Bay Area Jazzlines

Glen's Numbers June 30th, 2008

Glen Bell (Keller Williams Realty) — Fri, 04 Jul 2008 10:57:52 -0500

There's 2 things that stand out; 1) we're seeing some improvement and 2) the influence that REO's have had in our markets.

I usually speak about the relationship between actives and pendings as being an indication of markets, just as months supply and median price comparisons give us a clue to better understand real estate on a local basis.

Pendings hit an all time low last fall in most areas. Surprisingly they have rebounded since the beginning of the year to their highest levels since I've been tracking them, (July 2005). Why the rebound?

1) Investors looking for bargains, positive cash flows in markets that were virtually non-existent in the Bay Area 2 years ago.

2) Ownership costs vs cost of renting as pointed out in an article written by Carolyn Said of the Sf Chronilce. View her article HERE.

3) Prices have dropped to the point where buyers can now afford a house that they couldn't before.

4) Much of what's selling are foreclosures. Typically, banks take longer to close escrow. This skews the numbers, keeping them in a pending status for longer periods of time.

However, it's obvious that the trend is moving towards improvement in most areas. The most dramatic improvements are coming from many of the areas that have shown the worst performances over the last two years. Obviously, the areas that have had the highest inventory levels and foreclosure rates have also shown the largest price declines. Brentwood's a good example. Notice that inventory is now coming down while pendings are increasing. 74% of all sales in Brentwood over the past 3 months were foreclosures. There was a 14.2 months supply of homes there at the start of the year, now only 7.7 months.

Also, banks that we've been working with have become very aggressive in their pricing. I couldn't speak for other agencies involved heavily in foreclosure sales, but we've seen multiple offers in about half of our sales and pendings transactions. As a rule, banks typically spend very little to improve their property's "curb appeal." They understand inventory and competitor factors in the markets. Reducing prices to attractive levels has become their strategy in an attempt to unload assets. As a result, those areas highest in inventory and foreclosure rates have suffered the largest price reductions overall.

Another SF Bay Area REO Surprise!

Glen Bell (Keller Williams Realty) — Thu, 21 Feb 2008 12:45:00 -0600

As a follow-up to last month's REO surprise, "that one out of every five listings in the SF Bay Area is REO, Bank Owned Properties," we asked ourselves another question.

What is really influencing housing inventory and pricing in the SF Bay Area?

We've always heard that new construction has been the main culprit with overbuilding leading to a glut of houses for sale. All that new housing located along highway 4, Antioch, Brentwood, Pittsburg, Oakley seems to have led the way. After all, those areas are seeing between a 15 to 25% drop from last year's prices. (Median prices compared on a year to year basis for January).

So we ran some numbers again using DQ News and EBRD MLS services to see which has the greatest influence over listings and sales on a city by city basis. Numbers were pulled as of January 31, 2008.

SURPRISED again!

Well, with all of the subprime fallout, foreclosures, and REO news rolling around in the news, maybe it really isn't such a surprise.

The following list seems to put it in perspective. Reasons may vary, and differ depending on location. However, it is apparent that REOs, Bank Owned Properties, are now, the major influence on housing inventory and sales in the SF Bay Area.

Banks are the competition in a big way for sellers. Banks think differently about selling. Banks are becoming more aggressive in selling their properties. Not much in show or presentation, simply priced below the competition.

In many of our conversations this week, we've been hearing that activity has picked up. The word seems to be that "investors" are looking for bargains in the marketplace.

We have to agree that we are seeing that with our own REO listings. So we have to ask ourselves the next big question, will investors be leading the way?

Maybe they're smart enough to realize that timing a real estate market bottom is next to impossible. Maybe with low interest rates, lots of choices, and not many other buyers out there, this just may be the right time to pick up a bargain.

SF East Bay Housing Statisitics & REO Surprise

Glen Bell (Keller Williams Realty) — Fri, 18 Jan 2008 19:17:45 -0600

It seems that every day now, we see more and more properties for sale that are listed as REO (Bank Owned Foreclosures), and/or Short Sales.

Our team, has always run numbers as a means to better understand our markets. We researched the EBRD multiple listings service, following a conversation that we had last night. We were not surprised as to which cities had a higher percentage of REOs.

However, we did not expect the number for the entire San Francisco East Bay area to be this high, 21%. That means that roughly one in five houses that are for sale, are Bank Owned in the East Bay area. The interesting factor is that this number does not include "Short Sales."

When lenders allow a home to be sold for less than the amount still owing on the mortgage loan, that's called a pre-closure "Short Sale!"

I think you can see where this is going once you add "short sales" into the mix as well. The competition for many houses for sale in the market are from banks.

Here's our spreadsheet tracking cities in the San Francisco East Bay Area for Months Supply and REOs. Months supply is the ratio of inventory to sales. It tells us how many months the stock of homes for sale would last, if sales continued at their current rate.

For those living in other parts of the country, we'd love to hear what's happening in your market. We've already heard from one Las Vegas agent, that 20.8% of their listings are REOs or short sales.

Relay Transaction Management

Glen Bell (Keller Williams Realty) — Sun, 30 Dec 2007 15:47:34 -0600

Can anyone give me pros & cons on using Relay Transaction Management program?

East Bay Area Housing Forecast

Glen Bell (Keller Williams Realty) — Sun, 30 Dec 2007 15:45:02 -0600

What's in store for real estate in the Bay Area for the coming year? Most in the real estate industry agree that it will get worse before it gets better. However, predictions vary among our "experts." What are we in store for in 2008? When will prices begin to recover? Hear what some of them are saying.

"Don't count on market rebounding in '08, experts say." - Marni Leff Kottle of the San Francisco Chronicle. "A real recovery in the housing market is probably at least a year off," said Robert Kleinhenz, deputy chief economist for the California Association of Realtors.

California Association of Realtors's forecast for 2008; sales volume will continue to fall, 9% in 2008, as will the median price of a home, at 4%. Take a look at the 2008 California Housing Market Forecast presentation by Leslie Appleton-Young, Vice President and Chief Economist for the California Association of REALTORS® (C.A.R.).

"The best guesstimate most can come up with these days on a residential housing recovery is that 2008 will be more than half over before housing prices even stabilize. Right now, it's anybody's guess as to when they will start to grow positively." - Ryan Fuhrmann, an article printed in The Motley Fool.

It may take until the end of 2008 or beginning of 2009 for the market to hit bottom, said Mark Zandi, chief economist at Moody's Economy.Com.

"But the one thing that economists and real estate agents seem to agree on is this: As bad as it may get in the Bay Area, the region is weathering the downturn in the real estate market much better than most other places." "The housing market is fairly strong in the vast majority of the Bay Area," said Ken Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley. "It's slipping a little, but it's not the free fall you have in some parts of the country."

"When you look at the rest of the state and even the rest of the country, the Bay Area has held up quite well," said Larry Klapow, president of Coldwell Banker's San Francisco Bay Area region. "The market has shown incredible resiliency." - So Long, '07

"Builder's expect recovery in second half" - Jessica Saunders, East Bay Business Times. "At least two builders expect to see some recovery in the East Bay housing market in the second half of 2008, but another expert thinks it will be 2009 before demand and supply balance out."

"Once we get through the credit crunch, and buyers realize the world didn't end, they will come back," said Scott Menard, SummerHill Homes' chief operating officer, who predicts the market will continue down through at least the first quarter. "Next year will probably be a bit of an adjustment year." Which brings us to the question; Will 2008 be a good time to invest in real estate? See what a recent survey showed taken by the East Bay Business Times.

Contra Costa & Alameda County Housing Months Supply by City

Glen Bell (Keller Williams Realty) — Thu, 13 Sep 2007 10:15:49 -0500

This is a revision from the July Post as an update for what the months supply is doing on a city by city basis for Contra Costa & Alameda Counties.

What is months supply? Basically, months supply is the ratio of inventory to sales. And what it tells us is how many months the stock of homes for sale would last, if sales continued at their current rate.

See How your City is doing.

We currently have a 8.4 month supply of homes in the entire SF Bay Area. How does this compare historically? "A state of equilibrium" is considered 6 months, a point at which you would have an equal number of sellers and buyers. Considerably less, would be considered a "seller's" market, while anything more than that number would be considered a "buyer's" market. Since 1988, our low in California has been 1.3 months in April of 2004. It was even less than that in the San Francisco Bay Area. Our high was in February of 1991 at 18.8 months. The long run average has been 6.9 months. (Statistics are from C.A.R.)

Global Referral network Feedback

Glen Bell (Keller Williams Realty) — Tue, 07 Aug 2007 13:40:50 -0500

I've been contacted by Global Referral Network, a real estate relocation service. Can anybody give me some feedback on this company. Anyone currently working with them?

Glen's Market Data - Months Supply

Glen Bell (Keller Williams Realty) — Tue, 10 Jul 2007 20:50:29 -0500

This is a revision from the May Post as an update for what the months supply is doing on a city by city basis for Contra Costa & Alameda Counties.

See how your City's doing.

We currently have a 7.5 month supply of homes in the entire SF Bay Area. How does this compare historically? "A state of equilibrium" is considered 6 months, a point at which you would have an equal number of sellers and buyers. Considerably less, would be considered a "seller's" market, while anything more than that number would be considered a "buyer's" market. Since 1988, our low in California has been 1.3 months in April of 2004. It was even less than that in the San Francisco Bay Area. Our high was in February of 1991 at 18.8 months. The long run average has been 6.9 months. (Statistics are from C.A.R.)

El Cerrito Pending & Active Sales

Glen Bell (Keller Williams Realty) — Sun, 17 Jun 2007 01:53:18 -0500

I've tracked the pending and active sales in El Cerrito along with 34 other East Bay Cities since July of 2005. Pending and Active Sales give us a better idea on how the market is doing on local levels. At the very peak of the market, during 2004 through the middle of 2005, there were more pending sales than homes for sale. Basically, there were more buyers than there were homes to buy. Now, in most cities, there are far more homes for sale than pending. El Cerrito doesn't always follow the trends of the Greater Bay Area. Compared to Albany, Kensington & North Berkeley, it remains a bargain that appeals due to its central location and proximity to the nearby shops & culture of it's neighbors. It boasts having two BART stations plus there's an abundance of parks. It has become an affordable and attractive alternative. The Bay Area as a whole now has over a 7 months supply of homes. Not so in El Cerrito. It remains relatively low at a modest 2.7 moths.

Unsold Inventory Index

Glen Bell (Keller Williams Realty) — Tue, 29 May 2007 23:12:30 -0500

The unsold inventory index has climbed to 6.8 months for the San Francisco Bat Area, based on numbers derived from EBRDI, (East Bay MLS services). We haven't seen relative numbers like this since the late 1990's.

The unsold Inventory Index tells us how long it would take to sell the existing supply of homes on the market if no more homes were added for sale.

Still, this is much better than California as a whole and put in historical perspective, close to the long run average since 1988 as viewed by the historical chart below.

Source: California Association of Realtors

....And it is even much better compared to the rest of the country, as described in the recent article by San Francisco Chronicle staff writer, Carolyn Said, May 17th, 2007.

Bay Area's Housing Prices Buck National Trend.

East Bay Months Supply by City, May 2007

Glen Bell (Keller Williams Realty) — Tue, 15 May 2007 19:10:52 -0500

We currently have a 6.5 month supply of homes in the area. How does this compare historically? "A state of equilibrium" is considered 6 months, a point at which you would have an equal number of sellers and buyers. Considerably less, would be considered a "seller's" market, while anything more than that number would be considered a "buyer's" market. Since 1988, our low in California has been 1.3 months in April of 2004. It was even less than that in the San Francisco Bay Area. Our high was in February of 1991 at 18.8 months. The long run average has been 6.9 months. (Statistics are from C.A.R.)

See how your City's doing.

Glen's East Bay Market Trends

Glen Bell (Keller Williams Realty) — Tue, 15 May 2007 18:16:52 -0500

We, as real estate agents, have access to the MLS, and are able to extract up to the minute information to give us a better clue as to what's really happening in your neighborhoods.

However, these bits of information that we are able to pull are only snapshots. Tracking these numbers over time gives us the ability to spot trends. These trends may be subject to our interpretation, but they do give us an up to date insight on a market so that we are able to make a more well informed real estate decision

How many homes are for sale in your neighborhood, how long have they been on the market, and how many buyers are looking? (Simply put supply and demand). This translates to actives, average days on the market (actives only), and pending sales. The relationship that we find to each other in our respective markets can give us some indication as to whether we are in a sellers, a normal, or even a buyers market. This can be done on a more local basis, being able to look at your neighborhood by itself.

The chart above tracks the number of actives (homes for sale) and the number of pendings, (homes that are in contract with buyers). The sample was taken from 34 cities within Alameda and Contra Costa Counties. Pendings have dropped in comparison to actives since July of 2005. While the inventory (homes for sale) have climbed at a very aggressive pace since then. Simply put, there are more homes on the market with fewer buyers.

Some of what you see is seasonal, some unique to this market.

The graph above measures a very large area. A sample this large, translates to being able to make only very broad general conclusions about this market overall. It doesn't necessarily tell the story of the market in your particular neighborhood.

In reality, there are markets within markets, different neighborhoods within cities. Not every neighborhood in Berkeley, for example, will be quite the same. Some neighborhoods will have stronger markets than others. The right house, presented well, in the right neighborhood, and at the right price continues to bring multiple offers. However, in most cases, homes are staying on the market longer, we're seeing price reductions, and there are more homes coming onto an already saturated market.

What can you make of all this? Making your real estate decisions should be based on up to date information that reflects the conditions of your specific neighborhood. Ask your well informed real estate agent to talk to you about the market trends and conditions of your neighborhood before making that all important decision to buy or sell a home.

Contra Costa Home prices on the Rise

Glen Bell (Keller Williams Realty) — Fri, 11 May 2007 20:05:36 -0500

Prices also up in Alameda County, down Solano County; sales increase in March but down from 2006 - By Barbara E. Hernandez, CONTRA COSTA TIMES.

The median price paid for a Bay Area home in March was $639,000, up 3.1 percent in a month's time, bucking the national trend and regaining much of the decline since last summer, but the chorus still isn't singing "Happy Days Are Here Again." - George Raine, a SF Chronicle Staff Writer.

"The housing market in the state will show a substantial decline this year, on the order of 2 or 3 percent,'' said Ken Rosen, director of the Fisher Center for Real Estate at UC Berkeley</a>. Moreover, he said he expects the state's housing market to stay soft for a while.

"We had such a large run-up (in home prices) in the state as a whole in the last four years and now there is excess inventory in unsold houses -- in San Diego, Sacramento, Orange County and the Central Valley in particular,'' Rosen said. "Usually, the reaction time to an overheated market is two to three years.''

On the day after the normally glass-is-half-full Realtors trade association said the median price of existing U.S. homes will fall nearly a percentage point this year, DataQuick</a> said that Bay Area prices are holding their only-in-the-Bay Area value.

"Prices seem to have held up surprisingly well, probably because of a relatively strong economy. Additionally, it's starting to look like much of the current sales lull may be due to the strong sales in 2004 and 2005. Some of today's demand probably got pulled into that period because of low mortgage interest rates and the availability of exotic mortgages," said Marshall Prentice, DataQuick president.

Levy, at the said that the housing downturn of the 1990s, with slow and flat activity in prices and sales volumes, lasted seven years and that there is no reason to believe the current downturn will be short term. "I think we are closer to the middle of the housing adjustment process than to the end,'' he said.

"What the National Association of Realtors said about the price of homes going down screams volumes,'' Thornberg added. "It says, 'Guess what. This is not over. We have a ways to go.' To think we are out of the woods is silly.''

"The big story,'' Michael Lehmann, professor emeritus of economics at the University of San Francisco, "was the big surge in prices of homes between 2000 to 2005. That is over here and everywhere,'' he said. "And overall, if the weakness continues across the nation, it will be hard for the Bay Area to resist it in the long run."

El Cerrito Pending & Active Sales

Glen Bell (Keller Williams Realty) — Wed, 17 Jan 2007 22:16:00 -0600

I have provided the graph above for those of you trying to make sense of the Housing market in El Cerrito. The graph follows Pending Sales and Active Listings on a week by week basis beginning in July of 2005 through January 14, 2007. (Data has been collected from EBRD MLS).

Actives - are properties currently for sale.

Pending - are currently in escrow.

Following these numbers can sometimes give us an indication of market trends. For example, as in most cities within the greater Bay Area, there has been a trend coming from a very strong "seller's" market in the summer of 2005, and going to a more "normal" market at the beginning of 2007. The trend shows the relationship between inventories and the number of buyers. Simply put, this follows the laws of supply and demand. Last summer there were fewer homes for sale with many buyers. Now we have more homes for sale with less buyers.

Another indicator for markets would be to look at an area's Months Supply of inventory, (homes that are for sale compared with the number of homes sold over the past year).

For El Cerrito, we have gone from a 1 months supply during the summer of 2005 to as much as 3 months in October of 2006.

Housing: The Best Indicators of a Rebound

Glen Bell (Keller Williams Realty) — Wed, 17 Jan 2007 20:20:08 -0600

"Has the home market hit bottom? That is the key question for the U.S. economy in 2007. According to some housing indicators, there is some light at the end of the tunnel for homebuilders, but that cautious optimism comes with caveats."

Read the article found in the January 15, 2007 issue of BusinessWeek HERE.

"To get the most reliable signal that the housing recession is over, keep an eye on the average monthly supply of new homes for sale and the average mortgage rate each quarter. Analysis by Goldman Sachs U.S. economist Edward McKelvey of eight pieces of housing data widely used as leading indicators of the housing cycle showed those two series are better than quarterly averages of new and existing home sales, housing starts, mortgage applications, housing affordability, and homebuilder confidence."

Compare how your city has faired over the past year and half; from the "strong" summer of 2005, to the inventory highs of last October 2006, and finally to the lower winter inventories of today. (Data from EBRD, MLS).

Basically, the months supply is the ratio of inventory to sales. What it tells us is how many months the stock of homes for sale would last, if sales continued at their current rate. The "State of Equilibrium" is considered to be 6 months and the norm for housing inventory. This is the state where there are considered to be an equal number of sellers and buyers. This can also be used as a guage as to whether we are in a "Buyer's," "Normal," or "Seller's" market.