Bay Area Remains Most Expensive Real Estate Market in US

The success of the technology industry and desirable location are continuing to influence home listing prices in the San Francisco Bay Area, elevating it to one of the priciest real estate markets in the country. Today, the Home Listing Report (HLR) revealing several of the country's most expensive real estate markets are in Northern California. Google, Apple, Facebook and Stanford University are all located within 15 minutes of this year's most expensive market, Los Altos, Calif.,where the average listing price of a four-bedroom, two-bathroom home is 1,706,688.

"The success of many of our native tech companies has shined aspotlight on Silicon Valley and our real estate market in the SanFrancisco Bay Area," said Rick Turley, president of Coldwell Banker Residential Brokerage in the San Francisco Bay Area. "Listing pricesin our market are a product of ongoing high demand, projectedpopulation growth and the low inventory levels of homes in what is one of the most desirable locations to live."

In contrast, the most affordable market this year is Redford, Mich.,where a similar home, four-bedrooms, two-bathrooms, is listed at $60,490 -- a listing price difference of more than 1.6 million. Infact, 28 homes can be purchased in Redford for the price of a similarhome in Los Altos.

Overall, the report found the average listing price of afour-bedroom, two-bathroom home in the U.S. to be 292,152. Affordability remains strong in many markets across the country as 36 percent of the markets analyzed by the report had an average homelisting price of less than 200,000 for four-bedroom, two-bathroom homes.

About America's Most Expensive Markets:

The five most expensive markets are all in California, with four inthe San Francisco Bay Area. Los Altos, Calif. tops the list, followedby Newport Beach (1,658,000), Saratoga (1,582,434), Menlo Park(1,506,909) and Palo Alto (1,495,364). But even with these highpriced markets, California was not the most expensive state. Theaverage listing price of a four-bedroom, two-bathroom home inCalifornia (431,625) is less than both Hawaii (742,551) and Massachusetts (489,063).

Positive Real Estate Trend Continues: Sales, Prices, Confidence Up

The latest real estate market trends show continued improvement with an increase in existing home sales and prices, and rising confidence among home builders, according to industry data released today.

Existing home sales rose 2.1 percent in October, while median home prices posted a year-over-year gain of 11.1 percent, according to a report released today by the National Association of Realtors (NAR). Builder confidence rose for the seventh straight month to a high last seen in May 2006, according to the Housing Market Index released today by the National Association of Home Builders or NAHB.

Total existing home sales sold at a seasonally adjusted annual rate of 4.79 million in October, up from 4.69 million in September, despite the regional impact from Hurricane Sandy on real estate market trends, according to the NAR. October sales are 10.9 percent higher than the 4.32 million pace for October 2011.
“We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions,” Lawrence Yun, NAR chief economist, said in a statement.

The national median existing home price for all housing types, including single-family homes, townhomes, condominiums and co-ops, was $178,600 in October, the eighth consecutive month of annual increases.
“Rising home prices have already resulted in a $760 billion growth in home equity during the past year,” Yun said. “Given that each percentage point of prices appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year.”

Confidence among home builders rose 5 points to 46 on the NAHB Housing Market Index. “While our confidence gauge has yet to breach the 50 mark – at which point an equal number of builders view sales conditions as good versus poor – we have certainly made substantial progress since this time last year, when the HMI stood at 19,” the association’s chief economist, David Crowe, said in a statement.

The index tracks home builders’ perception of sale, sales expectations and traffic of prospective buyers. Builders’ reported an 8-point improvement to 49 in their view of current sales conditions, while the outlook for sales over the next six months rose 2 points to 53. Perceptions of traffic remained at 35 from the previous month.

California Home Sales Hits 3 Year High

California's real estate market bucked the typical fall slowdown last month, with buyers snapping up pricier homes and sales roaring up 18% over the prior month. Sales hit a three-year high for an October, rising 25% from the same month last year. The median sale price for a Southern California  home last month was $315,000, equal to September and up 17% from October 2011, according to real estate research firm DataQuick.

A decline in the number of foreclosed homes has caused a shortage of inventory in entry-level neighborhoods, pushing up home prices. Demand from investors also remains strong, with these buyers snapping up a near-record level of homes last month.

The rebound stems from more people chasing fewer homes. Interest rates remain near record-low levels, luring buyers. Investors with cash have poured into the market looking for cheap properties to flip or rent. And foreclosure resales have sunk to a five-year low, tightening the supply of cheap homes.

An estimated 21,075 newly built and previously owned houses and condominiums sold throughout the region last month. Coastal markets saw the biggest increases in sales — though every county posted double-digit gains compared with October last year. Orange County saw the biggest surge, with sales up 41%. Ventura rose 35%, San Diego, 31%, Los Angeles, 25%, San Bernardino, 18% and Riverside 13%.

Absentee buyers — investors and some second-home buyers — snapped up a near-record 28% of homes throughout the Southland last month. These investors paid a median $245,000, a 23% increase from October last year.

A recent report by real estate website Zillow showed that many investors and others are paying market value for foreclosed homes in the region, erasing the discount between foreclosed homes and regular properties. Discounts were marginal on bank-owned homes in September, with the discount in the Inland Empire just 2% and in the Los Angeles area 4% in September, Zillow said.

Bruce Norris, president of Norris Group, an investment company in Riverside that buys foreclosed homes, said he expects prices to increase in coming years as the Obama administration has encouraged banks to curtail foreclosures. That will push up prices, he said.

"It is policy driven," Norris said. "Since the policy is going to continue … you are about to see a pretty substantial price increase within the next two years." Indeed, the high level of affordability ushered in by the housing crash could erode quickly in California. This week the California Assn. of Realtors reported that homes in the state are getting less affordable as property values rise. The group estimated that 49% of home buyers in the third quarter could afford a median-priced house in California, a decline from 51% last quarter. The rise in prices is offsetting the benefit to home shoppers from low mortgage interest rates.

Christopher Thornberg, a principal at Beacon Economics and one of the first to call attention to the housing bubble, said home shoppers should expect expensive housing in the Golden State for the foreseeable future. The reason: Construction of new homes remains highly expensive for builders.
"Why would it stop?" he said. "The economy is growing. Short of a fiscally led second recession, there is no reason in the world that it's going to do anything but to continue."

The region's lowest-cost areas — often those the most starved for inventory these days — posted the weakest sales numbers last month, according to DataQuick. The number of homes that sold below $200,000 in the region dropped 11% from October last year. Sales in these markets have slowed because of the drop in foreclosures, while increased demand has pushed up prices.

Sales of previously foreclosed-upon homes made up just 16% of the resale market last month, a drop from 17% last month and 33% in October 2011. Foreclosure resales peaked at 57% in February 2009.
In the meantime, sales surged in several mid- and higher-cost neighborhoods throughout Southern California in October, DataQuick said. Sales of homes between $300,000 and $800,000 increased 42% year over year. Sales of homes costing more than $500,000 were up 55% and sales of homes more than $800,000 rose 52%.

Bill McBride, lead writer for the housing blog Calculated Risk, said that with the upswing in prices homeowners are encouraged to keep their homes off the market. "Why is there no inventory? I ask every real estate agent that, just to hear what they tell me. And they say people don't have enough equity in their homes and so they aren't listing them," McBride said. "That is a solid argument. But I also think the people are sensing that prices are going up and there is no urgency to sell."

Limited Inventory Challenges Homebuyers in 2012

The 2012 annual housing market study by the California Association of Realtors is pointing out what listing agents and brokers have been claiming for many months: Properties are getting multiple offers — especially those priced in the affordable echelon, the C.A.R. report says. Homes are also selling twice as fast as they did in 2011.


Fifty-seven percent of home sales received multiple offers, representing the highest percentage in the last 12 years.

Each home landed 4.2 offers, up from 3.5 in 2011. Lower priced homes, think REO (real-estate owned) or short sales, drew more offers than straight-up sales. Seven out of 10 REOs and short sales attracted multiple offers; equity sales, more than one.
Here are some additional nuggets from the report:

• Fourty-one percent of the homes sold without a markdown.
• Equity homes sold faster in 2012 by 35 days. Average days to ink a sale, 32. Last year, it took 67 days to sell a home with equity.
• REO sales took 30 days, shaving 20 days from the average in 2011.
• Short sales remain a tough nut to crack: The average sale took 90 days, but is down from 141 days in 2011.
• Thirty percent of all home buyers paid with all-cash; in 2001, that buy-pool represented only 9 percent.

The C.A.R. survey, a tradition since 1981, is based on random mailings to 15,000 Realtors across California. Realtors were asked to provide information on the most recent sale to close escrow in the second quarter of 2012.