The beginning of the New Year has a similar look and feel to what we saw at the beginning of 2010.  After hitting an inventory low in December for the year 2011, we actually saw a very slight gain in the number of homes for sale in January. This ended an 8 months streak of falling inventory.

Like 2010, with inventories this low, a slight “seller’s market” followed into summer. We’re starting to hear some positives in the market;

• As Clear Capital reported last month, “After years of decline, housing prices are expected to stabilize or even increase in some parts of the Bay Area this year, according to a new forecast.”
• The affordability index in California has reached a previous record high set in 2009.
• The Recent Robo-Signing Settlement.
• Home Affordable Modification Programs and proposed legislation addressing housing.
• Consumer sentiment improving as indicated by a recent Fannie Mae Survey.
• The employment market continues to strengthen
• Record low interest rates.
• Housing starts are still running at only one-third of their 2006 peak, but are up from their 2009-11 lows

Buyers who have remained on the fence due to the uncertainty in our economy are now beginning to slowing trickle back into the market. We’re starting to see some competition in desirable areas that have fewer homes for buyers to look at. This past month has brought us more multiple offer scenarios with pending sales going over asking.

As for the January numbers;

• The month’s supply for the combined 38 city area that I track is still at 1.9 months, again far below normal, and similar to what we saw at the beginning of 2010.

• Inventory typically drops off during the winter months plus we’ve been seeing banks slow down during this same time over the past 3 seasons with self imposed moratoriums during the Holidays.

• Our Pending/Active Ratio remained relatively high at 1.51, normally considered a seller’s market range. Keep in mind that this number is overstated due to the large number of short sales that remain in pending status for longer periods than normal.

• Distressed properties, (REOs and Short Sales), are still a large part of our local markets. 50% of the active listings, 77% of our pending sales (primarily due to the large number of short sales – 60%), and 55% of the sales over the last 4 months are distressed properties.

Other Recent News

DQNews,  Summing up the Year – January 18, 2012

The Bay Area’s housing market rounded out 2011 much the way it started it: with constricted and atypical sales activity, lots of bottom feeding, and a largely dormant mid- to move-up market.

“We’ll remember 2011 as much for what didn’t happen as for what did. People put discretionary buying and selling on hold, except at the very top of the market. The spectacular gains in affordability, based on the combination of lower prices and ultra-low interest rates, was largely theoretical for many people because it was so hard to get a mortgage. That, combined with negative equity and economic uncertainty, kept people away,” said John Walsh, DataQuick president.

“Many of the deals that did make their way through the system were in the distressed arena – foreclosures and short sales. Much of it was deeply discounted cash purchases, disproportionately at the lower end of the price scale,” he said.

Q4 2011 Housing Affordability Index – Feb. 9, 2012

California’s housing affordability rose to its highest level in fourth-quarter 2011, matching a record high set in 2009, thanks to lower home prices and record-low interest rates, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

A Solution to the Housing Crisis Could Be at Hand -Short sales and other measures are starting to clear the backlog

By Peter Coy and Prashant Gopal

Lenders and government agencies have finally begun to understand how to deal with the crash by efficiently saving the homes of people who can afford to stay in them—and quickly recycling the properties of delinquent borrowers who are beyond hope.

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glens Numbers through January 2012 here.

The December numbers

• 2011 comes to a close on the verge of what appears to be a market in transition. Inventory of homes for sale have dropped for the 8^th consecutive month bringing us to the lowest levels since December of 2009.

• The month’s supply for the combined 38 city area that I track is now 1.9 months, far below normal, and again reaching lows we haven’t seen since December of 2009.

• Our Pending/Active Ratio has increased again to 1.54, normally considered in a seller’s market range. Keep in mind that this number is overstated due to the large number of short sales that remain in pending status for longer periods than normal.

• Distressed properties, (REOs and Short Sales), are still a large part of our local markets. 54% of the active listings, 78% of our pending sales (primarily due to the large number of short sales – 61%), and 52% of the sales over the last 4 months are distressed properties.

Some Comments on “What’s this All Mean?”

I asked this question a couple of months ago; “With lower home prices and record low interest rates, why aren’t more people buying now?”

Well, in a sense they are. It really comes to where and in what price range. We’re seeing an increase in activity at the lower priced home market levels in many areas where the focus is with first time home buyers and investors. Increased demand coupled with lower inventory is beginning to place an upward pressure on prices. We’re beginning to see an increase in multiple offers. For both counties combined (Alameda & Contra Costa), 51.2% of sales over the past 4 months fall into this lower end price range (below $300,000).

The mid price levels ($300,000 to $750,000) continue to be sluggish primarily due to a lack “move-up” buyers who have experienced a loss of equity in their own homes, plus the uncertainty of the economy, including job concerns and the difficulty in obtaining a loan.

The pending and active graphs, attached, seem to be following a similar pattern that we saw happen during 2009 and at the beginning half of 2010. Inventory levels reached their low point in December 2009 before rebounding the beginning of 2010. If early indications hold up, we may see inventory pick up again at the start of the year, followed by an increase in pendings, and in the months supply. The beginning of 2010 experienced a slight seller’s market. Will history repeats itself?

Other Recent News

Bay Area Home Prices Low, Sales Creep Up December 14, 2011 – DQNews

Bay Area home sales were ahead of 2010 for the fifth month in a row in November, despite limited mortgage availability and sluggish high-end sales. The median sale price fell again on a year-over-year basis, partly because of the slowdown in sales above the mid point for prices, a real estate information service reported.

“These days, buyers and sellers have to contend with two sets of problems, which sometimes play into each other and sometimes conflict with each other. The first is the lousy economy and the opportunities it presents, for better or worse. The second is the dysfunctional mortgage finance system. Interest rates may be at record lows, but the types of mortgages that are available have been drastically reduced and qualifying is a true grind,” said John Walsh, DataQuick president.

“This creates uncertainty. Many potential buyers and sellers appear to be in a frame of mind that says, ‘when in doubt, don’t,’” he said.

Bay Area home prices expected to stabilize in 2012

After years of decline, housing prices are expected to stabilize or even increase in some parts of the Bay Area this year, according to a new forecast.

Stabilizing prices are a sign of a healthier market, even though homebuyers still face challenges — tight credit, not many homes for sale and competition from investors paying cash.

In a report to be released Monday, Clear Capital, a real estate valuations company in Truckee, predicts that prices will remain almost flat this year — compared with a 4.7 percent drop in 2011 — in the San Francisco-Oakland-Fremont metropolitan area, including Contra Costa County.

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glens Numbers through December 2011 here .

• For the 7th month in a row we’ve seen another slight decrease in inventory, a 30% drop since the end of April. The last time we’ve seen inventory levels this low was in February 2010.

• The months supply for the combined 38 city area that I track is now 2.3 months, below normal and again reaching lows we haven’t seen since February 2010.

• Our Pending/Active Ratio has increased again to 1.33, normally considered in a seller’s market range. Keep in mind that this number is overstated due to the large number of short sales that remain in pending status for longer periods than normal.

• Distressed properties, (REOs and Short Sales), are still a large part of our local markets. 50% of the active listings, 75% of our pending sales (primarily due to the large number of short sales – 58%), and 51% of the sales over the last 4 months are distressed properties.

Other Recent News

Housing Market Sees Signs of Stability: Clear Capital

The housing market may be stabilizing as house prices and REO saturation rates show little change on a quarterly and yearly basis, according to Clear Capital’s most recent Home Data Index.

NAR Forecast for 2012

NAR publishes forecasts each month based on the inflow of updated economic data. Here are the latest take-aways regarding the outlook for next year:

• No economic recession in sight. The GDP is expected to rise 2.5 percent in 2012. That is, the income of everyone combined in the U.S. will rise by 2.5 percent.
• The net job creation is expected to be 1.5 to 2 million. The national unemployment rate will slide to 8.4 percent by this time next year.
• The baseline forecast for existing home sales is a rise of 5 percent, while home prices will finally turn positive, albeit by only 2 percent. The total industry commission revenue, therefore, can be expected to rise by around 7 percent.
• New home sales will rise by 16 percent. A stronger comeback is in the cards, after brutal declines during the housing bust years.

Bay Area Home Sales Up From 2010, Prices Down

“We’ve been watching the real estate market take itty bitty baby steps in the direction of normalcy, but that trend paused last month. ARM and jumbo loan usage went back down, cash and investor sales went back up as a portion of the market. This may well be a short-term pause while the market recalibrates changes in loan thresholds. We’ll know more in a few months,” said John Walsh, DataQuick president.

C.A.R. October sales and price report

“While October’s sales were on track with expectations, the month-to-month drop in the median price was larger than usual for this time of year,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Because of the lower Fannie, Freddie, and FHA conforming loan limits, some buyers purchased less expensive homes so that their mortgages would meet the criteria for the lower limit, while others were unable to qualify for nonconforming loans that typically have higher down payment requirements and higher mortgage rates. The resulting change in the mix of sales drove down October’s median price.”

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s Numbers through November 2011 here.

But, it doesn’t feel like we’re in a Sellers’ market

Inventory has gradually decreased since April, (down 19.2% compared to a 37% increase over the same period of time last year). Month’s supply is now only 2.7 months. We haven’t seen inventory this low since April of 2010. Lower inventory usually means more competition favoring sellers.

However, we’re seeing homes stay on the market longer, sell for under asking, more transactions falling out, many price reductions or homes that are simply being withdrawn from the market.

With lower home prices and record low interest rates, why aren’t more people buying now?

1)     The loss of equity for many home owners have kept many from “moving up” into the mid level priced homes.

2)     The continued turbulent economic news has scared many buyers back onto the fence, with concerns that things will only get worse or that their own jobs may be in jeopardy. They are waiting for the “uncertainty” in the markets to go away before committing to making one of the most important decisions of their life, buying a new home.

3)     Over 60% of the market now consists of first time home buyers and/or investors looking for bargains primarily focused on the lower end of the market, (homes that are selling for $300,000 and below).

4)     57% of pending sales in the area are now short sales. This has skewed the numbers because they have longer escrows and many transactions never close. Taking this into consideration, the pending active ratio is misleading and should actually be adjusted down.

5)     There’s a larger fall out of transactions due to the difficulty of first time home buyers getting their loans.

6)     Of the few remaining buyers left,  many are feeling that they will stay in their next  home longer, passing on the smaller  homes for something larger and in a more “move in” condition.

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s East Bay Housing Numbers Through October 2011 here.

MEBA team member (and resident housing analyst) Glen Bell was recently featured in a piece that KRON4 news did on the Bay Area housing market.  Its always an adventure to see what makes it into the finished piece, but I think it came out pretty well.

To recap Glen’s points:

• Sellers aren’t getting the prices that they were getting several years ago & everybody is reluctant to take less.
• We’re looking at another 3-5 years where local housing markets are going to be relatively flat.
• Still, with prices coming down as far as they have, combined with historically low interest rates, it makes for one of the best buying opportunities that we’ve seen in a long time.

KRON 4 on Facebook

The months supply for the combined 38 city area that I track is now 2.9 months, slightly below normal.

Our Pending/Active Ratio has increased again slightly to 1.08, again slowly returning towards a “normal” market range. Keep in mind that this number is overstated due to the large number of short sales that remain in pending status for longer periods than normal.

Distressed properties, (REOs and Short Sales), are still a large part of our local markets. Although this is slowly becoming less of a factor with listings. 47% of the active listings, 74% of our pending sales (primarily due to the large number of short sales – 57%), and 49% of the sales over the last 4 months are distressed properties.

Other Recent News

Here are a few points that stood out to me from C.A.R.’s California Housing Market Forecast for 2012

Good fundamentals, but still dependent on the consumer & jobs.

“Despite the run of unforeseen global events in the first half of this year that slowed the overall economy, 2011 home sales are projected to essentially remain unchanged from last year,” said C.A.R. President Beth L. Peerce. “Looking ahead, the fundamentals of the housing market – such as low mortgage rates, high housing affordability, and favorable home prices – are expected to continue, but at this point, a strong housing recovery will depend on consumer confidence, job creation, and the availability and cost of home loans.”

Improved mix.

“Discretionary sellers will play a larger role in next year’s housing market,” said Peerce. “Those who held off selling in 2011 may list their homes in 2012, thereby improving the mix of homes for sale compared with the last few years. Additionally, distressed sales will remain an important segment of the overall market as lenders continue to work through the foreclosure process.”

Another transition year.

“2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain in the forefront for all market participants,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today’s very affordable housing market.

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s East Bay Housing Numbers Through September 2011 here.

We saw nearly a 32% increase last year during the same period. The months supply for the combined 38 city area that I track is now 3 months, slightly below normal.

Our Pending/Active Ratio has increased slightly to 1.06, again slowly returning towards a “normal” market range. Keep in mind that this number is overstated due to the large number of short sales that remain in pending status for longer periods than normal.

Distressed properties, (REOs and Short Sales), are still a large part of our local markets. Although this is slowly becoming less of a factor with listings.  47% of the active listings, 73% of our pending sales (primarily due to the large number of short sales – 56%), and 49% of the sales over the last 4 months are distressed properties.

From Around the Web…

Last month’s sales fell harder in the higher price ranges: The number of $500,000-plus homes sold dropped 25.4 percent month-to-month and 19.2 percent year-over-year.

“There’s certainly a lot more discretionary buying in the higher price ranges,” said John Walsh, DataQuick president. “A lot of those buyers have the option to just take it or leave it and, lately, it looks like more have been leaving it. There was a lot of uncertainty out there over the economy, home prices and the nation’s future. And that was before the stock market turbulence hit in early August.”

– DQNews: Bay Area Housing Market Takes a Breather

“Home buying will be conservative in the months ahead until we get a sense of which direction this economy is heading,” said Robert Dye, chief economist at Comerica Inc. in Dallas, who forecast a decline for July. “No one wants to buy into a soft housing market. We’ve seen prices remain soft in many areas.”

– Existing home sales unexpectedly dropped in July – Alex Kowalski, Bloomberg News

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s East Bay Housing Numbers Through August 2011 here.

Following our round table discussion at our last Better Homes & Gardens agent weekly meeting, I came from it with the distinct impression that we’re now seeing many buyers fall into two camps:

1) Backing off and going on the fence again given all of the uncertainty.

2) Seeing the opportunity that exists. The bargain hunters are out and they’re feeding on the available low interest rates, having more homes available to pick from, and with less competition.

The July numbers

•For the third month in a row we’ve seen a slight decrease in inventory, a 6.2% drop since the end of April. This isn’t typical because we’re usually picking up steam this time of year. We saw nearly a 25.9% increase last year during the same period.

•The months supply for the combined 38 city area that I track is now 3.2 months.

• Our Pending/Active Ratio has increased slightly to 1.01, slowly returning towards a “normal” market range. Again, keep in mind that this number is overstated due to the large number of short sales that remain in pending status for longer periods than normal.

• Distressed properties, (REOs and Short Sales), are still a large part of our local markets. Although this is slowly becoming less of a factor with listings. 46% of the active listings, 73% of our pending sales (primarily due to the large number of short sales – 56%), and 50% of the sales over the last 4 months are distressed properties.

Other Recent News

Homebuyers have mixed reactions to market swings - Eve Mitchell, Contra Costa Times

“The past two weeks have certainly been a test for the Bay Area housing market. Wild stock swings, the credit downgrade and continuing concerns about the economy have certainly weighed on buyers, sellers and their agents.”

Mortgage rates fall to 30-year near record low -Derek Kravitz, Associated Press

“Fixed mortgage rates fell to at or near record lows. That’s good news for the few who can afford to buy a home or are able to refinance. But the rates have done little to lift the ailing housing market.”

“Many people can’t take advantage of the low mortgage rates. Banks are insisting on higher credit scores and larger down payments from applicants. Others have too little equity invested in their homes to qualify for loans.”

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s East Bay Housing Numbers Through July 2011 here.

Our Pending/Active Ratio has increased slightly to .99, slowly returning towards a “normal” market range. Again, keep in mind that this number is overstated due to the large number of short sales that remain in pending status for longer periods than normal.

Distressed properties, (REOs and Short Sales), are still a large part of our local markets. Although this is slowly becoming less of a factor with listings. 45% of the active listings, 68% of our pending sales and 52% of the sales over the last 4 months are distressed properties.

Other Recent Housing News

A MacroMarkets survey of over 100 economists, investment strategists, and housing market analysts regarding their 5-year expectations for future home prices in the United States showed that…

“A significant majority of our panelists believe that the bottom for home prices arrived in the first quarter or will arrive sometime before year-end (2011). Despite persistent macroeconomic uncertainty and unprecedented housing market dysfunction, almost two-thirds of the panelists see the U.S. residential real estate market as at an historic turning point,” Robert Shiller said in a statement.

Price Expectations Survey, compiled from 108 responses of a diverse group of economists, real estate. “69 panelists who are currently forecasting a 2011 turning point predict less than two percent average annual growth in nominal home prices over the five-year period ending December 2015.”

If we really are close to a true bottom in home prices, that this combined with the continued low interest rates makes for a favorable buying environment.

From Reality Check: It’s a homebuyer’s market

“You’re seeing more and more markets across the country right now where the cost to acquire and own property financially simply makes more sense than renting,” says Budge Huskey, president and chief operating officer of Coldwell Banker Real Estate.

Huskey says buyers need to focus on their local market conditions instead of reacting to what they read about nationally.

We know there is a pent up demand from buyers simply looking for the right time, he says: “They’re trying to time what they consider to be the bottom of the market, which we know is almost impossible to do.”

If you’re looking to buy do your homework, consult a banker, and look only at homes you can comfortably afford. If it’s your first, remember it doesn’t need to be your dream home. Buying a starter, building equity, and trading up remains a good strategy.

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s East Bay Housing Numbers Through June 2011 here.

Distressed properties, (REOs and Short Sales), are still a large part of our local markets. Although this is slowly becoming less of a factor with listings. 47% of the active listings, 70% of our pending sales and 56% of the sales over the last 4 months are distressed properties.

The Pending/Active Ratio, which we use to gauge general market strength, has increased slightly to .97. Trending to towards a balanced market (1.00). Keep in mind that there are a large number of short sales that remain in pending status for longer periods than normal, this keeps the pending count higher, and in turn skews the ratio to the upside.  With that in mind, we would consider East Bay Housing to be in a slight buyer’s market.

Recent News

For all of those following the recent stories circulating about the latest Case-Shiller findings on the housing market, showing a nationwide double dip in housing prices, but I believe the news from Altos research may be closer to the truth.

Many experts have been predicting a U-Shaped recovery. Last year we saw a false bottom. Now, we hear that we might be in a Catfish Recovery.

A Catfish Recovery?

“[Altos Research VP Scott] Sambucci laid it out by describing the catfish as a bottom dweller that moves slowly, feeding off the lake or river floor for a while, then heads up to the surface and back down, bobbing up and down without a distinct pattern or clear direction.”

“Altos says markets should plan for prices over the long term to hit a bottom, rise a bit, sink back down, rise again.”

- via Double Dip: Altos Says Prices Have Been Steadily Rising Since Then

Yes, we’ve been saying for several months now that we were seeing further reductions in values for the SF Bay Area. However, we have been seeing different scenarios depending on what area you focused on and at what price level, once again proving that the real story is being told at the micro-market level.

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s East Bay Housing Numbers Through May 2011 here.

If you’re looking for more news throughout the month, check out the MyEastBayAgent Twitter feed for the latest links.