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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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