In “Bay Area housing recovery spreads from Silicon Valley to East Bay“, Argus reporter Pete Carey describes these housing micro-climates with fascinating data and dramatic anecdotes, starting with the following stark graphic:

(click to enlarge)

The housing micro-climates of the greater San Francisco Bay Area show a dramatic schism between recovery and despair

Source: Bay Area housing recovery spreads from Silicon Valley to East Bay (linked above)

The green areas are localities where housing prices are at or above their pre-crash peaks. In the most favorable areas with good school districts and plentiful jobs, the housing market is back to the good old bad days. Limited inventories, low interest rates, pent-up demand, and buyers flush with cash are scrambling to outbid each other and driving prices ever higher. In some of these areas, prices are already 15-24% ABOVE their pre-crash peak. Far away from the Bay Area’s job centers, housing inventory is plentiful, rampant sub-prime lending has transformed affordability into foreclosures and short sales, and prices are only just now climbing off their post-crash bottoms. The recoveries here may depend upon how fast residents’ tolerances for horrific commutes rebuild relative to the decline in tolerance for sky-high housing prices closer to jobs and good public schools. In between these extremes is a variety of local conditions generating pockets of housing prosperity and despair.

Further to the east is Stockton, now the country’s largest bankrupt city, gateway and ground zero for the state’s housing bubble and crash that rippled hardest throughout the central valley where houses multiplied much faster than jobs. Not shown on this map are the counties northward from San Francisco — Marin, Napa, Sonoma, and Solano. Contrasts exist here as well from the highly sought estates in Marin county, the plush vineyards of Napa, and bucolic surroundings of Sonoma to Vallejo in Solano County that declared bankruptcy at the height of the financial crisis.

This is quite a panorama that highlights the old real estate maxim of location, location, location. Here are some ZIP code related stats from the Argus article:

“Thirty-four of 185 ZIP codes in five counties have regained or surpassed their bubble-era peak home value or are less than 1 percent from it, according to this newspaper’s analysis of February median values for all homes from online real estate site Zillow.

Another 49 ZIPs are within 15 percent of their previous highs, including 18 in the East Bay. A year ago, only part of leafy Palo Alto had regained the value it lost after Bay Area home values crested in 2006-07…

…Fifteen ZIP codes in Contra Costa County and three in Alameda County are more than 50 percent below their peak median home value, according to Zillow’s data. In one Antioch ZIP, the median value of a home was $177,700, only 18 percent up from an October 2009 bottom of $149,800 and 62 percent below its peak of $473,400 in January 2006.”

An extreme example of the recovery comes from Burlingame, a city with some of the most expensive ZIP codes in the Bay Area.

“Up the Peninsula in a Burlingame ZIP code that surpassed its bubble-era peak in August, Dianna Herrmann decided it was time to downsize and put her historic, 6,000-square-foot home on the market for $3.98 million… Fifteen days later, the house was sold in an all-cash deal for over the asking price.”

The anecdotes I hear from friends and family confirm the heat in the Bay Area housing market. One friend offered $50K above asking price for a Sunnyvale home, only to find out that a buyer with all-cash outbid him by another $50K. He has since given up house hunting after seeing a Sunnyvale home in less-than-desirable surroundings sell for a cool million. Another friend has also slowed down her house hunt after realizing that her desired home close to work in Silicon Valley could not be found for less than $1.1M. Some homes in desirable markets are sold within a week of listing, creating an added sense of urgency with buyers:

“The market is so hot that sales in a week are not unusual. According to the real estate company Redfin, 24 percent of Alameda County listings in March were pending in a week; the numbers were 32 percent in Contra Costa County, 19 percent in San Mateo County and 26 percent in Santa Clara County.”

A classic quote I found in a flyer for a home in Fremont — an important traffic hub/gateway between the East Bay and Silicon Valley — offered a modest 3-bedroom house for about $600K that needed updates. It was marketed as an opportunity to turn this residence into “the home of your dreams!”

So why spend time studying and tracking this madness?

First and foremost, this drama provides the backdrop for the great results homebuilders are reporting in their California-based communities. Homebuilders like Tri Pointe Homes (TPH), KB Home (KBH), and Meritage (MTH) are benefiting from the premium markets in the Bay Area (for more on TPH see “A Concentrated Way To Play Rapid Price Appreciation In The California Housing Market“). Similar stories can be found in Southern California. The homebuilders learned many important lessons from the housing crash. One lesson has trained them to focus their building in areas with strong job growth and growing economies. Places like the Bay Area are providing blueprints for the country’s recovery, and we can find homebuilders converging on these locales.

Secondly and in related fashion, the frenzy going on in the housing market is likely a leading (or confirming) indicator of an improving economy, albeit an unevenly recovering one (after all, California has a poverty rate of 16% using traditional measures. When using the Census Bureau’s new supplemental approach that adjusts for the cost of living, California’s poverty rate goes to tops in the nation at 23%). The notion that deflation is a risk in this economy should be quickly dispelled after understanding what is going on in markets like California. The buying will slowly but surely spread out as it always does to the lower-priced regions of the Bay Area as the economy continues to grow. This will have plenty of cascading and multiplying impacts.

Finally, the California housing micro-climates are a great reminder of why both housing bulls and bears can make convincing arguments. Depending on the lens applied, debaters can conjure up plenty of skewed arguments about the health or weakness of the housing market. The biggest mistake I continue to see is the interpretation of low sales numbers (better yet, lower than expectations) as an indicator of a slowing housing market. When inventories are tight and sellers are anxiously waiting for today’s soaring prices to make them whole on their homes, it is no surprise that sales are constrained. Bulls can also overstate the case if they do not recognize that tight credit conditions continue to lock out many entry-level and first-time buyers. The housing market cannot continue its recovery if the buying remains dominated by well-heeled cash buyers. I am still looking for hard data on how many of these cash buyers are Canadians taking advantage of the enviable combination of a strong currency and relatively low prices for American housing; and/or wealthy Chinese nationals looking for lucrative foreign investments.

Overall, the housing market recovery is still just getting started. Markets like the San Francisco Bay Area are leading the way. Pent-up demand is getting released and running into low inventory levels. Homebuilders are scrambling to ramp up to meet some of this demand by buying land and securing scarce construction resources. The cost and price pressures are part of the early growing pains from a decimated industry where supply is not yet recovered enough to handle demand where it is most robust. It is hard to determine when prosperity will be more widely shared, but I am expecting that once unemployment begins a new trajectory downward, scenes like the ones in the Bay Area will spread like wildfire across the country… especially since interest rates are likely to remain extremely low as employment data only slowly improve.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More…)

Article source: http://seekingalpha.com/article/1380051-the-san-francisco-bay-area-s-housing-micro-climates-a-microcosm-of-a-2-speed-recovery?source=google_news

“In many areas, we are seeing more interest in urban infill locations than in remote exurbs, which is having a pronounced shift in neighborhood design elements,” said AIA Chief Economist, Kermit Baker. “And regardless of city or suburban dwellers, people are asking more from their communities in terms of access to public transit, walkable areas and close proximity to job centers, retail options and open space.”

Half of residential architecture firms highlight demand for multi-generational housing, up from 44 percent in 2011. Fifty-nine percent said access to public transportation is key, up from 47 percent a year ago. (Read More: New Nightmare for Home Builders: Not Enough Skilled Workers)

More homeowners are also upsizing what they have, with 58 percent of architects reporting improvement in additions and alterations, up from just 35 percent a year ago; kitchen and bath, as usual, top the must-have list.

During the last housing boom, extravagance drove new construction and remodeling. Now, the trends are more practical, with energy efficiency and the need to accommodate growing families driving the gains. Home owners are also looking to builders to help them use the space they have more efficiently, especially Baby Boomers.

“They have a lot of desires for the home, and we’re hearing this group say they want functionality and smartly-designed homes without wasted space,” said Meyer, who adds that this doesn’t necessarily translate into smaller homes. While these findings bode well for the home builders, they may also add optimism to the upper end of the market, and all those so-called “McMansions,” many of which lost significant value during the housing crash. (Read More: Pending Home Sales Surge to Five Year High)

Article source: http://www.cnbc.com/id/100321206

MILL CREEK, Wash., Sept. 12, 2011 /PRNewswire via COMTEX/ –
Prometheus Real Estate Group, Inc. has purchased Surrey Park apartments in Mill Creek, WA in a $5.1 million transaction. The acquisition was purchased all cash. Located at the corner of 156th Street SE and Mill Creek Boulevard, the 46 unit community is an excellent mix of well-designed one and two bedroom floorplans. Built in 1991, the property is well maintained with limited deferred maintenance. The business plan is to reposition the asset through an aesthetic renovation that will reposition the property to compete with larger institutional sized properties in the immediate neighborhood. The property is walking distance from the popular Mill Creek Town Center and 3 miles northeast of the Interstate 5 Interstate 405 interchange, providing for access to job centers along both sides of Lake Washington. Mill Creek is 16 miles north of Bellevue and 20 miles north of Seattle. Nearby employment centers are the biotech firms and the planned Google campus 3 miles south in Bothell and Boeing’s Everett campus five miles northwest. The brokers on the transaction were Philip Assouad and Giovanni Napoli of Kidder Mathews. This acquisition brings Prometheus’ Pacific Northwest portfolio to 18 properties totaling 4,277 units.

About Prometheus

Since its inception in 1965, Prometheus Real Estate Group has specialized in the development and management of high quality residential properties throughout the Western United States. Today, they are the largest private owner of multi-family properties in the San Francisco Bay area with a growing portfolio which includes over 18,000 class A apartments in Seattle, Portland, the San Francisco Bay Area and Los Angeles. Recognition includes over 75 awards since the firm’s inception including 2010 MHN Best Property Management Company of the Year.

For more information visit:
http://prometheusreg.com , Facebook/PrometheusAptsTwitter/PrometheusAptsLinkedIn/Companies/Prometheus-Real-Estate-Group

SOURCE Prometheus Real Estate Group, Inc.

Copyright (C) 2011 PR Newswire. All rights reserved

Article source: http://www.marketwatch.com/story/prometheus-real-estate-group-adds-another-asset-to-seattle-portfolio-2011-09-12

Throughout the nine counties, the median paid for an existing single-family house in July was $400,000, down 7.5 percent from the same month last year, according to DataQuick, a San Diego real estate research firm. A total of 5,096 homes changed hands in the month, virtually the same as in July 2010.

“More people became more concerned about the future and took a step back to the housing sidelines as we saw an increasing number of negative reports on the economy and jobs, and people fretted about the outcomes of the debt-ceiling debate in Washington, D.C.,” said Andrew LePage, a DataQuick analyst.

The median is strongly influenced by the mix of homes sold: more low-cost homes changing hands results in a lower median. DataQuick said sales of homes above $500,000 fell 19.2 percent compared with a year earlier, while sales of homes below $500,000 were up 3.5 percent over July 2010.

Many of the low-end transactions relied on low-down payment, government-backed Federal Housing Administration mortgages. They accounted for 22.4 percent of all Bay Area home purchase loans in July.

Distressed home sales remain a significant market force. Bank resales of foreclosed homes accounted for 26.6 percent of Bay Area resales in July. Short sales – in which people sell their home for less than they owe on the mortgage – represented 18.8 percent of resold homes.

As has been true throughout the housing downturn, coastal counties with easy access to job centers performed better than those in outlying regions. The median for San Francisco resales was virtually flat at $715,000 versus $714,500 a year earlier. Median prices for existing homes in Santa Clara, San Mateo and Marin counties were down about 3 percent.

“There is no question that Santa Clara and San Francisco (counties) have stood out as being relatively stable, given the strength of their local job markets and the constrained supplies,” LePage said.

But medians declined more steeply in Napa (down 15 percent), Solano (down 9.9 percent), Sonoma (down 8.6 percent), Contra Costa (down 8.5 percent) and Alameda (down 6.4 percent) counties.

For all homes, including resale homes, resale condos and new homes, sales volume inched up 1.7 percent and the median price fell 7 percent to $374,000 from $402,000.

Two competing factors affect the housing outlook for the rest of the year. On the one hand, consumer concerns about their finances were exacerbated by the wild ride the stock market has taken this month. On the other hand, interest rates are at historic lows and home prices are more affordable than in years past.

Even the best-case scenario doesn’t involve an immediate recovery but rather an extended period of prices bouncing along the bottom.

“I think it’s likely we’re in for a long period of stagnation,” LePage said. “If we get worse news on jobs and the economy and see big dips in the stock market, we could see prices come down some more. Of course (even with stagnation) prices will always bounce around a bit.”

The California Association of Realtors, which on Monday issued its report for July, had a similar take.

“Economic uncertainty and recent developments in financial markets have caused hesitation among buyers, the effects of which we may see in the coming months,” said Leslie Appleton-Young, the group’s chief economist, in a statement. “We must see sustained job and income gains along with an increase in consumer confidence before we can expect to see consistent improvement in the housing market.”

E-mail Carolyn Said at csaid@sfchronicle.com.

This article appeared on page D – 1 of the San Francisco Chronicle

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/08/16/BUD91KO7CA.DTL

The East Bay Tea Party, based in Alamo, has taken an interest in the regional planning effort, which seeks to curb suburban sprawl, car use and pollution by encouraging housing to be built near mass-transit hubs or job centers.

The work is the result of state legislation that requires regions to devise development and transportation plans to reduce emissions of greenhouse gases.

The Tea Party has become a national force, but its message of small government and lower taxes has made few inroads in the liberal Bay Area. Heather Gass, a Danville real estate agent, has been leading the charge for the East Bay Tea Party in the planning debate.

In a blog post, Ms. Gass takes the position that the Sustainable Communities Strategy is biased against people who want to raise their children in the suburbs and drive cars. She wrote that the plan portended a future of “working at your government-assigned job on the bottom floor of your urban transit center village because you have no car and who knows where your aging parents will be but by then it will be too late!”

On Tuesday, Ms. Gass and about a dozen others attended an Oakland meeting of the two planning agencies intended to get suggestions from the public. They peppered the urban planners with questions and comments.

When planners asked audience members to rank the importance of open space like parks, Ms. Gass exploded. “Open space also includes people’s private property,” she said. “You cannot ask people to vote on something that violates others’ private property.”

Lou Hexter, who was leading the exercise, tried to placate her, saying quietly, “It’s good to hear everyone’s opinion, but we need to ——.”

“Back off!” Ms. Gass yelled.

At one point, the host felt the need to ask everyone to take a “time out.”

Miriam Chion, a planner with the Bay Area governments group, said that no one was going to be removed from their home in the suburbs. “The sustainable-communities strategy is not about moving people,” she said. “It’s about addressing development challenges.”

Even with the group of vocal critics, when the audience voted on priorities for the Bay Area, the top five were: daily needs close to home, clean air, convenient access to jobs, water conservation and lower carbon emissions. “Large homes with big yards” was near the bottom.

zelinson@baycitizen.org

Article source: http://www.nytimes.com/2011/05/27/us/27bcteaparty.html