February ’15 Numbers

February 28, 2015 – Real Estate Market Numbers

By Glen Bell   (510) 333-4460

There was a small gain in inventory over the previous month, roughly 9% but overall 26% since the traditional low in December. We did expect more and do anticipate a steady climb in available inventory through spring, maybe doubling by June. Was February a bit of a “bump in the road?” Traditionally, it’s a slow month for sales, a short month, but usually the beginning of when new home listings start to hit our market.

While news articles will be discussing the lack of sales based on January and February numbers, this market’s actually picking up.

Pending sales increased dramatically over the previous month and there are now fewer homes sitting. This is significant and gives us a much better idea of what’s really going on. The assumption being that more of the “stale” homes are being absorbed and that the new listings are being picked up almost as fast as they are coming onto the market. This sets up for a very competitive spring with similar conditions as seen in the previous year at this time.

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Here are some highlights for the 38 East Bay Cities that I track:

• Inventory increased by 26.3% since our December low. Our monthly supply has increased to 27 days. Sellers usually begin to put their homes up for sale after the beginning of the new year. We anticipate that this will continue to grow through summer.

• The number of pendings, (homes that are in contract), increased dramatically over the last month with a 21.4% increase and the pending active ratio is now at 1.56. This supply and demand ratio typically signals whether we’re in a sellers or buyers market. Typically, a number well above 1, (more inventory with less pending) favors sellers. A number below 1 favors buyers.

• The percentage of homes “sitting” has decreased due to an increase in absorption of both existing “stale” homes and new ones coming onto the market. 36% of homes listed now remain active for 30 days or longer, while 20% stay on the market for 60 days or longer.

• The “distressed” market, (foreclosures and short sales) are no longer much of a factor representing only 7% of sales over the past 4 months.

• Median Price recovery on a city by city basis remains relatively the same but showing s0me signs of weakness in some areas as is typical for this time of year. 7 out of the 38 East Bay cities tracked are now at or above their median price “peak” levels with another 13 cities within 20%.

• The month’s supply for the combined 38 city area increased slightly to 27 days, similar to what February 2014 looked like. Historically, a 2 to 3 months supply is considered normal in the San Francisco East Bay Area.

• Our inventory for the East Bay (the 38 cities tracked) increased to 1,856 homes actively for sale. This is still up from the December 2012 low of 1,086 but close to where we were last year at this time. We’re used to seeing between 3,000 and 6,000 homes in a “normal” market in the San Francisco East Bay Area. Pending sales have increased at 2,890.

• Our Pending/Active Ratio is at 1.56. This is the 20th month in a row that we’ve seen a ratio below 2. Although this still favors sellers, we anticipate that it is primarily seasonal and will begin to move towards what is considered a more normal and balanced market in the coming months, (a ratio of 1 with an equal number of listings and pending sales).

• Distressed properties, (REOs and Short Sales), are still declining. Only 7% of the sales over the last 4 months have been distressed properties.

• Sales over the last 4 months, on average, are 1.8% over asking for this area. This number has slowly but steadily been coming down.

Download Glen’s Numbers for February 2015

Historical Median Price City by City Recovery

How much has the real estate market in your city recovered from their previous Peaks. The graph shows our recovery from each cities peak.  As you can see, the most sought after cities have led the way. However, this is a slow process and as buyers become priced out of some of these markets, their interest spills over to the surrounding cities. They too begin to follow the trend up towards recovering.

Recent News

Fannie Mae Reports All-Time High for Consumer Optimism Toward Economy Posted By Brian Honea On March 9, 2015 

The percentage of respondents who said they believe the economy is on the right track increased by 3 percentage points since January’s survey up to 47 percent, an all-time high since the survey began nearly five years ago. The rise in consumer optimism is largely attributed to recent employment gains, which totaled nearly 300,000 for February and averaged 266,000 per month in the last 12 months, according to the most recent report ^[4] from the Bureau of Labor Statistics. In that same BLS report, the nation’s unemployment rate dropped to 5.5 percent, its lowest level in nearly seven years.

Also hitting an all-time high for Fannie Mae’s housing survey was the percentage of respondents who said they believe it is easier to get a mortgage today (54 percent). The share of respondents who said they believe it would be difficult to get a mortgage dropped by 4 percentage points to an all-time survey low of 43 percent.

While the percentage of respondents in Fannie Mae’s survey who said they believe home prices will go up in the next 12 months declined to 46 percent, the share who said home prices will go down also declined, to 6 percent. The percentage who said mortgage rates will go up in the next 12 months increased to 48 percent.

“We continue to see strength in attitudes about the current home buying and selling environment and consistently high shares of consumers saying they expect to buy a home on their next move,” Duncan said. “At the same time, we still need to see further growth in consumer optimism toward personal finances and income for more robust improvement in housing market attitudes.”

Bay Area January Home Sales Slowest in Seven Years; Single-Digit Annual Price Gain, DQNews, February 18, 2015

January home sales dropped sharply month over month, which is normal for the season, and dipped year over year to the lowest level for a January in seven years. The median price paid for a home in January also declined sharply month over month – another seasonal norm – but it rose 9 percent from a year earlier, marking the 34th straight month with a year-over-year price gain.

The nine-county Bay Area in January 2015 was down month over month by 40.5 percent. Bay Area sales have fallen an average of 28.5 percent between the months of December and January since 1988, when CoreLogic DataQuick data began.

January 2015 sales were the lowest for that month since 3,586 homes sold in January 2008, which is the trough for January home sales in CoreLogic DataQuick’s statistics. The peak for January home sales was in 2005, when 8,298 homes sold. The January 2015 sales tally was 25.8 percent below the historical January average of 5,985 sales.

The median price paid for a home in the Bay Area was $572,000 in January 2015. That was down month over month by 5.1 percent from $603,000 in December 2014 and up year over year by 9.0 percent from $525,000 in January 2014. Although January 2015 marked the 34th consecutive month with a year-over-year gain in the median sale price, those annual increases slipped from double-digit to single-digit gains in the last few months. In January 2014 the region’s median price rose by 26.5 percent compared with January 2013 – nearly triple the gain when comparing January 2015 to January 2014.

The Bay Area median sale price peaked at $665,000 in June and July 2007 and dropped to a post-boom low of $290,000 in March 2009.

“January isn’t really a bellwether month when it comes to housing trends. For that we’ll have to wait until spring,” said Andrew LePage,” CoreLogic DataQuick data analyst. “But the latest data do indicate the market continues to struggle with challenges that many in the industry hoped would be resolved last year – challenges such as inactive groups of buyers and sellers and a mortgage market that remains difficult for many. More job and income growth, coupled with low mortgage rates, could fuel demand this year in a market still running short on supply and struggling with affordability constraints. It will be interesting to see whether recent home price appreciation will trigger a more pronounced ‘supply response’ – an increase in the number of homes listed for sale.”

Total January Home Sales in the San Francisco Bay Area counties

Source: CoreLogic DataQuick. Data available at DQNews.com
© 2015 CoreLogic, Inc. All rights reserved.

Bay Area housing lags booming economy By Richard Scheinin, March 6, 2015

With the Bay Area economy on fire and employment now matching the 2000 peak of the dot-com boom, regional leaders are concerned that housing lags.

That was the message issued Friday by the Association of Bay Area Governments (ABAG) in a new report that was the subject of a symposium at the MetroCenter Auditorium in Oakland.

Titled “State of the Region 2015: Economy, Population, Housing,” the 84-page report offers a snapshot of the nine-county region: accelerating population and job growth in San Francisco, San Jose and Oakland as the Bay Area grows more urban and less suburban; the squeezing of the middle class; and not enough housing across-the-board, especially for low and moderate income households.

With tight bank credit and low inventory, housing prices keep setting records at the high end, though low-end homes are still only half-way back to their bubble-era levels. Renters are in trouble: Almost half spend 30 percent of their income on housing, and about one quarter spend half their income. In Santa Clara, Alameda and San Francisco counties, rent increases have been especially steep.

“Housing is a wicked problem,” said Amit Ghosh, retired chief planner for the City and County of San Francisco, who moderated a panel on housing issues.

Glen Bell – (510) 333-4460   jazzlines@sbcglobal.net