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Is the Rise in SF Bay Area Home Prices a Sign of a Healthy Real Estate Market? – Virtual

Wed, 19 Mar 2014 03:10:02 +0000

San Francisco has seen a record increase in home prices in recent times. ACL Real Estate and Property Management analyze whether this growth is a sign of a healthy real estate market by reviewing the recently released report by The Demand Institute.

San Francisco, CA (PRWEB) March 18, 2014

Analyzing the recent report published by The Demand Institute, leading real estate and property management firm ACL Real Estate and Property Management says that San Francisco is unlikely to continue to witness the double digit housing price growth it experienced in 2013.

According to their report, A Tale of 2000 Cities, published by The Demand Institute in February 2014, home prices are likely to increase by an average of 2.1% per year during 2015-2018. However, this figure does not fully reflect the huge pricing differences the nation is likely to see across region. Here is how the report sees prices across states by 2018.

The report also demonstrates the disparity between home prices and the median income, with rents in San Francisco as high as thrice the national average. The Case-Schiller House Price Index for June 2013 had put the price rise in San Francisco at 47%, the highest among all the metropolitan areas studied. This increase, The Demand Institute’s report says was “largely driven by investors buying up swaths of distressed homes to meet growing rental demand.” At the same time, the report forecasts an annual growth rate of 2.1% for single-family homes during 2015-2018, given the expectations of better equilibrium between demand and supply.

“Rising housing prices is not always an indicator of a healthy market because health is more a function of whether people can afford homes at those prices in the long term,” says a spokesperson from ACL Real Estate and Property Management. According to the report published by The Demand Institute, 41% of households faced a moderate-to-severe housing cost burden in 2013 (with 25% carrying moderate burden and another 16% carrying severe burden). The Harvard Joint Center for Housing Studies defines a moderate cost burden as “the need to allocate 30 to 50 percent of pretax household income to essential housing expenses: mortgage principal and interest payment, rent, insurance, taxes, and utilities,” while a severe burden occurs when this figure rises to 50 percent.

The situation is scarcely better for renters. Following the 2007-2008 recession, more and more homeowners have turned into renters, leading to rising demand for rental accommodation. According to The Demand Institute’s study, 31% of tenants in the United States are today spending about 30%-40% of their pre-tax income on housing, with one in every four spending more than 50%. So, is the San Francisco residential market really healthy?

About ACL Real Estate and Property Management: With wide experience and a proven track record in quality service and reliability, ACL Real Estate and Property Management has carved a niche for itself for its real estate and property management services in the East Bay and Peninsula areas. The company has a successful track record of assisting home owners in both selling and buying any type of property. The company also offers comprehensive property management services that ease the process of selecting tenants, maintaining the home and ensuring timely rent collection for homeowners.

For the original version on PRWeb visit: http://www.prweb.com/releases/2014/03/prweb11678686.htm

Article source: http://www.virtual-strategy.com/2014/03/18/rise-sf-bay-area-home-prices-sign-healthy-real-estate-market

San Francisco median home price hits plateau?

Fri, 30 Aug 2013 06:19:28 +0000

As investors shift, housing is the new stock market

Wed, 28 Aug 2013 00:07:29 +0000

Another large-scale investor, Aaron Edelheit, CEO of Atlanta-based The American Home, has a different take on the slowdown in investor demand.

“Last year, the amount of institutional investors activity exploded. What you’re seeing now is the natural digestion of that exponential growth. That means maybe a slowdown in how many home they acquire, it may mean letting go employees in areas where it doesn’t make sense.”

These investors are moving their focus from acquisition to profitability, hoping to show Wall Street that the business model is not only feasible but highly profitable. The American Home now boasts 2,500 homes in Atlanta; Nashville, Tenn.; Orlando and Tampa, Fla.; and Charlotte, N.C.

Edelheit said rental demand is tremendous, and management is working well, but the model is still too green for the larger investment community. “You look at the stock prices of the companies that are public, and it’s pretty clear that Wall Street remains unconvinced in the single family rental model, and I think it’s natural for these firms to start right sizing and make sure that they are profitable.”

That could mean consolidation, with some of the larger firms that have stronger management structures buying up smaller players. Large-scale investors are still a relatively small segment of the 14 million single family rental market, but it appears they are here to stay, despite the recent volatility. Smaller investors, however, may be moving on, having exhausted their cash and their credit opportunities.

(Read more: Home prices across the US defy gravity)

Last spring, Redfin was running seminars for small “armchair” investors on how to buy and manage single family rentals. The classrooms were packed.

“There was a surge because people read the papers—in March, April, there was a bull market in housing. Suddenly at every cocktail party somebody wanted to make a killing in real estate,” Kelman said. “Some wanted to ride the wave, but some just caught it late.”

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC

Article source: http://www.cnbc.com/id/100988740

Housing starts stall, optimism doesn’t

Thu, 18 Jul 2013 09:22:02 +0000

Despite an unexpected and substantial fall in new home construction in June, industry analysts appear undeterred in their veritable housing euphoria.

“This reflects a characteristically volatile multi-family sector rather than renewed weakness, and we expect homebuilding volumes to rise further later this year,” wrote Paul Diggle of Capital Economics.

Housing starts fell 9.8 percent, but the drop was entirely in apartment construction, which accounts for 30 percent of all residential construction activity, according to the U.S. Commerce Department. Multi-family starts fell by 26.2 percent in June compared to May. Single family housing starts fell by just 0.8 percent month-to-month.

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

“Should we be concerned? Not yet,” wrote Patrick Newport of IHS Global Insight. “Builders are still not putting up enough homes. Far from it. By our estimate, underlying demand is running close to 1.4 million. Meanwhile, housing completions in July were 755,000 [annual rate], while housing permits were 911,000.”

Article source: http://www.cnbc.com/id/100893375

Home builder confidence soars despite rising rates

Wed, 17 Jul 2013 15:20:39 +0000

“Today’s report is particularly encouraging in that it shows improvement in builder confidence across every region as well as solid gains in current sales conditions, traffic of prospective buyers and sales expectations for the next six months,” noted NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “This positive momentum could be disrupted by threats on the policy side, particularly with regard to the mortgage interest deduction and federal support for the housing finance system.”

All three components of the index rose in July. Current sales conditions rose five points to 60—the highest level since early 2006. The component gauging sales expectations in the next six months gained seven points to 67, and the component gauging traffic of prospective buyers rose five points to 45—marking the strongest readings for each since late 2005.

“Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten,” noted NAHB Chief Economist David Crowe. “Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften.”Sales of newly built homes rose just over 2 percent from May to June. Single family housing starts were flat. But permits, considered a more reliable indicator, gained 1.3 percent month-to-month.

Article source: http://www.cnbc.com/id/100889688

Builders Can’t Keep Pace With Demand As Bay Area Housing Booms Again

Tue, 11 Jun 2013 13:10:21 +0000

SUNNYVALE (KCBS)— New townhome projects continue at a rapid pace in Sunnyvale, where home construction can barely keep up with demand. The 14 currently under construction probably won’t be empty for long. Home values increased nearly 11-percent nationwide over the last year, but homes in the Bay Area are getting even greater gains.

The Standard Poor’s/Case-Shiller home price index released Tuesday showed that all 20 cities measured by the report posted year-over-year gains for the third straight month.

And prices rose in 15 cities in March from February. That’s up from only 11 in the previous month. The monthly figures aren’t seasonally adjusted and may reflect the beginning of the spring buying season.

Prices rose in Phoenix by 22.5 percent over the past 12 months, the biggest gain among cities. It was followed by the Bay Area (22.2 percent) and Las Vegas (20.6 percent).

Niccole Beckerman said her family has been priced out of the Silicon Valley.

“It’s really expensive. My parents were trying to buy a house and it’s really expensive just because the schools are really good,” Beckerman said.

The story is the same throughout much of the Bay Area. According to the San Francisco Association Of Realtors, the median Bay Area price for a single-family home has crossed above the $1 million mark for the first time since 2007.

The Inventory of available homes remains extremely low according to San Jose realtor David Martz. He said there are only about 1,000 homes for sale in a population of nearly two-million people in the greater San Jose area.

“Combined with the fact that we currently have interest rates at an all-time low, it’s possible to get an interest rate close to three percent, which is driving demand, so the buyers are out there in force,” said Martz.

Martz said four out of every five homes that come on the market here receive multiple offers, with prices, in some cases, going up hundreds of thousands of dollars over asking.

Despite the gains, a limited number of homeowners are putting their houses on the market. That’s helped lift home prices. And it’s made builders more willing to ramp up construction. Applications for building permits rose in April to the highest level in nearly five years.

The supply of available homes jumped in April, but was still 14 percent below its level a year earlier.

Stan Humphries, chief economist at Zillow, a real estate data provider, said that the increase in the Case-Shiller index has been skewed higher by cities such as Phoenix and San Francisco. Fewer homes are available in those areas because many homeowners still owe more on their mortgages than their homes are worth. That makes it difficult to sell.

Still, even excluding those markets, home prices are rising steadily nationwide, Humphries said. The increases are “certainly confirmation that the housing market is experiencing a brisk recovery,” he added.

The housing recovery is creating more construction jobs and bolstering the economy in other ways. Higher home prices make homeowners feel wealthier and encourages them to spend more.

Rising prices also encourage more would-be buyers to purchase homes, before prices rise further. They also enable more homeowners to sell homes, by reducing the number of people who owe more on their mortgages than the homes are worth.

Prices have been increasing steadily since last summer. Still, they are about 29 percent below the peak reached in July 2006.

Banks have raised their credit standards since the housing bubble burst and are demanding larger down payments. That’s made it particularly hard for potential first-time buyers to get a mortgage.

Article source: http://sanfrancisco.cbslocal.com/2013/05/28/builders-cant-keep-pace-with-demand-as-bay-area-housing-booms-again/

Home Prices See Largest Annual Gain in Six Years

Tue, 28 May 2013 23:11:39 +0000

Despite the strong gains, home prices are still down approximately 28-29 percent from their peaks in the summer of 2006 and are now back at levels not seen since late 2003.

While prices continue to improve, there are still headwinds, specifically a relatively weak employment picture and a tight mortgage market. Existing home sales are also recovering far faster than new home sales, and much of the gains in new home construction is in multi-family apartments, as single family housing starts lag.

(Read More: Record High New Home Prices to Grow)

“Housing is making a positive impact on the economy, if one goes through the GDP numbers, residential construction is adding to economic growth,” said Blitzer. “But when you look at this, buying and selling existing homes, is recognized, we all feel good, the prices are going up, it doesn’t add anything to GDP.”

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

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100769361

Santa Rosa ranked one of most profitable ‘flip’ markets

Mon, 20 May 2013 16:27:43 +0000

NORTH BAY — As median home prices climb sharply in the North Bay, a recent report by real estate data tracker RealtyTrac shows that the Santa Rosa-Petaluma market is one of the most profitable nationwide for “flipping” homes.

The report by the Irvine, Calif.-based firm shows the Santa Rosa-Petaluma Metropolitan Statistical Area as the 18^th most profitable market for those who buy, renovate and resell homes, part of a list of the 25 markets where the practice generated the highest rate of return in 2012.

Brian Burke

Yet Brian Burke, managing director of the Santa Rosa-based real estate private equity investment fund Praxis Capital, cautioned against labeling the area or any other as a hub for that activity.

“It’s very deal specific — it’s hard to generalize,” said Mr. Burke, whose company specializes in real estate investments that include flipping homes. “What that tells me is not that Santa Rosa is the best place to buy homes because you can buy at a deep discount. Houses in Santa Rosa have appreciated faster than homes in other areas.”

A “flipped” home in Santa Rosa generated an average gross profit of 19 percent, or $53,558, according to the report. There were an estimated 527 such sales over the year, with an average original purchase price for the home of $285,344. The number of single family homes involved in the practice had increased 47 percent from the year before.

The city was the least profitable of other Bay Area markets that made it to the list. Flipped homes in San Francisco and San Jose generated an average return of 23 percent.

The most profitable market on the list was Orlando, Fla., where a home purchased at an average price of $103,701 generated an average profit of 63 percent upon resale, according to RealtyTrac.

Climbing home prices have attracted an array of investors in the current market, with “flipping” being among those practices. RealtyTrac estimated the sales that involved a flip by counting transactions that occurred within six months or less of a previous sale of the same home. The firm looked at 600 metro areas for the report.

The practice has changed from the days when buyers could purchase a distressed property at a deep discount and sell at a profit after basic renovations, Mr. Burke said. While investors were able to put between $10,000 and $30,000 into a property for a profitable sale while the market was at its low, those activities now entail from $30,000 up to as much as $250,000, he said.

“Now the business has shifted to looking for properties that may need another bedroom, or even a full rebuild of a home,” he said. “It’s basically the homebuilding of this decade. It used to be you buy a property and build 20 homes on it — that was real estate development.”

Investors, which account for the majority of absentee buyers, purchased 24.2 percent of all homes across the Bay Area in April, according to San Diego-based real estate data tracker DataQuick. That number was up from 23.5 percent in April 2012, with investors paying a median of $362,000 across the Bay Area region.

With multiple private placement funds involving single-family homes, “flipped” homes and multifamily properties in Texas, Praxis has grown to $25 million under management in four years, Mr. Burke said. Those funds have generated an average 20 percent annualized return for investors, but it is the stability of the funds that has proven attractive in a volatile investment climate, he said.

Median home prices in Sonoma County were up 23.5 percent in April versus the same month in 2012, at $376,000, according to DataQuick. The number of sales, 611, was also up 15.3 percent, while the number of sales Bay Area-wide notched down 0.6 percent.

Median prices continued to climb outside of Sonoma County as well, with approximately half of that due to price appreciation and half due to a greater number of higher-priced homes in the sales mix, according to DataQuick. Distressed sales are also on the decline, accounting for 24 percent of sales versus 44 percent across the Bay Area one year ago.

In Marin County, a median price of $799,000 was 29.3 percent greater than one year ago, with 345 homes sales representing an 18.2 percent increase. Napa County saw an April median of $385,000, up 21.3 percent, and a 13.3 percent increase in homes sales, at 136. There were 1.3 percent more homes sold in Solano County, at 564, and the median price of $238,000 was up 36 percent from April 2012.

Bay Area-wide, median prices rose above $500,000 for the first time since almost five years. Prices first passed that threshold in May of 2004, and continued rising for four years before dropping below $500,000 in June 2008. Median prices for homes sold across the Bay Area reached a low of $290,000 in March 2009.

Bill Facendini

With fewer distressed properties in the mix, larger investors are now looking towards higher-end homes and income properties, said Bill Facendini, president of Terra Firm Global Partners. More of their investor clients are holding on to their current properties, particularly those that are generating rental income, he said.

Meanwhile, the period of flipping distressed properties has left a positive mark on many neighborhoods, he said.

“It has been good for communities. I’ve seen some communities that had started to slide, but then these people come in and refresh some of these distressed homes. People are having pride of ownership again,” he said.

Article source: http://www.northbaybusinessjournal.com/73472/santa-rosa-ranked-one-of-most-profitable-flip-markets/

San Francisco median home hits $1 million

Sun, 19 May 2013 22:22:32 +0000

This home at 6905 Norfolk Road in Berkeley boasts four bedrooms and three bathrooms for $1,095,000 or $322 per square foot. See listing here.

Blanca Torres
Reporter- San Francisco Business Times

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The median price for a single family home in San Francisco hit $1 million in April — the highest level since 2007.

The new median price is a 32 percent jump from $760,000 last year.

Got a cool $1 million to spend on a home? Click on the slideshow to the right for a virtual tour of $1 million homes in Bay Area cities.

“Shrinking inventory combined with low interest rates and motivated buyers has resulted in historically high sales prices,” said Christine Dwiggins, president of the San Francisco Association of Realtors.

Inventory levels are significantly low with only 1.1 months of inventory available — that means the amount of time it would take to sell off all the homes on the market if no new supply came on — in April whereas five to seven months of inventory is considered a balanced market.

Single-family homes in San Francisco are selling in an average of 28 days, down about 44 percent from an average of 49 days a year ago.

Meanwhile, the median price for a condo in San Francisco reached $850,000 in April — the highest level in the last two years.

Home prices have ballooned in the past year in San Francisco, but it’s not the only Bay Area city enjoying price gains.

See our slideshow for examples of what $1 million can get you in the Bay Area these days courtesy of ZipRealty.

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

Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/05/median-home-price-hits-1-million-in.html

Even as Housing Revives, Apartment Growth to Boom

Fri, 17 May 2013 16:11:02 +0000

“Despite overtures of the headwinds from new supply, our April survey results showed positive gains in both occupancy and rents ahead of expected seasonal trends,” she wrote in a report to clients.

(Read More: Apartment Building Bubbles as Single-Family Homes Struggles)

Zelman noted an intentional slowing by home builders, who are strapped by labor and supply shortages and who are looking to gain pricing power as the market recovers, as a key driver of apartment demand.

Rising rents are pushing some tenants to move, but not as many as expected. 11.5 percent of departing residents in April left due to rent increases, according to the report, up from 10.9 percent in 2012 but way down from 17 percent in 2011. In addition, more than half of those moving out remained in the apartment rental market. Thirty percent bought a home, and ten percent rented a single family home; the remaining moved in with family or friends.

The concern for investors in the apartment sector, especially in multi-family REITs (real estate investment trusts), is that there is too much new supply coming on line, just as demand is about to turn. The government numbers for housing starts in April added confusion to that argument, but some say the monthly numbers, especially for new construction, which have a wide margin of error, are just “noise.”

(Read More: Rising Rates Rattle Mortgage Market)

“Multi-family starts plunged 38.9 percent to 23,000 units, but the more important average of March and April was still a solid 321,000 units,” noted Michael Montgomery, an economist at IHS Global Insight.

Article source: http://www.cnbc.com/id/100746253