where is the real estate market going – Page 38

My two cents – As the 1st quarter comes to an end – we sit on bated breath on what the future will bring in our Bay Area Real Estate Market. I have to say – the drop in the stock market has had a huge impact on buyer confidence and cash flow. I’ve even noticed a few price reductions on a select properties that haven’t sold in the first two weeks as expected. Could it be the market is shifting? Are sellers going to have to be a bit more realistic when pricing their homes? Are buyers going to anti-up there offers as they did last year? My biggest surprise has come from the rental market. I’ve been tracking several properties and many have rented for UNDER their original asking price. Which I have to say – is nice to see since our rental prices have skyrocketed and the word “affordability” is the forefront on concern.

What will this mean for our market? We’ll have to see.

I’d love to know your thoughts too! Enjoy this article by Realtor.com

The Numbers Are In: Yup, 2016 Is Off to a Good Start in Home Sales

We may be on the verge of spring, but housing and economic reports work on a bit of a lag time. We’ve only just gotten the major data reports for January, and it’s giving us a clear-eyed view of how the real estate market is measuring up this year.

And yeah, things are looking good.

Job creation—arguably the most important factor in housing demand—is moving apace. January saw 151,000 jobs created. That level of employment growth is below 2015’s monthly average, but unemployment is now near 10-year lows and is in line with the current macro forecast from the National Association of Realtors® (NAR). This level of employment growth should translate into the 3% growth in housing sales we are expecting for the year.

Speaking of sales, January’s existing home sales report did not disappoint. Even though sales are taking longer to close, due to the implementation of new disclosure and closing forms and procedures, the pace grew 0.4% in January from December. Granted, that’s not a lot, but analysts had been expecting a decline. And from January 2015 to January 2016, existing hom The increase in sales is resulting in continued tighter-than-tight supply—measured by NAR to be four months in January. For you non-economists out there, that metric measures the number of months it would take to sell the current inventory of available homes, at the current pace. Got it? Six to seven months’ worth of homes on the market is considered normal; four months is cray-cray.

This is driving prices higher and encouraging consumers who hope to buy this year to get started as soon as possible.

January’s new home sales and new home construction remained consistent with the pace of activity of the last several months. Still, the level of new construction still represents solid year-over-year growth, especially in single-family homes. The most encouraging sign: The median price of new homes is finally declining, as a result of the fact that builders are offering more affordable homes.

Finally, the most timely readings we can pass on come from our own observations at realtor.com that confirm that demand is growing rapidly at the start of the year, resulting in an acceleration in inventory movement that we typically do not see until March or April.

OK, not everything is rainbows and unicorns. The biggest negative trend impacting potential demand relates to the January and February declines in stock values, which have taken a toll on consumer confidence. But, even that negative trend has a silver lining: Mortgage rates are now substantially lower. The average 30-year conforming rate has stabilized at under 3.7%, giving buyers almost 5% more buying power than they had at the end of 2015, and strengthening their ability to meet the debt-to-income ratio requirement for a loan.

Net-net, pent-up demand appears stronger than any weakness caused by the financial markets. And the lower rates are encouraging would-be buyers to act sooner rather than later. With this strong start, 2016 should indeed see growth, but the biggest constraint will be the tight supply.

I read this article at: http://www.realtor.com/news/trends/2016-off-to-good-start-home-sales/

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The hottest topic these days is affordability and where the market is going. I am at the edge of my seat watching the real estate market and wisely advising my clients. This article touches on the high end of San Francisco Real Estate sales. The million dollar range is still widely active for the few listings available. I too am curious where this market is going. And open to hear your thoughts.

Cooling ahead for high-end San Francisco real estate

Nina Hatvany has worked for 25 years in San Francisco as a real estate agent concentrating on the high end of the market. Today, as a result of a reeling stock market and concerns about global economic stability and growth, the conversation with well-heeled clients has turned decidedly more cautious.

“I have a number of buyers who are just more hesitant,” Hatvany told CNBC. “They look and they talk and then they start arguing with me about the slow IPO market and overvalued unicorns. I feel like I have to argue with them about how nice the house is.”

As technology stocks slide — the Nasdaq is down 15 percent this year — and private tech valuations suffer, real estate brokers say the feverish clamor for high-end homes in San Francisco has quieted.

“Somebody who might have pulled the trigger at $5 million last year now might be a bit more cautious,” said Josh McAdam, a top producing real estate agent with Pacific Union in San Francisco. “It’s not the same environment.”

McAdam is quick to note that demand remains strong for homes selling in the $1 million range. But the high-end residences in the City by the Bay, if they are to attract buyers, now need to boast all the right finishes, he says.

For example, McAdam said only one home in the tony neighborhood of Noe Valley last year sold for over $5 million. The year before, he says a handful of homes sold in that price range and a couple even above $5 million.

Hatvany confirms the same trends. In the second quarter of last year, her firm said, 18 homes sold in San Francisco for $6 million or higher. That number dropped to nine in the fourth quarter.

One question: Will the more cautious tone now defining the ultra-high-end of the market spread to other price points?

Christopher Palmer — an associate professor at the Haas School of Business at the University of California, Berkeley, who specializes in the housing markets — said the biggest threat to price appreciation is a downturn in tech because so much of the Bay Area economy is reliant on the sector.

“Tech stocks have taken a beating in the past few months, and every time there is a stock market correction, people start to wonder if the spigot of capital that has fueled so much Bay Area growth is about to be turned off,” Palmer said.

Analysts at Fitch raise another concern, arguing that home prices in San Francisco have “risen to a level unsupportable by area income.” Fitch reports that home prices set a record last year and are now more than 60 percent above the post-crisis low of 2012.

Fitch estimates that the city’s current home prices are 16 percent overvalued relative to economic fundamentals.

Still, though home prices may fall in San Francisco, Palmer said a wave of mortgage defaults or foreclosures is extremely unlikely.

He notes that the average jumbo mortgage borrower in San Francisco had a nearly 40 percent down payment, implying that homeowners enjoy a lot of flexibility to navigate price declines before being underwater.

Palmer also highlights a benefit of decreasing home prices: “To many prospective homebuyers in the Bay Area, this is great news,” he said. “There is a substantial amount of young families that would appreciate a slowdown in appreciation to be able to get into a home.”

I read this article at: http://www.cnbc.com/2016/02/12/cooling-ahead-for-high-end-san-francisco-real-estate.html