bay area

Bay Area Real Estate in the News: Foggy With a Chance of Sun

Fog around Golden Gate Bridge and city skyline

DataQuick released their December 2010 monthly report for the Bay Area recently hitting the headlines with "Bay Area Housing Ends Year With Many Looking but Not Buying." But amongst the headline there were also bits of sun hinting of more to come for Bay Area real estate.

Here's what John Walsh, DataQuick president, said:

“While the dicey economy and employment concerns are major factors, tight mortgage credit is also a big issue right now, especially for the upper half of the market. There’s a lot of pent-up supply and demand out there, which will start to meet when the lenders re-open their spigots a turn or two,” he said.

Real Estate News Roundup: October 29th

Giants in the World Series

A shout out to The Orange and Black, living up to the name and making Texas look small. Good luck this Saturday and Sunday:

And in other orange news, your Halloween community event list:

Bay Area Real Estate News:

  • Palo Alto Weekly article talks about local "premium" housing developments.
  • SF Gate: On The Block says Bay Area real estate is walking on tight rope -- inventory is thin and demand is fickle.
  • Another one for On The Block, five red flags for renters.
  • Real estate monitoring company DataQuick reports that "Bay Area September Home Sales Second-Lowest in 19 years." On the other side of the coin, the median sale price is 8% higher than a year ago.
  • The Chronicle reports that Bay Area foreclosures are down 32.5% from last year; statewide they were down 25.5%.
  • San Jose mercury reports on a job market study done by Beacon Economics. In the third quarter of 2010, the Bay Area brought in 4,500 payroll jobs. But, construction, retail, and government remain the weakest industries.

National Real Estate News:

  • We all appreciate politics that call it as it is: presenting Jimmy McMillan of the Rent is Too Damn High Party, via Wall Street Journal.
  • Fresh Air with Terry Gross untangles the mortgage foreclosure crisis with guest Gretchen Morgenson, from the New York Times. A good summary of how we got here and how banks aren't helping solve foreclosures through the use of "robo-signers."
  • The Associated Press: New home sales rise 6.6% after dismal summer

To Fill Your Inner Real Estate Gossip:

  • Among other news, Chelsea Handler needs to talk to Mr. McMillan. She is renting for $35,000 a month in Brentwood, CA, via NBC Bay Area.
  • Couldn't help but one last Giants mention. Online tickets for the games at AT&T Park sell into the thousands, via Oakland Tribune.


Bay Area Real Estate Shifting to a Seller's Market, U.S. Still Slipping

Bay Area home sales in August may have dropped to an 18-year low (an 11% decline from last year), but the median sales price rose 6.9% from August 2009, according to a report released by MDA DataQuick this September. And viewed with a wider lens, things have been steadily improving in the Bay Area:

Last month was the second in a row to post a month-to-month decline in the median, which so far this year has peaked at $410,000 in May and June. On a year-over-year basis, the Bay Area median has risen for 11 straight months, though before July those increases had been in the double digits – ranging from 10.6 percent to 31.0 percent – since last November.

The San Jose Mercury News posted two stories on the report, asking Are Silicon Valley homebuyers holding out for lower prices? and stating that although the market is falling, it's not falling as fast as it was.

While the real estate prognosis changes from county to county and even neighborhood to neighborhood, the big picture drawn by DataQuick's numbers shows things pretty much bouncing along, with the market neither going off a cliff nor shooting for the stars.

While on a national level, Bloomberg News took a gloomier viewpoint on the real estate outlook, reporting that home purchases in August were at their second-lowest level since 1963, when experts first started recording the data; and the median selling price of $204,700 was at its lowest level since December 2003.

The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market. ... “Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco. “Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year.”

Which is where currently the Bay Area differs from the rest of the nation. Stated at the end of the Mercury News article, the inventory of unsold homes is shrinking to the point where in the next couple of months Bay Area real estate could turn into a seller's market. _

Recommended Reading:

Comparing Real Estate Trends of Local Cities

In order to help visualize the previous posts on the 2010 quarterly updates for Palo Alto, Los Altos, Mountain View and Sunnyvale, the graphs below show each city in comparison of overall home sales, median selling price and average days on market. The graphs cover quarterly results from 2008 to 2010 for single-family homes using data from MLS listings Inc.


Number of homes sold –

It is hard to see how the cities responded to the crisis within this time frame since most home sales drop off during the winter months and spike in summer. But it is clear that home sales sagged in the first quarter of 2009, were slow to return initially, and then eventually returned to similar or stronger numbers by the end of 2009, which have continued through 2010.


Median selling price

All four cities home prices started to slip at the end of 2008, with the exception of Mountain View, which dropped a couple quarters later. Prices rebounded mid-2009, after cities like Sunnyvale had bottomed out in the beginning of 2009, and have begun to stabilize at a depreciated value. Los Altos, which has the most expensive houses of the four cities*, realized a 20 percent drop from the beginning of 2008 to 2010; Mountain View dropped 17 percent, Palo Alto dropped 11 percent, and Sunnyvale dropped 15 percent.

*Los Altos may have a higher median selling price than Palo Alto, but part of that is the wider range of home prices available in each of the 14 Palo Alto neighborhoods, where the lower-end is selling quickly, and a population that is double the size of Los Altos. (Expect a post covering Palo Alto neighborhoods in the future.)


Average days on market –

Building up to the crisis, average days on market increased for all four cities until the beginning of 2009. Interestingly, Los Altos and Palo Alto numbers are still increasing today, while Sunnyvale and Mountain numbers are dropping. This may be a result of higher priced homes in Los Altos and Palo Alto that tend to stay on the market longer, especially in a recession, in contrast to the strong demand for the greater supply of low priced entry-level homes in Mountain View and Sunnyvale.