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

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Glen’s SF East Bay Real Estate Market Update

July 31, 2016

 

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

 

  • Inventory increased by 13.2% in the last 30 days and has almost tripled, (increased by 173%), since the beginning of the year. Inventory is greater than where we were last year at this time. Our monthly supply is now at 48 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 42 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), is roughly the same. That’s 9.4% less than what we experienced during this time last year. The pending active ratio has decreased to 1.04. 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, (1.25), and this may be an indication of moving towards a more “normal” or balanced market.

 

  • The percentage of homes “sitting” has slightly increased from last month. 39% of the homes listed now remain active for 30 days or longer, while 17% 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 2.8% of the active listings and 3.1% 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. 19 out of the 33 East Bay cities tracked are now at or above their median price “peak” levels with another 10 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 48 days, an increase from what we saw last June, 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) increased to 3,243 homes actively for sale. This is still well above the December 2012 low of 1,086 and greater than last year at this time of 2,855. 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 is about the same as last month at 3,368, lower than where we were last year at this time of 3,582.

Pending_Active_Ratio

  • Our Pending/Active Ratio decreased to 1.04. Last year at this time it was 1.25. 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 4.5% from what we saw in the last (4 month period) now at 9,217 for the 38 cities tracked. This is down 8.1% from what we saw last year at this time.
  • Sales over the last 4 months, on average, are 4.4% over the asking price for this area.

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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

Recent News

Oakland’s housing market tops Bay Area for overbidding

By Mark Calvey, SF Business News, August 3, 2016

 

Oakland saw the Bay Area’s highest percentage paid over asking price in the second quarter, capping what’s been a strong recovery over the past five years, according to the latest research from Paragon Real Estate Group.

“In Q2, Oakland was the most feverishly competitive market in the Bay Area, if not the entire country,” Paragon said.

The real estate brokerage firm’s analysis shows bidding over asking price is prevalent throughout the five-county Bay Area. The average percentage of sales price — for listings that did not see a price reduction — hit 117 percent of the asking price in Oakland. That compares to 109 percent in San Francisco, 108 percent for Alameda County, 105 percent in San Mateo County, 103 percent for Contra Costa County and 102 percent in Marin County.

“Virtually no place else in the country has seen competitive overbidding comparable to the inner core of the Bay Area, though some of it is caused by strategic underpricing,” Paragon said.

The numbers were the latest good news Paragon had for Oakland homeowners.

“Oakland had a very large subprime bubble, a huge crash, and then a sensational recovery highly pressurized by being just across the bridge from San Francisco — and much more affordable,” Paragon said.

California Gov. Jerry Brown, as mayor of Oakland, was fond of saying that the East Bay city was closer to San Francisco than some parts of San Francisco. That’s a point Oakland residents appreciate on their BART commute into San Francisco’s Financial District, often a faster trip than those trekking in from San Francisco’s western neighborhoods.

RealtyTrac recently had more good news for Oakland when its analysis of more than 3,500 zip codes nationally found that three of the Bay Area’s best up-and-coming neighborhoods are in Oakland.

Paragon’s report this week said Oakland’s median home price is up 178 percent since the 2011, compared to a 93 percent gain for San Francisco.

But since Oakland’s home prices became so inflated in the historic housing bubble, its home prices are up just 10 percent since 2007. Paragon says Oakland’s median home price was $585,000 at the peak of the market in 2007, then plunged to $232,000 in 2011 before rebounding this year to $644,000.

Uber-loaded: Look at where Oakland plans to put 14,000 housing units

By Cory Weinberg, SF Business Times

 

If you’re just now starting to pay attention to Oakland real estate because we reported that your favorite (or least-favorite) ridesharing company will set up shop there in a couple years, you have some catching up to do.

This may be news to a lot of people: about 14,000 units are in Oakland’s residential pipeline and thousands more will be on the way. That may be a revelation considering the East Bay city has seen very little market-rate development since the economy started booming. Now that rents have risen at one of the fastest rates in the country in Oakland, new development has started to make financial sense for builders.

If Oakland gets all this built in the next 15 years, it would triple the number of units built between 1999 and 2015, a period that encompassed then-Mayor Jerry Brown‘s famous “10K plan” to add 10,000 residents to downtown. Developers working on projects include real estate giants like Sun Cal, Ellis Partners, Lennar Corp. (NYSE: LEN), Blackstone ( NYSE: BX), Zarsion and Hanover Co.

Below is a map of the 14,000 units in the city’s pipeline, which will pop out of the ground between this year and next decade. Project data is from the City of Oakland and Business Times reporting. (If you really care about this stuff, you should check out the City Council’s hearing on housing equity tomorrow night. We’ll be reporting on it, too, but click here to download the report.)

To orient you a bit, here’s what to look for on the map:

  1. What’s that big dot near Alameda on the waterfront?That’d be Brooklyn Basin, and it’s been in the works long before Uber made headlines. Chinese development company Zarsion infused $1 billion into the massive mixed-use project, and local firm Signature Development Group is shepherding it through complicated infrastructure work, too. Catch up on the project with Roland Li’sbreakdown of the 3,100 units and 200,000 square feet of retail.
  2. Getting Oakland’s head above water.Two of the biggest residential projects sit squarely on Oakland’s waterfront – in Jack London Square, that is. Carmel Partners is building 330 units at 200 4th Street while Ellis Partners is buildingnearly 700 units across two sites on Oakland’s Embarcadero. On the map, you’ll see those projects near the tubes to Alameda.
  3. Head for the hills!The easternmost project you can see on the map is SunCal’s long-planned Oak Knoll project, which will include more than 900 units and bebuilt out in phases on a former Navy hospital site.
  4. Walking (or Ubering) to work:A heavy density of proposed market-rate projects are in the Broadway-Valdez corridor, which was recently zoned for about 1,030 residential units. Several large sites in the area have been snapped up and expect even more investment to pour in because it’s not too far from Uber’s future Oakland headquarters.
  5. West Oakland is becoming a hotbed: Reporter Roland Li has been tracking the changes in West Oakland, where he lives. You can see speckles of proposed development on the map. “West Oakland has lagged behind (in each real estate boom). It has remained pockmarked with vacant or abandoned lots, plagued by deprivation and crime and largely left out of Oakland’s regeneration. Multiple developers have recently completed or are planning more than 1,000 units, suddenly turning West Oakland into one of the city’s most active building zones,” Li wrote.
  6. You can always go downtown:Keep your eyes trained on what’s going to happen downtown. The city just initiated a downtown plan, which should try to figure out how to unlock development potential while stemming displacement and funding affordable housing. The think tank SPUR is advocating for Oakland to try to double its downtown population over the next 25 years. The fate of 40 downtown vacant parcels and parking lots will help determine whether Oakland can get there.
  7. All eyes on the lake:The city late last year completed a new zoning plan for the Chinatown neighborhood and the area just east and south of Lake Merritt. That should allow for 4,900 housing units eventually, though we haven’t seen many development proposals yet. Stay tuned because news should trickle out about what will happen to some of those sites later this year.

Of course, the city can’t just zone for development and call it a day. The costs for developers and financiers to build, buy land and go through entitlements has to be much less than what they expect to charge for rent or condo sales.

Developers disagree on how bullish to be on Oakland. Big-time San Francisco builders like John Kilroy of Kilroy Realty Corp. and Lou Vasquez of Build Inc. brushed off the supposed Oakland residential surge at the Business Times’ Structures panel last week, saying rental rates aren’t attractive enough.

But Andy Ball, who heads Suffolk Construction and will build several Oakland projects in Jack London Square and Broadway-Valdez, said they should be going full bore. He said construction costs are 5 to 10 percent cheaper, land costs less and projects get faster entitlements.

“The prices are going to appreciate (in Oakland) more than San Francisco,” he said. “It’s a safer bet than San Francisco. The economics look good.”

Oakland_Developments

 

2016 Mid-Year Market Outlook

Leslie Appleton-Young, Chief Economist, C.A.R., July 29.2016

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Glen’s SF East Bay Real Estate Market Udate, June 30, 2016

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Glen’s SF East Bay Real Estate Market Update

June 30, 2016

I had an agent ask me how we did on a NOBE Townhouse listing that just went pending last week. My response was that we had 11 disclosure packets out but received only 2 offers. It went for over asking but did not do nearly as well as the unit behind it that sold 2.5 months ago. They both have identical layouts, square footage, both were remodeled and converted to condos in 2013. Ours had a nice front yard, an upgrade to the floors and more light. Both were staged, vacant and showed well. Yet ours sold for quite a bit less. The agent then asked, “interesting, What’s your gut say: Market slow down, or just summer? ” My response was that I thought it was a combination of both.

Here’s a quote from the popular “Sound Off” section in Sunday’s Chronicle when asked: How do you view recent trends in the Bay Area’s real estate market? I liked the response from John Solaegui, a Paragon agent;

“Fellow agents and sales data are pointing to a shift in the market from the breakneck pace that we have experienced over the last four years. The changes are neighborhood specific, but properties are taking longer to sell and they are not garnering as many offers as they did before. Inventories are increasing for luxury homes greater than $3 million.”

(I might add to this that we’re beginning to see more price reductions, and more properties that don’t receive any offers on their stated “offer dates.” Also note that we have increased the number of homes available for sale by 140% since the beginning of the year.)

“This does not mean that the sky is falling. Interest rates are still attractively low. I think we will look back at this time and see that there were great deals to be had, just as we look back to 2009­ and wish we had purchased then. The real estate market is cyclical and savvy investors take advantage of those cycles.”

“To use an analogy, we are moving from a furious sprint to a healthy jog. It feels like we may be entering a more balanced market that presents opportunities for both buyers and sellers.”

There’s an interesting article included below under Recent News entitled; How to Use Real Estate Trends to Predict the Next Housing Bubble, by Teo Nicolais, Harvard Business School

Part of what he talks about are the “four phases of the real estate cycle,” and the indicators that are found in each.

“Perhaps the most stunning aspect of the real estate cycle is not its inevitability but rather its regularity. Economist Homer Hoyt, through a detailed study of the Chicago and broader US real estate markets, found that the real estate cycle has run its course according to a steady 18-year rhythm since 1800.”

“With just two exceptions (World War II and the mid-cycle peak created by the Federal Reserve’s doubling of interest rates in 1979), the cycle has maintained its remarkable regularity even in the decades after Hoyt’s observation.” You can see this chart in the full article below.

Where are we now?

“It’s important to remember that the Great Recession was not caused by an unexpected event. To those who study the real estate cycle, the crash happened precisely on schedule. It was painful, but it inaugurated the next iteration of the real estate cycle.”

“For many cities and asset classes the expansion phase is well under way. According to Glen Mueller, Boston, New York, Denver, and San Francisco, for example, are already experiencing incredibly tight rental markets and robust new construction in apartments.”

“Those who lived through the financial crisis of 2008 will (we hope) always be weary of the next major crash. If George, Harrison, and Foldvary are right, however, that won’t happen until after the next peak in 2024.”

“Between now and then, aside from the occasional slow down, the real estate industry is likely to enjoy a long period of expansion.”

However, this brings up another interesting point in our markets. The chart focuses on new construction. New construction always happens as a response of what’s going on in the market. It’s a supply and demand factor. Why build when there’s a glut of homes available coupled with declining prices and/or rent amounts.

Building happens as a result of a picked up demand (maybe it’s an increase in population possibly due to more jobs). There’s not enough inventory to fill that demand. With rising prices and rents, building follows, however, it’s always completed long after that signal to pick-up. That’s when markets are the most competitive, during the wait for more inventory. As a result we see prices/rents increase until there’s a glut again and/or a change in the economy. Then the cycle begins all over again.

We’re seeing this take place in the San Francisco condo market now according to a recent study, (see article below).

There are more condos now on the market in San Francisco than in the last four years, according to a report from real estate outfit Polaris Pacific, and there are even more under construction, swamping an already crowded market.”

As a result, we’re now seeing a softening in the San Francisco condo market

 

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

 Inventory increased by 13.4% in the last 30 days and has more than doubled, (increased by 140%), since the beginning of the year. Inventory is now at about where we were last year at this time. Our monthly supply is now at 42 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 42 days), tells us that’s how many days it would take to sell the remaining number of homes we currently have available for sale in any given market.

The number of pendings, (homes that are in contract), decreased by 6.8%. That’s 9% less than what we experienced during this time last year. The pending active ratio has decreased to 1.18. This supply and demand ratio signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers. This is at a lower level than we saw last year at this time, (1.60), and this may be an indication of a slight weakness in the market.

The percentage of homes “sitting” remained the same as last month. 35% of the homes listed now remain active for 30 days or longer, while 15% stayed on the market for 60 days or longer.

The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 2.7% of the active listings and 3.5% of sales over the past 4 months.

Median Price recovery on a city by city is beginning to see a slight increase. This is typical as we approach Summer. 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.

 Months_Supply

  • The month’s supply for the combined 38 city area increased to 42 days, a slight increase from what we saw last June, in 2015. 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) increased to 2,864 homes actively for sale. This is still well above the December 2012 low of 1,086 but about the same as we were last year at this time of 2,631. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have decreased to 3,372, lower than where we were last year at this time of 3,743.

Pending_Active_Ratio

 

  • Our Pending/Active Ratio decreased to 1.18. Last year at this time it was 1.42. This continues to slightly favor sellers. We anticipate that it is primarily seasonal and will begin to move towards what is considered a more normal and balanced market as we move towards summer and fall, (a ratio of 1 with an equal number of listings and pending sales).

Sales

 

  • Sales are increased 17.9% from what we saw in May based on a (4 month period) now at 8.812 for the 38 cities tracked. This is 5.8% less than where we were last year at this time.
  • Sales over the last 4 months, on average, are 4.6% over the asking price for this area.

Historical_Median_Price_by_City

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

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Glen’s SF East Bay Real Estate Market Update

May 31, 2016

 

Questions seem to come up this time of year asking whether the market is changing when one of the biggest factors may seasonal. There was an article that I referred to last year written by Kathleen Pender of the San Francisco Chronicle. Quoting her article:

“Although spring is the busiest season in the Bay Area real estate market, a shorter surge of activity starts after Labor Day and lasts through mid-November. In fact, September is traditionally the biggest month for new listings in San Francisco.”

“It’s all part of a seasonal pattern that buyers and sellers can use to their advantage if they are not constrained by school schedules or job transfers.”

“The annual cycle starts in January and February, when buyers return to the market after the near-dead holiday season but find little to choose from and start bidding up prices. By the time new listings catch up a couple months later, “there is so much demand, the competition is ferocious,” said Patrick Carlisle, chief market analyst with Paragon Real Estate Group.Zaque Eyn (below) and Andy Mandel (above) of Gigi Park install a… Inventory, sales and prices tend to peak in March, April and May. It’s also when homes tend to sell at the greatest percentage of list price. The sales-to-list ratio is a good measure of competition, Carlisle said.”

We’ve seen a similar pattern over the last three years. Hot spring through May and into June, a lull during July and August with another pick-up in September. Then it drops off the cliff again as you roll into winter.

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

 

  • Inventory increased by 5.7% in the last 30 days and has more than doubled, (increased by 112%), since the beginning of the year. Inventory is now at about where we were last year at this time. Our monthly supply is now at 36 days. As a reminder of what we mean by “months supply;” If no more homes come onto the market, and homes continue to sell at the same pace as they have been over the last 12 months, then the “months supply,” (in this case 33 days), tells us that’s how many days it would take to sell the remaining number of homes we currently have available for sale in any given market.

 

  • The number of pendings, (homes that are in contract), increased by 8.7%. That’s less than what we’ve experienced during this time last year. The pending active ratio has increased slightly to 1.43. This supply and demand ratio signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers. This is at a lower level than we saw last year at this time, (1.60), and this may be an indication of a slight weakness in the market.

 

  • The percentage of homes “sitting” increased slightly since last month. 35% of the homes listed now remain active for 30 days or longer, while 16% stayed on the market for 60 days or longer.

 

  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 4% of sales over the past 4 months.

 

  • Median Price recovery on a city by city is beginning to see a slight increase. This is typical as we approach Summer. 16 out of the 32 East Bay cities tracked are now at or above their median price “peak” levels with another 8 cities within 20%. That means that 9 cities are still well below their peaks, falling into the 20% to 40% range.

Months_Supply

  • The month’s supply for the combined 38 city area increased to 36 days, about the same level we saw last May, in 2015. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

Active_&_Pendings_5.31.16

 

  • Our inventory for the East Bay (the 38 cities tracked) increased to 2,525 homes actively for sale. This is still well above the December 2012 low of 1,086 but about the same as we were last year at this time of 2,461. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have increased to 3,619, lower than where we were last year at this time of 3,987.

Pending_Active_Ratio

  • Our Pending/Active Ratio has remained about the same at 1.43. This continues to favor sellers. We anticipate that it is primarily seasonal and will begin to move towards what is considered a more normal and balanced market as we move towards summer, (a ratio of 1 with an equal number of listings and pending sales).

Sales_5.31.16

  • Sales are increased 15.5% from what we saw in March based on a (4 month period) now at 7,474 for the 38 cities tracked. This is 5.2% less than where we were last year at this time.

 

  • Sales over the last 4 months, on average, are 4.6% over the asking price for this area.

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

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Recent News

Homebuyers’ Biggest Worries Are Cost and Competition

by Alex Starace, Redfin,  May 27, 2016

A growing number of home buyers are worried about competition, according to a Redfin survey of 975 home buyers conducted this month.

While affordability is the main concern keeping homebuyers up at night, nearly 19 percent cited competition from other buyers as their top worry, up from 16 percent in February and 11 percent in November.

Interestingly, fewer buyers were concerned about home supply this quarter than last, even though the dwindling number of homes for sale is the main driver of competition and affordability woes.

Buyers’ concerns are justified. Sixty percent of Redfin offers have faced competition in May to date and over half of all offers faced competition for much of each of the last four years. With prices up nearly 5 percent, the thought of a bidding war would be particularly worrying for a cost-conscious buyer.

“Though enticed by high rents and low mortgage rates to begin a home search, first-time buyers face a number of obstacles in today’s competitive market,” said Redfin chief economist Nela Richardson. “In many cities, starter homes have seen the largest price increases because the supply of affordable homes on the market is so low and the demand for these homes is so high.”

Rent is Still Too D@mn High

Those looking to buy are often fleeing an expensive rental market. Consistent with February’s survey, about one in four homebuyers surveyed this month cited high rent as their reason for house hunting, a significant jump since last August.

The change is attributable to first-time buyers. In the most recent survey, over fifty percent said high rent led them to the market, as compared to only 25 percent of first-timers in August.

Fewer Homebuyers Worried about Stock Market Fluctuations

Eighteen percent of homebuyers said that the recent turmoil in the stock market was a worrying economic sign that might signal a housing downturn, down 5 percentage points from February. Only 7 percent said stock market losses cost them money they had planned to use to buy a house, down from 12 percent. Seventy-two percent said the stock market had no effect on their decision to buy.

School Quality and Green Space are Very Important to Homebuyers

Buyers were asked to cite up to three of the most important factors in their choice of home, beyond square footage and price. Three choices rose to the top: the layout, finishes and design were most important (46%), followed by school quality (41%) and a yard or green space (39%). Ease of commute came in fourth, checked off by 32 percent of respondents.

Buyer Sentiment

Of buyers surveyed, 34 percent said they are more inclined to buy now than they were a year ago, up one percentage point from the previous survey and up five percentage points from the August report.

Only 27 percent of buyers felt an increased urgency to buy before prices or mortgage rates rose, down four percentage points compared to last quarter.

About the Survey

Redfin’s survey was conducted between May 17 and May 23, and includes responses from 975 homebuyers in 36 states and Washington, D.C.

Economist Says Summer May Be the Hottest Season to Buy and Sell, RISMedia

While spring is traditionally the busiest time for real estate sales, this summer could prove to be the hottest time for buying or selling a home, according to a real estate economist at Florida Atlantic University.

“From a buyer’s perspective you have more choice, but you’re also competing against far more buyers,” says Ken Johnson, Ph.D., a professor of finance and associate dean at FAU’s College of Business, who also has sold hundreds of homes as a real estate broker. “Sellers are also looking to sell over the summer, particularly if they have children and want to get a deal done before school starts again.”

Bay Area luxury housing market cools as economy slows

By Mark Calvey SF Business Times, June 6, 2016

Venture capitalists tightening their purse strings, startups shedding jobs and the continuing dearth of IPOs could be taking their toll on the Bay Area’s housing market.

By almost any measure, the Bay Area’s roaring economy is cooling. The region’s housing market is fueled by wealth creation and the new jobs that has been a hallmark of the regional economy.

The hardest hit segment of the Bay Area’s housing market is the luxury sector, according to research released Monday by San Francisco-based Paragon Real Estate Group.

“It appears the luxury segment has softened to a greater degree than more affordable segments, some of which remain very competitive,” Paragon said. “The number of high-end listings in MLS has jumped while sales have plateaued or declined.

When economic uncertainty swells, this is a market segment often affected first,” Paragon said.

Paragon cites the supply of high-end condo projects to market as well as the fact that expensive homes are usually a buyer’s second or third home, not a primary residence.

Apartment rentals also reflect job losses more quickly, with Paragon saying asking-rent appreciation has plateaued and that “it is quite possible that actual lease rents have already started to decline.”

“Down” & Dirty: California’s Affordability Challenge

C.A.R. Market Snapshot, May 2016

 Since the Great Recession ended roughly 7 years ago, home prices in California have posted some significant gains. After dipping by more than 58% during the downturn, the median home price has more than doubled to broach the $500,000 mark for the first time since 2007. This has eroded affordability as incomes have failed to keep pace. Perhaps the one saving grace in today’s market, at least from an affordability standpoint, is that interest rates remain near historic lows, which has helped to keep mortgage payments manageable even as prices rise.

However, low rates do little to offset the effects of higher home prices on the ability of prospective buyers to come up with a down payment. C.A.R. is currently forecasting that price growth will taper down towards something that is more consistent with income growth as the cycle progresses, but even if prices remained flat, there will be a significant down payment burden facing new home buyers in California for the foreseeable future.

As prices continue to rise, obtaining a down payment will be an even greater obstacle to home ownership. Low rates have kept mortgage payments more affordable than they otherwise would be for existing homeowners, but it is getting harder and harder for new buyers to get into the market in the first place.

State, cities encourage in-law units to ease housing crunch

By Kathleen Pender, San Francisco Chronicle, May 13, 2016 

On Monday, the California Senate is set to vote on a bill aimed at easing the dire housing shortage by making it easier for homeowners to add a legal in-law unit within their building’s existing footprint.

SB1069 is one of several bills that would prevent cities and other jurisdictions from imposing certain requirements on property owners wanting to add a second unit. It comes at a time when many California cities are relaxing their rules in an effort to promote affordable housing in established neighborhoods near transit and job centers.

San Francisco, Oakland, Berkeley and Redwood City are among the Bay Area cities that have recently passed ordinances easing restrictions on “accessory dwelling units,” commonly called in-laws, granny flats or backyard cottages.

“This is a really easy and visible way to add places for people to live, because some people have more house than they need,” said Denise Pinkston, co-chairwoman of the Bay Area Council housing committee.

 

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

 

 

 

 

 

Glen’s SF Real Estate Market Update, April 30, 2016

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April 30, 2016 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 

I liked Kira Mead’s comments, (of Modern Real Estate) in Sundays SF Chronicle edition of “Sound Off.”  I believe it applies to our markets here in the East Bay as well. Here’s her quote it in full When asked What pricing trends have you noticed in your specific market?

 “Last fall we saw a small pause that led to a lot of speculation as to whether or not we had hit the top of the market. But spring sales have been strong with competition for single-family homes and properties for first-time buyers being the strongest, especially in the core neighborhoods of San Francisco.”

“Some predictions for summer and fall: Super-desirable properties will still be popular with multiple bids and over-asking closes. Sellers will be pricing their home closer to the price they hope to get as overbids become less of the rule, and offer dates may begin to go away, with sellers willing to accept a good offer when it comes along.”

“If inventory increases, buyers will be pickier than they have been for the last few years, and properties that don’t check all the boxes will have to work harder to stand out. There should be some great opportunities for people who are well prepared, know what they want and are willing to jump in when the right place comes along.”

 

Love the San Francisco Bay Area? Hate the San Francisco Bay Area? Trying to make sense of the Bay Area Real Estate Markets? What do the experts have to say?

 

1)        “A new study from human resources consulting firm Mercer has found that out of 230 metro areas studied, San Francisco has the highest quality of life for any American city.” (San Francisco ranks No. 1 in U.S. for quality of life, study says), By Riley McDermid, SF Business Times, March 1, 2016

2)        “Californians are fleeing the state in unprecedented numbers, and their primary destination is Texas, according to an analysis issued Monday.” (Valerie Richardson of the Washington Times reports, August 31, 2015. Full Story (Texas emerges as top destination for Californians fleeing state).

3)        More than a third of Bay Area residents recently polled by the Bay Area Council said they are planning to leave the region, as skyrocketing housing costs, terrible commutes and an increasingly high cost of living make the area very difficult to afford. The figures come from the the 2016 Bay Area Council Poll.

It seems that on the surface, these statements from articles above contradict themselves. However, it isn’t until you read the 3rd article entitled; California job surge could squeeze low- and middle-income workers, By George Avalos, of the Contra Costa Times that it starts to make some sense.

4)       California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low and middle-income wage earners out of the Golden State, a report released Wednesday warned.”

“It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”

“Housing prices are rising at a time when California has experienced an influx of low-wage workers, the Beacon study determined.”

“Over the five years that ended in 2014, the most recent year for which these statistics are available, the number of low-wage workers coming into California increased by 16.1 percent, according to the Beacon research. The number of middle-wage workers rose 11.2 percent, and the number of high-wage workers increased 6 percent.”

“Left unchecked, housing costs could severely hamper the low- and middle-income workers that power our economy.” Perry said.

“The pressure on housing for middle- and low-income workers is particularly acute in the Bay Area, the world capital of the technology industry.”

5)        “Gridlock in the mid to low end of the housing market is one of the main reasons for the low inventory,” says Ralph McLaughlin, Trulia’s chief economist and the author of the study. Blame owners, not builders, for housing crunch By Paul Davidson, USA TODAY, March 21, 2016

6)        “Two words alone have, rightly, loomed large in discussions about California’s housing market this year: inventory and affordability. A tight supply of homes available for sale has helped to keep strong upward pressure on home prices, which in turn has caused further deterioration of affordability in the state.” C.A.R. News Letter

     ***************************************************************************

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

  • Inventory increased by 21.1% in the last 30 days and has doubled, (increased by 100%), since the beginning of the year. Inventory is now at about where we were last year at this time. Our monthly supply is now at 33 days. As a reminder of what we mean by “months supply;” If no more homes come onto the market, and homes continue to sell at the same pace as they have been over the last 12 months, then the “months supply,” (in this case 33 days), tells us that’s how many days it would take to sell the remaining number of homes we currently have available for sale in any given market.
  • The number of pendings, (homes that are in contract), increased by 9.6%. That’s less than what we’ve experienced during this time last year. The pending active ratio has decreased slightly to 1.39. This supply and demand ratio signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers. This is at a lower level than we saw last year at this time, (1.60), and this may be an indication of a slight weakness in the market.
  • The percentage of homes “sitting” decreased slightly since last month. 31% of the homes listed now remain active for 30 days or longer, while 15% stayed on the market for 60 days or longer.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 4% of sales over the past 4 months.
  • Median Price recovery on a city by city is beginning to see a slight increase. This is typical as we approach Summer. 16 out of the 32 East Bay cities tracked are now at or above their median price “peak” levels with another 10 cities within 20%. That means that 6 cities are still well below their peaks, falling into the 20% to 40% range.

Months_Supply

  • The month’s supply for the combined 38 city area increased to 33 days, roughly about the same level we saw last April, in 2015. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

Actives_&_Pending

  • Our inventory for the East Bay (the 38 cities tracked) increased to 2,388 homes actively for sale. This is still well above the December 2012 low of 1,086 but about the same as we were last year at this time of 2,333. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have increased to 3,328, lower than where we were last year at this time of 3,735.

Pedning_Active_Ratio

  • Our Pending/Active Ratio has remained about the same at 1.39. This continues to favor sellers. We anticipate that it is primarily seasonal and will begin to move towards what is considered a more normal and balanced market as we move towards summer, (a ratio of 1 with an equal number of listings and pending sales).

Sales_4.30.16

  • Sales are slightly less than what we saw in March based on a (4 month period) now at 6,479 for the 38 cities tracked. This is 2.9% less than where we were last year at this time.
  • Sales over the last 4 months, on average, are 3.5% over the asking price for this area.

Glen's_Numbers_Pg_2

 

Glen's_Numbers_Pg_1

 

Historical_Med_Price_by_City

 

 

 

Love it, Hate it, Leave it?…the SF Bay Area’s Real Estate Market

Love the San Francisco Bay Area? Hate the San Francisco Bay Area? Trying to make sense of the Bay Area Real Estate Markets? What do the experts have to say?

1) “A new study from human resources consulting firm Mercer has found that out of 230 metro areas studied, San Francisco has the highest quality of life for any American city.” (San Francisco ranks No. 1 in U.S. for quality of life, study says), By Riley McDermid, SF Business Times, March 1, 2016

2) “Californians are fleeing the state in unprecedented numbers, and their primary destination is Texas, according to an analysis issued Monday.” (Valerie Richardson of the Washington Times reports, August 31, 2015. Full Story (Texas emerges as top destination for Californians fleeing state).

It seems that on the surface, these statements from two of the articles above contradict themselves. However, it isn’t until you read the 3rd article entitled; California job surge could squeeze low- and middle-income workers, By George Avalos, of the Contra Costa Times that it starts to make some sense.

3) “California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low and middle-income wage earners out of the Golden State, a report released Wednesday warned.”

“It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”

“Housing prices are rising at a time when California has experienced an influx of low-wage workers, the Beacon study determined.”

“Over the five years that ended in 2014, the most recent year for which these statistics are available, the number of low-wage workers coming into California increased by 16.1 percent, according to the Beacon research. The number of middle-wage workers rose 11.2 percent, and the number of high-wage workers increased 6 percent.”

“Left unchecked, housing costs could severely hamper the low- and middle-income workers that power our economy.” Perry said.

“The pressure on housing for middle- and low-income workers is particularly acute in the Bay Area, the world capital of the technology industry.”

4) “Gridlock in the mid to low end of the housing market is one of the main reasons for the low inventory,” says Ralph McLaughlin, Trulia’s chief economist and the author of the study. Blame owners, not builders, for housing crunch By Paul Davidson, USA TODAY, March 21, 2016

“Gridlock in the housing market that’s slowing both first-time home purchases and trade-ups to better units is the chief reason for a persistent housing shortage, according to a new study.”

“The report by online real estate site Trulia casts doubt on the widespread belief that a scarcity of new construction is the main cause of a crunch that has driven up home prices and slowed sales.”

“Instead, the study says, a yawning price gap between mid-level and premium homes that’s shutting out many move-up buyers is the biggest obstacle to a more ample supply. Also, a large share of entry-level homes are off the market because they’re owned by either investors or so-called “underwater” homeowners who effectively can’t sell, the study says.”

5) Bay Area residents love what tech does, hate what it brings, new survey shows by Riley McDermid, San Francisco Business Times, March 30, 2016

Richard Zak, Charles Schwab regional branch executive based in San Mateo, told the San Francisco Business Times the recent study highlights that balancing act that Bay Area locals have to find between having a good quality of life while also getting ahead financially.”

“The results showed some yin and yang to them,” Zak said. “Bay Area residents feel good about the strength of the local economy, but the high cost of living is a real burden on their ability to reach their financial goals.”

What residents say are the Bay Area’s best assets

89% Technology industry

85% Weather, overall

85% Food and dining

78% Arts and culture

73% Quality of life

What residents say are the Bay Area’s worst assets

82% Cost of living

68% Housing market

66% Commute times

54% Tax rates

 

 

 

 

 

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

 

East_Bay_Banner

Glen’s SF East Bay Real Estate Market Update

March 31, 2016

 

Trying to make sense of the Real Estate markets? There seems to be several opinions, (key exerpts from recent news articles):

 

1) “First-time buyers were moving eastward, keeping sales robust there”, said Andrew LePage, a research analyst with CoreLogic.

“There’s more activity in some of the inland markets because of affordability,” he said. But overall, sales “are off to only a slightly stronger start than in 2015,” LePage said.

2) “Housing markets are poised for their best year in a decade,” Freddie Mac Chief Economist Sean Becketti said. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017.”

3) “These markets, I think, are substantially driven by psychology,” Shiller said during an interview on Cavuto: Coast to Coast. “And the psychology now is a little bit hard to interpret. Note that the cities with the biggest price increases are successful tech, entrepreneurial cities in many cases. So maybe people kind of believe in these markets as their salvation or their hope.”

4) “Gridlock in the mid to low end of the housing market is one of the main reasons for the low inventory,” says Ralph McLaughlin, Trulia’s chief economist and the author of the study.

In regards to the SF Bay Area Markets:

  • ·A new study from human resources consulting firm Mercer has found that out of 230 metro areas studied, San Francisco has the highest quality of life for any American city.
  • Californians are fleeing the state in unprecedented numbers, and their primary destination is Texas, according to an analysis issued Monday.
  • ·It seems that on the surface, these statements from two of the articles listed below contradict themselves. However, it isn’t until you read the 3rd article entitled; California job surge could squeeze low- and middle-income workers, By George Avalos, of the Contra Costa Times that it starts to make some sense.
  • California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low and middle-income wage earners out of the Golden State, a report released Wednesday warned.
  • “It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”

***************************************************************************

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

  • Inventory increased by 14.4% in the last 30 days and 65.6% since the beginning of the year. That increase is at a faster pace than we’ve seen during the previous three years. However, inventory is still lower than it was last year at this time. Our monthly supply is 27 days.
  • The number of pendings, (homes that are in contract), increased at about the same pace as inventory by 15.4%. That’s less than what we’ve experienced during the previous years. The pending active ratio remained about the same as last month at 1.54. 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 similar to the levels we saw last year at this time.
  • The percentage of homes “sitting” decreased slightly since last month. 32% of the homes listed now remain active for 30 days or longer, while 14% stayed on the market for 60 days or longer.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 4% of sales over the past 4 months.
  • Median Price recovery on a city by city is beginning to see a slight increase, typical as we approach Spring and Summer. 15 out of the 32 East Bay cities tracked are now at or above their median price “peak” levels with another 11 cities within 20%. That means that 7 cities are still well below their peaks, falling into the 20% to 40% range.
  • Some of you may have noticed that for many areas, the median price has come down. This is not by any means unusual for this time of year. The winter months are typically the lowest point for median price during most years and continues to rise throughout the spring months on into late summer where it reaches its seasonal high point.

Months_Supply

  • The month’s supply for the combined 38 city area increased to 27 days, roughly about the same level we saw last March, in 2015. 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) increased to 1,972 homes actively for sale. This is still well above the December 2012 low of 1,086 but below where we were last year at this time of 2,124. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have increased to 3,034, lower than where we were last year at this time of 2,346.

Pending_Active_Ratio

  • Our Pending/Active Ratio has remained about the same at 1.54. This continues to favor sellers. We anticipate that it is primarily seasonal and will begin to move towards what is considered a more normal and balanced market after the first quarter of this year, (a ratio of 1 with an equal number of listings and pending sales).

Sales

  • Sales are beginning to rise based on a (4 month period) t0 6,561 for the 38 cities tracked. This is a 2.2% increase over the previous 4 months and 5.6% ahead of the pace for last year at this time. As you can see from the graph, this is a seasonal factor.
  • Sales over the last 4 months, on average, are 2.8% over asking for this area. This number is starting to level off and come down slightly.

Glen's Numbers Pg 1

Glen's Numbers 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

Sales flat, prices mixed in February Bay Area housing market,

By Pete Carey, Contra Costa Times, March 18, 2016

A shortage of Bay Area homes for sale sparked bidding wars last month but kept sales low in what was the second-slowest February in eight years, according to a report released Thursday.

Sales of single-family homes were flat from a year ago across the region, the real estate research firm CoreLogic said, but it was a mixed market.

First-time buyers were moving eastward, keeping sales robust there, said Andrew LePage, a research analyst with CoreLogic.

“There’s more activity in some of the inland markets because of affordability,” he said. But overall, sales “are off to only a slightly stronger start than in 2015,” LePage said.

Real estate agents in parts of the East Bay and South Bay said there was plenty of demand — just not enough homes on the market. But in some areas, buyers were giving up.

“A lot of people are dropping out of market,” said Lynne French of Windermere Real Estate in Clayton in Contra Costa County. “For first-time buyers, $739,000 for a house is tough.”

High prices pushed millennial first-time buyers to the edges of eastern Contra Costa County. Sales were up 7.6 percent from a year earlier in that county and the median price of $460,000 was up 2.2 percent.

“Affordability is the issue,” said Jennifer Branchini, a real estate agent in Pleasanton. “First-time buyers are being pushed really far out.”

For Lisa and Brian Johnson, it’s been a war on multiple fronts, competing with downsizing baby boomers and investor-flippers for what they hope will be their first home.

Low inventory and overbidding drove prices up 15.7 percent to $640,000 from a year ago in Alameda County, while the number of sales dropped 1.6 percent.

Inventory levels “dropped off a cliff in December” and are just now coming back, said Glen Bell with Mason-McDuffie Real Estate in Berkeley.

But at this point there’s still a shortage in Berkeley and Oakland, said Barbara Reynolds with McGuire Real Estate.

Another factor depressing inventory is soaring rents, which make it tempting to rent out a home rather than sell it.

Is Housing Poised to Return to Pre-Crisis Glory?

Posted By Brian Honea, DSNews, March 31, 2016 

The recent predictions from analysts of a dark year for housing based on tight inventory combined with rapid home price appreciation and slow wage growth may be a little off base, according to Freddie Mac.

Freddie Mac is predicting that housing fundamentals such as home sales, housing starts, and prices will all reach levels not seen since 2006, right in the middle of the housing bubble and two years before the crash.

“Housing markets are poised for their best year in a decade,” Freddie Mac Chief Economist Sean Becketti said. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017.”

The year 2016 will be a robust one for housing for several reasons, according to Freddie Mac. For starters, the 30-year mortgage rate average is expected to attract homebuyers in the spring and subsequently remain below 4 percent for the second half of the year. Slowing home price appreciation is also expected to contribute to greater affordability—whereas home prices rose by 6 percent year-over-year in 2015, that pace is expected to slow down to 4.8 percent for 2016.

According to Freddie Mac, inventory, which has been cited by many industry analysts as a major hindrance to the housing market going forward is expected to pick up in 2016. Freddie Mac is predicting multi-family and single-family housing starts to increase this year by about 200,000, up to 1.3 million.

Robert Shiller: Housing Market Driven by Psychology

By Matthew Kazin, Fox Business, March 29, 2016 

 

Robert Shiller, one of the economists who developed the index, said the housing market is driven by the way people think.

“These markets, I think, are substantially driven by psychology,” Shiller said during an interview on Cavuto: Coast to Coast. “And the psychology now is a little bit hard to interpret. Note that the cities with the biggest price increases are successful tech, entrepreneurial cities in many cases. So maybe people kind of believe in these markets as their salvation or their hope.”

Shiller, who is also an economics professor at Yale University, said there is a decline in the interest of homes today.

“People aren’t as impressed by homes anymore after they saw how they collapsed in price with the financial crisis,” he said. “So it’s not such a clear case. I don’t think people are as impressed by big McMansions anymore as they used to be.”

He also explained why he believes a home is a good asset to have.

“The other thing about housing is that if you put yourself into a mortgage and you pay it off, you’re putting yourself into a saving program. A lot of people don’t save outside of some kind of a discipline device like that. So in that sense housing is a good investment.”

Bay Area Home Prices by Transit Stop

It’s no secret Bay Area home prices are among the highest in the country, but Estately wanted to show how those prices vary depending on which BART or Caltrain stop a home is near. To do this, Estately Real Estate Search analyzed the last six months of home sales for houses, townhouses, and condos that were within a one-mile radius of each BART and Caltrain transit stop. We then broke them down by price per square foot.

At an average of $1,630 per square foot, Caltrain’s California Avenue stop in Palo Alto is the Bay Area’s most expensive transit stop to buy a home near. Pittsburg/Bay Point BART stop, the furthest from downtown San Francisco, is the least expensive at $219 per square foot on average.

BART_Stops

 

Clock is ticking as Oakland officials try to control skyrocketing rents,

By Kurtis Alexander, SF Chronicle, April 7, 2016

The race is on for Oakland housing officials who this week won an unusual 90-day pause on rent increases in order to come up with a plan for making the city’s soaring real estate market a bit more affordable.

City leaders remained uncertain Wednesday about exactly what policies they will pursue, following the unanimous approval of the moratorium just hours earlier at Tuesday’s raucous City Council meeting that ran well past midnight.

But housing activists and city staffers have suggested that strategies to stem the tide of rising rents may include tighter long-term rent controls, cracking down on Airbnb rentals that they say are constricting the housing supply and boosting residential development.

“We’re at day one,” said Michele Byrd, city director of housing and community development. “This is an opportunity to do some analysis and determine what can be done.”

Oakland’s housing situation has indeed tightened: Rents over the past five years have nearly doubled as the Bay Area’s economy has boomed.

Rent control isn’t solving California’s housing problems,

By Joe Mathews, SF Chronicle, March 31, 2016

 

Rent control won’t solve California’s enormous housing problems. But that’s not stopping Californians from pursuing rent-control policies in their hometowns.

2016 threatens to become the Year of Rent Control, with the topic white-hot in the Bay Area, home to California’s most-expensive housing. Rent control refers to laws that put limits on how much landlords may raise rents.

Last summer, Richmond became the first city in California in 30 years to pass a new control law (though the law was later suspended, and the issue likely will be decided on the ballot). And in recent months, rent control has become a top issue in the state’s biggest cities.

In San Jose, multiple proposals to tighten rent controls, perhaps by tying them to inflation, are being debated in the City Council, and some could go to the ballot. A ballot initiative to cap rent increases was just filed in Oakland.

Such attention to rent control is understandable but unhelpful. Rent control is a policy that, as libraries full of research and California’s own experience demonstrate, doesn’t do much to accomplish its avowed purpose: to make more affordable housing available.

As the state’s nonpartisan Legislative Analyst’s Office made clear in a 2015 report, the heart of California’s housing problem is that we Californians have long failed to build anywhere close to enough housing to accommodate the number of people who live here. The office said we’d need an additional 100,000 units a year to mitigate the problem. The reasons for the lack of building are many and related: community resistance, environmental policies, a lack of fiscal incentives for local governments to approve housing, and the high costs of land and construction.

If rent control really lowers prices and produces stability for tenants, as its supporters claim, why are cities with rent control — among them Beverly Hills, Los Angeles, Palm Springs, San Francisco, Santa Monica, San Jose, Thousand Oaks and West Hollywood — so expensive? On the other side of the question, opponents of rent control sound ridiculous when they warn that it discourages construction, especially because state law exempts new construction from rent-control laws. The vast majority of California cities have no rent control — and they have housing shortages, too.

Bay Area building boom may not end housing shortage

By Kathleen Pender, SF Chronicle, April 2, 2016

Could the Bay Area’s housing shortage turn into a surplus? Given the number of high-density residential projects that seem to be popping up everywhere, the answer might seem to be yes.

In the nine-county Bay Area — which also includes Napa, Solano and Sonoma — just over 20,000 units were permitted last year.

Housing permits are considered a decent proxy for new housing supply because developers don’t usually pull them until they are ready to break ground. The permit doesn’t typically say whether the home will be for sale or rent.

But that’s only the supply side of the equation.

Demand is much harder to quantify, because it’s based on job, population and income growth and demographic factors. There is no question that since the recession, job and population growth has far outpaced housing creation, leading to stratospheric increases in home prices and rents.

As a result, experts say the Bay Area is not close to filling its housing hole, except at the high end of the market, where much of the new construction has taken place.

Blame owners, not builders, for housing crunch

By Paul Davidson, USA TODAY, March 21, 2016

Gridlock in the housing market that’s slowing both first-time home purchases and trade-ups to better units is the chief reason for a persistent housing shortage, according to a new study.

The report by online real estate site Trulia casts doubt on the widespread belief that a scarcity of new construction is the main cause of a crunch that has driven up home prices and slowed sales.

Instead, the study says, a yawning price gap between mid-level and premium homes that’s shutting out many move-up buyers is the biggest obstacle to a more ample supply. Also, a large share of entry-level homes are off the market because they’re owned by either investors or so-called “underwater” homeowners who effectively can’t sell, the study says.

“Gridlock in the mid to low end of the housing market is one of the main reasons for the low inventory,” says Ralph McLaughlin, Trulia’s chief economist and the author of the study.

In January, there was a four-month supply of existing homes for sale in the USA, well below a healthy six-month inventory, according to the National Association of Realtors. That drove up the median home price by 8.2% the past year, the biggest jump since last April.

The shortage is also helping constrain existing home sales, which totaled 5.25 million in 2015, below the 5.75 million considered normal in light of  population growth, saysLawrence Yun, the Realtor group’s chief economist.

Yun says the main reason for the skimpy supply is sluggish single-family housing starts, which hit an eight-year high of 715,000 last year but remained well below a normal 1.2 million.

McLaughlin disagrees, noting that new home sales represent less than 10% of all housing sales.

The study argues the answer instead can be found mostly in the makeup of the existing home market. For example, the median list price of a premium home across the USA is $542,805, compared to $267,845 for a mid-priced home. That gap is 17.3% higher than it was in 2012 and is keeping many mid-priced homeowners from trading up, curtailing the supply of mid-priced houses for owners of “starter” units, McLaughlin says.

The price chasm has widened even more sharply in some markets, increasing 70% in Dallas and 75% in Los Angeles.

McLaughlin at least partly blames a wealth gap that has seen the incomes of the top third of U.S. households climb more dramatically than those in the middle third and pushed up premium homes prices.

At the same time, the supply of starter homes is limited because many investors snatched up those units when prices hit bottom in 2011 and are renting them into a vibrant market that has seen rents soar. Nearly a third of starter homes were owned by investors in 2014, the latest data available, up from 27% in 2005, according to Trulia and government figures.

Meanwhile, about a quarter of starter homeowners are underwater, meaning they owe more on their mortgages than their homes are worth. That share has fallen in the housing recovery but is above the 13% average for all homeowners. That effectively prevents those owners from selling until prices recover.

America’s ZIP codes with the most expensive houses? We’ve got nine of the top 25,

by Jody Meacham, March 30, 2016

The list of the nation’s most expensive ZIP codes for housing can be taken as a guide to where the wealthy hang out or where — like the yacht market — if you have to ask the price, you can’t afford it.

Or you can take it as where Californians live, because in this year’s list, compiled by the real estate website PropertyShark.com, 17 of the 25 most expensive ZIP codes are in California and nine of those are in the Bay Area.

Bay Area’s population grows by more than 90,000 in a year,

By Kimberly Veklerov, SF Chronilce, March 26, 2016

The Bay Area’s population was boosted by 90,834 people — the size of Santa Barbara — between 2014 and 2015, according to estimates in a U.S. Census Bureau report, dramatically outpacing housing and transportation needs of the region, experts say.

The regional boom has cooled since a high in 2013, when the Bay Area greeted an additional 106,645 residents. But the relatively steady upswing in the past five years, policymakers say, underscores deficiencies in housing supply and public transportation.

“What should be a great story about job growth and very desirable communities is instead a story about housing displacement and gridlock,” said Gabriel Metcalf, president of SPUR.

Roadblocks to increasing the region’s housing stock, he pointed out, include zoning laws that prohibit high-density housing, prolonged project approval processes and the fact that many voters are homeowners not directly hurt by soaring home prices and who want to minimize congestion for themselves.

While each of the nine Bay Area counties grew between 2014 and 2015, the gains were far from equal. On the lowest end of the spectrum, Marin County added 671 people, just shy of a 0.3 percent increase. Alameda County, meanwhile, saw an almost 1.6 percent change in population, which is now at 1,638,215.

Alameda, Contra Costa counties among fastest growing in state,

By Peter Hegarty, Contra Costa Times, March 25, 2016

The most recent figures from the U.S. Census Bureau show the Bay Area’s population is increasing — and it’s increasing quickly, pushing home prices up and sending many renters scrambling for an affordable place to live.

The populations of San Francisco and the East Bay, especially around Oakland and Hayward, grew by more than 50,000 people between 2014 and last year, according to the bureau.

“It’s really not surprising at all,” said Rufus Jeffris of the Bay Area Council, a business-sponsored, public policy advocacy organization for the nine-county Bay Area. “The Bay Area is still a desirable place to live, despite the high cost of living. There’s great weather, good schools. There’s lots of reasons why people want to live here.”

Alameda County saw the second-highest population growth in the state between July 1, 2014, and the same period last year, rising by 1.6 percent, according to the bureau. Contra Costa County was the fifth-highest in the state, growing at 1.4 percent.

Digging Deeper Into the Declining Homeownership Rate,

By Brian Honea, DSNews, March 28, 2016

While many housing fundamentals have been nearing their pre-recession levels for months or even years in some cases, the nationwide homeownership rate sank to a 48-year low of 63.4 percent in the second quarter of 2015.

By the end of the year in 2015, the homeownership rate had clawed its way back up to 63.8 percent, but the full year of 2015 still represented the 11th consecutive year of decline since hitting an all-time peak of 69 percent in 2004.

Why does the homeownership remain low while other housing fundamentals continue to improve?

“Perhaps this period represented an unsustainable shift of many financially weaker families out of rental housing into homeownership, which subsequently reversed with the bursting of the housing bubble and the onset of the Great Recession,” said Bill Emmons, Assistant VP and Economist with the St. Louis Fed.

From 1968 until the late 1990s, the homeownership rate fluctuated between 63 and 66 percent over the three decades, which is likely the range to expect in the future, according to Emmons.

“Evidence supporting the return-to-normal hypothesis includes greater-than-average declines since 2004 in the homeownership rates of younger, less-educated and nonwhite families—precisely the financially weaker groups that moved into homeownership most rapidly during the housing boom,” Emmons said.

Still another explanation is that homeowership today is not as attractive as it has been in past decades because of fluctuations in home values, the tightened standards for obtaining a mortgage loan, and the fact that many millennials consider the prospect of being “tied down” to a house and the obligations that come with it less attractive than previous generations.

While it is possible the homeownership rate could decline further and even dip below 60 percent under the “retreat-from-homeownership interpretation of recent experience,” it is still too early to determine if the homeownership rate is on the path to “normalization” or if is in the midst of retreating, Emmons said, but one thing is certain—that the homeowership rate is not likely to approach its peak of 69 percent in the near future.

New HUD guidance on criminal records puts landlords in a bind,

By Kathleen Pender, SF Chronice, April 8, 2016

Landlords who have a blanket ban on renting to people with criminal records could be charged with violating the federal Fair Housing Act, under guidance issued last week by the U.S. Department of Housing and Urban Development.

However, a landlord who fails to screen prospective tenants for criminal records and rents to one who robs or hurts a neighbor could be sued by the victim.

That is the dilemma landlords now find themselves in as a result of HUD’s new guidance, which provides few specifics on how to comply.

“I understand the theory. From a practical standpoint, I’m not sure what a landlord is supposed to do,” said June Barlow, general counsel for the California Association of Realtors.

Scam steals closing money by hacking agent, escrow email

Deposits necessary to purchase a home are being diverted into hacker accounts, leaving buyers high and dry

by Marian McPherson, Inman News, March 19, 2016

Key Takeaways

  • Scammers are stealing homebuyers’ money by hacking agent and escrow email accounts, monitoring transactions and mimicking official email.
  • Closing costs are being illegally diverted to hacker accounts.
  • The best way to avoid this fraud is to never email money transfer instructions to clients — always call.

California job surge could squeeze low- and middle-income workers

By George Avalos, Contra Costa Times, March 3, 2016

California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low- and middle-income wage earners out of the Golden State, a report released Wednesday warned.

Those disturbing findings were contained in new research compiled by Beacon Economics and commissioned by Next 10, a San Francisco-based think tank.

“It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”

The state’s economic trends, while they offer prosperity to a wide array of residents, also are creating painful pressures on many who are unable to afford the cost of housing.

“The state has been growing its employment at nearly 3 percent a year,,” said Christopher Thornberg, principal economist and founding partner of Beacon Economics. “If we don’t build enough housing, where will the new workers live? If they don’t have a place to live, how will we fill these jobs?”

Housing prices are rising at a time when California has experienced an influx of low-wage workers, the Beacon study determined.

Over the five years that ended in 2014, the most recent year for which these statistics are available, the number of low-wage workers coming into California increased by 16.1 percent, according to the Beacon research. The number of middle-wage workers rose 11.2 percent, and the number of high-wage workers increased 6 percent.

“Left unchecked, housing costs could severely hamper the low- and middle-income workers that power our economy.” Perry said.

One of the big problems is that upward mobility is more difficult to come by in California despite its burst of high-paying tech jobs. That’s because many factory jobs have vanished, which has erased a slew of decent-paying jobs for the middle class.

The most robust high-paying jobs, typically in the technology sector, require skills right away. The employment and skills path is potentially difficult for people to work their way up from waiting tables to writing code at Google, Apple or Facebook.

“If you want to break into the technology field, you have to arrive with buy-in skills, ability to do coding, understanding of electronics, digital design skills, network architecture,” said Russell Hancock, president of San Jose-based Silicon Valley Leadership Group.

The pressure on housing for middle- and low-income workers is particularly acute in the Bay Area, the world capital of the technology industry.

Silicon Valley and the Bay Area increasingly are in danger of becoming more like a Manhattan of the West Coast that is dominated by high- and low-income workers, along with a shrinking middle class, Hancock said.

The study cited a report that showed that of the 10 metro areas with the worst home affordability in the United States, six were located in California. Santa Clara County was listed as the region with the worst home affordability. The San Francisco-San Mateo area was listed as second worst.

“While California innovation and entrepreneurship are driving business creation and job growth across the board, we don’t have enough housing,” Perry said. “That’s causing an affordability crisis.”

 

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

 

 

Glen’s SF East Bay Real Estate Numbers – February 29, 2016

East_Bay_Banner

 

Glen’s SF East Bay Real Estate Numbers

February 29, 2016

 

1) A new study from human resources consulting firm Mercer has found that out of 230 metro areas studied, San Francisco has the highest quality of life for any American city.

2) Californians are fleeing the state in unprecedented numbers, and their primary destination is Texas, according to an analysis issued Monday.

It seems that on the surface, these statements from two of the articles listed below contradict themselves. However, it isn’t until you read the 3rd article entitled; California job surge could squeeze low- and middle-income workers, By George Avalos, of the Contra Costa Times that it starts to make some sense.

3) California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low and middle-income wage earners out of the Golden State, a report released Wednesday warned.

“It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”

     ***************************************************************************

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

  • Inventory increased by 15.5% in the last 30 days and 44.75% over the last 60 days. That’s at a slightly faster pace than we have seen during the previous three years. Our monthly supply is 24 days.
  • The number of pendings, (homes that are in contract), increased at about the same pace as inventory. It’s slightly more than what we’ve experienced during the previous years. The pending active ratio remained about the same as last month at 1.53. 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 similar to the levels we saw last year at this time.
  • The percentage of homes “sitting” decreased since last month. 33% of the homes listed now remain active for 30 days or longer, while 18% stay on the market for 60 days or longer.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 4% of sales over the past 4 months.
  • Median Price recovery on a city by city is beginning to see a slight decline, typical during the winter season. 11 out of the 32 East Bay cities tracked are now at or above their median price “peak” levels with another 14 cities within 20%. That means that 7 cities are still well below their peaks, falling into the 20% to 40% range.

 

Months_Supply

  • The month’s supply for the combined 38 city area increased to 24 days, roughly 12% below what February 2015 looked like and 20% below the 2014 level. 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) increased to 1,724 homes actively for sale. This is still well above the December 2012 low of 1,086 but below where we were last year at this time of 1,856. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have increased to 2,630, slightly lower than where we were last year at this time of 2,890.

Pending_Active_Ratio

  • Our Pending/Active Ratio is at 1.53. This continues to favor sellers. We anticipate that it is primarily seasonal and will begin to move towards what is considered a more normal and balanced market after the first quarter of this year, (a ratio of 1 with an equal number of listings and pending sales).

Sales

  • Sales are continuing to decline based on the (4 month periods) t0 6,420 for the 38 cities tracked. This is a 12.7% decrease from the previous 4 months and 4.2% ahead of the pace for last year at this time. As you can see from the graph, this is seasonally typical.
  • Distressed properties, (REOs and Short Sales), are still declining. Only 4% of the sales over the last 4 months have been distressed properties.
  • Sales over the last 4 months, on average, are 2.5% over asking for this area. This number is starting to level off and come down slightly.

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 Photo

Glen's Numbers Pg 2Glen's Numbers Pg 1

Recent News

San Francisco ranks No. 1 in U.S. for quality of life, study says

By Riley McDermid, SF Business Times, Mar 1, 2016, 

A new study from human resources consulting firm Mercer has found that out of 230 metro areas studied, San Francisco has the highest quality of life for any American city.

To create the study, Mercer evaluated 230 metros based on 39 different factors, crunching data for metrics like recreation, consumer goods, natural environment, medical accessibility, public services including transportation, politics, media prevalence and censorship, currency and banking services and a host of others.

Using those metrics, San Francisco came in first in American cities, and 28th worldwide. The top spots internationally were largely in Europe, including Germany and Scandinavia, while the lowest ranked cities were Baghdad, Bagui of the Central African Republic, and Sana’a in Yemen.

Texas emerges as top destination for Californians fleeing state

By Valerie Richardson – The Washington Times – Monday, August 31, 2015

Californians are fleeing the state in unprecedented numbers, and their primary destination is Texas, according to an analysis issued Monday.

About 5 million Californians departed the Golden State between 2004 and 2013, while 3.9 million arrived from other states for a net population loss of roughly 1.1 million, The Sacramento Bee reported Monday, using tax return data from the Internal Revenue Service.

California job surge could squeeze low- and middle-income workers

By George Avalos, Contra Costa Times, March 3, 2016

California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low- and middle-income wage earners out of the Golden State, a report released Wednesday warned.

Those disturbing findings were contained in new research compiled by Beacon Economics and commissioned by Next 10, a San Francisco-based think tank.

“It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”

The state’s economic trends, while they offer prosperity to a wide array of residents, also are creating painful pressures on many who are unable to afford the cost of housing.

“The state has been growing its employment at nearly 3 percent a year,,” said Christopher Thornberg, principal economist and founding partner of Beacon Economics. “If we don’t build enough housing, where will the new workers live? If they don’t have a place to live, how will we fill these jobs?”

Housing prices are rising at a time when California has experienced an influx of low-wage workers, the Beacon study determined.

Over the five years that ended in 2014, the most recent year for which these statistics are available, the number of low-wage workers coming into California increased by 16.1 percent, according to the Beacon research. The number of middle-wage workers rose 11.2 percent, and the number of high-wage workers increased 6 percent.

“Left unchecked, housing costs could severely hamper the low- and middle-income workers that power our economy.” Perry said.

One of the big problems is that upward mobility is more difficult to come by in California despite its burst of high-paying tech jobs. That’s because many factory jobs have vanished, which has erased a slew of decent-paying jobs for the middle class.

The most robust high-paying jobs, typically in the technology sector, require skills right away. The employment and skills path is potentially difficult for people to work their way up from waiting tables to writing code at Google, Apple or Facebook.

“If you want to break into the technology field, you have to arrive with buy-in skills, ability to do coding, understanding of electronics, digital design skills, network architecture,” said Russell Hancock, president of San Jose-based Silicon Valley Leadership Group.

The pressure on housing for middle- and low-income workers is particularly acute in the Bay Area, the world capital of the technology industry.

Silicon Valley and the Bay Area increasingly are in danger of becoming more like a Manhattan of the West Coast that is dominated by high- and low-income workers, along with a shrinking middle class, Hancock said.

The study cited a report that showed that of the 10 metro areas with the worst home affordability in the United States, six were located in California. Santa Clara County was listed as the region with the worst home affordability. The San Francisco-San Mateo area was listed as second worst.

“While California innovation and entrepreneurship are driving business creation and job growth across the board, we don’t have enough housing,” Perry said. “That’s causing an affordability crisis.”

Bay Area leads the nation in house flipping profitability

By Riley McDermid, SF Business News, March 4,2016

The Bay Area is the most profitable place to buy a house, renovate it and then resell it quickly, making it the best region in the U.S. to “flip” a house, real estate tracking firm RealtyTrac said this week.

RealtyTrac analyzed sales deed data and automated valuation data and included any single-family home or condo flip from the second quarter, where a previous sale on the same property had occurred within the last 12 months.

It found that the markets most likely to make the highest profits were in the Bay Area, in Silicon Valley and in San Francisco/East Bay.

It’s now better to invest in homes in Oakland than in San Francisco

By Roland Li, SF Business Times, March 1, 2016

Oakland is a better place to invest than San Francisco for single-family rental property because of a higher return on investment and lower pricing, according to data from real estate firm HomeUnion.

In the fourth quarter of 2015, Oakland had a capitalization rate, or ratio of income-to-property value, of 3.9 percent, which is higher than San Francisco’s cap rate of 2.7 percent. That means investors can get greater cash flow in Oakland. The price of an average Oakland single-family home at the end of 2015 was $420,000, far less than San Francisco’s $1.19 million at the end of 2015.

Those two factors mean that Oakland single-family properties have more potential to increase in value, and it’s easier to enter the market because prices are lower, said Steve Hovland, manager of research services at Irvine-based HomeUnion. Buying in San Francisco is “really prohibitive, especially for investors,” said Hovland. “When you get prices up that high, it really cuts down on the buyer pool.”

“When you look at the entire East Bay collectively, you see better appreciation over the past six months,” she added. At the end of 2015, Berkeley had an even lower cap rate of 2 percent, while San Jose had a cap rate of 3.3 percent.

San Francisco’s monthly single-family housing rent in the fourth quarter was $4,893 on average, the highest in the country, according to Home Union. Oakland’s rent was $2,634 per month. HomeUnion expects Oakland’s single-family rents to increase by 4.5 percent this year, after a 9.4 percent jump last year.

Lower development activity in the East Bay is also expected to keep prices high. Around 2,200 new multifamily and single-family units are expected to hit the market in the East Bay this year, compared to around 6,000 in San Francisco, said Hovland.

Steve Pugh, president of Paragon Commercial Brokerage, which specializes in multifamily property deals, is also seeing more investor and tenant interest in Oakland because of San Francisco’s high rents.

“There’s a flight to Oakland because of affordability,” he said. Investors are targeting Oakland neighborhoods including Temescal, Rockridge and areas around Lake Merritt such as Adam’s Point.

Real estate websites: Who makes the grade?

Consumer Reports reviews Realtor.com, Redfin, Trulia and Zillow, finding few differences among the competitors

By Amy Swinderman, Inman News, Mar 2, 2016

Key Takeaways

  • Consumer Reports recently released a review comparing Realtor.com, Redfin, Trulia and Zillow and found little uniqueness among their offerings.
  • The key difference between the websites is the multiple listing service (MLS) they each use.
  • The sites pose their own strengths and weaknesses with regard to search tool reliability, emphasis on lifestyle factors and notification preferences.

Top real estate website competitors realtor.com, Redfin, Trulia and Zillow have more in common than they may want to admit — and each property search service has limitations, according to a recent Consumer Reports review of the websites.

The report, “Real Estate Websites Review: Virtual House Hunting,” researched those top four websites, finding little uniqueness among their offerings. The review is also available in the March 2016 print issue of Consumer Reports.

All four websites are free, provide the same basic property information, allow users to filter searches by price range and other home features, and offer “save and share” listing options.

But the key difference between the websites is the multiple listing service (MLS) they each use, according to the report, which noted that Redfin is the only non-portal website and operates more like a brokerage.

“None of the sites provides a complete picture of what’s currently on the market,” said Consumer Reports reviewer Tobie Stanger. “So we recommend that you try them all.”

The review also cautioned users to “exercise skepticism” when using the websites’ price valuation tools, as estimates can vary widely and may differ as much as 5 percent from the actual valuation.

“For more accuracy, ask a real estate agent for a free, comparative market analysis,” the report advised.

Here are a few pros and cons that Consumer Reports listed for the four websites.

Realtor.com

Pro: Allows users to easily check property records for every house on a street. Con: No for-sale-by-owner listings.

Redfin

Pro: If users like a house that’s not for sale, they can “favorite” it and get an alert if it gets listed. Con: Redfin doesn’t participate in every MLS, even within the states where it operates.

Trulia

Pro: Focus on lifestyle factors such as walkability, commute times and proximity to stores, restaurants and school districts. Con: In some cases, users must consent to sending their contact information to a real estate agent for a home value estimate.

Zillow

Pro: Users can compare a particular property to comps they choose themselves to account for local factors that Zillow’s Zestimate algorithm may not contemplate. Con: Online search tool is not as robust as those of Redfin or Trulia.

Oakland: Mayor Schaaf releases housing blueprint

By David DeBolt, Contra Costa Times, March 3, 2016

OAKLAND — Jerry Brown, as mayor of Oakland, launched an ambitious “10K Plan” to build new housing and draw residents to populate deserted, blighted blocks of downtown. Now, as the building boom is in full swing and more and more people flock to Oakland, Mayor Libby Schaaf on Thursday will unveil what could be called the “34K Plan” to make sure the city’s faithful don’t get pushed out.

“This is a city that values diversity … but we also want to keep this city as a city that has income diversity and is able to house all of its workers,” Schaaf said Wednesday.

In Oakland where rising rents have scattered longtime residents, the mayor’s proposal would shield low-income renters in 17,000 units, and build another 17,000 units of new homes over the next eight years.

Laws and support to protect renters would be strengthened and fees from new housing developments and a possible bond measure on the November ballot would be used to preserve and create affordable houses, according to the plan.

The new 17,000 units would be a mix of housing for the poor, middle class and wealthy residents, with roughly 28 percent dedicated to affordable housing, the mayor said.

The proposal comes as one of the missing pieces of Brown’s plan for a vibrant, 24-hour downtown neighborhood was approved Tuesday — a 27-story high-rise and seven-floor hotel at 1911 Telegraph Ave. in Uptown. The prime space is next door to the Fox Theater and across the street from the former Sears building, soon to become Uber’s headquarters.

The Telegraph Avenue high-rise, considered the first of its kind in a decade, one day will have company, as several large residential towers planned in downtown and Uptown promise to change the city’s skyline.

Estimates now place Oakland as the fourth most expensive rental market in the country, where average rents for a one-bedroom home have soared to $2,190 a month, outpacing income increases. Census data shows Oakland and Alameda County were the fastest growing region in the state over the past five years.

In a city where education, infrastructure and crime have historically been pressing issues, housing has emerged as perhaps the most talked about issue of the day. The new report says 22.5 percent of Oakland households are vulnerable to displacement with many spending 50 percent or more of their income on housing.

The mayor’s plan would be financed in part by a potential $500 million bond measure on the November ballot, raising service fees landlords pay annually per unit to fund the city’s rent control program, and a proposed impact fee paid by developers to be used for affordable housing. The plan estimates $61 million could be generated by impact fees over eight years, funding the construction of between 300 to 600 affordable units.

Another proposal would create a program for nonprofit housing organizations to buy and rehabilitate buildings for lower-income residents, with potential seed money from the Metropolitan Transportation Commission and a proposed City Infrastructure Bond.

There are already about 14,000 units of new housing in the pipeline, 6,600 of which are approved and ready to go, city officials said. Even if all are not built, city officials still anticipate they can reach the 17,000 unit mark over eight years.

The U.S. Supreme Court won’t make California’s housing crisis worse

Editorial – SF Chronicle, March 1, 2016

Bay Area cities, crushed by a housing affordability crisis, can breathe a small sigh of relief this week. The U.S. Supreme Court didn’t step in and make matters worse.

On Monday, the court declined to hear a legal challenge to a San Jose law that would require housing developers to build affordable, below-market-price units for low-income buyers on new projects within city limits.

The rule, known as an “inclusionary housing” law, is increasingly popular throughout California. The League of California Cities and the California State Association of Counties estimate that 170 local governments have some version of it, in response to California’s chronic shortage of affordable housing. Both associations supported San Jose in the legal case.

In the Bay Area, it’s been a crucial tool for city governments to add badly needed new housing projects while limiting the dramatic displacement of their lower-to-middle income workforce.

The state Supreme Court recognized the social good of these laws with its 7-0 unanimous ruling about this particular law: Crises around housing, wrote Chief Justice Tani Cantil-Sakauye in the ruling, have reached “what may be described as epic proportions in many of the state’s localities.”

For now, though, California cities can continue insisting on a sensible restriction that allows them to maintain some of their workforce population — while still allowing developers to make profits.

The nature of those restrictions remains heavily contested, even in local jurisdictions (San Francisco is currently battling over how much inclusionary housing is feasible). But inclusionary housing is a crucial tool in the toolboxes of cities that are struggling to maintain a population balance, and it would be unfair for the Supreme Court to take it away.

One in Four Homebuyers Cites High Rent as Reason for Buying

Affordability and Competition Remain Top Concerns in Redfin Homebuyer Survey; Most Expect Prices to Rise in the Next Six Months

Written by Alex Starace on February 25, 2016

One in four homebuyers is looking to purchase because their rent is too high, according to a Redfin survey of 750 homebuyers this month.

That’s up from one in five in November, and up from one in eight last August. In each survey, when we asked buyers what most influenced their decision to buy, the only choice cited more frequently was a major life event, such as the birth of a child or a marriage.

Affordability and Competition Headline Buyers’ Concerns

But the grass isn’t always greener. While buyers continued to cite affordability as their top concern, inventory woes are gaining attention. Twenty percent of buyers worried there weren’t enough homes to choose from, up four percentage points from last quarter. And 16 percent of respondents said there was too much competition from other buyers, a five percentage point jump from last quarter.

Buyers Expect Price Gains

Fifty-three percent of buyers anticipated that home prices would increase soon, compared to only 48 percent of respondents in the previous survey. Among those anticipating price increases, 13 percent felt prices would rise significantly, compared with 10 percent in the previous survey.

 

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