There is a lot going on in the Real Estate world these days. For a more complete look, check out Pacific Union’s blog today:
CAR’s February home sales report shows that pending home sales rose 14.2% over January. This is the second straight increase. Meanwhile, distressed home sales dropped across the state except in Solano County.
Home builders are increasingly looking toward infill projects rather than suburban tract homes. According to the Wall Street Journal, this is driving land prices up and is getting in the way of new-home sales, along with a lack of first-time home buyers and rising prices (although the latter two go hand in hand).
Also, last week Trulia released a report suggesting that Coastal California Markets (i.e. the Bay Area) may be headed for a bubble. The report argues that the Coastal CA market is overvalued: San Jose, San Francisco and the Oakland markets are all between 4-8% over what Trulia deems the current market value.
Quick recap of the Real Estate Market from over the weekend. For a complete recap, go to the Pacific Union blog:
- Citing a recent Zillow report, Pacific Union expects the real estate market to be hot this spring. San Jose and San Francisco should lead the way. Zillow’s report also shows that San Jose and San Francisco also have the highest home values in the country at $748,800 and $648,700 respectively.
- In addition, it looks like the Oakland inventory crunch is starting to ease up. Statistics show that there was a 19% increase in homes for sale in February.
- Although new housing starts are cooling off across the country, there is a new planned development coming along in Walnut Creek near the BART station soon.
I will be holding open 3848 Happy Valley Road in Lafayette from 1 – 4pm. The home is exclusively listed by Nancy Rothman and offered @ $2,595,000. Historic Happy Valley farmhouse artistically restored with designer finishes & custom quality by McNamara Development and Construction. The original home was built in 1903 for Herbert & Estella Brown Mullikan. Estella’s father was Henry Toler Brown and her grandfather was Elam Brown, the founder of Lafayette. While maintaining the original farmhouse charm, the home was remodeled and expanded to embrace today’s modern lifestyle. Reclaimed wood and brick from the original home can be found throughout. A rare opportunity to own a part of Lafayette’s history.
Just under 4,000sf, the ideal single story floorplan offers formal living and dining rooms, spectacular kitchen/family combo leading out to the patio and yard, 4 bedrooms, plus an office, and a guest suite with separate entrance. The expansive yard and serene setting create an easy indoor/outdoor entertaining lifestyle. Conveniently located in the heart of Happy Valley with easy access to top schools, BART, Freeways, and downtown Lafayette. I hope to see all of you there!
Last week, Pacific Union CEO, Mark McLaughlin wrote this insightful piece about the future of Bay Area home prices.
We are frequently asked how long the current real estate market or housing cycle will run. Our industry is not short on opinions, predictions, and speculations. This past month, I reviewed the most comprehensive housing report I have read since 2007: the John Burns Real Estate Consulting Home Value Index.
The report defines housing-cycle risk as a function of demand, supply, and affordability. This is a fairly simple perspective that comes as no surprise. The forecast or outlook is dependent on job growth for demand and excess supply in the form of new construction or foreclosures. On a relative scale compared with the housing market in the U.S., our local markets have limited excess supply at this time.
The Burns report goes on to note that the markets with the most upside are clearly those that experienced the most significant downs. Again, this concept is not overly complex, and the variables are relatively easy to comprehend.
The most stimulating aspect of the report is in the Burns Home Value Index Forecast for December 2017. We have often struggled with the S&P/Case-Shiller and similar indexes, which generally offer perspectives based on 90 to 120 days trailing market performance and do not look forward.
The Burns report cites summary research from nearly 100 economists’ responses to questions about housing appreciation in the U.S. from Q4 2012 through December 2017. The Burns report estimates 35.9 percent appreciation through December 2017, with more than 9 percent already realized through September 2013. The 100 economists’ consensus for that same time frame was 22.9 percent appreciation, with 6 percent already realized.
The Burns report provides regional outlooks on nearly 100 markets. The Bay Area findings are illustrated in the table below:
With the caveat that real estate is local and each neighborhood and home is unique, these forecasts are very reassuring. In particular, the outlook for 2017 is exceptionally encouraging. However, the report illustrates that the majority of the lift in the market will occur in 2014 and 2015, with modest to flat growth in 2016 and 2017.
The opportunity to realize value in real estate and historically low mortgage rates is now. Mortgages will likely exceed 6 percent by 2016, a 30 percent increase from today’s rates.
Your local Pacific Union real estate professional is uniquely positioned to review macro trends and neighborhood specifics to assist you in your residential real estate investments. Please remember that your most significant real estate investment is in your home — which is a place to live and create memories — rather than just your house.
– Mark A. McLaughlin, CEO, Pacific Union
You read the headline right: home prices around the Bay Area spiked 6.9 percent from May to June, setting a new record for June increase. Overall, prices of skyrocketed by 33.1 percent since the same time last year!
Around the nine counties, the median home price was $555,000 — the highest it’s been since December 2007. That’s up from $519,000 in May and $417,000 in June of 2012.
DataQuick, the firm tasked with researching home sales information, said prices went up because of “disappearing distress sales, an improving economy and mortgage rates that, while up off the bottom, remain very low.”
There’s still a ways to go before prices reach the peak of the housing bubble. The Bay Area’s highest median home price was $665,000 in June and July of 2007. It dropped to as low as $290,000 in March of 2009.
In Fannie Mae’s latest housing survey, 57 percent of Americans expect rising interest rates and home prices in the next year. 72 percent believe now is a good time to buy a home. Do those two have any correlation? You bet.
Fannie Mae’s chief economist Doug Duncan believes interest rate hikes “may increase housing activity in the near term by driving urgency to buy.” 30-year mortgage rates are already up 1 percent from the beginning of May to the end of June, and Duncan believes this trend will continue to bolster the housing market.
“Consumers may recognize that today’s still-favorable mortgage rates and homeownership affordability levels will recede over time,” Duncan said. “Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence.”
The potent local economy and low unemployment rates will likely increase real estate activity locally, according to Pacific Union. That, coupled with the temptation of locking in lower mortgage rates, should convince homebuyers that they have more spending power as property prices start to climb.
This sophisticated, contemporary masterpiece was designed for the owners to showcase their stunning art collection. A two-story light-filled glass entry which opens to the gallery joins the public rooms, all of which have custom, barrel vault ceilings with no two alike.
This stylish 4 bedroom, 4 bathroom home was designed by Tim Ward and Agnes Bourne. Complete with a unified design and handcrafted finishes, this home features soaring ceilings and walls of glass that show off its gorgeous panoramic view. French doors open to its gardens, decks and infinity pool. An extra 1 bedroom, 1 bathroom Casita adds an additional 600 square feet.
I have the following properties open this weekend. Stop on by and check them out:
First Open House, June 2 1 -4 PM
Elegant, single story traditional home located in fabulous St. Mary’s Gardens neighborhood. Situated on a mostly level .25± acre lot, the 4 Bedroom, 3 Bathroom, 2437± square foot interior has been thoughtfully updated throughout with timeless appeal and bursts with pride of ownership.
Open June 2, 1 – 4PM