May 31, 2017 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

 

Zillow_-_April

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

  • Following a dramatic 60% drop at the end of the year, inventory continues its’ seasonal trend upward. However, for the first time since 2012, we did not see a monthly increase in our inventory from April to May. Pendings did go up by 10.8%. This leads us to believe that there were more homes that did come onto the market over the last month but that they got “gobbled” up quickly due to the high demand resulting in no inventory level gains. Inventory levels have increased by 79% since the beginning of the year. Expecting to follow the trends we saw in the previous 3 years, we anticipate a gradual increase on a month by month basis through spring and summer to occur before finally peaking in the fall months. Inventory levels are slightly less than what we experienced last year at this time. Our monthly supply is now 33 days. As a reminder of what we mean by “months supply;” If no more homes come onto the market, and homes continue to sell at the same pace as they have been over the last 12 months, then the “months supply,” (in this case 33 days), tells us that’s how many days it would take to sell the remaining number of homes we currently have available for sale in any given market.
  • The number of pendings, (homes that are in contract), has increased 10.8% over the last 30 days but is less than what we experienced during this time last year by 12.8%. The pending active ratio increased to 1.42. This supply and demand ratio signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers. This is about what we saw last year at this time, (1.43). This will change in the coming months as we continue to move towards a more “normal” or balanced market for 2017.
  • The percentage of homes “sitting” has increased slightly with 34% of the homes listed now remaining active for 30 days or longer, while only 15% stayed on the market for 60 days or longer. This is about the same level that we saw last year at this time.
  • The “distressed” market, (foreclosures and short sales) are no longer a factor representing less than .1% of the market with only .02% of the active listings and .03% of sales over the past 4 months.
  • Median Price recovery on a city by city is beginning to see a slight increase. 17 out of the 33 East Bay cities tracked are now at or above their median price “peak” levels with another 12 cities within 20%. That means that only 4 cities are still well below their peaks, falling into the 20% to 30% range. The Median Price for the East Bay has increased from $617,500 to $640,000 over the last 4 months, also typical for this time of year.

Months_Supply

  • The month’s supply for the combined 38 city area remains at 33 days. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area. As you can see from the graph above, this is a repetitive pattern that we’ve seen over the past four years.

Actives_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) remains about the same at 2,226 homes actively for sale. This is still above the December 2012 low of 1,086 and less than last year at this time of 2,525 or (11.9% lower). We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales increased to 3,156, lower than where we were last year at this time of 3,619 or (12.8% lower).

Pending_Active_Ratio

  • Our Pending/Active Ratio is 1.42. Last year at this time it was 1.43. This will be moving towards a more balanced or “normal.” (a ratio of 1 with an equal number of listings and pending sales) as we continue into summer and fall.

Sales

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

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Recent News

 

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

Melia Robinson, Business Insider, May 14,2017

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

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

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

 

America’s Hottest Real Estate Markets in May 2017

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

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

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

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

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

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

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

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

By Janis Mara, Berkeleyside, June 9, 2017,

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

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

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

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

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

All_Cash_Purchases

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

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

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

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

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

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

Who are the people paying cash?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

by HERB WEISBAUM, NBC News, June 5, 2017

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

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

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

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

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

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

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

BY ALEXA FIANDER, Zillow, June, 1, 2017

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

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

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

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

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

Blue kitchens

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

Light blue bathrooms

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

Brown living rooms

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

Cadet blue bedrooms

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

Slate blue dining rooms

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

“Greige” home exteriors

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

Navy blue front doors

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

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

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

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

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

Mark Calvey, SF Business Times, June 6, 2017

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

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

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

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

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

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

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

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

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

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

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

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

Good Walk Scores have SF buyers, renters running to homes

By Kathleen Pender, SF Chronicle, June 3, 2017 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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