April 30, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 Zillow_March_2017

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

 

  • Following a dramatic 60% drop at the end of the year, inventory continues its’ seasonal trend upward for the fourth month in a row gaining 18.8% over the last 30 days and 79% since the beginning of the year. Expecting to follow the trends we saw in the previous 3 years, we anticipate a gradual increase on a month by month basis through spring and summer to occur before finally peaking in the fall months. Inventory levels are slightly less than what we experienced last year at this time. Our monthly supply is now 30 days. As a reminder of what we mean by “months supply;” If no more homes come onto the market, and homes continue to sell at the same pace as they have been over the last 12 months, then the “months supply,” (in this case 27 days), tells us that’s how many days it would take to sell the remaining number of homes we currently have available for sale in any given market.
  • The number of pendings, (homes that are in contract), has increased 7.5% over the last 30 days but is less than what we experienced during this time last year by 14.5%. The pending active ratio decreased slightly to 1.28. This supply and demand ratio signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers. This is at a lower level than we saw last year at this time, (1.39). This will change in the coming months as we continue to move towards a more “normal” or balanced market for 2017.
  • The percentage of homes “sitting” has begun to decrease with 29% of the homes listed now remain active for 30 days or longer, while only 14% stayed on the market for 60 days or longer. This is due more to a clearance of some of the “stale” inventory seen as bargains and new homes beginning to come onto the market. This is about the same level that we saw last year at this time.
  • The “distressed” market, (foreclosures and short sales) are no longer a factor representing less than .1% of the market with only .02% of the active listings and .03% of sales over the past 4 months.
  • Median Price recovery on a city by city is beginning to see a slight increase. 17 out of the 33 East Bay cities tracked are now at or above their median price “peak” levels with another 12 cities within 20%. That means that only 4 cities are still well below their peaks, falling into the 20% to 30% range. The Median Price for the East Bay has increased from $617,500 to $640,000 over the last 4 months, also typical for this time of year.

Months_Supply

  • The month’s supply for the combined 38 city area remains at 30 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is a repetitive pattern that we’ve seen over the past four years.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) increased to 2,222 homes actively for sale. This is still above the December 2012 low of 1,086 and slightly less than last year at this time of 2,388. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased to 2,847, lower than where we were last year at this time of 3,328.

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.28. Last year at this time it was 1.39. This will be moving towards a more balanced or “normal.” (a ratio of 1 with an equal number of listings and pending sales) as we continue into the spring and fall.

Sales

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

Recent News

Bay Area home sales and prices heat up in March

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

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

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

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

Bay_Area_Prices_SFC

One caveat, though, is the weather.

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

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

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

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

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

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

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

Affordable housing drying up across Bay Area, report finds

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Roland Li, SF Business Times, May 5, 2017

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

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

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

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

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

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

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

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

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

Walters: Why California’s housing problem is getting worse

By DAN WALTERS, Sacramento Bee, May 2, 2017

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

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

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

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

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

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

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

The new housing data seem to support that contention.

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

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

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

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

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

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

The Housing Recovery That Wasn’t

By Ralph McLaughlin, Trulia, May 03, 2017

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

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

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

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

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

More in US Expect Local Home Values to Rise

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

STORY HIGHLIGHTS

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

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

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

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

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

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

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

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

Gallup Poll

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

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

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

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

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

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

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

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

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

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

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

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

Bay Area residents contemplating Sacramento exodus, says report

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bay Area rent control movement continues to spread

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

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

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

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

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

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

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

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

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

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

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

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

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

Neither does anyone else.

 

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

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