Sunday, February 27, 2011

Market Watch - 02.11.11 - SF Peninsula

From my boss, Rick Turley of CB:

SF Peninsula — The spring buyers are out and ready to buy when they can locate the right inventory, our Burlingame managers report. We are routinely seeing multiple offers on well-priced homes under $1 mill. Open house activity has increased with as many as 100 people through one open house. Buyers are more positive and sellers more flexible on price.

Across the hills in Half Moon Bay, there seems to be two extremes in the market – the very low end selling quickly or the upper end second home, all cash, selling quickly.

Our Menlo Park offices report that they are definitely seeing a stronger high-end market in that community. Buyers are not afraid to spend $2.5 million for a house anymore. The inventory is slowly increasing, our Redwood City office says. Buyers are taking their time before making a decision. Agents are working with both buyers and sellers for longer periods of time. Overall attitude seems to be positive.

The Palo Alto market is extremely tight in inventory. The $2.5 million price range is strong and getting multiple offers. One example: a Palo Alto listing at $2,195,000 had 118 groups through open house, 14 packets are out, offers on Wednesday.

Our San Mateo offices say open houses are still very well attended, although many buyers still on the fence.

Finally in Woodside, our local manager says sales activity and inventory have dipped. Still a lot of interest, but no action.

Tuesday, February 22, 2011

Housing’s Role in the Road to Recovery

By Brian Summerfield, Online Editor, REALTOR® Magazine

The National Association of REALTORS® took out a full-page ad in this past Sunday’s edition of the Washington Post to get across a simple but important message: Housing creates jobs, which America needs for a genuine, complete recovery. Indeed, much of the positive economic news that’s come out recently — even in real estate — has been tempered by the enduring high levels of unemployment. Although those figures have improved incrementally over the past couple of months, the unemployment rate is still more than 9 percent, well above historic norms, and when people who have stopped looking for jobs are factored in, it’s much higher.

The aim of NAR’s ad was to advise policymakers and Congress, in advance of the release of President Obama’s Fiscal Year 2012 budget today, that certain changes to the mortgage interest deduction or government involvement in the secondary mortgage market — however well-intended — could have disastrous consequences for the economy. Conversely, by supporting policies that foster home ownership and purchases, they can help create the necessary conditions for a turnaround.

(Note: There is a provision in the 2012 budget that would limit the value of all itemized deductions, including the mortgage interest deduction, to 28 percent for taxpayers in higher brackets — households earning more than $250,000. The proposal is similar to a provision included in last year’s budget proposal, which was rejected by Congress.)

In fact, according to NAR, for every two new houses sold, a job is created. This argument rests on measuring gross domestic product (GDP) as the sum of all income. NAR estimates that each existing-home sale at the median price creates $30,792 because of commissions, fees, moving expenses, furniture, and a “multiplier effect” due to reinvestment of capital from a home sale into the economy. For a new-home sale, nearly $28,000 more is added to that because of spending on materials and labor for construction.

So, let’s say you add two new-home sales together. That adds $117,058 to the economy. Now, divide U.S. GDP by the number of payroll workers, and you get approximately $113,000. (NAR acknowledges this is an overestimation of salary income since income can be earned from profits, rents, and other sources, but does provide a ceiling to earnings per worker.) In other words, these two transactions pump enough money into the economy to pay another worker. And if you substitute average earnings — about $57,000 — for the GDP-divided-by-payroll-workers formula, that jumps up to two jobs.

Now, this is all theoretical, but there’s no denying that just a few transactions can have a significant economic impact on localities — with respect to people’s livelihoods, home values, and viability of communities. The housing sector won’t be the only thing to restore the vitality of American economy, but it will play an important part.

Learn more about why home ownership matters for economic recovery.

Saturday, February 5, 2011

California home sales, median price rise in December

From the California Association of Realtors February Newsline:

California home sales rose in December, posting their highest level since May, according to data from C.A.R. The statewide median price increased from November, but was down from a year ago.

“December’s sales increase reflects buyers taking advantage of rock bottom interest rates and improved affordability since the first half of the year, when prices were higher,” said C.A.R. President Beth L. Peerce. “Most of December’s sales opened escrow in October and November. Rates hit their absolute lowest in October but began edging higher in November, prompting buyers to get off the fence,” she said.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 520,680 in December. December’s sales were up 5.9 percent from November’s revised pace of 491,590 but were down 6.8 percent from the revised 558,840 sales pace recorded in December 2009.

Following three consecutive monthly declines, the median price of an existing, single-family detached home sold in California increased 1.7 percent from a revised $296,690 in November but was down 1.6 percent from the revised $306,860 median price recorded for the same period a year ago.

“While sales rose in December, the sales pace in the second half of the year was lower than the first half as the housing market weaned itself off home buyer tax credits,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “For 2010 as a whole, sales reached 494,900 homes sold, down 9.5 percent from the 546,860 homes sold in 2009. However, the statewide median price increased 10.2 percent to reach $302,900 for the year, up from the $275,000 recorded in 2009,” she said.

Here are other highlights of C.A.R.’s resale housing report for December 2010:
A greater than usual drop in listings combined with the sales increase caused C.A.R.’s Unsold Inventory Index to decline more than one month. The Unsold Inventory Index for existing, single-family detached homes was 5.0 months in December, down from 6.2 months in November. The index was 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Thirty-year fixed-mortgage interest rates averaged 4.71 percent during December 2010, compared with 4.93 percent in December 2009, according to Freddie Mac. Adjustable-mortgage interest rates averaged 3.31 percent in December 2010, compared with 4.31 percent in December 2009.

The median number of days it took to sell a single-family home was 57.5 days in December 2010, compared with 35.1 days for the same period a year ago.

Regional MLS sales and price information are contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 97 of the 329 cities and communities reporting showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for November may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. online at

Statewide, the 10 cities with the highest median home prices in California during December 2010 were: Beverly Hills, $2,180,000; Los Altos, $1,300,000; Calabasas, $1,175,000; Laguna Beach, $1,105,000; Manhattan Beach, $1,085,500; Newport Beach, $1,000,000; Santa Monica, $921,000; Cupertino, $904,500; Rancho Palos Verdes, $849,000; Los Gatos, $840,000.

Statewide, the cities with the greatest median home price increases in December 2010 compared with the same period a year ago were: Beverly Hills, 54.3 percent; Calabasas, 39.1 percent; Poway, 25.5 percent; Ridgecrest, 23.3 percent; San Juan Capistrano, 19.2 percent; Compton, 17.5 percent; Laguna Hills, 15.7 percent; Santa Cruz, 14.1 percent; Gilroy, 14.1 percent; La Habra, 13.2 percent.