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Repeat, repeat, repeat: The Bay Area housing market is showing definite signs of cooling.

That message — heard again and again in recent weeks — is amplified once more by a report from the California Association of Realtors, showing pending sales across the region down 11.6 percent in October on a year-over-year basis.

“Prices have risen to a point where they’re starting to eat into demand,” said Jordan Levine, an economist for C.A.R.

The report shows pending sales for October were down year-over-year in San Francisco by 21.2 percent, in Santa Clara County by 12.5 percent, and in San Mateo County by 5.0 percent. The report does not break out numbers for Alameda and Contra Costa counties.

But given the dramatic size of the regional decline, Levine said, “You can extrapolate that this is something we’re seeing in the East Bay, as well. It’s not just a San Francisco and Santa Clara phenomenon.”

The report also says that multiple offers are down across the state — for the seventh consecutive month. In October, 59 percent of California properties received multiple offers, down from 63 percent in September and from 64 percent in October 2015.

Again, Levine emphasized that buyers are suffering from sticker shock and therefore feeling less competitive.

“It’s a question of finding the funds you need for a down payment,” he said. “When prices get to the levels that we’re seeing, you’re still having to come up with a pretty decent down payment — even if you’re a first-time home buyer getting an FHA loan for 3.5 percent down.”

Levine did some quick math: In Alameda County, where the median price of a single-family home is $780,000, that FHA loan would translate to “more than $27,000 cash you’ve got to put down, not counting other closing costs …” he said.

“I just think that affordability is becoming an issue on the demand side. A lot of folks will be challenged to get into home ownership.”

Real estate tracking firm CoreLogic’s next county-by-county analysis of the Bay Area market is scheduled for release Wednesday.

Article source: http://www.mercurynews.com/2016/11/29/definite-signs-of-frost-on-once-sizzling-bay-area-housing-market/

That Bay Area home sales are sluggish isn’t a surprise. But the slowest October in three years? That is.

A new report on the region’s residential real estate market reinforces that the market continues to slow — while home prices keep climbing. The number of single-family homes sold in the nine counties was down 1.5 percent in October from the year before, according to the CoreLogic real estate information service. Looked at historically, sales were 9.2 percent below the average October, going back three decades.

It was the third straight month that regional sales were up or down 2 percent or less on a year-over-year basis.

“That’s basically flat,” said Andrew LePage, the service’s research analyst. “And why is that, since job growth is good and mortgage rates — even with the recent increase — are basically low? It’s largely because of buyers’ affordability concerns and the region’s inventory constraints.”

We’ve been hearing this for a while now.

The tight housing supply, coupled with high prices and challenging loan-qualification hurdles, practically guarantees a low volume of sales. At the same time, with job growth continuing to fuel demand, prices haven’t stopped climbing. It all adds up to the ongoing crisis: not enough houses, generally, and not enough affordable housing, specifically.

The annual rate of appreciation has ratcheted down into single digits in most locales, and many analysts agree the market is losing steam. Still, look at these median prices for single-family houses in the month of October: $499,000 in Contra Costa County (up 9.7 percent from the year before); $702,500 in Alameda County (up 6.4 percent); $940,000 in Santa Clara County (up 8.3 percent); and $1.268 million in San Mateo County (up a whopping 24.7 percent).

That San Mateo County figure is an all-time high — though LePage expressed caution, calling it “a record with an asterisk,” since the county’s reporting of closings toward the end of October was incomplete. Once all the data is collected, the number could be adjusted downward.

Even so, the region’s prices, especially in Silicon Valley hot spots, can continue to surprise.

“We defy gravity,” said Alain Pinel[comment=”CQ”] agent Mark Wong. Buttressing his point, he compiled a list of 15 properties that recently sold for $200,000 or more above asking. Then he added a 16th to the list: a 2,249 square-foot, three-bedroom house in Mountain View that sold in November for $2 million — $502,000 over the listing price.

Chris Trapani, founder and CEO of the Sereno Group, offered a more sober assessment of the local market. Looking at the Multiple Listings Service earlier this week, he noted that only 1,082 homes were on the market in all of Santa Clara County, where inventory has diminished over the last three years to a level he described as “crazy. We’re comparing low to low.”

According to his analysis, the median home price for a single-family home in the county appreciated by about 11 percent from 2014 to 2015 and is on pace to increase by around 8 percent from 2015 to 2016. He expects seasonal demand to create a new bump in prices heading into the new year, with a “modest appreciation for 2017 in the 4 to 5 percent range.”

CoreLogic’s report for October gives one last look at the market prior to the presidential election. What happens next “is far from clear,” said LePage. Whether the administration of President-elect Donald Trump will move to loosen guidelines for loans, and whether rates will continue to climb — it’s all an unknown.

Rates already have risen about half a percentage point since the election, and the Federal Reserve is said to be considering another increase in interest rates this month.

“I’m looking at a quarter point,” predicted William Doerlich, president-elect of the Bay East Association of Realtors. Such an increase might “stimulate activity on the part of buyers in the first quarter of 2017,” he said. “People are going to look at that quarter point and say, ‘You know, I better get off the fence before it goes up even further.’ ”

But in the long-term, Doerlich, Trapani and other market observers agreed, a sustained increase in mortgage rates could seriously discourage buyers.

That’s one reason agents are encouraging homeowners to sell now — before further headwinds develop.

In Milpitas, homeowner Wayne Fong recently sold the three-bedroom house he co-owned with his aunt for $635,000. Guided by agent Wong, he had listed the house for $599,950.

“It’s an old house, a fixer-upper, so it’s better to go in low and be realistic about it and let the local market bid it up,” Fong said.

The strategy worked. He and his aunt received seven written offers within a week and turned a tidy profit on the 1,067-square-foot house, purchased for $170,000 in 1996. Sold in as-is condition, it had appreciated by more than 370 percent.

“It all went very smoothly,” Fong said.

In Martinez, Mark Cowherd listed his house — three bedrooms, two baths, 1,500 square feet on a corner lot — for $609,900 in mid-October after fixing up his backyard, installing new floors and replacing appliances. Doerlich, his agent, held a series of open houses that generated two offers, including the one accepted by Cowherd for $605,000.

A history teacher at Piedmont High School, Cowherd has had roots in Martinez since 2003. But commuting to work has “taken a toll on me. I’m 19 miles door-to-door from work, and it’s taking an hour to get home these days. It’s quality of life. I’m trying to get my commute down to 15 minutes or under — that changes my life.”

He has identified several Oakland neighborhoods in which he would like to buy a new house, including Montclair. In September and October, he bid on five or six houses and was “blown out of the water” by the competition. Lately, he senses, “the craze is slowing down a little bit” and there are far fewer choices.

“Right now there’s nothing out there,” he said, sounding a little nervous. The buyers of his Martinez home have given him until late January to find a new place.

“It’s going to be an interesting winter,” he said.

Article source: http://www.mercurynews.com/2016/11/30/bay-area-real-estate-sales-are-sluggish-but-prices-rise/

Repeat, repeat, repeat: The Bay Area housing market is showing definite signs of cooling.

That message — heard again and again in recent weeks — is amplified once more by a report from the California Association of Realtors, showing pending sales across the region down 11.6 percent in October on a year-over-year basis.

“Prices have risen to a point where they’re starting to eat into demand,” said Jordan Levine, an economist for C.A.R.

The report shows pending sales for October were down year-over-year in San Francisco by 21.2 percent, in Santa Clara County by 12.5 percent, and in San Mateo County by 5.0 percent. The report does not break out numbers for Alameda and Contra Costa counties.

But given the dramatic size of the regional decline, Levine said, “You can extrapolate that this is something we’re seeing in the East Bay, as well. It’s not just a San Francisco and Santa Clara phenomenon.”

The report also says that multiple offers are down across the state — for the seventh consecutive month. In October, 59 percent of California properties received multiple offers, down from 63 percent in September and from 64 percent in October 2015.

Again, Levine emphasized that buyers are suffering from sticker shock and therefore feeling less competitive.

“It’s a question of finding the funds you need for a down payment,” he said. “When prices get to the levels that we’re seeing, you’re still having to come up with a pretty decent down payment — even if you’re a first-time home buyer getting an FHA loan for 3.5 percent down.”

Levine did some quick math: In Alameda County, where the median price of a single-family home is $780,000, that FHA loan would translate to “more than $27,000 cash you’ve got to put down, not counting other closing costs …” he said.

“I just think that affordability is becoming an issue on the demand side. A lot of folks will be challenged to get into home ownership.”

Real estate tracking firm CoreLogic’s next county-by-county analysis of the Bay Area market is scheduled for release Wednesday.

Article source: http://www.mercurynews.com/2016/11/29/definite-signs-of-frost-on-once-sizzling-bay-area-housing-market/

To say the San Francisco Bay Area has a hot real estate market would be an understatement. The dream of buying a home has collided with the reality of limited supply and the influx of new residents driving up demand. As a result, competition is fierce. Anyone searching to discover that perfect house, condo or Tenancy-in-Common (TIC) in the morning, may find it gone by lunchtime.

The cutthroat real estate competition often leads larger banks to set the bar higher for borrowers who might fall outside of a traditional mortgage “box.” Examples might be an entrepreneur starting her own business, a dentist trying to acquire a practice, or even a seasoned business owner with complex finances, such as multiple mortgages and lines of credit. In residential lending, being “outside of the box” can pose difficulties in qualifying. Such a borrower may be turned down outright, face higher rates, or, at the very least, experience delay.

Individuals and families with stable finances and good FICO scores should not have to tolerate higher rates, delays, or poor service. By doing their homework and learning about what different banks offer, potential homebuyers should be able to find a residential loan that meets their needs, and to secure that loan in an appropriate timeframe.

When looking at residential lenders, potential homeowners should look at large, regional and community banks as well as credit unions. Each has a distinct value proposition. While larger banks might publish the most attractive rates, they often require additional documentation, rely solely on the borrower’s financials, can take an exorbitant amount of time to process the loan, and frequently tack on extra fees to increase their profit margins.

Community banks operate differently and take a more holistic, personalized approach when determining a borrower’s eligibility for a residential loan. Community bankers have the flexibility to consider additional factors, and can take the time to get to know the borrower’s entire financial picture. Borrowers can typically expect a more rapid and streamlined approval process as well.

A December 2015 Brookings Institution report sums it up well. “… These banks often engage in personal and non-standardized lending since they have specialized knowledge and expertise of their communities and customers, leading to their being called ‘relationship’ bankers.”

Community banks also may offer specific products or services that large institutions do not. In the San Francisco market, for example, these might include residential loans such as TICs and Co-ops.

Because they are based locally and have a deep understanding of the specific market they serve, community banks are typically aware of the unique needs present in their marketplace. Buying a home in the Bay Area is stressful enough. You don’t need your bank adding to it.

Wendy Ross is the President of Bank of San Francisco. She has more than 35 years of international, commercial, and private banking experience. Ross is a 2002 graduate of Leadership San Francisco and is a board member for numerous Bay Area organizations. 

Article source: http://sfbaytimes.com/financing-a-home-in-the-bay-areas-hot-real-estate-market/

The fallout from Donald Trump’s upcoming presidency on luxury real estate markets comes down to an old maxim—location, location, location.

Take San Francisco for example, where a flight of wealthy Chinese buyers in the wake of a potential trade war with China prompted by Trump could create a demand shock in the Bay Area. Secondary markets, meanwhile, like Melbourne, Amsterdam and Vancouver, could all stand to benefit if an unsteady political landscape pushes investors to diversify their real estate holdings, experts said.

More: Click Here to Read About NYC Developer’s Views on Trump

If there’s anything the world learned from Mr. Trump’s election—and the U.K. vote months earlier to exit the European Union—it’s that nothing is certain. There are, however, a few nationwide economic changes that economists and industry leaders predict will play out in the near-term under Mr. Trump, including rising mortgage rates, some form of infrastructure spending, deregulation and reduced taxes for corporations and the wealthiest tier of individuals.

While rising mortgage rates will have little-to-no effect on the luxury sector, as buyers tend to pay cash, said Danielle Hale, managing director of housing research at the National Association of Realtors, infrastructure spending paired with lowered corporate taxes would create an economic boost that could spur more real estate investment, at least short-term.

“There’s not a whole lot of detail yet,” Ms. Hale said. “If the infrastructure spending were to go through, we would see a short-term economic boost.”

Counteracting that, however, could be a flight of foreign buyers, as aggressive trade policies or offensive rhetoric from America’s top leadership pushes them to invest in cities outside of the U.S. To get a better sense of how these scenarios might affect prime real estate’s major markets, here’s a global city-by-city breakdown:

New York

There are three drivers of New York City real estate, said Donna Olshan, a New York broker and publisher of the weekly Olshan Report on luxury contracts.

“One is Wall Street, how is it doing; two is supply and demand; and the third is how do people (particularly foreigners) feel about New York as a safe place for their financial assets,” Ms. Olshan said.

“If New York is seen as safe financially, then we’re in good shape,” she said.

More: Click Here to Read More About New York Mansions

Wall Street has already seen some gains on the back of his election, particularly for construction companies like Caterpillar. Bank shares have also moved precipitously, with the SPDR Financial Select Sector exchange-traded fund reaching its highest point since 2008 last week.

Moving forward, proposed tax breaks to companies and their wealthy executives could mean more cash for New York moneymakers to invest in Big Apple real estate.

“Trump’s economic platform proposes a large tax cut and investment in infrastructure which are generally favorable to housing,” Jonathan Miller, the chief executive of appraisal firm Miller Samuel, told Mansion Global the day after Mr. Trump’s election victory.

And while New York City voted overwhelmingly for Democratic candidate Hillary Clinton, the shock of her loss did nothing to slow contract signing on megamillion homes. There have been two strong weeks for the luxury market since the second week of November, with 40 contracts signed, according to the Olshan Report.

“With world economies generally falling or remaining weaker than the U.S., I’m skeptical of any adverse impact to housing markets like New York, which I believe will remain a global safe haven for investors,” Mr. Miller said.

London

British brokers are generally optimistic about Mr. Trump’s potential effect on the London market, as his win brings the world’s largest economy onto the same political boat as the U.K.

“The U.K. and its commercial and residential property markets, ironically could end up beneficiaries of the shock election result,” said Frank Knight Chief Economist James Roberts. “Until now the U.K. has appeared a political outlier since the Brexit vote, for having turned its back on the economic consensus that favoured large trade blocs. Today, Brexit appears to be part of a wider political groundswell.”

More: Click Here to Read More about London Mansions

Peter Wetherell, chief executive of London West End, was ecstatic about Mr. Trump’s win, banking on the hope that the president-elect will boost U.S.-U.K. trade relations that could lead to more American investment in London prime real estate.

“Post-Brexit there has been a significant upturn in American buyers and renters into the prime London resi-market. The first post-Brexit sales deal in Mayfair was to an American buyer who bought a big flat in a significant eight-figure deal,” Mr. Wetherell said in a statement the day after Mr. Trump’s election.

“He will be very pro-property, and this can only be a good thing for London,” particularly Regent’s Park, Grosvenor Square and West London, which have been very popular among U.S. expats, he said.

Another boon for London could be if Mr. Trump’s anti-Islamic rhetoric, which was seen on the campaign trail, continues into the oval office. In that case, London can also expect to see more dollar-backed foreign buyers from the Middle East, said Becky Fatemi, director at Rokstone brokerage.

“I do think there will be more Middle Eastern buyers coming to London rather than Los Angeles or New York,” Ms. Fatemi said.

Dubai

On that note, Mr. Trump vexed a number of his own business partners in the Middle East when he proposed temporarily banning all Muslims from entering the U.S. last December during the Republican primaries.

A chain of retail stores in the Middle East suspended selling Trump-branded home decor products, and his name was stripped from a golf course under development in Dubai.

His comments, if they continue, and proposed registry of Muslims could stem the flow of investment from wealthy Arabs into U.S. properties, but they’re unlikely to have a direct impact on Dubai’s local property market, said Yolande Barnes, head of Savills World Research.

“I’m not sure Trump will make a great deal of difference,” Ms. Barnes said. “It’s not one of the safe-haven cities with regard to people outside of the region; it’s a safe haven market within the region.”

More: Click Here to Read More about Dubai Mansions

Dubai’s luxury residential market could still get a boost, however, if high-net-worth buyers from the Middle East start hunting for investment properties away from the political uncertainty now facing the U.S. and Brexit-headed U.K.

“It may well be that Middle Eastern investors will be more inclined to look for alternative cities to invest their money,” Ms. Barnes said. That bodes well for Dubai, but also amenity-rich metropolises like Sydney, Melbourne and Amsterdam.

There’s already some evidence that Arab investment in American real estate has slowed.

Francis P. Lively, executive director of real estate for Wafra Investment Advisory Group, the investment arm for Kuwait’s social security trust fund, said investors in the Middle East have been “very, very concerned” since Mr. Trump’s election. Mr. Lively offered his views during a panel discussion last week in New York on global equity capital flows.

Some Arab investors will “hold off for now” on funding U.S. real estate development until it’s clear whether Mr. Trump will follow through on discriminatory, anti-Islamic policies, or whether it was empty rhetoric, Mr. Lively said.

San Francisco

“Basically the Bay Area is in shock,” said Patrick Carlisle, chief analyst at Paragon Real Estate Group.

Like New York, San Francisco turned out voters for Ms. Clinton in droves, and the city stands to suffer from any hint of a trade war with China.

“They are significant players in the luxury condo market,” as both home buyers and commercial investors in condo developments, Mr. Carlisle said. Their participation in the market could drop off, however “if our relationship with China declines precipitously to the point where the Chinese don’t believe they are welcome here.”

More: Click Here to Read More About San Francisco’s Market

At a recent commercial real estate conference in New York, Kai-Yan Lee, managing director of Vanke Holdings USA, a subsidiary of China Vanke Co., the mood has been one of concern and “wait and see” since Mr. Trump’s election.

Los Angeles

Mr. Trump’s presidency is unlikely to affect demand in Los Angeles for luxury homes valued up to $15 million, said Eric Lavey, an L.A. broker at The Agency,

“I’m not going to lie, Los Angeles was rocked. But the hangover is already starting to go away,” Mr. Lavey said.  

Los Angeles, like most of the U.S., has seen oversupply and price corrections at the highest levels of the luxury market, but there is still strong demand for entry-level luxury homes between $3 million and $5 million and even in the $10 million-$15 million category, Mr. Lavey said.

“I have a sneaking suspicion that we aren’t in any form of a decline,” he said, citing the fact that L.A.’s price per square foot at the luxury price point is still far below competitors like New York and London.

More: Click Here to Read More about Los Angeles Mansions

Price per square foot for luxury homes was just over $1,000 in 2015, compared to $1,860 in New York and $1,930, according to a report by Christie’s International Real Estate published in June.

Like other U.S. cities, however, L.A. may suffer from a slowdown in foreign purchases, particularly in the already-soft market for homes over $15 million, if foreign policy discourages buyers in China or the Middle East, Mr. Lavey said.

Miami

Miami is already suffering from an oversupply of luxury condos, with even more developments under construction or in their planning phases (like the Aston Martin high rise).

But with Mr. Trump leading the country, Miami could face a demand shock if his election puts off Latin American buyers, said Nela Richardson, chief economist at Redfin.

“Trump’s immigration plan may cool demand among foreign nationals who are turned off,” she said. About 10% of buyers in Miami are from outside the U.S., with a large contingent from Latin American countries.

Foreign buyers are “much more fickle,” and they may hold off from buying until Mr. Trump’s stances on immigration, borders and his general rhetoric is fully known, she said.

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