homesmillbrae.com » Stiff Competition

Housing Recovery to Face Test as Builders Report

Tue, 23 Apr 2013 10:57:49 +0000

Lack of land, labor and credit are all standing in the way of increasing home buyer demand, and leaving many of the small and mid-sized builders frustrated as their costs soar. They simply don’t have the access to cash that the bigger players do.

“I think for the short term the people who have the cash will have the advantage. Over the longer haul, I think it will even out. I think the recovery is uneven,” says Howard.

(Read More: Is Multi-Family HomeConstruction Overheating?)

The first builder to report Monday is Virginia-based NVR, with Ryland, Pulte and D.R. Horton continuing through the week. Analysts say Texas-based D.R. Horton, whose stock has recently outperformed its peers, is the one to watch, a bell weather for the group.

“They are the largest builder in terms of the number of closings, and they are in the most markets, so they will probably be able to tell us not only about orders, but also about other things that are important to folks now, like what are material prices doing, how are you negotiating with suppliers,” notes Megan McGrath, an analyst at MKM Partners.

Most of the big builders have seen dramatic growth in new orders, as first time home buyers slowly come back to the market. These buyers are facing stiff competition from all-cash investors in the existing home market, and are therefore looking to new builds. D.R. Horton is an entry-level builder, but has been able to shift product to move-up buyers when the demand is there. Move-up buyers have been moving out of the market of late, despite the overall housing recovery and rising values.

“I think the recovery we’re seeing right now is first-time buyer and the very high end of the market. The move-up buyer has not really shown up as of yet, and if you want to see a very strong recovery in housing we need to see the move-up buyer playing a more prominent role than they are today,” says Richard Smith, Chairman and CEO of Realogy Holdings Corp.

Monthly readings on new and existing home sales are also out next week and will offer more insights into the current strengths and weaknesses of the housing recovery in this crucial Spring season.

(Read More: What’s Holding Up City Home Prices? Boomers)

“In a worst-case scenario, confidence could weaken further and housing starts could mark time,” says Paul Diggle of Capital Economics. “But by far and away the most likely outcome is that the construction industry’s growing pains are overcome and homebuilders break ground on many more sites over the next few years.”

Article source: http://www.cnbc.com/id/100656470

Buyers compete for short supply of homes in Bay Area – Marin Independent

Mon, 26 Mar 2012 04:44:55 +0000

Peter Giovannotto is smack in the middle of a major shift in the Bay Area housing market.

The Peninsula real estate agent recently had a modest Palo Alto ranch-style home draw 38 offers and sell in eight days for nearly a half-million dollars more than the asking price, all par for the course in Palo Alto’s overheated real estate market.

“We started at $1.2 million and ended up selling for $1.65 million,” he said.

A flock of eager buyers competing for fewer-than-usual homes for sale is sending prices soaring along the Peninsula, where Googlers and Facebook employees duke it out with foreign investors for a place to live.

In other parts of

the Bay Area, pent-up demand has helped create a hot market for lower-cost homes, with buyers having to move fast to grab foreclosures and be prepared for stiff competition on other homes for sale. In Contra Costa County, pending sales of single-family homes are up about 62 percent from last year and inventory is down 32 percent — a seller’s market.

“We are getting lots of multiple offers on lower-end properties,” said Barbara Safran, president of the Contra Costa Association of Realtors. “One person told me they had 12 offers on a property in Concord.”

The winning bidder on the Palo Alto home was a Google (GOOG)

employee from China, highlighting two trends: the rise of the wealthy tech buyer and the buyer from Asia. “We’re seeing lot more buyers from that region,” Giovannotto said. “It’s difficult to buy property over there, and the power of their money is greater over here.”

Another Palo Alto home drew 10 offers recently, selling for $325,000 over the asking price.

In the East Bay, a relatively small supply of lower-priced homes and an increase in demand has homebuyers jumping.

Two

couples working with Danville real estate agent Kevin Kieffer of Keller Williams used the “strike first” method Kieffer advocates to grab their homes this month. He tells clients that in this market, they have to make a bid almost immediately, not wait until the weekend when the bulk of buyers are looking. If it’s a foreclosure, the bank is likely to welcome a decent offer, he said.

Cameron and Rissa Kossen bought a bank-owned Martinez house that’s near Pleasant Hill schools for $313,000 by making an offer quickly. Had he waited until the weekend, Cameron Kossen said, other buyers would have made offers and “it would have gone up to $330,000 or $340,000.”

Another East Bay couple, Ken and Ashley Wilson, were outbid on three homes

before landing the fourth, a three-bedroom, two-bath house in Pleasant Hill.

“The housing market is moving so quick that houses would come on the market and my wife and I were having to make decisions almost at that minute, because there were others willing to purchase the home right then,” said Ken Wilson, who works at Lawrence Berkeley Laboratory.

On both sides of San Francisco Bay, real estate agents say fewer homes than usual are for sale.

“Menlo Park and Palo Alto are both desperate for inventory,” said Wendy McPherson of Coldwell Banker in Menlo Park. She said that Palo Alto recently had only about 30 homes for sale.

Ray Chavez of Alain Pinel in Los Gatos sold a home in Santa Clara that received five offers in

six days and sold for $17,000 over the asking price of $609,000, a big bump in that market for a small home.

“It’s amazing what’s not out there right now,” he said. “There are only 32 homes in the whole city of Santa Clara. We’re down 74 percent from February 2011.”

The threat of historically low interest rates rising further — the rates rose above 4 percent this week — combined with increased confidence in the economy is bringing out buyers who have been holding back.

“I think it’s a little bit like Christmas,” said Safran of the Contra Costa Association of Realtors. “People finally started buying again this Christmas when they hadn’t bought for three years. I think they’re just ready. It’s time.”

Sales were

up across the Bay Area in February, the strongest showing for that month in five years, according to DataQuick, a real estate information service.

Silicon Valley is having its fourth-highest year in sales since 2000, said Richard Calhoun of Creekside Realty in San Jose. Calhoun, who has tracked the inventory of homes for sale in Santa Clara County for more than a decade, said that in some parts of Silicon Valley, including the Palo Alto area, the entire stock of homes for sale would be exhausted in less than a month.

“The housing market has definitely bottomed and is on a recovery path,” said Ken Rosen, chairman at the Fisher Center for Real Estate and Urban Economics at UC Berkeley. “I think it is a real recovery happening, around the whole country.”

Contra Costa County, saturated with foreclosures, is still 18 months away from a full recovery and a normal housing market, Rosen said. “There’s going to be a spillover from San Francisco and the Bay Area, but it hasn’t happened yet.”

Some would-be sellers on the Peninsula seem to be holding out until next year, when Facebook’s newly minted millionaires will begin spending their money, potentially driving up prices even more.

Sellers are “getting greedy” and pulling homes off the market, said Alex H. Wang of Rainmaker Properties in Los Altos. “They get multiple offers on their house and say, ‘I don’t want to sell anymore. I’ll wait until next year.’ That upsets everybody.”

Contact Pete Carey at 408-920-5419.

Article source: http://www.marinij.com/business/ci_20235268/buyers-compete-short-supply-homes-bay-area

Buyers compete for short supply of homes in Bay Area

Sat, 24 Mar 2012 16:38:55 +0000

Peter Giovannotto is smack in the middle of a major shift in the Bay Area housing market.

“We started at $1.2 million and ended up selling for $1.65 million,” he said.

In other parts of

The winning bidder on the Palo Alto home was a Google (GOOG)

Another Palo Alto home drew 10 offers recently, selling for $325,000 over the asking price.

In the East Bay, a relatively small supply of lower-priced homes and an increase in demand has homebuyers jumping.

Two

Another East Bay couple, Ken and Ashley Wilson, were outbid on three homes

before landing the fourth, a three-bedroom, two-bath house in Pleasant Hill.

On both sides of San Francisco Bay, real estate agents say fewer homes than usual are for sale.

“Menlo Park and Palo Alto are both desperate for inventory,” said Wendy McPherson of Coldwell Banker in Menlo Park. She said that Palo Alto recently had only about 30 homes for sale.

Ray Chavez of Alain Pinel in Los Gatos sold a home in Santa Clara that received five offers in

six days and sold for $17,000 over the asking price of $609,000, a big bump in that market for a small home.

“It’s amazing what’s not out there right now,” he said. “There are only 32 homes in the whole city of Santa Clara. We’re down 74 percent from February 2011.”

Sales were

up across the Bay Area in February, the strongest showing for that month in five years, according to DataQuick, a real estate information service.

Some would-be sellers on the Peninsula seem to be holding out until next year, when Facebook’s newly minted millionaires will begin spending their money, potentially driving up prices even more.

Contact Pete Carey at 408-920-5419.

Article source: http://www.mercurynews.com/business/ci_20235268/buyers-compete-short-supply-homes-bay-area

U.S. Federal Reserve Beige Book: San Francisco District (Text)

Thu, 08 Sep 2011 10:08:25 +0000

The following is the text of the
Federal Reserve Board’s Twelfth District– San Francisco

TWELFTH DISTRICT-SAN FRANCISCO

Economic activity in the Twelfth District continued to expand
modestly during the reporting period of mid-July through the end
of August. Upward price pressures were mixed but appeared to
ease overall, and upward pressures on wages were subdued. Demand
for retail items edged up on balance, as did demand for business
and consumer services. Manufacturing activity in the District
grew a bit further. Demand remained robust for agricultural
producers but fell slightly for providers of energy resources.
Activity in District housing markets stayed sluggish, and demand
for commercial real estate was largely unchanged. District
banking contacts indicated that overall loan demand was stable
or inched down.

Wages and Prices

Upward price pressures were very limited on net during the
reporting period. Further modest price declines were noted for
energy inputs and some raw materials. Stiff competition among
domestic firms, combined with weak final demand, resulted in
largely stable prices for most categories of final goods and
services. The primary reported exceptions were clothing and
medical care, for which recent cost increases were passed
through to final prices.

Upward wage pressures were largely nonexistent, as compensation
gains were held down by high levels of unemployment and limited
demand for new hires. As a result of uncertain product demand,
businesses in most sectors expect to remain highly cautious in
regard to hiring for the foreseeable future, suggesting that
compensation pressures are likely to remain subdued. However,
contacts continued to report significant upward wage pressures
for workers with advanced skills in technology fields.

Retail Trade and Services

Retail sales were mixed but rose a bit overall. For general
merchandise such as apparel and smaller household items,
contacts reported modest improvements in sales, with stronger
performance for traditional department stores than for discount
chains. By contrast, retailers of major appliances and furniture
reported weaker demand resulting from a renewed sense of caution
on the part of consumers. Grocery sales were largely flat. Sales
of new automobiles improved somewhat, despite ongoing shortages
of parts and assembled vehicles for some brands arising from the
natural disaster in Japan earlier this year. The demand for used
vehicles continued to firm, with contacts noting rising sales
and additional upward pressure on prices and trade-in values.

Demand for business and consumer services continued to
strengthen overall. Sales expanded further for providers of
technology services, as consumer demand for software, e-books,
and mobile applications continued to grow. Providers of
professional services such as law and accounting reported that
demand was little changed from the prior period. Similarly,
demand for transportation services was characterized as largely
flat. For energy utilities, demand waned a bit during the
beginning of the reporting period but improved later. Providers
of health-care services reported that demand strengthened
somewhat. Conditions in the District’s travel and tourism
industry improved further, with demand growth reported for the
business and tourism segments alike.

Manufacturing

District manufacturing activity was mixed but appeared to grow
slightly during the reporting period of mid-July through the end
of August. Although manufacturers of semiconductors and other
technology products reported slower growth for new orders and
sales, capacity utilization rates remained high and inventories
were near desired levels given the pace of sales. For makers of
commercial aircraft, significant increases in new orders for
narrow-body aircraft combined with an existing order backlog to
keep production rates near capacity. A metal fabricator noted
that sales were “steady but slow” and raw materials were readily
available. Petroleum refiners reported slightly weaker demand
and capacity utilization rates that were largely stable, causing
product inventories to rise somewhat. Demand held at very low
levels for manufacturers of wood products.

Agriculture and Resource-related Industries

Demand grew further for agricultural products and metals but was
down slightly for natural resources used for energy production.
Orders and sales continued to expand for a wide variety of crop
and livestock products, especially cattle and cotton. Contacts
noted that agricultural input costs have stabilized following
significant increases in the spring. Rising sales prices for
assorted metals spurred further increases in mining activity in
parts of the District. Overall demand for crude oil weakened a
bit, primarily reflecting weaker domestic demand, but extraction
activity for natural gas was largely unchanged.

Real Estate and Construction

Demand for housing and for commercial real estate was little
changed from existing low levels. Although the reports pointed
to scattered signs of improvement in the entry-level and high-
end segments of the District’s housing markets, the pace of home
sales and construction remained depressed. By contrast, demand
for rental space continued to grow, enabling landlords to
increase rents and scale back tenant concessions in some areas.
Demand for commercial real estate remained weak overall, and
vacancy rates for office and industrial space stayed elevated
throughout the District. Conditions were mixed across geographic
markets, with deterioration in leasing activity for some areas
contrasting with ongoing improvements in areas that have
benefited from growth in the technology sector, such as the San
Francisco Bay Area and Seattle.

Financial Institutions

Reports from District banking contacts indicated that loan
demand was largely stable to marginally down compared with the
prior reporting period. Citing heightened levels of uncertainty,
some businesses showed a reduced desire to engage in
expansionary capital spending, reportedly causing demand for
commercial and industrial loans to weaken slightly. Contacts in
most sectors reported downward revisions to their expectations
for growth in their industry for the remainder of the year,
suggesting that capital spending will remain muted in coming
months. On the consumer side, loan demand was largely unchanged.
While lending standards remained relatively restrictive for
business and consumer loans, the reports pointed to ongoing
improvements in overall credit quality and some loosening of
credit standards for selected borrowers.

Article source: http://www.bloomberg.com/news/2011-09-07/u-s-federal-reserve-beige-book-san-francisco-district-text-.html