Looking Closer into the East Bay REO & Short Sale Market
May 23, 2011 by Glen Bell · View Comments
When I was compiling my latest set of East Bay Housing Numbers, I decided to take a closer look at the distressed property market and chart the sales since the beginning of 2007.
The graphs consist of all sales on a month by month basis for both Contra Costa and Alameda Counties. It also shows what portion of sales were distressed property (both REO and Short Sales) since the beginning of 2007 to current April 2011 numbers.
The influence of distressed properties reached their peak during the first quarter of 2009, consisting of 72% to 76% of all sales in Alameda County, and 81% to 83% of all sales in Contra Costa County.
While the number of REO sales has since declined to its current levels, (48% in Contra Costa County and 55% in Alameda County), the number of short sales have gradually increased, now almost as much of a factor on sales as REOs.
Taking a Closer Look Into the East Bay Condo Market Slowdown
April 13, 2011 by Glen Bell · View Comments
We are seeing a slowdown in the condo market and I decided to run some numbers to verify what I’ve been hearing.
Below is a chart showing the median price of condo/townhouses in selected cities on a quarterly basis over the past two years, (ending March 31, 2011).
Some are more obvious than others, but values have come down in the last two or three quarters. I expect that trend to continue. Keep in mind there are seasonal influences and there have been some ups and downs over the past couple of years in terms of inventory, demand and values.
The biggest influences with condos in this market are the difficulty in getting a loan based on the condo certifications, declining values, and high HOA dues. Many are being purchased now all cash. However, some investors have stayed away because prices have still not come down enough to cash flow, and many times that is because of the HOA dues.
Carolyn Said highlighted this in her recent article in the San Francisco Chronicle
“In a vicious cycle, lending restrictions bar potential buyers from getting a mortgage in complexes where too many units are behind in homeowner association dues, are not owner occupied or are concentrated in one party’s hands. Units is such complexes must sell for all cash, which drives down their price.”
Eve Mitchell highlights another problem for the condo market in her recent Contra Costa Times article
“In a housing market in which prices continue to be battered by foreclosures and short sales, many would-be buyers of condominiums in the Bay Area instead have found bargain-priced single-family houses as the price gap between the two housing choices closes.”
In summary, the deteriorating HOA financial situations along with the tightening loan requirements & the sudden viability of single family alternatives, have resulted in a East Bay condo market that is struggling to find it’s footing right now.
Time to Jump in and Buy Real Estate Again!
March 30, 2011 by Glen Bell · View Comments
In an article posted on CnnMoney, on March 28th, titled “Real estate: It’s time to buy again,” Shawn Tully, senior editor, states; “Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.”
This is a compelling article, with an optimistic overview on the housing market well worth the read!
This following quote lays the foundation and leads to an insightful argument in favor of recovery in the housing market.
If all the noise you’re hearing about housing has you totally confused, join the crowd. One day you’ll read that owning a home has never been more affordable. The next day you’ll see news that housing starts have plunged to nearly their lowest level in half a century, as headlines announced in March. After four years of falling prices and surging foreclosures, it’s hard to know what to think. Even Robert Shiller and Karl Case can’t agree. The two economists, who together created the widely followed S&P/Case-Shiller Home Price indices, are right now offering sharply contrasting views of housing’s future. Shiller recently warned that the chances were high for a further double-digit drop in U.S. home prices. But in an interview with Fortune, Case took a far brighter view: “The lack of new home building is a huge help that a lot of people are ignoring,” says Case. “People think I’m crazy to be optimistic, but housing is looking like the little engine that could.”
flickr photo credit Jitze Couperus Used under a creative commons license.
Glen's East Bay Housing Numbers Through July 2010
August 5, 2010 by Glen Bell · View Comments
This market has seen some dramatic swings over the past 3 years.
To put this in perspective, I’ve attached some slides borrowed from a presentation by Leslie Appleton-Young, Vice-President & Chief Economist for C.A.R. (California Association of Realtors).
Included are the following (3) slides:
- Median Price of Existing Detached Homes
- Peak vs. Trough Price
- Trough vs. Current Price – May 2010.
The first slide takes us on a wild ride from the Median Price Peak for the San Francisco Bay Area of $852,713 in May of 2007, down to the Trough we saw in February 2009 at $399,040, followed by some recovery at $592,930 as of May 31, 2010.
The other two slides demonstrate how our region, the San Francisco Bay Area has stacked up to others in the state.
Does this mean we’re seeing recovery for the Bay Area Real estate markets?
According to C.A.R.’s 2010 Market Outlook (as of 6/18/2010), California will see a small decrease in sales during 2010, down 4.7% from last year, but a 9.1% increase in median price.
Let’s take a closer look at what’s happened since December of 2009 to today.
I try to look for trends in the 38 cities that I follow, (in Alameda and Contra Costa Counties). December’s numbers showed inventories at their lowest levels since I started tracking these numbers back in 2005.
(Click on images to view the larger versions)
Here are the East Bay housing highlights since December:
- 94.4% increase in inventory, (Active Listings) – From 3,690 to 7,164
- 6.2% increase in pendings, (listings that have gone into contract) – From 6,133 to 6,517
- 45.2% drop in the Pending/Active ratio – from 1.66 to .91
- Month’s supply has doubled – From a 1.7 Month supply to a 3.4 month supply.
So, as a summary, we normally see an increase from December into early summer for both the number of homes that come onto the market and the number that go into contract. This year had an unusually high amount come onto the market. Distressed sales contributed 46% of this market, (REO/Foreclosures and Short sales). This has become slightly less of a factor since the end of last year where 54% were distressed properties.
Pending sales increased as well through April, but since have dropped off. We have seen a 12.8% drop in pendings since April 30, 2010, perhaps indicating the influence of the federal and state incentive programs.
The Month’s supply of homes that are for sale has increased from a low of 1.7 months at the beginning of the year to a 3.4 month supply now. The long range average for California is 7.2 months as stated by C.A.R. (California Association of Realtors). However, the San Francisco Bay Area tends to fair better than the rest of the state with a long range average considered to be closer to a range of between a 5 to 6 month supply of homes for sale.
This is in line with what we are seeing in the ratio between active listings and pending sales. The ratio at the beginning of the year was at a high of 1.66, (low inventories with a high number of buyers going into contract indicating a stronger seller’s market). We are now looking at a ratio of 0.91.
So what’s in store for the East Bay housing market?
It’s difficult to make a blanket prediction for the entire Bay Area due the many differences in local markets. Lower price ranges vs. med to high end markets are behaving differently. Demand is also determined on a city by city, even neighborhood by neighborhood basis. We’re seeing more properties come onto the market, sitting longer and experiencing more price reductions in the mid to high end ranges. Even with that, there’s still not enough inventory for investor and home owner demand in the lower price range areas.
A few months from now, I think we’ll be talking about a modest decline in sales numbers along with a continued increase in inventory, with the pendulum continuing to swing from the brief seller’s market we experienced in early spring back into a buyer’s market with opportunities, as long as the rates stay low. If rates start to rise however, I think the market will suffer and we’ll see the additional 2-8% decline in home values by next July that Moody’s recently forecasted.
I’m always 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 also download the entire copy of my numbers through July 31st here.
–Glen Bell
Glen’s East Bay Housing Numbers (through May 2010)
June 3, 2010 by Glen Bell · View Comments
The May edition of Glen’s East Bay Housing Numbers show that housing inventories continued to climb at an unusually fast pace, up 64% since the beginning of the year. Since January 1st the month’s supply has increased from 1.7 months to 2.8 months while the pending over active ratio dropped from 1.66 to 1.18.
When comparing these numbers to May of 2009, we’re able to put this in a better perspective.
Last year’s May numbers are similar to this year’s as follows:
1) Active Listings (Homes for sale) are roughly within 2% of last year’s numbers.
2) Pending Sales (Homes in contract) are within 5% of last year’s numbers.
3) We now have a 2.8 month supply, the same as last year.
4) The Pending over active ratio was 1.15 last year, now 1.18.
Although it’s typical to see a swing up in homes coming onto the market from December to May, we haven’t seen an increase of this size so quickly since I have been tracking these numbers (2005).
I think the real question to ask here is not why are we seeing such a huge increase but why were December’s numbers so low?
Government programs and concerns over bank financial statements were an influence. REOs continued to dominate sales while few were coming on to replenish the market. As an REO agent, dealing in foreclosed properties, our assignments dropped off dramatically beginning last fall. Other REO agents confirmed similar circumstances. This is also consistent with what many media sources have indicated.
A comparison over a four month period, between this year and last year, shows a dramatic drop in REO sales. 32% of the sales over the last 4 months have been REOs. For the same four month period last year, 63% of sales were REOs.
This year’s increase was not dominated by distressed properties coming onto the market. Active listings, pending sales, and sales over the last 4 months are all down by about 5% compared to what they were at the beginning of the year.
From what we’re hearing, this may change in the coming months. Foreclosure activity has increased over the last few weeks and we, as well as other agents, are beginning to see new assignments.
All indications are that distressed properties will continue to be a factor for several years.
Glen's October East Bay Housing Numbers
November 2, 2009 by Glen Bell · View Comments
Here’s a snapshot of the San Francisco East Bay Real Estate Market through October 31st. I run these numbers monthly and have been tracking 38 cities since 2005. I primarily look at two indicators, Months Supply and Pending Over Active ratios.
Pending Over Active ratio relates to buyers and sellers. Basic Econ 101, Supply and demand. Actives (represents sellers), or properties that are still available, versus Pending (represents buyers), or properties leaving the market. That relationship often indicates whether we’re in a “sellers or buyers” market.
A ratio of 1 (an equal number of Actives and Pending) is considered a normal market or in a state of equilibrium. Anything under (high inventory, few buyers), prices are flat or dropping. Anything above (low inventory, many buyers) is considered a seller’s market.
The trend since earlier this year indicates that we are in a “sellers” market in most cities. However, one factor that may be skewing the numbers is that there are longer escrows due to REOs and increased government loans.
Months Supply, Basically, months supply is the ratio of inventory to sales. What it tells us is how many months the stock of homes for sale would last, if sales continued at their current rate. Six months supply is considered normal or equilibrium.
We are currently at a two month supply of houses for sale for the entire 38 cities that I track. Many cities are now below that level with a few even below 30 days. This is also an indicator that we are in a “sellers” market in most cities.
DOM, (Days On Market), continue to decrease in most areas. Houses are going into escrow quicker. However, once in escrow, they are taking longer to close.
Also, the relationship between what, on average, homes are selling for to list price support this. We’re seeing properties in many areas getting multiple offers and actually now, on average, selling at or above the average list price. The spreadsheet takes into account sales by city during the last 4 months.
Areas that were hit hardest last year due to high inventories and downward pressure on prices due to the high number of distressed properties on the market, are now starting to see some recovery, especially in the lower priced areas. Examples would be in East Contra Costa along highway 4, (Pittsburg, Antioch, Brentwood, even Concord). More recently, in West Contra Costa in the San Pablo, Richmond, Pinole, Hercules areas).
Finally, we are starting to see a slight increase in foreclosed properties coming onto the market. 17% of active listings are foreclosed properties (REOs), as compared to 14% last month.
Call me if you’d like to chat more in depth about the San Francisco East Bay market.
-Glen 510-333-4460
Download a PDF w/ the rest of Glen’s Numbers 10-31-09
-Glen 510-333-4460
East Bay Housing Market Stats: Another REO Surprise!
February 27, 2008 by Glen Bell · View Comments
As a follow-up to last month’s REO surprise, “that one out of every five listings in the SF Bay Area is REO, Bank Owned Properties,” we asked ourselves another question.
What is really influencing housing inventory and pricing in the SF Bay Area?
We’ve always heard that new construction has been the main culprit with overbuilding leading to a glut of houses for sale. All that new housing located along highway 4, Antioch, Brentwood, Pittsburg, Oakley seems to have led the way. After all, those areas are seeing between a 15 to 25% drop from last year’s prices. (Median prices compared on a year to year basis for January).
So we ran some numbers again using DQ News and EBRD MLS services to see which has the greatest influence over listings and sales on a city by city basis. Numbers were pulled as of January 31, 2008.
SURPRISED again!
Well, with all of the subprime fallout, foreclosures, and REO news rolling around in the news, maybe it really isn’t such a surprise.
The following list seems to put it in perspective.
Glen’s East Bay housing numbers
Reasons may vary, and differ depending on location. However, it is apparent that REOs, Bank Owned Properties, are now, the major influence on housing inventory and sales in the SF Bay Area.
Banks are the competition in a big way for sellers. Banks think differently about selling. Banks are becoming more aggressive in selling their properties. Not much in show or presentation, simply priced below the competition.
In many of our conversations this week, we’ve been hearing that activity has picked up. The word seems to be that “investors” are looking for bargains in the marketplace.
We have to agree that we are seeing that with our own REO listings. So we have to ask ourselves the next big question, will investors be leading the way?
Maybe they’re smart enough to realize that timing a real estate market bottom is next to impossible. Maybe with low interest rates, lots of choices, and not many other buyers out there, this just may be the right time to pick up a bargain.
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