The Bay Area’s overheated housing market is restoring thousands of homes to their pre-crash peak values in a ZIP-code-by-ZIP-code recovery that is rapidly spreading from Silicon Valley to the East Bay.

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.

“Seven or eight years ago, there was really a bubble,” said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. “Now it’s just good real estate where values are returning to near past peaks.”

Every part of the Bay Area has seen gains in the past year, with Silicon Valley leading the way. But parts of Contra Costa and Alameda counties, where subprime lending was heavy, are still far below their peaks.

The recovery has pulled many homeowners out from underwater — when houses are worth less than the mortgage — and convinced others it may finally be time to sell and move to bigger homes. They’re diving into a fast-moving market in which homes can sell in a day for more than the asking price.

Mike and Lois Lee

sold their Danville home for $780,000 in two days this month, after their real estate agent, Mark Kennedy of Empire Realty, told them their house was again worth more than they paid for it. They made $10,000 on the sale, the result of the past year’s rise in home values.

“I had no idea the market had corrected that much,” Mike Lee said.

Kennedy said the couple tried to sell in 2011 but there were no takers, and it might have resulted in a short sale. “I would say that in a year they went from losing money to making money,” he said.

In one Sunnyvale ZIP code that surpassed its bubble-era peak in December, Greg and Daisy Biggers decided in January it was time to make a move. Their family — four children — was outgrowing the home and the market timing looked right. In fact, it couldn’t have been better.

The Biggers family sold their home in less than a week, with all offers above asking price. Then they bought a home in Orinda, paying above the asking price. The whole process, from the decision to move to the purchase of the Orinda home, took eight weeks. Both homes are in escrow, and agents declined to reveal the sales prices before closing.

“When we started looking at the market, we picked up on this

Daisy Biggers, left, her husband, Greg, and son, Jeffrey, 11, pack some of their belongings that were stored in the garage of the house they recently sold in Sunnyvale on Tuesday, April 23, 2013. They sold their house in less than a week, and bought one in Orinda. The whole process, from the decision to sell, took only eight weeks. Housing values have staged a big comeback and are rapidly accelerating around the Bay Area, with the biggest recovery so far in the Peninsula and Silicon Valley. (Patrick Tehan/Bay Area News Group)
(
Patrick Tehan
)up-trend in prices,” Biggers said. “We quickly decided that if we’re going do it, now is the time. We had much higher demand than we had hoped for, which is great. And things are moving really, really quickly.”

Some pricier parts of Berkeley, Pleasanton, Oakland and Orinda are 10 percent or less below their earlier peaks. Not far behind are San Ramon, Moraga, Alameda, Danville and Fremont.

“Property in Dublin is selling at prices you would more commonly associate with some parts of the Peninsula,” said Lanny Baker, president and chief executive of ZipRealty. Baker said prices should hold even as more homes come on the market.

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.

Ally Yang bought a home in Mountain View in a day after losing another home to a higher offer. Her agent, Mark Wong of Alain Pinel Realty, “sent me the listing. I said let’s go check it out. I walked in, it’s a single family, I know the value, I think it’s a good deal.”

She made an offer of $705,000 that afternoon, and it was accepted. “I think in this kind of market you just have to know what you want and go after it,” she said.

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.

“I watch the real estate market a lot,” Herrmann said. In February, she called her real estate broker. “I said things are overheated, inventory is low, prices are moving up and rates are low. Is this a good time to sell?”

The answer was yes.

Fifteen days later, the house was sold in an all-cash deal for over the asking price.

“The market is faster than ever,” said Burlingame broker Jennifer Tasto. “When a place sells, there’s one person who gets it and two other people replacing that buyer.”

The recovery is in full bloom in San Francisco. The Mission Bay neighborhood, where new luxury condominiums are about all that’s for sale, edged past its prior peak in January, and other parts of the city are nearing their previous highs.

“San Francisco has recovered incredibly,” said Leslie Bauer, an agent who specializes in the South Beach, Yerba Buena and Mission Bay districts. “I would say we’re recovered beyond when the market fell.”

But the data also reflects the stark contrast between the tech-heavy South Bay and Peninsula, where many areas are surpassing their pre-crash peak values, and the far reaches of the East Bay, where home values in some places are 50 percent or more below peaks that were inflated by subprime lending.

Antioch, Pittsburg, Richmond and a ZIP code in East Oakland have a long climb ahead of them. There, values still hover near their bottoms.

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.

“We have a ways to go before we recover,” said Luis Salas, a real estate agent in Antioch. “We’re far from the city and there was so much construction the prices went down a lot in Antioch — in some cases more than 50 percent from the peak. But it’s recovering.”

As prices rise in Antioch, some short sales are drawing offers over asking price and becoming regular equity sales, according to Joy Di Ricco, an Antioch real estate agent who has specialized in short sales since the market crash.

She said one client’s home was $100,000 below the amount of the mortgage six months ago.

“I told them hold off,” Di Ricco said. “Sure enough, I think in another 30 days we may have an equity sale.”

Contact Pete Carey at 408-920-5419 Follow him at Twitter.com/petecarey.

Article source: http://www.mercurynews.com/business/ci_23107869/bay-area-housing-recovery-spreads-from-silicon-valley

The Bay Area’s recovery from the housing crash is proceeding ZIP code by ZIP code, with only a few upscale communities nearing the values they saw before the bubble popped five years ago.

It may take another three to five years for the entire region to return to a healthy housing market, one that sees prices go up every year in most areas, and has far fewer foreclosures.

According to an analysis by this newspaper of home values by ZIP code, with higher priced homes, such as the core of Silicon Valley and parts of San Francisco, have recovered much of the home equity lost in the crash. The data is for all types of homes: single-family, condos and townhouses. But neighborhoods with low-cost homes, especially those in parts of Alameda and Contra Costa counties, are still far below peak values, hurt by the waves of foreclosures that struck those areas.

The analysis of ZIP code data supplied by the online real estate site Zillow used April 2006 as the approximate peak in Bay Area home values, although different communities reached their highest levels a bit before or after that. After that, values gradually declined until crashing in late 2007.

“In the Bay Area, it’s incredibly sensitive to where you are,” said Richard K. Green, director of the Lusk Center for Real Estate at the University of Southern California. “Places like Atherton and Palo Alto are just crazy. San Francisco is not all the way back, but it’s getting there. Oakland

is still dead.”

Of the 204 Bay Area ZIP codes analyzed, the median loss in value from the peak stands at 30 percent. The top 10 best performing ZIP codes were in Silicon Valley. The bottom 10 were in Alameda and Contra Costa counties.

“It comes down to whether these are areas with a lot of unemployment or a lot of jobs,” said Svenja Gudell, senior economist at Zillow. “Is there a lot of negative equity and an oversupply of homes? That will put downward pressure on prices.”

The good news is that real estate agents say those low prices are beginning to attract buyers.

Cheryl and Ken Mensing bought their first house this month after 28 years in a mobile home. There were nine bids on the 4-bedroom, 2-bath foreclosure in the Santa Teresa area of San Jose listed at $429,000. The couple won with a bid of $442,000.

Mensing said she and her husband saw prices edging up and decided that the stars were aligned for “a leap of faith” into the housing market.

“The prices finally came into where we could actually afford them and get into the market,” she said. “The interest rates were so low, so we thought this is the time — now or never. We just closed our eyes and jumped.”

Their agent, Eric Sjoberg of Century 21 in San Jose, said he thinks the South Bay is “past the tipping point. I’m starting to see increasing values incrementally in many, many of our markets.”

But while one neighborhood may be on the road to recovery, others in the same city may still be struggling. The variation between neighborhoods is evident in San Jose, where one ZIP code (95116) bordering the city’s east side had home values in February that were still 52 percent below the Bay Area’s peak in April 2006, while another (95129) in West San Jose was only 11 percent under.

To the north, in the upscale areas from Mountain View to Menlo Park, two Los Altos ZIP codes (94022 and 94024) are 5.6 and 3.7 percent below their highest point. One ZIP (94306) in Palo Alto is back at its peak. Parts of San Francisco are within 15 percent or less of their highest values before the bubble burst.

“There are two things going on,” said Jed Kolko, economist with Trulia, an online real estate company. “There has been stronger job growth in San Francisco and in some of the areas with a lot of high-tech jobs. But more importantly, these are areas that didn’t see the overbuilding during the boom.”

The East Bay is more challenged, especially eastern Contra Costa County. One Antioch ZIP code (94531), for example, is 64 percent below its high point. But Lafayette (94549) has regained all but 23 percent of the value it lost in the housing crash.

Mary Chatton Brown, an agent with Prudential California Realty in Orinda, said she has one client doing a short sale and another facing foreclosure. She recently sold a home that fetched a price below its appraisal.

“I have been in business quite a number of years, and I have been through a lot, but never like this,” she said. “This is very unique. That’s why everybody’s walking around thinking, what’s going to happen? When are we going to get through it?”

Not for a few more years, according to Home Value Forecast, which provides analysis and forecasts of the housing market.

“In general, the Bay Area’s held up better than other hard-hit markets around the country,” said Michael Sklarz, president of Collateral Analytics and contributing author of Home Value Forecast.

“We think the market’s hit bottom and we’re in the midst of a gradual recovery which will start accelerating over the next three to five years,” Sklarz said. “What people don’t understand about real estate markets is they are very long drawn-out cycles.”

Homebuilders are seeing signs of a modest recovery in some parts of the Bay Area, and are launching new single-family and condo developments. The San Jose metro area is back to its typical level of home building, according to Trulia.

“We think the recovery’s going to be ZIP code by ZIP code,” said Michael Maples, co-founder of Trumark Homes in Danville. Trumark is starting one single-family home development in San Jose this summer, and two in Sunnyvale later in the year, for a total of nearly 250 single-family homes and townhouses.

In anticipation of the recovery, Toll Brothers’ Northern California Division has been acquiring single-family lots over the past year — 24 east of Walnut Creek, 71 in Brisbane, and 51 in Sunnyvale.

“We do feel a little bit better about the market,” said Gary Mayo, Northern California group president of the national homebuilder. “There are people sitting on the fence not wanting to make that major investment until they can see some positive signs in the economy. We see those signs all over the Bay Area.”

Also investing in the housing market is San Francisco-based 643 Capital Management, which owns 600 foreclosed houses in the Bay Area and plans to buy more. Gregor Watson, the fund’s co-founder and managing partner, said he expects “modest appreciation for four or five years. There’s light at the end of the tunnel, but that may be a long tunnel,” he said.

At least some builders are counting on tech workers to help spur the housing recovery.

“My hope is the tech boom that’s creating all these jobs will spill over into the rest of the nine-county Bay Area,” said Doug Bauer of TRI Pointe, which plans to open a luxury home development in the San Jose foothills this month. “As prices of homes become too expensive for somebody making $80,000 a year, they’re going to have to head back into Contra Costa County. It’s like we repeat ourselves every 10 years.”

Contact Pete Carey at 408-920-5419.

Article source: http://www.mercurynews.com/business/ci_20402461/bay-area-sees-patchwork-recovery-from-housing-crash?source=rss