Wednesday, December 30, 2015

Experts Revel 2016 Real Estate Predictions

As real estate-minded people, we’re always trying to predict the future. No one wants to buy at the height of the market, and everyone is scared the rates are going to rise. The more people you ask, and the more research you do, the more opinions you’ll hear. So, what are the real trends in the market, and what does that mean for us as buyers, sellers, investors, etc?
First, most experts will agree that extremely hot markets like NYC, San Francisco and Southern California will begin to cool down. These very expensive markets saw less of a hit in the recession and therefore rebounded much quicker. The sales will likely slow in these markets, which could possibly lead to increased inventory, or at least a slower rate of price increases.
Next, if people are starting to buy less in these hot markets, it would make sense that they are putting their money elsewhere. It seems as though more buyers are moving from the northeast and west coast and heading south. Markets in Texas, Florida and the Mid-Atlantic are all seeing more houses sell, and they are selling at a faster rate.
This third trend is a bit surprising, but a very good sign for overall population and density growth in our major metro areas. This is the trend of people living in more multi family/condo units, work-live spaces and amenity-rich suburbs. What was once the majority of home buyers frowned upon is now a very common trend in cities across the country. With such pull toward these hot markets, more and more people are moving into less and less space. Engineering and technology advances have led to innovative new building and neighborhood designs. The benefits of living in these kinds of areas are really starting to outweigh the possible negatives.
Now, let’s look at the age groups buying. Last year, only 25% of home buyers were classified as Generation X, or ages from 35-49. We should start to see more of this group entering the housing market. Millennials (those aged 34 and younger), made up about 32% of recent home purchases. They may be getting ready to trade up to a bigger house, as their starter condos/houses aren’t large enough for their new families. On the other hand, baby boomers will likely continue to downsize, selling big houses and moving into small housing developments and condos.
Four major trends that seem to summarize what most experts believe to be true. Interest rates will increase, but this small increase will only help stabilize the different markets, as seen in trends one and two, listed above. We are not in a bubble, people will continue to buy and prices will continue to increase slowly for the next few years. We are at a good time in real estate and should continue to see it improve. Just remember, you can make a good investment in any market trend - you make money on the purchase, not on the future predictions!

Thursday, December 17, 2015

Commercial Real Estate Market Activity Shows Signs Of Slowing In Q3, LLC, the nation's leading online real estate marketplace, today released its Q3 2015 Commercial Real Estate (CRE) Market Monitor™, which reveals that CRE market activity is continuing to show signs of slowing and stabilizing after several years of run-up and appreciation. Total transaction volume across the five major CRE sectors dipped 6.5 percent on a quarter-over-quarter basis, sitting just 2.6 percent higher than one year ago — down from 24 percent higher in Q2. The slowdown in deal volume occurred amid the patch of U.S. economic softness in late summer, though the overall capital markets climate remains bullish. Cap rates continued to tighten and prices across all sectors maintained their ascent.

"A drop in sales volume back in Q2 signaled an unexpected shift in the CRE market after a very strong first quarter, and now we're seeing actual proof of a slowdown," said Chief Economist Peter Muoio. "While all of the major sectors are still performing better than a year ago, CRE as a whole is feeling the pinch from recent shifts in the U.S. economy. Paced by a promising hotel sector, however, CRE pricing still remains on the uptick, even though that sector's price growth has decelerated over the past quarter and could cool in the immediate future."

Office and apartment transaction volume increased in Q3 as a share of the five sector total relative to the second quarter. While apartment deal volume climbed and pushed the sector's quarterly share 440 bps higher than its 10-year average, office volume was only slightly trailing its 10-year average. Retail and industrial shares of volume did not significantly deviate from historical trends, though the hotel sector saw a pronounced pullback in activity. That sector's share of total five sector deal volume shrank from at least 11 percent in each of the last two quarters to just 7.1 percent in Q3.

Sunday, December 13, 2015

Top 5 Real Estate Trends for 2016

The year is about to end but what do investors have to say about next year's real estate market? Nela Richardson, chief economist for Redfin, a national real estate brokerage firm, said that a rate increase won't be likely.

"Buyers now don't seem to be all that spurred or driven by a rate increase," Richardson said. "That lack of urgency will translate into next year's housing market. There's interest, but there's not a lot of inventory to buy," an article from US News reported.

"Buyers now don't seem to be all that spurred or driven by a rate increase," Richardson said. "That lack of urgency will translate into next year's housing market. There's interest, but there's not a lot of inventory to buy," an article from US News reported.
After that revelation, these top 5 real estate trends should be expected:
1.       Slowing coastal markets -- Ralph McLaughlin, housing economist at Trulla said that areas where the priciest homes are located (West Coast and Northeast areas) will see signs of slowing compared to the previous year. It is very noticeable in real estate markets in San Francisco, San Jose, Southern California and in the Northeast.

2.       Booming market areas in the South -- McLaughlin further speculated that areas like the metros of Winston-Sale and North Carolina will spark as buyers migrate to the south. Baby boomers and young investors will choose the south to escape the cold.

3.       Increase in suburban properties -- Svenja Gudell, chief economist from Zillow hinted that amenity-rich suburbs are more preferred than densely populated cities. Future homeowners are looking for better amenities such as easy access to commercial establishments, supermarkets, dry cleaners and other conveniences of suburban living.

4.       Increase in older first-time buyers -- people with growing families will now consider buying their own homes and those that are not too affected by the labor downturn may now think of buying next year. Millennials or those 34 and younger make up 32 perfect of the overall generational home buying trends from the National Association of Realtors.
5.       Increase in trade ups from millennials -- those that already own homes, condos or apartments may be thinking of trading up for a more spacious home to start their own families. But inventories may be reduced in most markets since other types of homeowners are looking for trade ups as well.



Friday, November 20, 2015

Bay Area Real Estate Showing Similarity to 2000 Dot-Com Bust

Surging rents, skyrocketing real-estate prices and booming tech companies. Sounds like San Francisco in 2015, right? It also describes the city just before the tech bust of 2000, according to a recent report.

John Burns Real Estate Consulting of Irvine, Calif., and Pacific Union, a San Francisco real-estate brokerage, say that based on the appreciation (and apparent correlation) of venture capital deals and rent prices, the rise in the Bay Area’s rapid real estate and rent price appreciation today is looking more like a repeat of the dot-com bust of 2000.

“The San Francisco Bay Area is on our watch list for a correction,” said John Burns, his company’s chief executive, in an interview. He said that while San Francisco has become a permanently more expensive place to live and should be one of the most expensive places to live in the world because of its status as the center of the high-tech and Internet economy, the recent increases in home prices and rents have been fueled mainly by speculation.

“Affluent older buyers, often for investment reasons, have identified San Francisco as a place they want to own or live and have driven up prices dramatically,” he said. About a third of all-cash buyers in the Bay Area are purchasing property only as an investment, he said. 

In the City of San Francisco, the median value of homes has skyrocketed, from $670,000 in the beginning of 2012 to $1.1 million this month, a gain of more than 67%, and a gain of 15% in the past year alone, according to

But to gauge when such a correction might occur, you need to look to venture capital deals — and rent prices, he said.

Burns and Pacific Union noted that the size of the average venture capital (VC) deal rose from $4.9 million in 1997 to $17 million in 2000, a 243% increase. At the same time, apartment rents in San Francisco and San Jose increased by 52% and 60%, respectively.

Burns also noted that in the three years that followed — as VC funding collapsed during the 2001 recession and the turmoil that followed the September 11 attacks — rents fell in with the decline in VC funding, which plunged from an average of $16 million per VC deal in 2001 to just over $7 million by 2004, a decline of over 50%.

During the same time frame, average rents in San Francisco plunged from about $2,300 a month in mid-2001 to about $1,600 by 2004, a decline of about 30%, according to data compiled by Burns’ group from PricewaterhouseCoopers, Axiometrics Inc. and Thomson/Reuters.
Rents in San Jose fell even further, from a similar average of $2,300 a month to $1,400 a month, or a decline of about 39%, Burns’ research showed. 

The current tech sector upswing in the Bay Area is presenting a similar relationship between VC funding and apartment rents, said Burns.

In 2010, the average VC deal in the Bay Area was $6.9 million, but had risen to $23.5 million in 2015, a 240% increase, Burns says.

At the same time, just like in the 1997 to 2000 period, average monthly rent for apartments in San Francisco and San Jose have shot up. In San Francisco, average rents have soared from about $1,900 a month back in 2010 to more than $3,200 today, a gain of 68%. In San Jose, the average rent in 2010 was about $1,600 a month. Now it’s $2,800, a gain of 75%.
“Rents in San Francisco and San Jose have respectively eclipsed prior dot-com bubble peaks,” Burns said. “We think another decline this time around is inevitable.” 

Monday, November 16, 2015

3 New Design Trends for Real Estate in 2016!

If you’re a real estate junkie like I am, then you love to watch real estate shows. Love It or List ItHouse HuntersMillion Dollar Listing New York. These are some of my favorites.
Because of my fondness for these shows—and because I recently bought and sold two houses—I can rattle off popular real estate terms. I’m thinking specifically of en suite, chef’s kitchen and open concept, which has people knocking down walls left and right.

While many of these terms continue to be used in real estate lingo, a recent survey unveiled some new terms we should probably get used to hearing. They are the top 3 hot real estate trends, based on real people’s preferences and what they want in a house they’re buying. These trends are described as “Inviting,” “Rustic” and “Beachside Charm.” Here’s how they come to life:

The Inviting living space is described as a welcoming atmosphere that includes fun barware, plenty of seating and a gather-worthy kitchen (can you say open concept?) that can serve as the life of the party.

Those who prefer a Rustic look want natural elements in their homes. These include wood, stone, water and light. Designers say that this style takes traditionally organic materials from the outside and brings them inside to achieve perfect balance.

You don’t have to live anywhere near the water to capture Beachside Charm. It is described as relaxed, casual, airy and breezy. This design incorporates terracotta tile, patio umbrellas, sundecks and scattered shells to make homeowners and others feel like they are miles away from the hustle and bustle of life’s daily pressures.
I’m not sure which of these trends I like the best. What I do know, though, is this: when people come to visit, I want my home to make them feel comfortable and relaxed.

Tuesday, November 3, 2015

California Home Price to Increase 4.7% in 2016

CoreLogic® a leading global property information, analytics and data-enabled services provider, today released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ data for September 2015 which shows home prices are up both year over year and month over month.

According to the CoreLogic HPI, home prices nationwide, including distressed* sales, increased by 6.4 percent in September 2015 compared with September 2014 and increased by 0.6 percent in September 2015 compared with August 2015.**

The CoreLogic HPI Forecast indicates that home prices are projected to increase by 4.7*** percent on a year-over-year basis from September 2015 to September 2016, but could potentially dip slightly month over month from September 2015 to October 2015. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“After nearly 10 years of very high home price volatility, home price increases have been remarkably stable for the last 15 months, ranging between a 4.8 percent and 6.5 percent year-over-year increase,” said Sam Khater, deputy chief economist for CoreLogic. “Home price volatility is now back to the long-term trend prior to the boom and bust which is a good barometer of the market’s stability and health.”

“The continued growth in home prices is welcome news for many homeowners but more markets are becoming overvalued. In the near term, this trend is likely to continue and pose evaluated risks to the housing economy,” said Anand Nallathambi, president and CEO of CoreLogic. “More has to be done to expand inventories if we are going to address the emerging affordability crisis, especially in hot markets like California and Colorado.”

Sunday, October 18, 2015

5 Trends That Will Keep Real Estate Growing in 2016

A report about the real estate trends for 2016 has been released by Pricewaterhouse Coopers and the Urban Land Institute on Wednesday.
According, commercial real estate will soon be dominated by small- scale building firms as companies with less than 50 employees surpass the growth of large- scale construction firms.
Mitch Roschelle, a partner at PwC, said "The real estate industry's traditional focus on big cities and large employers is shifting significantly as small businesses emerge as the growth engine for the U.S. economy. This is creating disruption in the office sector as it finds ways to create new space models to accommodate these employers."
The trend report is the result of varius interviews and surveys with different real estate professionals and firms. Below are some of the top real estate trend for 2016 according to Pricewaterhouse Coopers and the Urban Land Institute's report.
1.       Real estate industry will see success in "18- hour cities"
-          "18- hour cities" are the place known as secondary market. Several reports have shown that these secondary market are starting to gain momentum as real estate investors are turning their gazes to these markets. These market entice investors for it can offer the same urban amenities a company requires but for a cheaper price. These secondary markets are San Antonio, Denver, Austin and the like.
2.       Office sector will continue to grow
-          As the number of employees grow, so as the office buildings needed to house the business. Also, expansion of companies from different industries open an opportunity for real estate investors selling or leasing office spaces to gain more profit. Laos, redesigning office spaces is becoming part of the company's way of introducing their brand resulting to renovations and acquiring new spaces to better suit their business.
3.       Suburban properties are making a comeback
-          For years, acquiring properties or investing in suburbs has been feared by the investors as lack of market might kill off their business. However, recent reports showed that millennials are starting to look into living in suburbs to take a major life step of having a family. Developers are now looking into offer features that will both benefit the urban and suburban areas of a certain town. This includes mixed used properties and transit- oriented real estates.
4.       Food production in urban areas
-          People in cities are starting to look into having access to fresh food which made the use of urban property to produce food has becoming a trend nowadays. One example of this is the three hydroponic operations in Brooklyn and Queens that produce more than 300 tons of vegetables. The report also said "Just as the reinvention of the suburbs is an emergent story for the decade ahead, so is the creative adaptation of inner-city uses."
The report also detailed other trend that might be a trend though some of it are still going through extensive observation and research to fully identify if these trends are going to change the face of real estate industry.

Friday, October 9, 2015

Shortage of Inventory Will Keep California Home Prices Rising in 2016

California’s housing market is expected to improve in 2016, but a shortage of available inventory and continuing high costs are expected to limit the improvement, according to a report released Thursday by the California Association of Realtors.
According to CAR's 2016 California Housing Market Forecast, existing home sales are expected to rise in 2016 by 6.3% over 2015’s expected total.
Additionally, existing home sales are expected to hit 407,500 in 2015, which would also represent a 6.3% increase over 2014, when there were 383,300 existing home sales.
CAR’s forecast calls for existing home sales to rise to 433,000 in 2016.
The state’s rising prices are predicted to hold back home sales slightly. The California median home price is projected to increase 3.2% to $491,300 in 2016, following a projected 6.5% increase in 2015 to $476,300.
Despite those increasing prices, 2016 is still estimated to have the slowest rate of price appreciation in five years.
CAR’s forecast projects growth in the U.S. gross domestic product of 2.7% in 2016, after a projected gain of 2.4% in 2015.
With projected nonfarm job growth of 2.3% in California in 2016, the state’s unemployment rate should decrease to 5.5% in 2016 from 6.3% in 2015 and 7.5% in 2014, the CAR forecast said.
Additionally, the CAR forecast projects the average interest rate for the 30-year, fixed mortgage will climb only slightly to 4.5%, but should still remain at historically low levels.
With a statewide market as diverse as California, some areas will see the effects of those changes more than others, according to CAR President Chris Kutzkey.
“Solid job growth and favorable interest rates will drive a strong demand for housing next year,” Kutzkey said.
“However, in regions where inventory is tight, such as the San Francisco Bay Area, sales growth could be limited by stiff market competition and diminishing housing affordability,” Kutzkey continued. “On the other hand, demand in less expensive areas such as Solano County, the Central Valley, and Riverside/San Bernardino areas will remain strong thanks to solid job growth in warehousing, transportation, logistics, and manufacturing in these areas.”
CAR Vice President and Chief Economist Leslie Appleton-Young said that there may be a shift in sales to more inland areas of the state in 2016.
“The foundation for California’s housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth,” Appleton-Young said.
“However, the global economic slowdown, financial market volatility, and the anticipation of higher interest rates are some of the challenges that may have an adverse impact on the market’s momentum next year,” Appleton-Young added. “Additionally, as we see more sales shift to inland regions of the state, the change in mix of sales will keep increases in the statewide median price tempered.”

Friday, September 25, 2015

San Francisco Rents Hit Another Milestone Peak

San Francisco metro area residents paid record median rent in August, but there was a glimmer of good news: the pace of year-over year rent increases rose at the slowest pace since June 2014, Zillow said Tuesday.

The Zillow Rent Index for the San Francisco metro area stood at $3,313 in August, up 13.3 percent from August 2014.

That put San Francisco in second place nationally for highest median rent — surpassed only by the San Jose metro area, which had a Zillow Rent Index of $3,401 in August, up 9.5 percent from August 2014.

The San Jose area's 9.5 percent year-over-year increase in August median rent marked the first month the Silicon Valley metro area's year-over-year increase in median rent was below 10 percent since April 2014, according to Zillow data.

The Zillow Rent Index is the median rental value of all the rent zestimates in an area.
The Bay Area's slowing pace of rent increases reflects a national trend, which the Associated Press covered.

Zumper, a venture-backed startup focused on creating a more efficient apartment rental market, says the level of venture capital pouring into the region is a key factor in San Francisco's high rents.
Zumper pins one-third of San Francisco's rents on venture capital financings in the region.

"At the end of the day, we had an adjusted R-squared correlation of 0.83 for venture capital investment. It's very strong," Devin O'Brien, head of Zumper marketing told TechCrunch.
That will come as little surprise to those who managed not to sleep through their Econ 101 class. Housing costs have a strong correlation, if not the strongest, to job creation.
What's one of the first things entrepreneurs do when they get venture funding? Hire.

Wednesday, September 16, 2015

Hot Bay Area Housing Market Shows First Sign Of Cooling

Zillow's latest figures show that the nation's housing market is cooling off, even the white-hot Bay Area. The national housing market is slowing down, with home values showing the first monthly drop since the market began recovering four years ago, according to the real estate data company's report for July.

San Francisco, San Jose, Denver and Dallas are still tallying double-digit year-over-year home value increases, but even those hot markets are seeing a pullback in their pace of appreciation from June, Zillow said.

In San Francisco, July's Zillow Home Value Index stood at $756,100, up 0.6 percent from June and 11 percent higher from July 2014. In San Jose, July's Zillow Home Value Index was $891,500, up 0.7 percent from June and 11.5 percent from July 2014.

"This slip in home values is a sign of the times. Many people didn't think it was happening, but it is: we're going negative," Zillow Chief Economist Svenja Gudell said in speaking of the national housing market. "We've been expecting to see a monthly decline as markets return to normal.

"The market is leveling off, and it's good news, particularly for buyers, because it will ease some of the competitive pressure," Gudell said. (Note to loyal followers of Zillow's number-crunching: Gudell's predecessor Stan Humphries was promoted to chief analytics officer for Zillow Group.)
Zillow (NASDAQ: Z) expects that the pullback in June-to-July valuations in several cities, including Cincinnati and Washington, D.C., will spur home owners, who have been sitting on the fence pondering whether to sell, to finally put their homes on the market. That would help ease a shortage of available homes for sale that buyers have confronted over the last several months.

But the slower rise in appreciation, if not outright depreciation, will likely come as a shock to Bay Area home owners accustomed to robust growth in home values. Still, the key to home values will continue to be the pace of job growth.

Zillow says falling valuations and more homes on the market may spur renters to buy, especially given the dramatic increases in rents. San Francisco area rents jumped 14.1 percent to $3,285, according to the latest figures from Zillow. The company found that Bay Area rents can be quite painful, literally, as tenants skip doctor and dentist visits so they can pay the landlord

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 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%.