This one-bedroom home in Berkeley at 1196 Cornell Ave. is on the market for $400,000.

Blanca Torres
Reporter- San Francisco Business Times

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For all the talk in recent years about more Bay Area residents steering toward a “car-free” lifestyle, it sure is hard to find a place to live that is affordable and pedestrian-friendly once you leave San Francisco’s city limits.

Emeryville-based ZipRealty Inc. ranked the most walkable cities with the most affordable homes near San Francisco and came up with a whopping four cities: Emeryville, downtown San Jose, Albany and Berkeley.

ZipRealty used data from WalkScore.com, which ranks locations with walkability scores of 0 to 100, to come up with its list.

“One of the allures of living in San Francisco is the city’s beautiful and convenient walkability, and that appeal is well-reflected in its lofty real estate prices,” said CEO and President Lanny Baker. “According to our partner Walk Score, San Francisco is the second-most walkable large city in the United States, behind New York City. In the local study we conducted, the most walkable and affordable communities were quite surprising alternatives to the high average price in San Francisco, which currently exceed $1 million.”

Here is a breakdown of the four cities with median home price and Walk Score:

1. Emeryville: $388,888 / 80.
2. Downtown San Jose: $508,450 / 74.
3. Albany: $622,500 / 86.
4. Berkeley: $786,256 / 95.

This list points out some interesting dynamics about Bay Area real estate. It appears living in a city where you can get around without a car will cost you a premium. San Francisco by nature is a dense, walkable city with amenities around the corner in most neighborhoods. In contrast, cities around San Francisco developed with the more suburban model of separating residential and commercial areas, making residents dependent on cars.

Emeryville is a compact, 1 square-mile sized city that has undergone a major transformation during the past few decades from an industrial wasteland to a city with thriving commercial and retail districts. Most of the housing there is either apartments or condos, as is the case with most of the homes for sale that fit ZipRealty’s criteria for affordable and walkable.

Having alternatives to driving is not just better for the environment and buyer’s pocketbooks, but has other benefits, said Josh Herst, CEO of Walk Score.

“The trend in urban areas is moving toward less dependency on cars and a greater commitment to live more sustainably,” Herst said. “People in walkable neighborhoods weigh six to 10 pounds less than those who don’t. Walk Score has also done extensive research showing that walkable places make people happier and healthier. Finally, short commutes reduce stress levels and give people more free time to be involved in their communities.”

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/08/top-bay-area-cities-where-you-can-buy.html?page=all

It is likely no coincidence that standards are easing as rates rise and mortgage applications fall. Total mortgage applications were down 47 percent last week from a year ago. Refinances, which had been the banks bread and butter during the housing crash, are down 59 percent from a year ago. Applications to purchase a home are up just 5 percent.

“People see interest rates rise, they slow down some of that eagerness to get into the market,” said David Stevens, CEO of the Mortgage Bankers Association in an interview on CNBC’s “Squawk Box.”

(Read more: Map: Tracking the US real estate recovery)

Credit standards tightened dramatically over the past several years, as loose credit was largely blamed for the crash in housing. Average borrower credit scores on new loans are dramatically higher today, and lenders require larger down payments.

Even the FHA, the government mortgage insurer, which was created to help lower creditworthy borrowers, has raised its standards as well as its insurance premiums. Many lenders have overlays to their guidelines that they add on top of standard conventional guidelines. They could do that because refinances were so high, they needed to slow the volume in order to process all the loans.

Article source: http://www.cnbc.com/id/100939328

The area median home price shoot up by 43 percent to $620,000 in the Bay Area during the past year, according to ZipRealty.

Blanca Torres
Reporter- San Francisco Business Times

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The Bay Area housing market is on fire — and we’re about to get burned.

The median home price in the Bay Area ballooned by 43 percent during the past year to $620,000 in June, up from $435,000 a year ago, according to ZipRealty, the Emeryville-based online brokerage.

The Bay Area leads the nation in year-over-year growth, followed by Sacramento with 41 percent, Los Angeles with 31 percent, Las Vegas with 30 percent and San Diego with 25 percent.

Meanwhile, the number of homes on the market in the Bay Area has dropped by 32 percent to 7,961 from 11,662 a year ago.

The fire burns brighter in particular parts of the Bay Area (like San Francisco, where the median price hit $1 million in April).

Still, that type of growth is phenomenal — and likely unsustainable. So, how long before prices level off?

The drop in inventory indicates that we’re in a supply constrained market, which could entice more sellers to put their homes on the market.

“After months of runaway prices and a near-desperate inventory situation, the Bay Area housing market is starting to replenish itself,” said ZipRealty CEO and President Lanny Baker. “Home owners across the region now see increased values, tight bid/offer spreads and lightning fast sales, and they’re reacting by putting more homes, and particularly more attractive homes, on the market once again. It’s a welcomed break in the trend even if it ultimately means prices start to cool off a bit too.”

But, what do rising home prices really mean?

I asked economist Christopher Thornberg of Beacon Economics, who is best known for rightly predicting the 2008 mortgage crisis (even though no one agreed with him).

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/blog/2013/07/bay-area-housing-prices-jump-43.html

“Rising interest rates and increasing cost of new supply will help keep that supply down and will allow us to continue to increase rates on our existing residents,” says Neithercut.

A subset of multi-family, the lesser-watched student housing sector, could also benefit, specifically the largest, American Campus Communities (ACC). Since it has so little competition, it benefits from a cheaper cost of capital.

(Read More: Map: Tracking the US Real Estate Recovery)

“We actually have a very favorable comparison in terms of yields. The development transactions that we’re undertaking typically are 7 to 7.25 yield, a nice spread to multi-family, so we tend to have more cushion in that regard,” says Bill Bayless, CEO of American Campus.

For the overall REIT space, however, analysts are questioning whether this is a long term cyclical change tied to improving gross domestic product. If so, sectors with shorter-term leases, like multi-family, self-storage and health care may fare better than office or industrial, which have longer-term leases.

Article source: http://www.cnbc.com/id/100793087

(Read More: US Pending Home Sales Tick Upward in March)

“In terms of our mix, less is going to Arizona and California today,” said Justin Chang a principal at Colony. “Our mix is increasing on east coast, Georgia, Florida, we’re active in Texas. I think over time some of the early markets will become a smaller part of our overall portfolio.”

Some investors are also starting to look at new construction, as home builders start to ramp up production again. The key is to find new product that is cheaper than replacement costs, which still is not that easy. So far investment has mostly gone only as far as distressed new homes, but as prices rise, that may change.

“On home building, there’s a lot of chatter about that. We are in some conversations with builders,” explained Chang, who admits the economics have not been compelling yet. “Over time you’ll see more and more of these transactions, and we may do one as well.”

Another potential strategy going forward is a consolidation, as investors turn away from distressed properties and focus on so-called “Mom and Pop” landlords, who may buy just one or two properties. There are an estimated 14 million single family rental homes owned by this cohort.

“If you think about all of the major institutions maybe owning 70,000 total homes compared to the market size of 14 million homes, the long term potential is enormous. Institutions are literally a fly on an elephant,” said Aaron Edelheit, CEO of The American Home, an Atlanta-based company that owns and manages about 2,500 homes. “We may look back and realize that the REO [real estate owned] to rental space was only the foundation for an exponentially larger industry with institutions owning hundreds of thousands, if not millions, of homes.”

(Read More: Next Boom? ‘Spec’ Homes Are Back)

There are 7.2 million more renters today than there were in 2004, and just 400,000 more homeowners, according to the U.S. Census.

Despite the recovery in home sales, the homeownership rate continues to fall, from an all-time high of 69.2 percent to 65 percent in the first quarter of 2013. As home prices rise and the employment picture improves, more people will come back to home ownership, and some of the new rental homes will inevitably be sold, but certainly not all of them.

“If you buy homes in areas with below-median income, I think the mortgage market is going to have harder time providing credit to these people, and it’s going to take longer for that to recover,” said Bloemker. “We think that these homes are more likely to be long term rentals, and those are likely to end up in the hands of institutional investors.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC
—CNBC’s Stephanie Dhue contributed to this story

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100700113

(Read More: The Million-Dollar Home Challenge)

Mid-Atlantic, a small Maryland builder with six communities, now has 10 percent of its backlog in spec homes, and they are not alone. The big public builders are heading back to spec as well.

“I think the biggest competitive advantage builders have right now is that they have product, and with existing inventory so low they need to take advantage of the fact that they actually have something to sell,” explained Megan McGrath, a home building analyst at MKM Partners. “When you’re starting to think about the first-time buyer coming back into the market, you may want to increase your spec inventory a little.”

(Read More: Housing “Stuck” Due to Short Supply)

Supplies of homes for sale are down across the nation. Inventory in March fell 17 percent from a year ago, according to the National Association of Realtors. Listings usually rise dramatically in the spring, but they have not kept pace with historical averages.

In its earnings release Monday Meritage Homes CEO Stephen J. Hilton noted, “Housing demand is greater than the supply of homes available for sale in many of the areas where we operate, causing home prices to increase.”

Article source: http://www.cnbc.com/id/100669083

(Read More: Housing “Stuck” Due to Short Supply)

“We are pricing our homes and limiting the number of lots we’re releasing for sale in some communities to better manage our order volumes relative to our production capacity, and to maximize our profit from those communities,” wrote Meritage CEO Steven J. Hilton in the company’s quarterly earnings release.

Meritage is not the only one, as limited supply of new and existing homes pushes prices higher across the nation. It may seem counterintuitive to stop building in such a scenario, but apparently it is making business sense.

(Read More: Housing Recovery to Face Test as Builders Report)

“Many builders are starting to limit production,” noted Megan McGrath of MKM Partners. “I think raising prices is one part of the equation, but I also think there is the issue of limited labor and finished lots at play.”

With the housing crash so deep and prolonged, the big builders may have been caught off guard by the swiftness of new housing demand. Few predicting the inventory shortfall, and it is still unclear how long that shortfall will last. Builders are in the business of selling homes, but they also need to be in the business of staying in business and delivering to shareholders. If slower production amid rising demand equals higher prices, then that may just be the new normal.

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100673946

April 22 (Bloomberg) — Redfin CEO Glenn Kelman discusses the madness in Bay Area real estate with Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

The recent tech boom in the Bay Area has also meant a boom in the real estate market, with a mad dash to buy homes.

Bloomberg TV talks with Redfin CEO about the area’s real estate market.

Article source: http://www.bizjournals.com/sanfrancisco/morning_call/2013/04/how-crazed-is-the-bay-areas-real.html

(Read More: The Million-Dollar Home Challenge)

Mid-Atlantic, a small Maryland builder with six communities, now has 10 percent of its backlog in spec homes, and they are not alone. The big public builders are heading back to spec as well.

“I think the biggest competitive advantage builders have right now is that they have product, and with existing inventory so low they need to take advantage of the fact that they actually have something to sell,” explained Megan McGrath, a home building analyst at MKM Partners. “When you’re starting to think about the first-time buyer coming back into the market, you may want to increase your spec inventory a little.”

(Read More: Housing “Stuck” Due to Short Supply)

Supplies of homes for sale are down across the nation. Inventory in March fell 17 percent from a year ago, according to the National Association of Realtors. Listings usually rise dramatically in the spring, but they have not kept pace with historical averages.

In its earnings release Monday Meritage Homes CEO Stephen J. Hilton noted, “Housing demand is greater than the supply of homes available for sale in many of the areas where we operate, causing home prices to increase.”

Article source: http://www.cnbc.com/id/100669083

Inventories are tightest on the low end of the market, where investors came in and bought most of the distressed properties and are now holding them as single-family rentals. There is about a four-month supply of homes priced under $100,000, while there is around a twelve-month supply of homes priced over $500,000. That’s why sales of those low-end homes are down 16 percent from a year ago, and sales of higher-end homes are up 25 percent, according to the Realtors.

(Read More: Housing’s Big Challenge: Student Debt)

“The housing shortage is going to continue,” claimed Yun, who says the builders need to ramp up housing starts by 50 percent. He admits that is unlikely to happen due to land, labor and supply constraints.

Weak supplies are pushing home prices up far faster than wage growth, which is keeping first-time buyers especially on the sidelines. These buyers made up just 30 percent of the market in March, compared to the historical norm of 40-45 percent. They just can’t compete with all cash investors.

(Read More: Why Housing Affordability Is at Risk)

But if prices get too high, investors could leave the market. Their share was already down in March to 19 percent compared to 22 percent just one month ago. The danger is that they will start to unload the homes they own, which would bring much-needed supply back but which could also turn home prices in the other direction.

Article source: http://www.cnbc.com/id/100660999