 4.5%. That’s slightly less than what we experienced during this time last year. The pending active ratio has decreased to 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 at a slightly lower level than we saw last year at this time, (1.14), and this may be an indication of moving towards a more “normal” or balanced market combined with the typical summer slowdown.
  • The percentage of homes “sitting” has slightly increased from last month. 45% of the homes listed now remain active for 30 days or longer, while 20% stayed on the market for 60 days or longer.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 3% of the active listings and 2.8% 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 Early Fall. 18 out of the 33 East Bay cities tracked are now at or above their median price “peak” levels with another 11 cities within 20%. That means that only 4 cities are still well below their peaks, falling into the 20% to 30% range.

months_supply

  • The month’s supply for the combined 38 city area increased to 45 days, an increase from what we saw last August, in 2015 of 42 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

active__pendings

  • Our inventory for the East Bay (the 38 cities tracked) decreased to 3,029 homes actively for sale. This is still well above the December 2012 low of 1,086 and slightly greater than last year at this time of 2,923. 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 3,218, slightly lower than where we were last year at this time of 3,324.

pending_active_ratio

  • Our Pending/Active Ratio decreased to 1.06. Last year at this time it was 1.14. This is moving towards a more balanced or “normal.” (a ratio of 1 with an equal number of listings and pending sales).

sales

 

  • Sales are up 3.5% from what we saw in the last (4 month period) now at 9,541 for the 38 cities tracked. This is down 7.8% from what we saw last year at this time.
  • Sales over the last 4 months, on average, are 4% over the asking price for this area.

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