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Glen’s SF East Bay Real Estate Numbers

February 29, 2016

 

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

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

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

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

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

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

  • Inventory increased by 15.5% in the last 30 days and 44.75% over the last 60 days. That’s at a slightly faster pace than we have seen during the previous three years. Our monthly supply is 24 days.
  • The number of pendings, (homes that are in contract), increased at about the same pace as inventory. It’s slightly more than what we’ve experienced during the previous years. The pending active ratio remained about the same as last month at 1.53. This supply and demand ratio signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers. This is similar to the levels we saw last year at this time.
  • The percentage of homes “sitting” decreased since last month. 33% of the homes listed now remain active for 30 days or longer, while 18% stay on the market for 60 days or longer.
  • The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 4% of sales over the past 4 months.
  • Median Price recovery on a city by city is beginning to see a slight decline, typical during the winter season. 11 out of the 32 East Bay cities tracked are now at or above their median price “peak” levels with another 14 cities within 20%. That means that 7 cities are still well below their peaks, falling into the 20% to 40% range.

 

Months_Supply

  • The month’s supply for the combined 38 city area increased to 24 days, roughly 12% below what February 2015 looked like and 20% below the 2014 level. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

Active_&_Pendings

  • Our inventory for the East Bay (the 38 cities tracked) increased to 1,724 homes actively for sale. This is still well above the December 2012 low of 1,086 but below where we were last year at this time of 1,856. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have increased to 2,630, slightly lower than where we were last year at this time of 2,890.

Pending_Active_Ratio

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

Sales

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

Historical Median Price City by City Recovery

How much has the real estate market in your city recovered from their previous Peaks. The graph shows our recovery from each cities peak. As you can see, the most sought after cities have led the way. However, this is a slow process and as buyers become priced out of some of these markets, their interest spills over to the surrounding cities. They too begin to follow the trend up towards recovering.

Historical Median Price By City Photo

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

Recent News

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

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

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

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

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

Texas emerges as top destination for Californians fleeing state

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bay Area leads the nation in house flipping profitability

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Real estate websites: Who makes the grade?

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

By Amy Swinderman, Inman News, Mar 2, 2016

Key Takeaways

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

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

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

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

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

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

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

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

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

Realtor.com

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

Redfin

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

Trulia

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

Zillow

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

Oakland: Mayor Schaaf releases housing blueprint

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Editorial – SF Chronicle, March 1, 2016

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

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

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

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

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

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

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

One in Four Homebuyers Cites High Rent as Reason for Buying

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

Written by Alex Starace on February 25, 2016

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

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

Affordability and Competition Headline Buyers’ Concerns

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

Buyers Expect Price Gains

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

 

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

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