Monday, August 24, 2015

California Pending Home Sales Soared in July



Pending home sales in California soared in July compared to the previous year, posting the strongest year-over-year increase in more than six years, an industry trade group reported Monday.
But there are signs of a possible forthcoming decline in real estate activity after California Realtors, responding to CA’s July Market Pulse Survey, saw a reduction in floor calls, listing appointments, and open house traffic, compared with June.

The Market Pulse Survey is a monthly online survey of more than 300 California Realtors, which measures data about their last closed transaction and sentiment about business activity in their market area for the previous month and the last year.

The Pending Home Sales Index, meanwhile, climbed 17 percent on an annual basis to 122.4 in July, based on signed contracts, CAR said in a statement. The July 2015 index was up from the 104.5 index recorded a year ago and marked the eighth straight month of year-to-year gains and the sixth straight month of double-digit advances, it said.

Statewide pending home sales in July also reversed a three-month decline, rising 1.6 percent on a month-to-month basis.

Pending home sales in Southern California were essentially flat, dipping 0.3 percent from June to reach an index of 109.3 in July but up 16.8 percent from a year ago.

At the same time, the share of equity sales — non-distressed property s
ales — increased in California in July to post its highest level since late 2007. Equity sales made up 93 percent of all home sales in July, up from 92.4 percent in June and 90.2 percent in July 2014, according to CAR.

Conversely, the combined share of all distressed property sales fell in July to 7 percent of total sales, down from 7.6 percent in June and 9.8 percent a year ago.

CAR also reported today that the share of sales closing below asking price was unchanged in July, remaining at 43 percent. More than a third of homes — 34 percent — closed above asking price, and 24 percent closed at asking price, CAR said.

For the one in three homes that sold above asking price, the premium paid over asking price remained at an average of 11 percent, unchanged from June but up from 11 percent in July 2014, and the 43 percent of homes that sold below asking price sold for an average of 9.6 percent below asking price in July, down from 11 percent in May, according to CAR.

Tuesday, August 11, 2015

Bay Area Home Prices Seen Higher in 2016



Like many people in the Bay Area, Ken Ball and his wife would like to sell their home in Oakland and use the profit to buy a house without a mortgage somewhere cheaper. The problem is, they can’t do it for nine to 12 months, and Ball wonders where the market will be then.

“I think we are at some kind of peak” in the market, but “we are probably not ready” to sell, he said. “Is there a resource that offers Bay Area housing price forecasts out a year?

Many people forecast home prices for the state or U.S., but these are of limited use because real estate is hyper local. Most forecasters expect Bay Area prices will be higher a year from now, although the rate of appreciation will slow.

Zillow, the real estate website, forecasts home values all the way down to the ZIP code. It first looks at macroeconomic factors such as unemployment, mortgage rates, construction costs and land availability, then looks at what prices are likely to do based on what they are doing today. It updates its forecast every month.


It predicts that home values will be higher in June than they were this June in all nine Bay Area counties, with increases ranging from 1.5 percent in Sonoma to 6.8 percent in San Mateo. 

Readers can find Zillow’s forecast by going to www.zillow.com/research/data. Under Additional Data Products, click on Data next to the line labeled Zillow Home Value Forecast and you will get a spreadsheet with Zillow’s price forecast for every metro area, city and ZIP code.

Ken Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley, said he thinks real estate prices will “slow substantially” in 2016, but will still be positive. In June, prices in Bay Area counties were up 10 to 20 percent over the previous year. “The three things that are causing this — the huge increase in jobs, the supply shortage and very low interest rates” will all begin to change in 2016.
He sees mortgage rates going up a half a percent, job growth slowing and inventory growing. 

“Because of the big price increases, people will start thinking maybe they can sell their house,” he said. “We might see a bigger supply next year than we have the last couple of years.”

A year from now, he predicts prices will be 7 percent higher in the East Bay and 9 percent higher in San Francisco. “I don’t see prices going down unless we have a big recession or mortgage rates going up much higher than a half a percent.

Mark Schniepp, director of the California Economic Forecast, also sees Bay Area prices going up. “Our forecast was made in April. We had 6 to 7 percent for this year,” which proved to be conservative. “In certain cases, (price increases) are off the charts.”

At the time of his forecast, he predicted that prices in San Francisco would be 6.1 percent higher in 2016, 4.4 percent higher in 2017 and 3.6 percent higher in 2018. His forecasts for other Bay Area counties are in the same ballpark. He considers the current rate of appreciation unsustainable.
“You are approaching another bubble-like condition,” he said. “At some point in time, you are going to see it level off or pare back so that the annual average for 2015 is going to be a little more rational. If it doesn’t, I would want to adjust 2016 so it might actually show a decline.”

Jerry Nickelsburg, an economics professor at the UCLA Anderson School of Management, predicts that Bay Area prices will be higher for a simple reason. “Home demand depends on household formation,” which includes people moving to the Bay Area, kids moving out of their parents’ house and roommates moving into their own homes. “You have had very rapid job and income growth. That has fueled demand for housing, but you have not had much increase in the stock of housing. That gives you better home prices.”

His forecast is for the Bay Area to experience job growth faster than the U.S. over the next 12 months. “That is going to mean higher home prices,” he said.

Dean Wehrli, a senior vice president with John Burns Real Estate Consulting, agreed. “There is no question that a year from now, prices will be higher,” he said. “Three years from now, that’s a harder question to answer.”

Nela Richardson, chief economist with Redfin, a real estate website and brokerage, does not forecast local prices. But she said homeowners can get a sense of where they are going by looking at statistics such as how many days a home is on the market before it sells, the percentage of homes selling above list price, and inventory, or how many months it would sell all of the homes on the market at the current pace of sales.

In June, homes in the San Francisco metro area stayed on the market for 19 days versus 15 days the previous June. Although 19 is very low, “it looks like it is slowing significantly,” she said. The fastest market was Denver, where homes lingered only five days. The nationwide average was 26 days, a record low since Redfin started keeping track in 2009.

As for inventory in the San Francisco metro area, it’s running around 2.3 months. “Anything over six months is considered a buyer’s market,” Richardson said. Below that is considered a seller’s market. Oakland has just 1 ½ months of supply. “It’s a more affordable market than San Francisco,” she said.
Although low inventory “generally” means higher prices, things may get so unaffordable that buyers move to the sidelines. “You don’t always have to buy. We are seeing in San Francisco, buyers are a little more hesitant. It used to be, anything upright can be sold.”

Sunday, August 2, 2015

Bay Area Median Home Price on the Rise



The median home value in San Jose is $783,100. San Jose home values have gone up 10.7% over the past year and Zillow predicts they will rise 4.5% within the next year. The median rent price in San Jose is $2,830, which is lower than the San Jose Metro median of $2,980.

Foreclosures will be a factor impacting home values in the next several years. In San Jose 0.8 homes are foreclosed (per 10,000). This is greater than the San Jose Metro value of 0.7 and also lower than the national value of 3.8

Mortgage delinquency is the first step in the foreclosure process. This is when a homeowner fails to make a mortgage payment. The percent of delinquent mortgages in San Jose is 3.9%, which is lower than the national value of 6.0%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of San Jose homeowners underwater on their mortgage is 4.3%, which is higher than San Jose Metro at 3.8%. 

Thursday, July 16, 2015

Housing Price Map Shows Bay Area Real Estate "Eating Up" US



The latest illustration of just how out of whack the Bay Area housing market is shows local counties overwhelming the United States map, when counties are drawn proportionate in size to their property values.

Real estate tracker and data enthusiast Max Galka created the cartogram map and other intriguing visualizations for his website Metrocosm.

“To create the map (above), I took the total residential property value for every county in the U.S. (the contiguous 48 states), and substituted those values for each county’s land area,” said Galka. “Notice what a small portion of the U.S. land area is actually covered by the red counties.”
Here’s a still image explaining how the colors equate to total residential property value:

As you can see, the Bay Area falls entirely within the $40 billion plus range.
Galka recently did similar mapping of property values by state. The above maps mirror those results in that the top five states in terms of property value greatly outweigh the other 43 contiguous states.
“About half of the total value comes from the top five states: California, New York, Florida, Texas, and Pennsylvania, respectively,” wrote Galka.

Things don’t show any signs of slowing down. In San Francisco alone, prices have shot up more than 30% in the last 2 years. Now, Bravo has announced that they will begin airing a reality real estate program called ‘Million Dollar Listing’ featuring Bay Area properties as the star. 

Wednesday, July 1, 2015

Lack of Inventory Could Drive Home Prices Higher This Summer



A lack of houses for sale has had two main effects: it has reduced the selection of homes that consumers can choose from while making those that are available more expensive than they might otherwise be.

Higher prices have had some positive effect, helping homeowners regain some lost equity, but the lack of inventory has mostly been a negative, keeping down the number of home sales.
That now appears to be shifting as Realtor.com's Advance Read on June Trends finds inventories are rising. It says that could lead 2015 to be the best year for housing since the bubble-peak year of 2006.

Rising rates a factor

“Factors lending themselves to the market’s upswing are the psychological effect of recently increased mortgage rates as well as the specter of the Fed raising interest rates later this year, said Realtor.com chief economist Jonathan Smoke. “Although demand has been strong all year, in June we’re finally beginning to see an uptick in supply as sellers become more confident about home prices.”

But the rise in home prices may be slowing – which you might expect with rising inventories – and that could have the short-term effect of spurring sales.

"What we're seeing is the passing of the baton, as mortgage rates begin to rise and incomes and household formation rates increase – from a stimulus-driven housing market to one driven by fundamentals," said Dr. Stan Humphries, chief economist at Zillow, a competing real estate site. "This transition from housing recovery to a more normal market is a good thing in the long-term, but we can expect some bumps along the way. In the end, increasing household formation and stronger income growth should be able to overcome the headwind of rising mortgage rates and return markets to health."

First time buyers are back

Realtor.com says other demand drivers include an increase in the number of first time home buyers – many of whom are Millennials who previously had been held back by challenging market conditions.
Realtor.com carefully analyzes its site traffic to monitor consumer behavior and is able to break it down along demographic lines. In June, it added a survey and found 65% of older Millennials said they intend to purchase a home within 3 months – an increase of 12% compared to just 6 months ago.
Smoke says the National Association of Realtors' announcement this week, which stated that May's pending home sales hit a 9-year high, joins a growing collection of optimistic indicators.
“All show both demand and supply improving, foretelling further gains this summer,” Smoke predicted.

Hottest markets still in California

Some areas are experiencing this improvement faster than others. Three of Realtor.com's hottest June housing markets are in California – San Francisco, Vallejo-Fairfield and Santa Rosa – and its Top 20 list includes 5 other California metros But the list also includes Detroit at number 9, Billings, Mont., at 14 and Ft. Wayne, Ind., at 20. Nationally, the median list price increased to $233,000, up 7% year-over-year and 2% over May.  

Thursday, June 11, 2015

20 of the Hottest Real Estate Markets in the US



The housing market is chugging ahead, with even higher home prices and more buyer activity—and in May, we’re seeing more than the ordinary seasonal uptick.

“On the demand side, we are seeing traffic and searches on realtor.com® continue to set new highs,” said our chief economist, Jonathan Smoke, who did a preliminary analysis of our site’s data in May. Visits and searches are expected to be up more than 50% and 35%, respectively, year over year.
Helping create more opportunities for buyers, the listings inventory is now growing faster, at 4% over April—but it’s still down compared with last year, so buyers will need to keep on their toes. In part because of the limited inventory, the median list price increased nationally to $228,000, up 7% over the previous year and 1% over April. At the same time, homes are moving more quickly: Median days on market, now at 66, continued a sharp decline, down 11% year over year and 10% month over month.

Smoke’s team also ranked the nation’s 20 hottest real estate markets for buyers and sellers. Looking at the nation’s 300 largest markets, the team used the number of views per listing on realtor.com to gauge demand, and the median age of inventory to assess supply.

California dominated the list, with half of the country’s 20 hottest real estate markets, because of its tight supply of homes and economic-powered growth in demand. San Francisco and San Jose maintain the second and third spots from the April rankings, while the state capital, Sacramento, leaped from No. 21 in April to No. 12 in May.

“Sacramento typically follows strong growth in Silicon Valley and the San Francisco Bay Area, as it is a relatively more affordable alternative,” Smoke said. “But this market has had strong employment growth above the national average and is seeing strong household growth as a result.”
Three states pulled off a two-fer on the list: Texas, with No. 4 Dallas–Fort Worth and No. 16 Austin; Colorado, with No. 1 Denver and No. 13 Boulder; and Michigan, with No. 9 Ann Arbor and No. 10 Detroit. These markets’ success also reflects economic-powered gains, but the Texas and Colorado story is more of a continuing saga that shows the resilience and diversified nature of the states’ economies despite the declines in oil. Michigan’s performance is related to economic recovery and very strong affordability.
Denver resoundingly maintained the top ranking as inventory there shaved six days off the median age while listing views grew 7% over April. Like Dallas, Denver is experiencing substantial economic growth, and the tight supply of housing is resulting in the fastest-moving inventory in the country.

The 20 Hottest Real Estate Markets in May 2015

MarketMay RankApril Rank
Denver-Aurora-Lakewood, CO 1 1
San Francisco-Oakland-Hayward, CA 2 2
San Jose-Sunnyvale-Santa Clara, CA 3 3
Dallas-Fort Worth-Arlington, TX 4 4
Vallejo-Fairfield, CA 5 5
Boston-Cambridge-Newton, MA-NH 6 6
Santa Cruz-Watsonville, CA 7 8
Santa Rosa, CA 8 7
Ann Arbor, MI 9 9
Detroit-Warren-Dearborn, MI 10 11
San Diego-Carlsbad, CA 11 10
Sacramento-Roseville-Arden-Arcade, CA 12 21
Boulder, CO 13 17
Fargo, ND-MN 14 12
Los Angeles-Long Beach-Anaheim, CA 15 15
Austin-Round Rock, TX 16 14
Oxnard-Thousand Oaks-Ventura, CA 17 13
Manchester-Nashua, NH1831
Columbus, OH1922
Stockton-Lodi, CA2038

Tuesday, June 2, 2015

Rental Rates Outpace Home Appreciation



Buying a home is already far more affordable than renting one, and that imbalance could worsen as rents outpace home values for the first time in years.

In April, rents nationally rose an average of 4 percent compared to home values increasing by just 3 percent year-over-year, according to new data from Zillow.

One result: Renters who were considering buying are now taking that first step.
“We finally have more buyers who are serious now,” said Cyndi Mino, an agent with First Team Real Estate Agents in Huntington Beach, CA. “Landlords are raising rents ridiculously high, and people are saying, ‘That’s it — it’s time to buy.'”

In Mino’s area, first-time home buyers are finding 2-bedroom condos for $350,000 and 2-bedroom town homes for about $450,000.

Although millennials are expected to be the largest home-buying group in 2015, many first-time buyers are older, Mino said. “They never thought they would or could buy, but with rents going up, if they can save enough money to buy, they’ll pay less for a mortgage [than for rent].”
The last time this happened, it went on for a while — but the situation was considerably different.
In the wake of the housing bust, home values declined before rebounding. Rents, maintaining steady growth, easily stayed ahead.

That changed in April 2013, when home values finally heated up enough to pass rents. By April 2014, home values were sprinting at 8.8 percent year-over-year, while rent gains remained steady between 2 percent and 3 percent on an annual basis.
Now home values are cooling off, while rents pick up a little — and that’s enough for the tortoise to pass the hare.