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The foreclosure site PropertyRadar reported that home sales across six Bay Area counties plunged to an eight-year low this fall, and it’s evidently the fault of the cheapest properties on the market.

All told, PR records a 10 percent decline in home sales across the Bay Area for the first nine months of 2016, relative to the same period in 2015.

That includes a 13-percent drop in San Francisco, even as prices climbed nine percent year over year.

This mostly corresponds to the chatter and speculation from analysts and realty hubs all year about a general cooling of the market. Where things get weird, though, is when you look at which house aren’t selling.

It’s the most inexpensive homes—those priced at $500,000 or less—which saw the greatest degree of decline, with sales down 26.7 percent over the year.

On the other hand, sales of seven-figure homes actually went up a tiny bit (0.4 percent), the only price bracket to see an improvement compared to 2015 in the PropertyRadar data.

Are there really that many Bay Area homes selling for under half a million dollars to begin with? As it turns out, yes, nearly 11,000 of them so far this year, (compared to over 12,600 homes sold for over $1 million).

The trick is, a lot of these are what are euphemistically called “distressed properties.” In most cases, these are foreclosures, or other emergency sales that suggest very unfortunate circumstances.

Yes, our gangbusters housing market the past few years has rested on a bit of a foreclosure foundation.

While foreclosure sales have been declining for years ever since peaking in (you guessed it) 2009, they’ve taken a particularly big dip this year.

Part of that is just soaring prices and property values.

Back in April, the analytics firm Black Knight estimated that even if home values were to suddenly drop 10 percent, there would only be 350 homes underwater in San Francisco and San Jose combined.

But there’s also the fact that you can only get so much water by squeezing the same sponge year after year. In San Francisco, foreclosures tend to hit one particular neighborhood again and again.

Just today, eleven of the 23 foreclosure sales listed on the MLS aggregate site Redfin are around the Bayview area.

In the San Francisco Chronicle’s foreclosure database, more than one in seven San Francisco foreclosures from 2001-2014 happened in the 94124 ZIP code.

And the realty site RealtyTrac estimates that while the city overall has a foreclosure rate of one in every 4,405, that southeastern ZIP code suffers a rate of one in every 854. That’s nearly four times that of the next hardest hit area.

Interestingly, other high-foreclosure zones include wealthy neighborhoods like South Beach and the Castro. But none of them come even close enough to the rates seen in the Bayview area to be mentioned in the same breath.

• SF Home Sales Lowest Since 08 [PropertyRadar]
• Mortgage Monitor [Black Knight]
• Foreclosed Homes [Redfin]
• Foreclosure Database [Chronicle]
• Foreclosure Trends [RealtyTrac]

Article source: http://sf.curbed.com/2016/11/21/13703454/bay-are-house-foreclosure-decline-market

The case involved the sale of a luxury home overlooking the Pacific Ocean in Malibu where the square footage was in dispute. The buyer and seller were represented by agents from different Coldwell Banker offices.

Under California law, a broker may act as a dual agent for both the seller and the buyer in a real estate transaction, provided both parties consent to the arrangement after full disclosure that the broker owes a fiduciary duty to both.

What was at dispute in the case was whether that duty extends to “associate licensees,” who are the individual agents/salespeople who operate under that broker’s license. The court ruled 7-0 that it does.

The seller of the home, a family trust, was represented by Chris Cortazzo, a salesman in Coldwell Banker’s Malibu West office whose celebrity clients have included Richard Gere, Ellen DeGeneres, Pamela Anderson and Josh Groban, according to the New York Times.

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The buyer was Hiroshi Horiike, a wealthy Hong Kong resident represented by Chizuko Namba, who was a saleswoman in Coldwell Banker’s Beverly Hills office.

Before advertising the property on the Multiple Listing Service, Cortazzo “obtained public record information from the tax assessor‘s office, which stated that the property’s living area was 9,434 square feet, and a copy of the residence’s building permit, which described a single-family residence of 9,224 square feet, a guest house of 746 square feet, a garage of 1,080 square feet, and a basement of unspecified area,” the court said in its decision, written by Associate Justice Leondra Kruger. “When Cortazzo listed the property on the MLS in September 2006, however, the listing stated that the property ‘offers approximately 15,000 square feet of living areas.’”

In November 2007, Namba and Cortazzo showed the home to Horiike. “At the showing, Cortazzo gave Horiike the marketing flyer stating the property offered ‘approximately 15,000 square feet of living areas,’ and a Multiple Listing Service listing printout that did not specify the square footage and contained a small-print advisement that ‘Broker/Agent does not guarantee the accuracy of the square footage,’” the court wrote.

After viewing the property and signing the required disclosure documents, Horiike purchased the property. According to news reports, he paid $12.25 million cash in 2007. However, in 2009, “Horiike reviewed the building permit and noticed that it appeared to contradict Cortazzo’s representation that the property offered approximately 15,000 square feet of living space,” the court wrote.

Horiike sued Cortazzo and Coldwell Banker, alleging, among other things, that they had breached their fiduciary duties toward Horiike. He did not sue his own agent, Namba.

At a trial in 2012, the jury exonerated Cortazzo on various claims including misrepresentation. The judge had already concluded that Cortazzo had no fiduciary duty to Horiike and essentially threw out that cause of action against him. The judge told the jury it could only find Coldwell Banker liable if another agent, not Cortazzo, had breached his or her fiduciary duty to Horiike. The jury found in favor of Coldwell Banker.

The Court of Appeal reversed the trial court’s decision. The Supreme Court affirmed the affirmed appellate court decision. The case now goes back to the trial court to determine whether the defendants violated their fiduciary duty to the buyer.

“Because Cortazzo, as an agent of Coldwell Banker in the transaction, owed Horiike a duty to learn and disclose all facts materially affecting the value or desirability of the property, the trial court erred in granting nonsuit on Horiike’s breach of fiduciary duty claim against Cortazzo and in instructing the jury that it could not find Coldwell Banker liable for breach of fiduciary duty based on Cortazzo’s conduct,” the decision said.

What it means is that when agents on both side of a transaction are licensed by the same firm, “the salesperson who is selling owes a fiduciary duty to not only the seller, but also the buyer,” said Frederic Cohen, the plaintiff’s attorney. Cohen thought that was already clear under state law, but Coldwell Banker and the real estate industry disagreed.

Coldwell Banker argued that “each salesperson owes a duty only to the person they are directly working with, not the opposite side.” Coldwell Banker referred requests for comment to the California Association of Realtors, which filed a brief supporting the defendants.

“We think it’s clear that Coldwell Banker owed a duty to both” buyer and seller in the transaction. “What we didn’t agree with is that duty flows back to every single agent in the transaction,” said June Barlow, the association’s general counsel.

Although the Supreme Court disagreed, the association does not think its decision will result in any major changes in the real estate industry. “We were more worried about an unwarranted expansion” of fiduciary duty that essentially would have outlawed dual agency, said June Barlow, an attorney for the association.

California law already requires listing agents to disclose all material facts that affect the value or desirability of a property to all prospective buyers, no matter who represents them. This includes facts such as a murder that occurred on the property or overly hostile neighbors. Listing agents also must do a visual inspection of the property and disclose any defects found to to all buyers.

As for practical impacts of the Supreme Court ruling, Cohen believes that when listing agents owe a fiduciary duty to the buyer, “They have to do more than a cursory inspection.”

He also said these agents “cannot fulfill their duty to disclose information (to buyers) by providing them a blizzard of paper buried in which the information is disclosed.”

Article source: http://www.sfchronicle.com/business/networth/article/California-high-court-decision-favors-real-estate-10629057.php

A new report confirms what many have been saying for several months now: The residential real estate market is losing steam around the Bay Area.

Sales are sluggish and the rate of price appreciation should continue to decelerate in 2017, according to the PropertyRadar information service.

“Prices can continue to skate higher for a while, but at some point you run out of people willing to pay, and prices correct,” said Madeline Schnapp, the Truckee-based firm’s director of economic research.

Looking at the first nine months of 2016, the report shows a 10.3 percent year-over-year decline in sales across the region. Broken down by county, the number of single-family homes and condominiums sold fell by 11.3 percent in Alameda County, 10.1 percent in Santa Clara County, 9.1 percent in San Mateo County and 8.2 percent in Contra Costa County. And in San Francisco, sales tumbled 13 percent.

Even in the inland counties — heretofore a safety valve for buyers seeking affordability — sales were lackluster. Sales activity fell by 9.4 percent in Napa County and 2.4 percent in Sonoma County, while Solano County sales sneaked up by just 1 percent.

Ironically, it is a sign of economic health — the diminishing number of foreclosures and distressed properties — that is contributing to the market’s slowing. According to the report, distressed property sales — down 35.7 percent on a year-over-year basis for the first nine months of 2016 — have declined so dramatically that they now are a drag on overall sales through the region.

When the Bay Area was in the throes of recession early in 2009, distressed property sales — “short sales” of underwater properties and sales of foreclosed properties — accounted for an astonishing 69.1 percent of all sales in the region. In the first nine months of 2016, distressed sales accounted for only 8 percent of total sales.

Because most distressed properties sell for $500,000 or less, their diminishing numbers contribute to the shrinking supply of affordable homes. During the first nine months of 2016, sales of homes priced at $500,000 or less fell 26.7 percent on a year-over-year basis throughout the region, while sales of distressed properties in that same price category fell 45.7 percent.

Here’s the upshot. An increasing number of buyers who can’t qualify for, say, a $780,000 house — which in September was the median price of a single-family house in the Bay Area — are left without many options. County by county, these were the September median prices, as charted by PropertyRadar: $505,000 in Contra Costa; $730,000 in Alameda; $950,750 in Santa Clara; $1.137 million in Marin; and $1.18 million in both San Francisco and San Mateo.

“Our prediction,” Schnapp said, “is that we will continue to see sluggish sales and prices that grind higher but at a much slower pace until either prices adjust or new inventory comes on the market.”

Article source: http://www.mercurynews.com/2016/11/23/bay-area-real-estate-market-cooling-off-new-report-indicates/

Caption

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(L-R) Melania Trump, wife of Republican presidential nominee Donald Trump, and his daughters Tiffany Trump and Ivanka Trump cut the ribbon at the new Trump International Hotel October 26, 2016 in Washington, DC. The hotel, built inside the historic Old Post Office, has 263 luxury rooms, including the 6,300-square-foot ‘Trump Townhouse’ at $100,000 a night, with a five-night minimum. The Trump Organization was granted a 60-year lease to the historic building by the federal government before the billionaire New York real estate mogul announced his intent to run for president. less

Photo: Chip Somodevilla / Getty Images

Republican presidential nominee Donald Trump (C) and his family (L-R) son Donald Trump Jr, son Eric Trump, wife Melania Trump and daughters Tiffany Trump and Ivanka Trump prepare to cut the ribbon at the new Trump International Hotel October 26, 2016 in Washington, DC. The hotel, built inside the historic Old Post Office, has 263 luxury rooms, including the 6,300-square-foot ‘Trump Townhouse’ at $100,000 a night, with a five-night minimum. The Trump Organization was granted a 60-year lease to the historic building by the federal government before the billionaire New York real estate mogul announced his intent to run for president. less

Photo: Chip Somodevilla / Getty Images

For the first-ever real-estate mogul president-elect, Donald Trump spoke very little during the campaign about his housing policies.

“I cannot recall Mr. Trump explicitly connecting his experience with real estate to how he will handle housing policy during his presidency,” said Nela Richardson, Redfin’s chief economist.

That being said, given how outspoken Trump has been on various other topics—such as trade, immigration and deregulation—Richardson, as well as a few local experts, have their guesses about how the impending Trump presidency could affect the market moving forward.

Mortgage rates 

We won’t have to wait until January to see how Trump affects the mortgage market; mortgage rates have already climbed half a percent in the week since the election, as investors take their money out of bonds and head back to the stock market.

Richardson points out that a 4 percent interest rate is still very low historically, and shouldn’t impact the market much unless it continues to get significantly higher at a rapid pace. That substantial increase could certainly happen if there is a move to privatize beleaguered financial services agencies Fannie Mae and Freddie Mac, she said.

According to Patrick Carlisle, chief market analyst at Paragon Real Estate, with affordability already problematic in the high-priced Bay Area, every uptick in the mortgage rate could mean more people priced out of homes.

“Interest rates are a huge concern,” he said. “In the Bay Area housing affordability is one of our biggest social, economic and political issues. If interest rates go up dramatically, that will dramatically affect housing affordability for the worse. For example, rates a couple weeks ago were in the 3.5 percent to 3.6 percent range. If they jumped to 4.5 percent, that’s a 25 percent increase in interest rates for the average home buyer, who is already having issues affording Bay Area homes, especially in its most expensive areas.” 

Foreign investment

Trump’s push for exclusionary immigration policies could have a big impact on foreign investments in the market nationwide.

“Right now, U.S. real estate is looked upon as a safe haven investment for foreign buyers,” said Richardson. “Any uncertainty created around the safety of that investment, such as concerns about the ability to liquidate their assets or even occupy their homes could cause shocks to the luxury housing market in particular.”

Locally, the biggest factor is how Trump’s anti-Chinese rhetoric might deter investment, said Carlisle. “If the Chinese start believing they’re not welcome or safe here, they will stop coming here, sending their kids here for college, and investing here, immediately,” he said.

But Selma Hepp, chief economist at Pacific Union (which opened a “Chinese Service Concierge Desk” in San Francisco in 2014) believes that Trump’s real-estate background will lead him to realize the importance of foreign investment in real estate and she was hopeful his administration would understand “the value of high-skilled immigrants, the spillover effects and their impact on the economy.”

In short, any fear from Chinese investors may be short-lived. “We may see some trepidation from Chinese buyers and they may frankly look to other markets, such as Canada (though they are already have large presence there), but I think when we get a clearer picture of what the immigration reform entails, those Chinese investors will return,” she said.

A certain uncertainty 

Trump has already begun to pull back on some of his campaign rhetoric after his victory, which left our experts wondering how much of what he said on the campaign trail would actually come to pass. Richardson, for one, was hopeful that the promised return of jobs to “Rust Belt” states would help the still-struggling housing markets there. “Unlike cities along the East and West coasts, time won’t fix these communities, only jobs will,” she said. “They need our attention and reinvestment in their local economies before homeownership can become a great investment again.”

But if Trump follows through on his promises to revise trade policies and bring those jobs back to the U.S., California’s economy is sure to be affected, argued Hepp. “The Chinese government is very concerned about Trump’s ideas on trade agreements and what he wants to do with them,” she said. “As I wrote in my article, it is particularly concerning for California since so much trade passes through California’s ports and foreign investment from East Asia is largely focused on California.”

And while Richardson was also hopeful that Trump’s emphasis on deregulation as well as his real-estate background might lead to an easing of restrictions on development, and therefore more housing, Carlisle didn’t think any changes on a national level would have much impact locally. “Our market and all its regulations—code, environmental, planning review, and so forth— and political resistance to development are all set locally or on the state level,” he said.

In fact Carlisle’s overall view on Trump echoed many in the Bay Area this past week: “Pray that Trump isn’t going to be the president he has promised during his campaign that he will be.”

Emily Landes is a writer and editor who is obsessed with all things real estate.

Article source: http://blog.sfgate.com/ontheblock/2016/11/16/how-trump-could-affect-the-san-francisco-real-estate-market/

The foreclosure site PropertyRadar reported that home sales across six Bay Area counties plunged to an eight-year low this fall, and it’s evidently the fault of the cheapest properties on the market.

All told, PR records a 10 percent decline in home sales across the Bay Area for the first nine months of 2016, relative to the same period in 2015.

That includes a 13-percent drop in San Francisco, even as prices climbed nine percent year over year.

This mostly corresponds to the chatter and speculation from analysts and realty hubs all year about a general cooling of the market. Where things get weird, though, is when you look at which house aren’t selling.

It’s the most inexpensive homes—those priced at $500,000 or less—which saw the greatest degree of decline, with sales down 26.7 percent over the year.

On the other hand, sales of seven-figure homes actually went up a tiny bit (0.4 percent), the only price bracket to see an improvement compared to 2015 in the PropertyRadar data.

Are there really that many Bay Area homes selling for under half a million dollars to begin with? As it turns out, yes, nearly 11,000 of them so far this year, (compared to over 12,600 homes sold for over $1 million).

The trick is, a lot of these are what are euphemistically called “distressed properties.” In most cases, these are foreclosures, or other emergency sales that suggest very unfortunate circumstances.

Yes, our gangbusters housing market the past few years has rested on a bit of a foreclosure foundation.

While foreclosure sales have been declining for years ever since peaking in (you guessed it) 2009, they’ve taken a particularly big dip this year.

Part of that is just soaring prices and property values.

Back in April, the analytics firm Black Knight estimated that even if home values were to suddenly drop 10 percent, there would only be 350 homes underwater in San Francisco and San Jose combined.

But there’s also the fact that you can only get so much water by squeezing the same sponge year after year. In San Francisco, foreclosures tend to hit one particular neighborhood again and again.

Just today, eleven of the 23 foreclosure sales listed on the MLS aggregate site Redfin are around the Bayview area.

In the San Francisco Chronicle’s foreclosure database, more than one in seven San Francisco foreclosures from 2001-2014 happened in the 94124 ZIP code.

And the realty site RealtyTrac estimates that while the city overall has a foreclosure rate of one in every 4,405, that southeastern ZIP code suffers a rate of one in every 854. That’s nearly four times that of the next hardest hit area.

Interestingly, other high-foreclosure zones include wealthy neighborhoods like South Beach and the Castro. But none of them come even close enough to the rates seen in the Bayview area to be mentioned in the same breath.

• SF Home Sales Lowest Since 08 [PropertyRadar]
• Mortgage Monitor [Black Knight]
• Foreclosed Homes [Redfin]
• Foreclosure Database [Chronicle]
• Foreclosure Trends [RealtyTrac]

Article source: http://sf.curbed.com/2016/11/21/13703454/bay-are-house-foreclosure-decline-market