Median cost is up 6.6%, driven by strong upscale market, but number of homes sold is down 20%
The Bay Area appears to be shaking off the nation's housing doldrums.
Local home prices are still going through the roof, even though far fewer properties are changing hands. That contradicts the national real estate trend of slumps in both price and sales volume.
Why does the region's housing seem to defy gravity?
It's the wealth effect.
"The Bay Area is one of the strongest economies in the country today," said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. "The upper end of the market in the inner areas (San Francisco and the counties closest to it) is doing extremely well. This is a completely different trend than the rest of the country."
The median price for an existing single-family dwelling in the Bay Area hit a record $720,000 in April, up 6.6 percent from last April, according to a report released Wednesday by DataQuick Information Services.
That happened even though the number of existing homes sold in April fell 19.9 percent to 5,015, compared with 6,263 a year ago. The month was the 27th in a row in which sales volume declined, and April's sales count was the lowest in 12 years. The April average is 9,614.
At the same time, Marin County established its own record with a median home price of $1,010,000 -- the first county in California to pass the million-dollar mark, DataQuick said.
The median price for a single-family home nationally was $215,300 in March, a 0.9 percent drop from the previous year, according to the National Association of Realtors.
The Bay Area numbers come with some caveats, however. The median price is skewed by strong activity at the upper end. Real estate in the region is composed of numerous micro-markets, which vary tremendously. In fact, affluent Bay Area housing markets are getting stronger, while poorer areas are softening.
"The volume (of sales) being low tells you that we've lost the bottom 20 to 30 percent of the market that can't qualify for mortgages," Rosen said. Banks have tightened lending standards in recent months since numerous homeowners started defaulting on subprime loans. Subprimes are higher-cost mortgages sold to people with poor credit.
Both Rosen and DataQuick analyst Andrew LePage said the Bay Area market is a dichotomy.
"There are dual realities emerging here," LePage said. "There is one reality for mid- to upper-priced homes up through the luxury market. In a lot of areas, there are tentative signs of those markets stabilizing and maybe even inching up both in sales (volume) and price." For the Bay Area, he defines mid-priced as $800,000.
DataQuick's county breakdowns show that existing-home prices rose in April in the six innermost Bay Area counties -- Alameda, Contra Costa, Marin, Santa Clara, San Francisco and San Mateo -- but declined in the area's furthest-out counties: Napa, Solano and Sonoma.
"It's safe to say that the more expensive the neighborhood, the more likely it appears to at least temporarily be stabilizing now," LePage said. "At the opposite end of the price spectrum, in starter neighborhoods, you're more likely to see big sales drop-offs from last year and more significant price declines."
Bearing out that thesis, Leif Jenssen, a Realtor with Red Oak Realty, recently cut $20,000 off the price of a 2-bedroom, 1-bathroom home he's selling in Oakland's Maxwell Park, which he considers a starter neighborhood, with home prices from $400,000 to $550,000.
"If you search six blocks in either direction from the house, there are 80 houses for sale," he said. "The one right next door, which is a bit smaller, came on the market at $449,000. We were at $495,000 so (we reduced the price) to $475,000."
Maxwell Park exemplifies the kind of area likely to suffer from the subprime problems.
"It will probably have a fair amount of foreclosures because a lot of people buying in that neighborhood were low-income and didn't have money to put down," Jenssen said. "I see properties out there that say they're bank-owned (which means they have been foreclosed)."
Paul Rozewski, a Realtor with Windermere Properties of the East Bay, said he is seeing properties sit on the market longer in places like Hayward and Newark.
"The buyer is more in the driver's seat," he said. "It's not something where the buyer can ask for the world and expect to get it, but it's a much more even playing field."
But in sought-after, affluent neighborhoods, real estate agents say they are fielding multiple offers, just as they did during the housing boom.
"I've got two deals I'm holding in my hand" that received multiple offers and sold for over listing price, said D.J. Grubb, principal of the Grubb Co. in Oakland and Berkeley. "I'm living in the best of all worlds; I'm in a great microclimate -- Berkeley, Oakland, Piedmont, Kensington. My over-$2 million range is absolutely on fire."
Nowhere is the market pricier than in Marin County.
Payton Stiewe, a Realtor with Sotheby's International Real Estate, is selling what he calls "a great little house" in Mill Valley for close to Marin's new million-dollar median. The two bedroom, 1,300-square-foot house is listed for $1,069,000. Stiewe said that is a bargain price for its location on Lovell Avenue, where larger homes typically sell for several million dollars, and even an empty lot went for $2.6 million last year.
San Francisco families moving to Marin for its schools have helped drive up prices, Stiewe said.
"I feel our market is immune to decreases in value," he said. "We might slow down a little and just hover, but then it picks up again."
The number of homes on the market obviously has a huge impact on prices. In the Bay Area, inventory is up compared to last year but is much less than the inventory levels for California and the nation.
Inventory stood at 3.3 months of unsold houses in March, up from 2.3 months last March, according to the California Association of Realtors. The number shows how long it would take to sell the homes on the market at the current sales pace. The group tracks in seven Bay Area counties -- Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Solano.
By contrast, California's unsold inventory was 8.7 months in March, almost double the 4.7 months last year. The national index was 7.2 months of inventory in March versus 5.4 months last March, according to the National Association of Realtors.
"Any place where there's a lot of new construction, the inventory of unsold new homes weighs down on the existing-home market," Rosen said. That also explains why counties like San Francisco and Marin, where there is little new-home construction, continue to have strong price appreciation.
Rosen pointed out that the "extraordinarily high" median price of $720,000 presents a real problem for the Bay Area. "That is more than triple the national average," he said. "Prices this high make it difficult to attract the labor force that we need. We need affordable housing, higher density, in inner locations."
The Bay Area appears to be shaking off the nation's housing doldrums.
Local home prices are still going through the roof, even though far fewer properties are changing hands. That contradicts the national real estate trend of slumps in both price and sales volume.
Why does the region's housing seem to defy gravity?
It's the wealth effect.
"The Bay Area is one of the strongest economies in the country today," said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. "The upper end of the market in the inner areas (San Francisco and the counties closest to it) is doing extremely well. This is a completely different trend than the rest of the country."
The median price for an existing single-family dwelling in the Bay Area hit a record $720,000 in April, up 6.6 percent from last April, according to a report released Wednesday by DataQuick Information Services.
That happened even though the number of existing homes sold in April fell 19.9 percent to 5,015, compared with 6,263 a year ago. The month was the 27th in a row in which sales volume declined, and April's sales count was the lowest in 12 years. The April average is 9,614.
At the same time, Marin County established its own record with a median home price of $1,010,000 -- the first county in California to pass the million-dollar mark, DataQuick said.
The median price for a single-family home nationally was $215,300 in March, a 0.9 percent drop from the previous year, according to the National Association of Realtors.
The Bay Area numbers come with some caveats, however. The median price is skewed by strong activity at the upper end. Real estate in the region is composed of numerous micro-markets, which vary tremendously. In fact, affluent Bay Area housing markets are getting stronger, while poorer areas are softening.
"The volume (of sales) being low tells you that we've lost the bottom 20 to 30 percent of the market that can't qualify for mortgages," Rosen said. Banks have tightened lending standards in recent months since numerous homeowners started defaulting on subprime loans. Subprimes are higher-cost mortgages sold to people with poor credit.
Both Rosen and DataQuick analyst Andrew LePage said the Bay Area market is a dichotomy.
"There are dual realities emerging here," LePage said. "There is one reality for mid- to upper-priced homes up through the luxury market. In a lot of areas, there are tentative signs of those markets stabilizing and maybe even inching up both in sales (volume) and price." For the Bay Area, he defines mid-priced as $800,000.
DataQuick's county breakdowns show that existing-home prices rose in April in the six innermost Bay Area counties -- Alameda, Contra Costa, Marin, Santa Clara, San Francisco and San Mateo -- but declined in the area's furthest-out counties: Napa, Solano and Sonoma.
"It's safe to say that the more expensive the neighborhood, the more likely it appears to at least temporarily be stabilizing now," LePage said. "At the opposite end of the price spectrum, in starter neighborhoods, you're more likely to see big sales drop-offs from last year and more significant price declines."
Bearing out that thesis, Leif Jenssen, a Realtor with Red Oak Realty, recently cut $20,000 off the price of a 2-bedroom, 1-bathroom home he's selling in Oakland's Maxwell Park, which he considers a starter neighborhood, with home prices from $400,000 to $550,000.
"If you search six blocks in either direction from the house, there are 80 houses for sale," he said. "The one right next door, which is a bit smaller, came on the market at $449,000. We were at $495,000 so (we reduced the price) to $475,000."
Maxwell Park exemplifies the kind of area likely to suffer from the subprime problems.
"It will probably have a fair amount of foreclosures because a lot of people buying in that neighborhood were low-income and didn't have money to put down," Jenssen said. "I see properties out there that say they're bank-owned (which means they have been foreclosed)."
Paul Rozewski, a Realtor with Windermere Properties of the East Bay, said he is seeing properties sit on the market longer in places like Hayward and Newark.
"The buyer is more in the driver's seat," he said. "It's not something where the buyer can ask for the world and expect to get it, but it's a much more even playing field."
But in sought-after, affluent neighborhoods, real estate agents say they are fielding multiple offers, just as they did during the housing boom.
"I've got two deals I'm holding in my hand" that received multiple offers and sold for over listing price, said D.J. Grubb, principal of the Grubb Co. in Oakland and Berkeley. "I'm living in the best of all worlds; I'm in a great microclimate -- Berkeley, Oakland, Piedmont, Kensington. My over-$2 million range is absolutely on fire."
Nowhere is the market pricier than in Marin County.
Payton Stiewe, a Realtor with Sotheby's International Real Estate, is selling what he calls "a great little house" in Mill Valley for close to Marin's new million-dollar median. The two bedroom, 1,300-square-foot house is listed for $1,069,000. Stiewe said that is a bargain price for its location on Lovell Avenue, where larger homes typically sell for several million dollars, and even an empty lot went for $2.6 million last year.
San Francisco families moving to Marin for its schools have helped drive up prices, Stiewe said.
"I feel our market is immune to decreases in value," he said. "We might slow down a little and just hover, but then it picks up again."
The number of homes on the market obviously has a huge impact on prices. In the Bay Area, inventory is up compared to last year but is much less than the inventory levels for California and the nation.
Inventory stood at 3.3 months of unsold houses in March, up from 2.3 months last March, according to the California Association of Realtors. The number shows how long it would take to sell the homes on the market at the current sales pace. The group tracks in seven Bay Area counties -- Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Solano.
By contrast, California's unsold inventory was 8.7 months in March, almost double the 4.7 months last year. The national index was 7.2 months of inventory in March versus 5.4 months last March, according to the National Association of Realtors.
"Any place where there's a lot of new construction, the inventory of unsold new homes weighs down on the existing-home market," Rosen said. That also explains why counties like San Francisco and Marin, where there is little new-home construction, continue to have strong price appreciation.
Rosen pointed out that the "extraordinarily high" median price of $720,000 presents a real problem for the Bay Area. "That is more than triple the national average," he said. "Prices this high make it difficult to attract the labor force that we need. We need affordable housing, higher density, in inner locations."
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