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Median home prices in San Francisco have fallen by more than $300,000 in three months, real estate website Compass reports in a new survey analyzing the Bay Area real estate market.

Yes, prices are falling, but many potential home buyers still consider the cost to own a home in the Bay Area too high for them to commit to with mortgage rates still up. Experts said it is tough to buy a home now as prices are likely to fall further.

“As that’s happening, we’re seeing sales start to dip,” said Nicole Bachaud, a senior economist at real estate website Zillow. “We’re seeing homes stay on the market longer so inventory is beginning to pool up, and that’s going to drop prices as demand is taking a step back because people just can’t afford to be transacting in this market.

Meanwhile, Redfin numbers show some prospective homebuyers are getting cold feet. The real estate website reports 23% of those who signed a contract to buy a home in Northern California backed out of the deal — that is double the number from last year.

Article source: https://www.nbcbayarea.com/news/local/home-prices-bay-area/2979104/

For the first time in years, the tables are starting to turn in the Bay Area’s insane housing market — as prices drop, some sellers have been forced to make concessions.

They’re chipping in to help pay closing costs and even to buy points to lower mortgage rates — all to convince increasingly reluctant buyers that the time is right to purchase a home.

“I’m seeing sellers concerned about prices dropping,” said San Jose-based real estate agent Gustavo Gonzalez, who works with both buyers and sellers. While he said recent price drops have not been drastic, sellers are having to reset their expectations of what they can get for their property.

The change comes as June home sale prices dropped from the previous month in all of the five core Bay Area counties, according to new data from CoreLogic and DQNews. Meanwhile inflation and interest rates remain high, giving many potential buyers pause. But there’s no reason to assume the real estate market is about to come crashing down, experts say. After all, prices are still extremely high.

“The market is absolutely changing,” said David Stark, public affairs director for the Bay East Association of Realtors. “Particularly when you have buyers or sellers in the market expecting certain things to happen because that’s what’s been happening, when you do have a shift it’s a big deal and it raises some eyebrows. However, you’ve got to take a longer view.”

San Mateo County — the most expensive market in the five-county Bay Area — saw the median sale price of a single-family home drop from just under $2 million in May, to $1.83 million in June, the new data show. San Francisco fell from $1.9 million to $1.8 million, Santa Clara dropped from $1.8 million to $1.7 million, Alameda dipped from $1.4 million to $1.3 million, and Contra Costa — the most affordable of the Bay Area counties — went from $950,000 to $900,000.

The California Association of Realtors recently reported similar numbers, and the new data further cements the idea that the tides are turning.

The slightly lower prices may present an opportunity for buyers who previously had been boxed out of the market — especially if they shop around and try to find a below-average interest rate, said Sheila Cunha, president of the Bay East Association of Realtors. In addition, some sellers now are willing to offer various incentives that were unheard of when the market was hotter — such as helping a buyer “buy down” their mortgage by paying points upfront for a lower interest rate.

For sellers, the drop in prices can be distressing. Cunha has a listing on the market now that probably would have been priced several hundred thousand dollars higher if it listed in January or February.

“It’s just trying to remind the sellers that when they’re pricing their property, they need to be real,” she said. “We’re not living in the market that we’ve been living in for the last three years.”

The shift is coming as the Bay Area struggles with multiple economic stressors. Consumer prices in the Bay Area jumped by nearly 7% in June — the fastest year-over-year increase since 1984. Gas prices have soared since last year and the average interest rate for a 30-year fixed-rate mortgage peaked at 5.8% at the end of June, compared to 3% at that time last year, according to Freddie Mac.

“I’m seeing buyers somewhat shocked about the new interest rates because they’ve gone up and what they means about affordability and what they can purchase,” Gonzalez said.

In addition, the stock market has been volatile — adding an extra worry in a region where many homebuyers sell stocks to fund their home purchase, Gonzalez said. The combination of factors is causing some buyers to take a step back and re-evaluate their options.

The number of single-family homes sold in the five-county Bay Area dropped from 4,239 in May to 3,737 in June — a nearly 12% decrease. Summer is traditionally a busy time for home sales.

Even so, median prices in several Bay Area counties were up year-over-year in June. Alameda County saw the biggest jump, with a 10% increase. Santa Clara County saw a 7.4% jump, while Contra Costa County reported a 0.3% increase, San Mateo County saw no change, and San Francisco saw a 1.5% decrease.

That’s a change from the start of 2022, when year-over-year appreciation was generally in the high teens, said Selma Hepp, deputy chief economist at CoreLogic.

At the same time, in the East Bay as of June, single-family homes spent an average of 15 days on the market before selling — up only slightly from 13 days in June 2021, according to the Bay East Association of Realtors.

“To me, that’s a great indicator of buyer behavior and buyer confidence and enthusiasm for home ownership,” Stark said. “The market is still moving very, very quickly.”

And one month of declining home prices does not make a trend, Hepp said. Several factors may have influenced June’s decrease, in addition to the economy. Luxury home sales dropped in June, which helped drag down median sale prices. And travel recently picked up after a major lull during the pandemic, which could be another reason people aren’t buying homes, Hepp said. “Maybe people are just on vacation.”

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Article source: https://www.mercurynews.com/2022/08/02/bay-area-home-prices-drop-as-inflation-interest-rate-woes-continue

Moody’s “assesses whether local economic fundamentals, including local income levels,” are sustainable relative to the cost of local housing.

The San Francisco-Oakland-Berkeley area — lumped together by Moody’s Analytics — has home prices that are overvalued by 11.4%, according to data by Moody’s Analytics. Other parts of what’s broadly considered the Bay Area, excluding Vallejo (where homes are overvalued by nearly 20%), see smaller or comparable percentages. 

Outside the Bay Area, particularly in areas that have had an influx of residents, home values are reportedly inflated. In the Santa Cruz-Watsonville area, homes are overvalued by nearly 36%. And in Reno, prices are 39% higher than expected. That’s not to mention Boise, Idaho, and Austin, Texas, which have seen overvaluations of 72% and 61%, respectively. (In Boise, Fortune notes, housing prices have already been cut.)

These “overvaluation” numbers don’t necessarily mean that prices will decline, Fortune explains. But when housing markets are no longer booming, as has been the case in 2022 so far, local housing markets with wildly inflated home values (over 25%) do typically experience significant price drops.

Now, what does that mean for the Bay Area, where overvaluation is less severe? It remains to be seen for certain, but already, price reductions for active home listings in San Francisco are up nearly 200%, according to Compass. And a Redfin report in July suggested that the Bay Area housing market is cooling faster than anywhere else in the country.

Article source: https://www.sfgate.com/realestate/article/san-francisco-home-prices-reportedly-overvalued-17398683.php

Across the breezeway from Berkeley Repertory Theatre’s new Medak Center, fuchsia light from the set of the new musical “Goddess” streamed through an open loading bay door, like a portal to Narnia.

Such a sight might frequently greet the company’s out-of-town actors, directors, designers and playwrights — as well as its fellows, Berkeley Rep’s interns — when they wake up each morning and walk next door to work from their new home.

But the 42,885-square-foot, $26.2 million center, which plans to host a dedication ceremony on Sept. 3, isn’t just about short commutes. It marks a historic and visionary investment in artist housing in a region with ballooning real estate costs.

Berkeley Rep’s outgoing managing director, Susie Medak, the center’s namesake and the driving force behind its construction, remembers when housing out-of-town artists cost the company $300,000 to $400,000 per year. These days it’s more like $2 million. Before the pandemic postponed the most recent season opening, Berkeley Rep had committed to paying for 7,000 nights at a nearby Marriott hotel for this past year.

“The amount of money we spend on other people’s buildings — that’s why this is so necessary,” Medak said while leading The Chronicle on a tour of the space in advance of the dedication ceremony. “Even if we couldn’t lower our costs, if we could fix them, that would make a big difference.”

Assuring comfort and quiet was another objective for the Medak Center. In a university town, a living situation that looked promising during daylight hours might be beset by 3 a.m. parties.

“I can’t tell you the number of times we’ve had to move actors in the middle of a run,” Medak said.

The new center, located next door to Berkeley Rep’s Roda and Peet’s Theatres, has 45 units with capacity for 128 occupants. (Fellows will share three-bedroom units.) When Berkeley Rep’s not using those rooms, it plans to rent them to other nonprofits. Medak said she’s already gotten calls from Aurora Theatre Company, the Freight Salvage venue and American Conservatory Theater.

The building also features a classroom and a studio workshop space, which could host anything from movement classes to small experimental performances. Artistic Director Johanna Pfaelzer’s vision, Medak said, is to engage audiences “who are as excited about the process as they are about product.” Creating this new small venue adjacent to the flagship spaces is a part of that effort.

Other amenities include new storage space, a third-floor terrace with gardening beds for organic produce for residents, and a covered loading dock for the theaters so crews no longer have to load and unload sets while exposed to the rain.

The building has key-card access, laundry on every floor and full kitchens in every unit. It’s also Gold LEED-certified for environmental efficiency.

A trendy gray palette marks the interior. For one wall of the exterior, Berkeley Rep has commissioned a four-story mural by Oakland artist Cece Carpio to honor Ohlone peoples, on whose ancestral and unceded lands Berkeley Rep now sits.

The theater has owned the property where the Medak Center was built since 1991, but for years it contained an empty lot and a warehouse. The project was a decades-long dream until Signature Bank helped finance it; the theater company finally broke ground in 2019.

One comparable local facility is the San Francisco Conservatory of Music’s Ute and William K. Bowes Jr. Center for Performing Arts, which opened in 2020 and can house 400 conservatory students and 10 visiting artists, as well as 52 students from the San Francisco Ballet School. Those students pay for rooms, however, while Berkeley Rep’s fellows get free housing as part of their contract as workers.

“The Bowes Center brought together a range of our ambitions: positioning the institution right in the middle of Civic Center, providing much needed additional performance and teaching space, giving our students beautiful, safe accommodations in a place where they can work and live,” said President David H. Stull.

That means, for example, a guest artist such as superstar Chinese pianist Yuja Wang might live and create and record music in the same building as students. “It’s really created this fantastic nexus of opportunities,” Stull noted. 

The San Francisco Ballet School has been able to increase student beds from 40 to 52 since the Bowes Center opened, reports Director of Education and Training Jennie Scholick. And now that students live right next to where they take classes, as opposed to a bus ride away in Pacific Heights, the school can accept younger students.

At Berkeley Rep, Medak said that the company won’t know all the new center’s benefits and opportunities until residents move in, but her excitement is palpable.

The company’s first fellows are set to move into the new building Sept. 26, followed by visiting artists in Berkeley Rep’s Ground Floor program, and then the cast and creative team for “Wuthering Heights” later in the fall.

The board’s commitment to the Medak Center through pandemic delays and uncertainty, Medak said, was “the greatest statement of our intent to exist on the other side of this pandemic. Building this building is a statement of optimism.”

Medak recalled something the late New York theater producer Margo Lion once told her: “The only thing that kept (Berkeley Rep) from being the perfect place to develop new work is the extraordinary cost of our housing.”

Now, she said, “we’ve fixed that.”

Article source: https://datebook.sfchronicle.com/theater/how-one-berkeley-company-plans-to-house-traveling-artists-amid-soaring-bay-area-housing-crisis