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Home prices keep on ratcheting up as Bay Area outpaces national growth

Thu, 30 May 2013 11:20:24 +0000

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Homes keep getting bid up over asking, which keeps pushing up prices. Another week, another real estate report showing that home prices are on a tear, with the Bay Area among the nation’s leaders. This time, it was the SP/Case-Shiller home-price index showing double-digit prices increases.

Here are photos from one of those now-commonplace scenarios: A perfectly nice, but not extraordinary house that went for way over asking. In this case it was a four-bedroom rancher in Walnut Creek’s Larkey Park area. Listed for $615,950, it went for $650,000 — $34,050 or 5.5 percent over asking.

On average, homes in the 9-county San Francisco Bay Area area are selling for 103.6 percent of asking; this time last year, they went for 100 percent of asking, said Lanny Baker, CEO of Emeryville’s ZipRealty.

Realtors around the Bay Area continue to report flocks of buying chasing super-tight inventory. ZipRealty shows that for-sale Bay Area inventory is down 43 percent from this time last year to only about 6,998 homes. In 22 out of 24 metro areas it tracks nationwide, ZipRealty “saw more new listings as of April 30 compared to April 30, 2012,” it said in a report. “San Francisco and Austin were the only two metros showing slight declines in new listings.”

“Five of the top seven cities in our national report on price appreciation are in California,” Baker said. “We see San Francisco (metro) as the No. 1 city in the country right now for price momentum,”

In the Case-Shiller report, prices for a 20-city composite index were up 10.9 percent in March versus a year earlier. For the SF metro, which Case-Shiller defines as the counties of San Francisco, Marin, San Mateo, Alameda and Contra Costa, the increase was a strong 22.2 percent, second only to Phoenix’s 22.5 percent gain. For an in-depth look at the report and its implications, click here.

Carolyn Said is a San Francisco Chronicle staff writer. Follow her on Twitter: @csaid

Article source: http://blog.sfgate.com/ontheblock/2013/05/29/homes-prices-keep-on-ratcheting-up-as-bay-area-outpaces-national-growth/

San Francisco Housing Bubble May Be Brewing, Says New Report

Sat, 04 May 2013 20:14:55 +0000

SAN FRANCISCO — As anyone who even thought about buying a home in San Francisco in the past few years can readily attest, the city’s real estate market is both insanely expensive and insanely competitive.

And if a recent analysis by real estate brokerage Redfin is any indication, the city may be in the midst of a burgeoning housing bubble.

Redfin’s study looked at home sales in major cities across the country and found San Francisco to be among a handful of metro areas where the median home price-to-household income ratio is high enough to suggest the formation of a real estate bubble. Other factors, including rapid growth in prices, low levels of available properties and houses regularly selling within a week of first being placed on the market, also pointed to a similar conclusion.

“A lot of people [in San Francisco] are really frustrated that they can’t buy a home in the city because it’s so expensive,” explained Redfin CEO Glenn Kelman.

Over the first three months of the 2013, the median home sale price in San Francisco was $771,750. The median annual household income is currently $72,947. The former number is rising much faster than the latter, indicating that the price of housing in the city has increasingly less to do with what the average home buyer can actually pay.

The meager supply of available housing in San Francisco further exacerbates the problem.

“Some properties are receiving in upward of 40 to 60 offers and selling in 24 hours or less,” said Bay Area Redfin agent Charmaine Frank, who noted that on a number of occasions, every single Redfin agent in San Francisco represented a different potential buyer for a single property.

“The normal laws of economics don’t apply to the Bay Area,” added Kelman. “You could have huge unemployment numbers here and home prices would still go up because [the supply is so constrained and] there are enough people with limitless amounts of money who want to live there.”

As a result, it’s becoming increasingly difficult for anyone but the wealthy to afford a house in San Francisco. Last year, real estate blog Movoto urged prospective house hunters to cool their jets until the bubble bursts.

“Unless you happen to be a billionaire, you should probably steer clear of shopping for a new home in the city,” Movato writer Kristin Crosier advised. “Even then it would be an unfortunate way to spend your piles of money.”

In a typical real estate bubble, individuals put all their money into buying property on the assumption that they can later sell it for a profit. But market forces cause home values to eventually decrease. When that happens on a massive scale, the bubble pops, a large amount of money suddenly evaporates, and a trail of economic destruction ensues.

Deterred by skyrocketing home prices, many San Franciscans have opted to navigate the city’s mind-bogglingly expensive rental market on the assumption that renting will be cheaper. However, according to a recent investigation by real estate site Trulia, buying a home is still cheaper than renting in every major American city, San Francisco included.

This rapid growth in home sale prices isn’t limited to San Francisco’s city limits. Over the past year, the median sale price of homes in the whole San Francisco Bay Area jumped by nearly 40 percent — the biggest spike of any metro region in the country. Over that same time period, the number of new listings decreased by eight percent.

In fact, overheated housing markets have popped up all along the California coastline. After Washington, D.C., which the Redfin study ranked as having the biggest housing bubble in the nation, the next three cities — Los Angeles, San Diego and San Francisco — were all in California

“California is hot because that’s where so many people want to live,” Frank said. “There are long-term demographic patterns driving people into California.”

Related on HuffPost:

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Sacramento, Calif.

Year Over Year Increase: 42.57 percent

Median Home Listing Price: $285,000

Total # Of Listings: 2,962
Santa Barbara/Santa Maria/Lompoc, Calif.

Year Over Year Increase: 35.72 percent

Median Home Listing Price: $699,000

Total # Of Listings: 1,195
San Francisco, Calif.

Year Over Year Increase: 25.04 percent

Median Home Listing Price: $749,000

Total # Of Listings: 2,292
San Jose, Calif.

Year Over Year Increase: 23.53 percent

Median Home Listing Price: $562,000

Total # Of Listings: 2,035
Phoenix, Ariz.

Year Over Year Increase: 21.21 percent

Median Home Listing Price: $200,000

Total # Of Listings: 15,114
Atlanta, Ga.

Year Over Year Increase: 19.93 percent

Median Home Listing Price: $179,000

Total # Of Listings: 32,530
Oakland, Calif.

Year Over Year Increase: 17.22 percent

Median Home Listing Price: $375,000

Total # Of Listings: 1,911
Seattle/Bellevue/Everett, Wash.

Year Over Year Increase: 16.66 percent

Median Home Listing Price: $349,950

Total # Of Listings: 4,381
Fresno, Calif.

Year Over Year Increase: 16.28 percent

Median Home Listing Price: $184,900

Total # Of Listings: 1,949
Riverside, Calif.

Year Over Year Increase: 15.65 percent

Median Home Listing Price: $229,000

Total # Of Listings: 14,909

Article source: http://www.huffingtonpost.com/2013/04/16/san-francisco-housing-bubble_n_3088591.html

US Homeowners Rise Above Water on Mortgages

Fri, 22 Feb 2013 00:35:44 +0000

The negative equity numbers also don’t say anything about whether or not the loans coming out from underwater are delinquent. While the overall delinquency rate dropped dramatically in the fourth quarter of 2012 to 7.09 percent of all loans, according to a survey released Thursday by the Mortgage Bankers Association, nearly 11 percent of all U.S. mortgages are either delinquent or in the foreclosure process.

“One cautionary note is that the 90 day delinquency rate increased by 8 basis points, reversing a fairly steady pattern of decline and the largest increase in this rate in three years,” notes the MBA’s chief economist Jay Brinkmann.

(Read More: Why Sequestration Will Hit Housing on Several Fronts)

These so-called “seriously delinquent” loans are being processed more quickly now that new foreclosure rules are in place and will therefore be sold back to banks or investors in the next few months. Those sales would therefore be shown as loans coming out from underwater because they would cease to exist.

Another important factor in looking at negative equity, as with everything else in real estate, is location:

“Among the nation’s 30 largest metro areas, those with the highest number of homeowners freed from negative equity last year were Phoenix (135,099 homeowners freed in 2012); Los Angeles (72,936 homeowners freed in 2012); Miami-Fort Lauderdale (70,484 homeowners freed in 2012); Dallas-Fort Worth (59,461 homeowners freed in 2012); and Riverside, Calif. (58,417 homeowners freed in 2012),” notes the Zillow report.

(Read More: Taking The Real Estate Recovery Local)

The highest volume of underwater borrowers were in the most distressed states, where the foreclosure rates are high and where investors are pursuing short sales fervently. It is therefore incorrect to make the assumption that all of the “newly freed” borrowers are either still in their homes with newfound equity or sold at any kind of profit. Of course this also means that negative equity may cure faster than anticipated, since it is so highly concentrated in certain hot investor markets.

The return of home equity is good news for the greater economy, as it makes borrowers feel better about their own personal wealth and therefore more apt to spend. It could also prompt more borrowers to sell their homes. Unfortunately that will not do much to ease the severe inventory shortage of homes for sale, as most sellers will be buyers as well. There are currently just 1.74 million homes for sale, the lowest since December of 1999.

(Read More: Fewer Borrowers Are Behind on Mortgages, but for How Long?)

Article source: http://www.cnbc.com/id/100480500

Next hot Bay Area neighborhoods might surprise you

Tue, 22 Jan 2013 20:21:11 +0000

Real estate site Redfin listed its picks for the next hottest neighborhoods or small cities across the country, and it’s no surprise that three of them are in the Bay Area (8 out of the 10 are in California!). What might surprise you is which neighborhoods Redfin agents predict will be hottest in 2013.

OK, coming in at No. 9, The Mission District might not surprise you. But San Jose’s Willow Glen neighborhood at No. 6? Livermore at No. 5? Hmm.

Where would the up-and-coming type Bay Area resident live in these neighborhoods? Here are the hippest looking pads we could find there:

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Redfin’s post explains: “the hottest neighborhoods aren’t the well-known bastions of privilege. They’re once-gritty urban areas and far-flung suburbs with school districts on the rise.”

How did Redfin decide which neighborhoods to designate as ”hot”? They looked for “shrinking selection, increasing sales, and increasing prices—often at rates far above the metro areas that contain them.” Listings in the Mission are down 29 percent, sales are up 17 percent and prices are up 80 percent (!), all year-over-year as of December. Listings in Willow Glen are down 60 percent, sales are up 9 percent and prices are up 32 percent. In Livermore, listings are down 71 percent, sales are up 13 percent and prices up 20 percent.

Indeed, this article describes Willow Glen as both trendy and upward bound. As much as we searched, we couldn’t find any recent article that used the words “trendy” and “Livermore” together, but if Redfin is right, you may be able to say a few years from now that you moved to Livermore before Livermore was cool.

By the way, the LA neighborhoods that made the list are: Glassell Park (7), Eagle Rock (4), Faircrest Heights (3) and Highland Park (1). In San Diego, Mira Mesa was listed at No. 2.

Carrie Kirby is a freelance writer who recently returned to the Bay Area after living for six years in Chicago. Carrie is more heavily invested in real estate than she ever expected to be, since she and her husband are now long-distance landlords of their Chicago home, and have also purchased a house in Alameda. She posts about interesting properties and real estate trends in San Francisco and Silicon Valley every Tuesday. Carrie also shares money-saving tips on her blog, Frugalistic Mom.

Article source: http://blog.sfgate.com/ontheblock/2013/01/22/next-hot-bay-area-neighborhoods-might-surprise-you/

Bay Area rents, home prices up sharply

Thu, 03 Jan 2013 07:04:47 +0000

If you’re seeking a new pad in the Bay Area, you can expect to pay more than a year ago whether you’re buying or renting, according to a report released Wednesday.

Asking prices for homes for sale around the Bay Area rose substantially in December compared with the same time last year, according to San Francisco real estate website Trulia, ranging from a 16.3 percent spike in tech-fueled Santa Clara County to a 7.6 percent increase in Napa County. The nine-county Bay Area saw an average increase of 13 percent. By comparison, asking prices nationwide rose 5.1 percent in December compared with December 2011, Trulia said.

“Both job growth and tighter inventory gave (sale) prices a lift,” said Jed Kolko, Trulia’s chief economist. “Price increases accelerated throughout 2012, getting bigger as the year went on.”

Analyzing asking prices of homes currently for sale provides a leading indicator of what sales numbers are likely to look like in a few months’ time, Trulia said.

Data on sales throughout much of 2012 have shown the housing market recovering from the extended downturn that started in 2007.

Nationwide, Trulia said, “2012 marked a huge turnaround year for most local housing markets” with prices increasing in 82 of the 100 largest metro areas in December. In December 2011, only 12 markets had price increases.

Las Vegas, Seattle and Phoenix were Trulia’s “top turnaround” markets, followed by Oakland metro (Alameda and Contra Costa counties) and San Jose metro (Santa Clara and San Benito counties).

California cities such as Sacramento and Fresno that were devastated by the housing crisis also saw strong gains in 2012, Trulia said.

“Nine of the top 10 turnaround markets in 2012 were in the West,” Kolko said. “The only one east of the Rockies was Atlanta.”

Asking rents also rose, with Alameda County seeing the biggest spike (13.2 percent) and already pricey San Francisco the least (2.9 percent), Trulia said. The average increase for eight Bay Area counties (Napa did not have enough data) was 7.8 percent. Nationwide, rents grew 5.2 percent.

“We’re seeing rent increases across the region,” Kolko said. “In San Francisco they were smaller because rents are already so much higher there than elsewhere and it has had strong rent increases before this. The slower increase doesn’t make the city affordable.”

While rising home prices illustrate a housing market beginning to recover – and to stimulate economic recovery – they of course are not good news for those house hunting.

“They come with the perennial challenge of affordability in the Bay Area,” Kolko said.

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com

Article source: http://www.sfgate.com/realestate/article/Bay-Area-rents-home-prices-up-sharply-4163037.php

San Francisco 2nd, San Jose 6th least affordable places to buy in the country

Sun, 09 Dec 2012 10:52:17 +0000

We’ve written numerous times about how crazy expensive buying a home in the Bay Area is for the average folk. Out comes another survey, this one by the National Association of Home Builders/ Wells Fargo Housing Opportunity Index, that confirms what we already know about Bay Area real estate. As AOL Real Estate reports, this survey looks at a metropolitan area’s median home price and median income and then determines what percentage of the homes an average homebuyer can afford.

The San Francisco metro area ranks 2nd in the nation in housing affordability

Based on these statistics, the San Francisco metro area was the second least affordable area to buy. With a median home price of $659,000 and median income of $103,000, only 31.4% of homes are affordable to the average Bay Area resident. This wasn’t too far off from New York City, which was the least affordable place to buy, where the average New Yorker could afford to buy only 28.5% of homes there.

Heading south along the bay, San Jose was ranked the sixth least affordable place to buy. The median home price there was $530,000. Median incomes in the San Jose metro area were $105,000 and based on these two numbers, about 46.2% of homes are affordable to the average homebuyer. Better, but still not great.

San Jose is 6th in the country in housing affordability

Interestingly, the article also points out that San Francisco and San Jose were two of only a handful of metro areas where the median income was in the six figures – all thanks they say to the once again booming tech industry.

In all, California heads the list as the least affordable state. In addition to San Francisco and San Jose, the metro areas of Los Angeles, Santa Ana and San Diego made the list. To look at the other areas that made the list, click here.

Article source: http://blog.sfgate.com/ontheblock/2012/12/07/san-francisco-2nd-san-jose-6th-least-affordable-places-to-buy-in-the-country/

Mercury News interview: Transwestern managing director Edward Del Beccaro

Wed, 28 Nov 2012 03:42:29 +0000

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Commercial real estate goes hand in hand with the local economy. If more jobs are being created, companies need more office space. If job shrink, then office vacancies increase.

Edward Del Beccaro, managing director of the East Bay office of commercial real estate firm Transwestern, has 34 years of experience in the commercial real estate industry. Before joining Transwestern, he headed up the local offices of commercial realty brokerages Colliers International and Grubb Ellis.

He recently was interviewed about the commercial real estate market and the regional economy. His comments have been edited for length and clarity.

Q: What is your assessment of the Bay Area economy?

A: The Bay Area is one of the healthiest metro areas for job creation in the entire United States. It is because of the intellectual capital in the South Bay and San Francisco, and the manufacturing and transportation capabilities in the East Bay. That’s been the division of labor here for a long time.

Q: What about the East Bay? How do you see that economy?

A: The East Bay is characterized by anemic growth, but growth nonetheless. The Port of Oakland and the refineries will help the East Bay economy grow, even if it is very slow growth. The East Bay will have anemic growth, but most of the country is going to be jealous of that growth.

Q: The South Bay has enjoyed strong leasing activity from Google (GOOG), Apple (AAPL), and other major tech companies. Do you think that office leasing boom is going to continue?

A: I think it will hold steady despite all the bad crosswinds.

Q: What are some of those crosswinds?

A: My daughter is deployed on a Navy ship in the Persian Gulf right now. If there is an Iranian or Middle East oil event, that will be an issue. That will flatten growth.

Q: What about the East Bay commercial real estate market? What is happening there?

A: Our current trend of slow growth and slow leasing continues. Look at the job creation vehicles and the absorption. They are more dynamic in the South Bay than the East Bay.

Q What trends do you see for the retail market in the East Bay?

A In eastern Contra Costa County, there are rising vacancies for big-box retail. Developers overproduced retail in East County. It’s because of the foreclosures that there was less demand for retail than anticipated.

Q: What about the new Paragon Outlets in Livermore? Why are those doing so well?

A: That part of the East Bay was underserved. You have the BART station in the area and connections to the Central Valley, and the Paragon outlets are near two major freeways, 580 and 680, that intersect in the area. And they are building new houses in Livermore and Dublin. Forget about the foreclosures, the prices are high enough that they are building. The Tri-Valley is strong because that is a commuting suburb to Silicon Valley.

Q: How is retail doing in the South Bay?

A: South Bay retail is strong. Retail reflects the dynamics of strong engines for growth. Cars, merchandise, restaurants are all doing well. Same thing in San Francisco. Same thing in Walnut Creek and Emeryville and the Tri-Valley. Those are all good retail markets.

Q: What is your assessment of the downtown Oakland office and retail markets?

A: Oakland is a tale of several cities. Uptown is healthy and getting healthier. Jack London Square is getting better. Broadway addresses tend to be tougher for getting tenants in there. You never know when you’re going to be shut down because of an Occupy protest march.

Q: Overall, will Oakland see improvement?

A: Oakland, because of its central location and transportation access, has a lot of potential.

Q: Long term, do you see that Silicon Valley is going to continue on its growth pace for the commercial property market?

A: Bottom line is that Silicon Valley continues its present leasing and absorption activity and levels. And that will benefit the entire Bay Area.

Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.

Edward Del Beccaro

Age: 58
Birthplace: Covington, Ky.
Company: Transwestern
Position: Managing director
Residence: Danville

Five Things about Edward Del Beccaro

As past president of the Walnut Creek Library Foundation, he has raised several million dollars to build a new library.
He has a personal library in Danville with 4,000 books.
He is a volunteer for arts organizations.
His daughter is a petty officer in the U.S. Navy and that has caused him to be more involved in veterans organizations.
He is an “amateur urbanologist.” He loves to know how cities are born, how they evolve and how they decay.

Article source: http://www.contracostatimes.com/business/ci_22044873/chat-transwesterns-edward-del-beccaro

Mercury News interview: Transwestern managing director Edward Del Beccaro

Sun, 25 Nov 2012 21:32:23 +0000

Click photo to enlarge

Commercial real estate goes hand in hand with the local economy. If more jobs are being created, companies need more office space. If job shrink, then office vacancies increase.

He recently was interviewed about the commercial real estate market and the regional economy. His comments have been edited for length and clarity.

Q: What is your assessment of the Bay Area economy?

Q: What about the East Bay? How do you see that economy?

Q: The South Bay has enjoyed strong leasing activity from Google (GOOG), Apple (AAPL), and other major tech companies. Do you think that office leasing boom is going to continue?

A: I think it will hold steady despite all the bad crosswinds.

Q: What are some of those crosswinds?

A: My daughter is deployed on a Navy ship in the Persian Gulf right now. If there is an Iranian or Middle East oil event, that will be an issue. That will flatten growth.

Q: What about the East Bay commercial real estate market? What is happening there?

A: Our current trend of slow growth and slow leasing continues. Look at the job creation vehicles and the absorption. They are more dynamic in the South Bay than the East Bay.

Q What trends do you see for the retail market in the East Bay?

Q: What about the new Paragon Outlets in Livermore? Why are those doing so well?

Q: How is retail doing in the South Bay?

Q: What is your assessment of the downtown Oakland office and retail markets?

Q: Overall, will Oakland see improvement?

A: Oakland, because of its central location and transportation access, has a lot of potential.

Q: Long term, do you see that Silicon Valley is going to continue on its growth pace for the commercial property market?

A: Bottom line is that Silicon Valley continues its present leasing and absorption activity and levels. And that will benefit the entire Bay Area.

Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.

Edward Del Beccaro

Age: 58
Birthplace: Covington, Ky.
Company: Transwestern
Position: Managing director
Residence: Danville

Five Things about Edward Del Beccaro

Article source: http://www.mercurynews.com/business/ci_22044873/chat-transwesterns-edward-del-beccaro

San Francisco Leads Nation in Foreclosure Reduction

Thu, 01 Nov 2012 19:54:14 +0000

Home News San Francisco Leads Nation in Foreclosure Reduction

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

Trending: Mortgage Rates are Rising
On August 16, 2012, the average rate for a 30-year fixed mortgage rose to 3.62%. What kind of rate can you get?

Conventional:
FHA:

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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.

Filed under San Francisco

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

Bay Area housing values jump in second quarter

Tue, 24 Jul 2012 16:49:08 +0000

Bay Area home values increased at a sizzling pace in the second quarter, the online real estate site Zillow reported Tuesday, reinforcing hopes that at least some parts of the region are in the early stages of a housing market recovery.

Home values increased 3.9 percent in San Francisco from the first quarter of this year; 3.79 percent in Santa Clara County; 2.75 percent in Alameda County; 2.18 percent in San Mateo County; and 1.47 percent in Contra Costa County.

For the nine-county Bay Area, which includes areas hit hard by negative equity and foreclosures, the quarterly increase was a surprising 2.5 percent.

While such increases are unsustainable over the long run, according to Stan Humphries, Zillow’s chief economist, the rising values eventually should persuade more people to put their homes up for sale. That will ease the current lack of inventory that has put a damper on sales, he said.

Home sales in the region have been crimped because so many houses are worth less than their mortgages, so owners don’t list them, he said. Also playing into the low inventory is “seller psychology,” Humphries said. “No seller wants to sell at the bottom,” he noted.

With inventory low, parts of the Bay Area are experiencing bidding wars, and some buyers are even enticing sellers with paid vacations or a couple of months of free rent in their home or a condo. Last month Zillow ranked the San Jose and San Francisco metro areas as the top two

“sellers’ markets” in the U.S.

“I have so many frustrated buyers spinning their wheels, having a difficult time getting offers accepted when there’s a multiple-offer situation or quite simply just finding home,” said real estate agent Linette Edwards of Better Homes and Gardens Real Estate in Piedmont.

Edwards, who represents homebuyer and sellers in Contra Costa and Alameda counties, said she has started getting queries from would-be sellers who were too far underwater last year to consider putting their homes on the market.

“Now they’re calling me and realizing they may be able to start listing their houses,” Edwards said. “I anticipate we’ll see more of that in the coming year as homeowners realize the market has picked up.”

She said one homeowner in Danville is listing his home for $700,000. Last year the valuation was too low for him to consider selling, she said.

Zillow uses a proprietary formula for its home value index for detached single-family homes, as well as condos and co-ops. It includes homes that were sold, but also looks at other factors, including various attributes of homes sold, and excludes foreclosure resales.

For the greater Bay Area, the median home value was $453,255, Zillow said. San Francisco’s median home value was $680,000, followed by San Mateo County, $608,800; Santa Clara County, $575,200; Alameda County, $392,500; and Contra Costa County, $297,500.

Paul Kim of San Jose said he stopped looking to buy after a home in San Jose’s Rose Garden district drew 70 offers. Kim said he bid $80,000 over the asking price but the winner bid $140,000 over the price. “I’m going to start aggressively looking again in late September, when hopefully there won’t be as many buyers,” he said.

If rising prices spread to other areas, more homes may go on the market.

“When prices go up, more people will put their homes on the market and inventory will come back to normal levels,” said Richard K. Green, director of the Lusk Center for Real Estate at the University of Southern California. “There are places in the Bay Area where that could happen pretty quickly.”

Negative equity — the plight of homeowners who owe more on their mortgage than their home is worth — will probably remain high for the next two to five years, gradually lessening as home values increase, according to Zillow.

In some areas, negative equity is “not as much as people think,” said Silicon Valley real estate agent Brenda Avilla-Kintz. “We need another 10 to 15 percent growth and a lot of people won’t even need to do short sales,” in which a home is sold for less than is owed on it. “That’s still a couple years out,” she added.

“It’s becoming less negative as house prices are going up around the Bay Area,” said Ken Rosen, chairman at the Fisher Center for Real Estate and Urban Economics at UC Berkeley. “It only affects those people who bought at the peak two or three years. Part of the reason they have negative equity is that they borrowed a lot of money.”

Contact Pete Carey at 408-920-5419.

Article source: http://www.mercurynews.com/business/ci_21142320/bay-area-housing-values-jump-second-quarter-zillow

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