Real Estate Executives Forecast More Growth in 2016

June 11, 2015 by Pacific Union • Posted in Market Forecasts
New home sales and prices should rise in the coming year, say recent projections from housing industry executives, while the chance of a downturn over the next three years appears less likely than it did one year ago.

These were a few of the key takeaways from The Summit, a two-day conference hosted by John Burns Real Estate Consulting. Held in early May, the event gathered nearly 80 real estate industry executives — including home builders, land developers, and investors – to gauge where the U.S. housing market is headed in the coming years. As a subscriber of the company’s research, Pacific Union CEO Mark A. McLaughlin attended The Summit, the only executive from a residential real estate brokerage at the conference.

When asked to project home price growth over the next year, 69 percent of attendees felt that prices will rise by 2 to 5 percent. Last year, the majority of attendees called for 5-percent appreciation, and the company’s Burns Home Value Index indicates that prices actually rose by 4.1 percent. JBREC predicts price of growth of 5 percent in 2015 and 4.5 percent in 2016.

Conference participants also expect new home sales to increase by about 10 percent from 2015 to 2016, down from JBREC’s current forecast of 12 percent. Fifty-three percent of attendees believe that new home sales will rise by 5 to 10 percent, while 38 percent predict sales gains of 10 to 20 percent.

This year, real estate industry executives are more optimistic about the overall state of the nation’s housing market. Attendees put the chance of a housing downturn at 17 percent, compared with 22 percent at last year’s event.

Along with home prices and sales volume, most conference participants also think that mortgage rates will increase over the coming year, with 59 percent predicting gains of between 0.25 and 0.75 percent. Another 36 percent believe that rates will remain essentially flat. Currently, JBREC projects that mortgage rates will rise by 0.3 percent over the next year.

According to the company, a key area of disagreement involved investment location. The majority of participants felt it was preferable to invest in more expensive markets with plentiful jobs — such as downtown San Francisco — because even if greater costs mean lower returns, such areas will always be in demand. Others indicated a willingness to venture into outlying areas because they feel the risk/reward proposition outweighs the high prices of real estate in urban centers.

JBREC says that attendees also were split on homeownership rates amongst millennials. Some feel that fewer millennials will own homes due in part to affordability conditions, while others believe that ownership rates will be about the same as with previous generations – just delayed.

In November, Pacific Union and JBREC will team up for the second consecutive year to deliver the San Francisco Bay Area Real Estate and Economic Forecast 2018, which will offer our clients an exclusive, in-depth look at what to expect in Northern California in the coming three years.

(Image: Flickr/Mark Moz)

Bay Area Home Values Jump, Condo Values Rocket To New High

May 26, 2015

Single-family home and condominium values within the San Francisco Metropolitan Area gained 3.0 and 4.5 percent respectively from February to March, according to the latest S&P Case-Shiller Home Price Index.

The San Francisco index for single-family homes is running 10.3 percent higher on a year-over-year basis and is within 5.7 percent of a 2006 peak, having gained 52 percent since January of 2010.

The index for the bottom third of the market gained 1.8 percent in March and is running 12.8 percent higher versus the same time last year; the index for middle third of the market gained 3.1 percent, up 10.2 percent year-over-year; and the index for the top third of the market jumped 3.9 percent in March to a new all-time high and is up 10.1 percent year-over-year.

S&P Case-Shiller Index: San Francisco Single-Family Home Values

According to the index, single-family home values for the bottom third of the market in the San Francisco MSA are back to just above June 2004 levels (26 percent below an August 2006 peak); the middle third is back to just below April 2005 levels (8 percent below a May 2006 peak); and values for the top third of the market are now 9.8 percent above an August 2007 peak.

San Francisco condo values gained 4.5 percent in March and are running 13.2 percent higher on a year-over-year basis, 11.3 percent higher than at the previous cycle peak reached in October 2005.

S&P Case-Shiller Index: San Francisco Condo Values

For the broader 10-City U.S. composite index, home values gained 0.8 percent in March and are 4.7 percent higher on a year-over-year basis but remain 16.0 percent below a June 2006 peak.

Our standard SocketSite S&P/Case-Shiller footnote: The S&P/Case-Shiller home price indices include San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., greater MSA) and are imperfect in factoring out changes in property values due to improvements versus appreciation (although they try their best).

Articles and photos sourced from: www.socketsite.com

San Francisco One of World’s Hottest Luxury Real Estate Markets in 2014

May 6, 2015 by Pacific Union • Posted in Market Conditions

A home in San Francisco’s Presidio Heights neighborhood.

After astounding growth in 2013, luxury property sales returned to more normal levels in San Francisco last year, although the region still ranks as one of the top-performing high-end real estate markets in the world.

In its 2015 Luxury Defined report, Christie’s International Real Estate gave San Francisco the second-highest score – 54 of a possible 100 – on its Luxury Thermometer metric, which tracks growth and demand at the top end of the global market. CIRE uses four factors to gauge a region’s luxury temperature, including annual sales growth and fewest average days on market.

In 2014, sales of $1 million homes in San Francsico grew by 19 percent on an annual basis, down from a whopping 62 percent in 2013. Pacific Union CEO Mark A. McLaughlin told CIRE that the slowdown was predictable and that the region’s high-performance economy will continue to drive growth in luxury home sales.

“The Bay Area is still experiencing a perfect storm of hot market conditions, exceptional job growth, excellent income levels, and limited supply,” McLaughlin said.

Because housing inventory in the Bay Area remains constrained, high-end homes in San Francisco leave the market quickly. According to the report, luxury homes in our region sold in an average of 71 days as of December 2014, eight days faster than a year ago and second only to Toronto.

And though San Francisco remains a pricey place to purchase a luxury property, it is still relatively affordable by global – and even national – standards. CIRE says the entry point for a luxury home in San Francisco is $3 million, compared with $5 million in New York, $6 million in London, and $8 million in Los Angeles.

Luxury buyers can also get more home for their money in the Bay Area than they can in other top international destinations, says the report, which compares listings from around the globe. For $5 million, a homebuyer in San Francisco could purchase a four-bedroom, 4,800-square-foot, single-family home with Golden Gate Bridge views. In London, $5 million buys a two-bedroom, 1,300-square-foot flat, while in New York, that money fetches a three-bedroom, 1,865-square-foot condominium on Manhattan’s Upper East Side.

Last year saw an uptick of so-called “trophy home” transactions, CIRE says, with global sales of $100-million-plus homes reaching an all-time high. According to the report, five such homes around the world sold in 2014, and there have been 13 $100-million-plus sales since 2010.

Perhaps unsurprisingly, two of those 13 trophy sales happened in Silicon Valley, where mind-bogglingly expensive real estate is almost a given. In 2011, a single-family home in Los Altos Hills found a buyer for $100 million, while a home in Woodside sold for $117.5 million the following year.

(Photo: Flickr/Allan Ferguson)

Articles and photos sourced from: www.pacificunion.com 

Golden State Real Estate Investors Optimistic About Price Growth

May 12, 2015 by Pacific Union • Posted in Industry Surveys & Studies
An overwhelming majority of California real estate investors believe that property prices will grow in the coming years, according to a recent survey, and they’re anticipating handsome returns.thumbs_up

In its 2015 Investor Survey, the California Association of Realtors (CAR) found that 75 percent of investors believe that real estate prices in their neighborhood will increase over the next five years, while 70 percent expect appreciation in one year. Investors project that their property prices will grow by 27 percent during the period of ownership, an average of 6.1 years in 2015. In both 2013 and 2014, investors said they would keep their homes for an average of about eight years.

And if recent home price gains are any indication, California real estate investors have just cause for the sunny outlook. According to CAR’s survey, the median sales price paid for an investment property increased from $292,000 in 2013 to $375,000 in 2015.

Overall, the number CAR real estate professionals who reported closing a transaction with an investor over the past 12 months declined from 39 percent in 2013 to 26 percent this year. Survey respondents said they had an average of 5.4 investor clients in 2015, essentially unchanged from last year but down from seven in 2013.

California investors still far prefer single-family homes, with 72 percent buying that type of property. Multifamily property purchases by investors grew from 14 percent in 2013 to 21 percent in 2015, a trend that CAR attributes to the depletion of distressed housing inventory on the market.

The survey found that two-thirds of investors financed the transaction in all cash, virtually identical to the previous two years. About half of investors funded the purchase with profits from a previous investment, while 42 percent tapped their personal savings.

Two-thirds of investors also plan to become landlords – with the average monthly rent pegged at $1,850 — while about one-quarter intend to flip the property. California investors tend to gravitate toward homes that are already in excellent shape, with 69 percent purchasing properties that needed no or minor improvements. Those that did have to renovate spent a median of $10,000, down from $15,000 last year.

Southern California is still the preferred locale for investors in the state, accounting for 46 percent of transactions in 2015. However, investor activity in Northern California is rising, up from 15 percent in 2014 to 24 percent this year.

(Photo: Flickr/Sarah Reid)

Pacific Union’s April 2015 Real Estate Update

May 7, 2015 by Pacific Union • Posted in Pacific Union Monthly Real Estate Updates
Demand for Northern California real estate remained heavy in April, with the median home sales price reaching yearly highs in the majority of Pacific Union’s Bay Area regions. And buyers weren’t wasting any time, particularly in Contra Costa County, the East Bay, Silicon Valley, and the Mid-Peninsula, where homes sold in three weeks or less.

CONTRA COSTA COUNTY
The median sales price in Pacific Union’s Contra Costa County region rose just a bit from the previous month to finish April at $1.1 million. Properties sold for an average of 2.5 percent above original price, the highest such premiums recorded in the past year.

The months’ supply of inventory (MSI) dipped for the second straight month, landing at 1.3. On average, homes sold in 19 days, nearly identical to the pace of sales one year ago.

Defining Contra Costa County: Our real estate markets in Contra Costa County include the cities of Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek. Sales data in the adjoining chart includes single-family homes in these communities.

EAST BAY
Home prices in Pacific Union’s East Bay region moved closer to the $1 million mark in April, with the median sales price increasing to $946,500. Homes in the region appear to be more coveted than ever, with eager buyers paying an average of 16 percent more than original price in order to close a deal.

Properties sold in 16 days, the quickest pace in the past year, while the MSI fell to 0.9.

Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Alameda; Albany; Berkeley; El Cerrito; Kensington; and Piedmont. Sales data in the adjoining chart includes single-family homes in these communities.

MARIN COUNTY
At 1.2, the MSI in Marin County reached a one-year low in April. Prices headed in the other direction, with the median sales price climbing to $1,203,625.

Homes sold in an average of 58 days, 12 days longer than in March. Buyers got a bit of a break, with the average property selling for about 96 percent of asking price.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the adjoining chart includes single-family homes in these communities.

NAPA COUNTY
April’s median sales price in Napa County ratcheted up to $635,000, a year-over-year gain of 24.5 percent. Sellers banked about 96 percent of the original price, similar to what we observed last spring and early summer.

Homes left the market in 96 days, five days longer than in March, while the MSI increased modestly to 3.1.

Defining Napa County: Our real estate markets in Napa County include the cities of American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville. Sales data in the adjoining chart includes all single-family homes in Napa County.

SAN FRANCISCO – SINGLE-FAMILY HOMES 
The median sales price for single-family homes in San Francisco has risen every month thus far in 2015 and hit $1,350,500 in April. Overbids remained commonplace, with the average buyer paying about 13 percent above asking price to get the job done.

Homes sold in an average of 26 days, nearly identical to March’s pace, while the MSI dropped to 1.2.

SAN FRANCISCO – CONDOMINIUMSMonthlyMarketUpdate_Apr15_SFCondos
The median condominium price in San Francisco was down month over month in April, but at $1,097,500, it is up almost 20 percent from one year ago. Sellers enjoyed premiums of about 8 percent, in line with what we saw last spring.

At 1.1, the MSI was unchanged from the previous month. San Francisco condominiums took an average of 33 days to sell, two days longer than in March.

SILICON VALLEY
Silicon Valley was one of the few Pacific Union regions where home prices were not at their yearly peaks in April. But with the median sales price at $2,665,000, it remains the most expensive of our Northern California regions in which to purchase a home.

The MSI dipped to 1.2, matching its one-year low. Homes left the market in a brisk 19 days, and the average buyer paid a 6.5 percent premium.

Defining Silicon Valley: Our real estate markets in the Silicon Valley region include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the adjoining chart includes all single-family homes in these communities.

Mid-Peninsula Subregion

As in neighboring Silicon Valley, homes didn’t linger on the market very long in the Mid-Peninsula, with properties selling in an average of 21 days. The MSI improved slightly from March, but at 1.0, the region’s housing supply remains low.

The median sales price climbed to $1,688,000 with the average buyer paying 7.5 percent more than original price to successfully close a transaction.

Defining the Mid-Peninsula: Our real estate markets in the Mid-Peninsula subregion include the cities of Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area). Sales data in the adjoining chart includes all single-family homes in these communities.

SONOMA COUNTY
The median sales price in Sonoma County has been gaining steam every month in 2015 and closed out April at $541,000. The average seller took home almost 100 percent of the original price, the most in the past year.

Homes left the market in 55 days, more than a month faster than earlier in the year, and the MSI dropped to 1.6.

Defining Sonoma County: Our real estate markets in Sonoma County include the cities of Cotati, Healdsburg, Penngrove, Petaluma, Rohnert Park, Santa Rosa, Sebastopol, and Windsor. Sales data in the adjoining chart includes all single-family homes and farms and ranches in Sonoma County.

SONOMA VALLEY
Sonoma Valley’s median sales price rocketed up to $757,500 in April, a month-over-month gain of 32 percent. Sellers received an average of 0.5 percent above the original price, the first time in the past year they’ve enjoyed any sort of premium.

Buyers took an average of 66 days to close a deal, two days longer than they did in March. The MSI in Sonoma Valley has been declining every month so far in 2015 and fell to 2.1 in April.

Defining Sonoma Valley: Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the adjoining chart refers to all residential properties – including single-family homes, condominiums, and farms and ranches – in these communities.

LAKE TAHOE/TRUCKEE – SINGLE-FAMILY HOMES
The median sales price for a single-family home in Pacific Union’s Lake Tahoe/Truckee region dropped to $542,500, not terribly different from what we saw in April 2014. The MSI expanded to 6.4, ensuring that homebuyers in the region have plenty of properties from which to choose.

Homes left the market in an average of 103 days, in line with the pace of sales one year ago. Sellers got an average of 92 percent of the asking price, a bit less than they did in March.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes single-family homes in these communities.

LAKE TAHOE/TRUCKEE – CONDOMINIUMS
The median condominium price also dropped in the Lake Tahoe/Truckee region from the previous month to finish April at $281,000. At 17.9, the MSI nearly doubled from March to reach a yearly high.

Condominiums in the region sold in an average of 100 days, with the average seller receiving about 94 percent of the asking price – unchanged from the preceding month.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes condominiums in these communities.

Articles and photos sourced from: www.pacificunion.com 

Real Estate Roundup: Bay Area a Hotbed of Hefty Down Payments

May 11, 2015 by Pacific Union • Posted in Weekly Real Estate News Roundups
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

AFFLUENT BAY AREA BUYERS DROPPING SIZABLE DOWN PAYMENTS
Even with sky-high home prices, Bay Area buyers are making some of the largest down payments in the U.S., with five of our local markets landing in the top 15.Hundred-dollar bills

According to data from RealtyTrac, the average San Francisco homebuyer put down 30 percent — $305,467 – of the purchase price in 2014, the second most of any county in the nation. San Mateo County ranked No. 3, with an average down payment of 28.5 percent, followed by Marin County at No. 5 (27.8 percent), Santa Clara County at No. 7 (25.5 percent), and Sonoma County at No. 13 (22.6 percent).

RealtyTrac says that markets where buyers can afford to make large down payments are those with the strongest economies – certainly the case in the Bay Area, where eight of nine counties were at full employment in March.

BAY AREA HOUSING MARKETS MOVING AT BREAKNECK SPEED
If you’re shopping for a home in the Bay Area this spring, you’d do well to make haste, as properties aren’t sticking around for long, especially in parts of Silicon Valley and the East Bay.

Citing MLS data, the San Jose Mercury News reports that single-family homes in two Redwood City neighborhoods have sold in an average of 10 days over the past six months, down from 14 days one year ago. Buyers in Palo Alto were also snapping up homes in 10 days, six days faster than last year. In the Oakland metro area, the average home sold in 12 days, down from 13.

While attractive homes are selling fast across the region regardless of financing method, buyers who can pay all cash move particularly quick, the publication says. All-cash buyers accounted for about 25 percent of all transactions in March in Santa Clara and San Mateo counties and about 20 percent in Contra Costa and Alameda counties.

SAN FRANCISCO RENT PRICES HIT NEW HIGH
The news isn’t getting any better for renters in the City by the Bay, with prices recently climbing to an all-time high.

According to a blog post at SFGate, San Francisco rents averaged $3,458 in the first quarter of 2015, up 13 percent from the first quarter of 2014. However, it’s important to consider that that figure only includes 50-plus unit buildings, which tend to be newer and more expensive.

Rents were also rising across the rest of the Bay Area, SFGate says, averaging $2,370, a gain of 14 percent from the first quarter of 2014. Renters pushed out of the San Francisco market are helping to drive up prices in Alameda County, where rents grew by 14.6 percent year over year, the largest increase in the Bay Area.

SAN JOSE ECONOMY, HOUSING MARKET BACK ABOVE NORMAL
The U.S. housing market continued its recovery in the first quarter but has still not returned to a state of normalcy. In the San Jose metro area, housing and economic activity have surpassed their typical levels, thanks to the exceptionally strong Silicon Valley job market.

The National Association of Home Builders’ latest Leading Market Index gives the U.S. housing market a score of .91, meaning that the country’s economic and housing activity is at 91 percent of normal levels based on permit activity, prices, and employment. According to the LMI, 68 of 350 metro areas nationwide have either returned to or surpassed their last normal activity levels.

San Jose is one of those markets and ranks sixth in the U.S. among major metro areas for highest LMI scores, though the report does not disclose an exact number. NAHB Chief Economist David Crowe said that job growth is driving the return to normalcy across the U.S., while permit activity saw only a modest improvement.

(Photo: Flickr/ 401(K) 2012)

Articles and photos sourced from: www.pacificunion.com