Home News Bay Area Housing: Santa Rosa House Prices Continue to Rise, Along With Demand

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By Brandon Cornett | Housing Market News
August 5, 2013 | © 2013, All rights reserved

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By Brandon Cornett | August 5, 2013 | 2013, All rights reserved

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If Zillow’s Home Value Index (ZHVI) is any indication, the Santa Rosa real estate market is undergoing a major transformation right now. The ZHVI for Santa Rosa increased by 24.6% over the last year or so.

Granted, the ZHVI is not an exact science. But it does give us some insight into which way the market is moving. And the Santa Rosa housing market is clearly headed north, where home prices are concerned. The same could be said for the entire San Francisco Bay Area.

The median sale price is arguably a better indicator, because it’s based on actual sales prices. Here again, the trend is undeniable. According to Zillow, the median price paid for homes in Santa Rosa has risen by more than 27% in the last year or so. The median list price climbed by 21.7% during the same period.

Data from Trulia, another real estate information website, confirms this trend. Trulia’s numbers show a 28% increase in Santa Rosa’s median sale price over the last year, closely matching Zillow’s figures.

These are tremendous gains, and they mirror the broader trends we are seeing across the San Francisco Bay Area housing market. All across the nine-county Bay Area, home prices are surging in response to inventory shortage and growing demand. It’s good news for homeowners. But it presents certain challenges for home buyers.

Bay Area Housing Market En Fuego

The entire Bay Area real estate market is on fire right now – for better or worse. Consider the evidence. According to DataQuick, a San Diego-based company that tracks housing trends in key cities across the country, the region’s median sale price rose at its fastest pace ever in June 2013.

The largest gain occurred in Alameda County, where the median rose by a whopping 44% over the last year. Sonoma County’s median sale price rose by 29.8% during the same 12-month period.

Granted, home prices in the Santa Rosa real estate market (and elsewhere across the Bay Area) are still well below their pre-crisis peaks. This is partly why we are seeing such big gains right now.

According to DataQuick president John Walsh: “It’s easier for a market to regain lost ground than to push into new territory. We’re still bouncing off the bottom.”

Santa Rosa Real Estate Trends Good for Sellers

This is all good news for Santa Rosa area homeowners, particularly those who lost a significant amount of equity during the housing downturn. While home prices are still well below their pre-crisis peaks, they are gaining ground quickly.

This could be a game changer for homeowners who were unable to sell or refinance their homes in the past, due to their negative or low-equity situations. Property values in the area will likely continue to rise for some time, further empowering homeowners by restoring lost equity.

But the news is not so good for home buyers. The real estate market in Santa Rosa, California has become increasingly competitive. Housing demand has increased on the heels of economic improvement, but inventory levels have fallen over the last year. This means there are more buyers competing for fewer properties. This is what we’re seeing across the entire Bay Area housing market right now.

“There’s a slew of buyers, and there’s nothing for them out there,” said Santa Rosa real estate agent Mike Kelly, when speaking to the Press Democrat recently.

At the same time, rising prices will create affordability issues for many would-be buyers.

The Santa Rosa housing market is emblematic of what is happening across the entire San Francisco Bay Area. Declining inventories, along with the release of pent-up demand, are driving prices north with surprising speed. It’s not a question of if home prices will continue rising through the end of 2013. The question is, by how much.

Disclaimer: This story contains forward-looking statements about the Bay Area real estate market in general, and Santa Rosa in particular. These statements represent an educated guess made by the author. They should not be viewed as facts or financial advice. We make no guarantees about the future of home prices or other housing trends.

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Article source: http://www.homebuyinginstitute.com/news/santa-rosa-prices-rise-437/

Home News Case-Shiller: San Francisco Home Prices Rose Again in March, Climbing 22% YOY

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By Brandon Cornett | Housing Market News
June 14, 2013 | © 2013, All rights reserved

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By Brandon Cornett | June 14, 2013 | 2013, All rights reserved

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The housing market in San Francisco continues to be a standout, where prices are concerned. According to the latest release of the SP/Case-Shiller Home Price Index, house values in San Francisco rose 3.9% from February to March of this year. Prices have risen by a whopping 22% annually, when measured from March 2012 to March 2013. There is a two-month reporting lag with the Case-Shiller index, which is published on the last Tuesday of every month.

The chart below shows the 20 cities that make up the Case-Shiller 20-city composite. As you can see, the San Francisco real estate market experienced the second-largest annual gain in home prices, slightly behind Phoenix, Ariz.

San Francisco had the largest monthly gain of any metro in the 20-city index, and one of the largest monthly returns in the country. According to the Case-Shiller index, San Francisco property prices rose by 3.9% from February to March.

The Bay Area real estate market continues to rise a wave of recovery that has spread across the entire state. In the chart above, you’ll also notice strong annual returns for San Diego and Los Angeles. These returns are indicative of the positive housing trends throughout California.

In San Francisco’s real estate market, as in other metros across the Sunshine State, housing inventories have plummeted. According to Realtor.com’s monthly housing summary, the total number of homes listed for sale in San Francisco has dropped by 31.22% over the last year. This trend is being seen in other California cities as well, and often to a larger degree. Listing inventory is down 52% in Orange County, 46% in Oakland, and 45% in San Jose.

These are unprecedented statistics. Imagine half of a local real estate market disappearing in a single year. It’s no wonder home buyers are having trouble finding properties in these markets. The supply-and-demand picture has shifted considerably over the last couple of years, and it’s sending prices north. In short, more buyers are vying for fewer properties.

The median list price within the San Francisco housing market has climbed by more than 20% over the last year, according to Realtor.com.

According to DataQuick, a San Diego-based company that provides real estate market data, the median sale price in the nine-county Bay Area reached $519,000 in May. That was an increase of 1.8% from the previous month and 29.8% from the same time last year. The median for San Francisco County climbed to $870,000 last month — the highest of any county in the Bay Area.

Within the city proper, the median sale price is a cool million. According to the real estate firm Redfin, sellers within the city are getting 112% of their asking prices, on average. Clearly, it’s a good time to be selling a home within the San Francisco real estate market.

Home sales have slowed over the last year. In May 2012, a total of 8,899 sales were recorded across the Bay Area. Last month, 8,541 sales were recorded, 4% fewer than the same time last year. In San Francisco County, home sales have declined by 14% over the last year. But this is certainly not due to a lack of demand. It’s from a lack of inventory. If every buyer who wanted to buy a home in the Bay Area could actually find one, sales would probably be 20% to 30% higher this year.

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Article source: http://www.homebuyinginstitute.com/news/case-shiller-san-francisco-409/

Home News The Top 7 San Francisco Housing Trends in 2013

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By Brandon Cornett | January 31, 2013
© 2013, All rights reserved

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Haight-Ashbury district. Photo by Philippe Teuwen.

The housing recovery continues to sweep across California. In major cities like Los Angeles, San Francisco and San Diego, inventories are returning to healthy levels and home prices are rising.

But the most dramatic real estate changes seem to be occurring in the San Francisco Bay Area.

San Francisco home buyers entering the market in 2013 will find a market that is completely different from a few years ago. In just three or four years, the city has transformed from a stagnant buyers’ market to a bustling sellers’ market.

The 7 Biggest Trends in San Francisco Real Estate, 2012 – 2013

We scoured the housing headlines of the last few weeks to come up with this list. Here’s what is currently happening in the San Francisco housing market, and what we expect for the rest of 2013.

1. Housing supply will remain tight in 2013.

RE/MAX recently published a report that listed cities with the lowest housing supply, going into 2013. They measured the number of months worth of supply in December 2012 and ranked the cities accordingly.

Several California cities made the list. San Francisco took the #1 spot, with only a 1.1-month housing supply in December 2012. That was well below the national average of 4.4 months of supply.

Related: Bay Area price gains driven by supply-and-demand shift

This will be one of the biggest obstacles for San Francisco home buyers in 2013. Buyers will need to be aggressive when shopping for a property in this market. They should also be prepared for bidding wars. Sellers, on the other hand, can enjoy being in one of the hottest markets in the country. A well-staged, reasonably priced house should sell quickly in this market.

2. San Francisco has one of the healthiest housing markets, according to economist.

Jed Kolko, chief economist for the real estate website Trulia, recently published a list of the healthiest housing markets in 2013. He based his rankings on a number of factors, including vacancy rates, job growth, foreclosure trends and more. The San Francisco real estate market ranked among the top three cities.

Kolko pointed out that San Francisco has one of the fastest-growing job markets in the country right now you. Additionally, foreclosure filings and default notices have both declined across the metro area, over the last few years. All of these trends bode well for the local housing market.

3. Significant price gains have been reported by Case-Shiller.

The SP/Case-Shiller home price index for January was released a few days ago. It included pricing data through the end of November 2012. According to that report, house prices in San Francisco have increased by a healthy 12.7% (from November 2011 to November 2012).

4. San Francisco’s median list price rose by 25%.

Each month, Realtor.com publishes a housing summary with data on 146 of the largest metropolitan areas in the country. It includes monthly and yearly changes to the median list price for each metro. According to their latest report, which included data through December 2012, the median list price in San Francisco has risen 25% over the last year or so.

In this context, the “list” price is the amount sellers are asking for when they list their homes for sale. This makes it different from the median sales price, which is the actual amount paid. But that number has also risen over the last year (see below).

5. Median sales price rose by 32% across the Bay Area, 21% in San Francisco.

According to San Diego-based DataQuick, the median sales price for the nine-county Bay Area rose by a whopping 32% from December 2011 December 2012. Inside San Francisco proper, the median sales price rose by 21.1% during the same 12-month reporting period.

This is one area where all of the experts and data agree. Whether you look at the list prices on Realtor.com, home prices in the Case-Shiller Index, or the median sales price reported by DataQuick — they all show a clear trend of appreciation. We expect this trend to continue through 2013, though the gains will likely be more modest.

6. Default notices have dropped by 42%.

This is something I touched on earlier. Default notices (one of the first steps in the foreclosure process) have dropped by more than 40% over the last year or so. This is according to a recent report from DataQuick. From the fourth quarter of 2011 to the same period in 2012, default notices in the San Francisco metro area dropped by 42.3%

This should improve the health of San Francisco’s real estate market even more, going forward. The dramatic decline in default notices suggests a return to normalcy. It also means there will be fewer distressed properties on the market down the road — the kinds of properties that erode home values.

7. Trustee deeds are down by 51.2%.

During the foreclosure process, a trustee deed is typically issued whenever a house is actually foreclosed upon. So another way to state this statistic is to say that home foreclosures have dropped by more than half. From the Q4 2011 to Q4 2012, trustee deeds in the San Francisco area fell by 51.2%.

Many housing markets across the country are rebounding. But few are experiencing the kinds of dramatic changes that we are seeing in San Francisco’s real estate market.

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Article source: http://www.homebuyinginstitute.com/news/san-francisco-trends-304/

Home News Bay Area Real Estate Price Gains Driven by Major Supply-and-Demand Shift

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By Brandon Cornett | January 18, 2013
© 2012, All rights reserved

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Vicksburg Street in San Francisco. Photo by Allan Ferguson.

At a glance: The median home price for the San Francisco Bay Area rose by 32% over the last year or so. It’s the result of inventory decline, job growth, and stronger optimism among consumers. 

I’ve been giving California homeowners mostly bad news for a long time. After all, San Francisco was one of the hardest hit cities during the housing crisis. Just look at this free fall from 2006 – 2009.

It’s nice to have some good news for a change.

The median home price in the nine-county Bay Area rose by 32% in 2012, according to the latest figures by DataQuick. And current trends suggest we could see additional price gains in 2013.

Good Year for Bay Area Real Estate Prices

In December 2011, the median home price in the San Francisco Bay Area was $335,500. A year later, in December 2012, the median price had risen to $442,750 — a gain of 32%. According to DataQuick, a San Diego-based data firm, that was the largest year-over-year price gain since they started tracking them in 1988.

Some of this has to do with market shift. In the wake of the housing crisis, most of the Bay Area sales activity occurred on the lower end of the pricing spectrum. Low-cost distressed properties (read ‘foreclosures’) were the order of the day back then. In more recent months, however, activity has shifted toward the mid-market and move-up homes, according to DataQuick.

Overall market improvements have played a major role as well. Real estate inventory has plummeted in most parts of the Bay Area over the last year. Meanwhile, demand for housing has risen among both investors and live-in buyers. Supply and Demand 101: When there is less of the former and more of the latter, prices tend to rise. And when these factors shift considerably in a short period of time, as they have in the Bay Area real estate market, we see things like a 32% rise in median home prices.

Investors, Inventory and Home Prices

Inventory has a lot to do with this. According to data from Realtor.com, the San Francisco metro area had one of the largest reductions in for-sale inventory over the last year or so. The number of homes for sale dropped by 43% from December 2011 to December 2012. Out of the 146 metropolitan areas tracked by Realtor.com, San Francisco had the sixth highest year-over-year reduction in inventory.

Interestingly, nine of the top ten cities for inventory reduction were in California, but that’s another story.

Another positive trend: San Francisco recently had the largest decline in foreclosure filings, among the nation’s largest metro areas. A reduction in foreclosure inventory bolsters property values in two ways. It affects the overall balance of supply and demand. It also prevents pricing data from being unnaturally skewed by a high level of distressed homes (something that has plagued the city in previous years).

Much of this is the result of investment activity. Investors began pouring into the Bay Area real estate market a couple of years ago. They sensed the ‘bottom’ of the housing market and were eager to snatch up bargain properties, before appreciation wiped out their profit margins. Above all else, this is what drove inventory down the most.

At the same time, the economy as a whole was slowly improving (see employment notes below). So housing demand grew among regular home buyers as well, those who plan to live in their homes. We can probably expect more of this in 2013, though annual price gains will likely be more modest than last year.

More Jobs Equals More Buyers

Nothing fuels a housing market like job growth. This is another area of improvement. The unemployment rate for the San Francisco-Oakland-Fremont metro area fell to 7.5% in November 2012, down from a high of 10.6% in July 2010.

Granted, 7.5% is nothing to brag about. But the overall trend is undeniably positive. Job growth puts more people in a position to buy a home. It increases housing demand, and at a time when inventory is more limited than it was two or three years ago.

All of these trends seem to be having a positive effect on home buyers’ attitudes. The California Association of Realtors recently published the results of their 2012 survey of California home buyers.

According to the report: “Home buyers were more optimistic about future home prices than buyers in 2009. Nearly a quarter (23 percent) of them believed that home prices in their neighborhood will go up in one year, as compared to 8 percent in 2009.”

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Article source: http://www.homebuyinginstitute.com/news/bay-area-home-298/

Home News San Francisco Leads Nation in Foreclosure Reduction

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By Brandon Cornett | November 1, 2012
© 2012, All rights reserved

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Colorful houses in San Francisco. Ian Ransley.

The San Francisco housing market continues to recover, and in more ways than one.

New research shows that foreclosure activity has dropped significantly across the Bay Area. This will support home prices and increase market stability going forward.

The Federal Reserve recently published a positive outlook for the San Francisco metropolitan-area housing market. Among other things, it predicted strong demand for homes into 2013. That’s good news for sellers.

Here’s more good news for homeowners in the area. Foreclosure filings are receding — and fast.

36% Drop in San Francisco Foreclosures

Last week, RealtyTrac released their Metropolitan Foreclosure Market Report for the third quarter of 2012. Among the nation’s largest metro areas, San Francisco experienced the largest reduction in foreclosure activity. Third-quarter foreclosure filings fell 36%, compared to the same time last year.

RealtyTrac’s report included all properties with at least one foreclosure filing, across all three phases of the foreclosure process — defaults, auctions, and bank repossessions. In total, there were 9,798 filings in the San Francisco metro area, during the third quarter of 2012. That marks a 3% reduction from the previous quarter, and a 36% reduction from the same period in 2011.

Typically, a major reduction in foreclosure activity helps to stabilize the market in two ways. First, we have an overall drop in the number of homes for sale. With a consistent level of demand, a drop in supply will put upward pressure on home prices.

Secondly, we have less price erosion resulting from distressed properties. Foreclosure homes are often priced and sold below their market values. So they end up as low-end comps, or comparable sales, putting downward pressure on home prices. Thus, the San Francisco real estate market benefits in two ways from this trend.

On the broader stage, this is just one of several factors boosting Bay Area home prices. The metro-area unemployment rate hit 7.4% in August, down from a recession high of 10.1% in January 2010. Housing inventory has fallen across the board, not just in the foreclosure sector. Meanwhile, demand is growing among investors and ‘regular’ home buyers alike.

Homes are Selling Faster, and for More

According to data provided by ZipRealty, San Francisco’s real estate market is still bustling. Home sales typically drop off in the fall, after the summer buying ‘season.’ But that doesn’t seem to be the case here. In most Bay Area counties, homes sold faster this September compared to last. List prices and sale prices both rose at the same time.

Within San Francisco County, the median number of days on market (DOM) was 40 days in September. That marks an 18% decline from the same time last year. At 12 days, Santa Clara County had the lowest median DOM for the Bay Area (it’s no wonder prices are jumping in places like Saratoga). The median DOM declined in eight of the nine Bay-Area counties over the last year. Only Solano County saw an increase in this metric.

The median listing price rose in eight of nine counties as well, again with exception of Solano County. Median selling prices rose in all nine counties over the last year. This is according to data from ZipRealty, a real estate company headquartered in Emeryville, California.

The latest SP/Case-Shiller Home Price Index was released the day before Halloween. According to that report, home prices rose 5.3% across the San Francisco metro area, from August 2011 to August 2012.

While California seems to be leading the recovery, it’s becoming a national trend. At the monthly level, prices rose in 19 of the 20 major metro areas tracked by Case-Shiller. “The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market,” said David M. Blitzer, chairman of the index committee at SP Dow Jones Indices.

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Article source: http://www.homebuyinginstitute.com/news/san-francisco-foreclosure-reduction-275/

Home News San Francisco Real Estate Prices Rise as Inventory Falls

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By Brandon Cornett | 7/14/11
© 2011, All rights reserved

Recent reports show San Francisco real estate prices rising, partly due to a reduction in housing inventory. It’s a blip on the EKG of an otherwise flat-lining housing market.

The Alamo Square neighborhood of San Francisco

On Monday, real estate analytics firm Altos Research released its latest market report. The company’s “Real-Time Housing Market Update” focuses on the same 20 metro areas featured in the SP/Case-Shiller Home Price Index. Their latest data shows that home prices in San Francisco rose 2.34 percent in June, compared to the previous month.

That’s not a big leap by any means. But it was the second largest increase of all 20 metro areas included in the report.

San Francisco took the lead in the three-month category. Based on data for April, May and June, San Francisco home prices rose by 5.75 percent. This was the largest three-month increase of all 20 cities contained in the report.

Inventory Reduction Supports Prices

San Francisco stood out in other ways, as well. The city had the second largest inventory reduction of all 20 metro areas tracked by Altos Research. If this trend continues, it could put continued upward pressure on San Francisco real estate prices. This is good news for homeowners who have lost significant equity since the housing market crashed.

In most real estate markets across the country, excessive inventory is the biggest drag on home prices. Mortgage rates are low, and homes are more affordable than they’ve been in years. But high inventories have been pushing prices south, making potential buyers wary about taking the plunge.

If you take the falling prices out of this equation, you have a perfect scenario for buyers and investors — low mortgage rates, and low (but rising) home prices. This is how things are shaping up in the San Francisco real estate market.

Granted, most housing analysts are predicting a long and flat bottom for housing markets — San Francisco included. But when the patient has been in a coma for years, any sign of life is worth noting.

San Francisco Home Prices in Second Half of 2011

On July 8, 2011, real estate valuation firm Clear Capital released a report showing home-price trends and forecasts for 50 U.S. cities. Their predictions were mostly gloomy for the second half of 2011, with a few exceptions. San Francisco was one of the exceptions. It was one of only five metro areas where home prices were predicted to rise in the second half of 2011 (New York, Dallas, Orlando, and Washington, D.C. were the other four).

Stated differently, San Francisco was in the ten-percent club. The other ninety percent of the metro housing markets tracked by Clear Capital were predicted to see flat or declining home prices for the rest of this year.

The Truckee, California-based company expects San Francisco home prices to rise by 0.2 percent between July and December of this year. It’s a small number by any yardstick. But given the price erosion predicted for the rest of the country, it’s a noteworthy number.

Jump in Home Sales – May to June 2011

We also witnessed an unexpected jump in home sales in San Francisco, from May to June. Bay Area home sales rose by 14.5 percent during that month-over-month period. This marked the highest level of home sales since June 2010 (when the home-buyer tax credits were expiring).

DataQuick president John Walsh pointed to a number of factors that could have caused the spike: “June likely benefited from a combination of factors, such as price reductions, low mortgage rates and perhaps a batch of short sale transactions from spring that took months to close.”

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By Brandon Cornett | 3/16/11

Reader Question: “We live in Oakland but are considering a move soon. We have an appointment with a real estate agent to go look in Livermore and San Ramon, California. Can you tell me anything about the real estate market in these areas, or the San Francisco Bay Area in general? I’m wondering about home prices and how much they’ve come down. Are we at the bottom? Would now be a good time to buy?”

Bay Area Home Prices Real Estate Trends

The real estate market in the Bay Area is very diverse, in terms of home prices. There’s a lot of price differential from one city to the next, and sometimes from one neighborhood to the next within the same city. With that said, I don’t think the Bay Area as a whole has hit bottom yet. In fact, they just experienced one of the biggest price drops of any metro area in the U.S.

According to Altos Research, home prices in the San Francisco metro area declined by 3.53% from January to February. The 90-day trend showed an even bigger decline: “All 27 of the major markets tracked by Altos showed price decreases during the most recent quarter, most significantly in San Francisco … which showed declines of 9.31%.”

Here’s a must-read article from the Wall Street Journal. It talks about San Francisco home prices in 2010, but the article was published recently. So it will give you some insight into where the market has been, and where it might be headed.

San Ramon home prices seem to be stabilizing faster than Livermore, but both areas could see continued declines in the coming months. San Ramon looks like it might (keyword “might”) be bouncing along the bottom right now. This would mean small ups and down for the near future, with an upward trend in the next 6 – 12 months. Just note that I used the word might two times in that sentence.

A lot of San Francisco real estate agents will point to the steady appreciation that occurred during the first half of 2010. But this was almost entirely due to the California tax credit for home buyers, which has since expired. It was artificial market stimulation that evaporated when the government stopped the incentive.

Real estate agents will say anything to make things seem better than they really are — it’s in their interest to do so. You can’t blame them really. You just have to take it with a grain of salt. On a side note, if your agent wants to throw tomatoes at me when reading this, please make sure they’re organic.

And then there’s the whole foreclosure situation. I think foreclosures will drive inventories up through most of this year, which puts even more downward pressure on home prices. RealtyTrac already predicted a 20% rise in foreclosure filings for 2011, with an all-time high occurring sometime this year.

I’d Buy Outside of San Francisco

What does all this mean? You can probably expect further declines in home prices for most cities in San Francisco metro area. But the true bottom may not be far off. I’d buy a house in the outskirts right now, but probably not within the city of San Francisco. I think the outlying cities are going to see some appreciation much sooner than the metro.

Even if prices drop a little after you buy a house, it’s probably nothing to worry about. Barring another housing crisis, you’ll start seeing some appreciation soon — and it could be significant appreciation.

You have more bargaining power than the seller does right now. But tread carefully when making an offer. Some homeowners realize that it’s a tough market to sell in, so they’ve priced their homes competitively. Despite the sluggish housing market, a multiple-offer scenario could still occur if the home is priced well. So if you come in and low-ball the homeowner out of a false sense of security, you could see your offer rejected. In other words, you should make your offer based on the realism of the asking price.

This article makes a good companion piece for everything we’ve just discussed:
Is now a good time to buy a home?

Disclaimer: This QA response contains forward-looking statements about real estate prices in the San Francisco area. These statements are based on information available at this time. The real estate market changes rapidly. So these remarks should not be taken as gospel.

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Article source: http://www.homebuyinginstitute.com/news/san-francisco-prices-155/