Rebounding California housing market a leading indicator for US

Surviving cold winter blackouts

California's housing market is rebounding, perhaps leading the way for the nation and year-to-year numbers shows Santa Cruz and Silicon Valley are leading the way in California.

by Broderick Perkins
© 2009 DeadlineNews.Com



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Deadline Newsroom - California's housing market is often a bellwether for the nation and if the Golden State's housing market trends continue, conditions could bode well for the rest of the nation.

Both home prices and home sales are on the upswing in California, previously one of the hardest hit states in the nation during the recession.

The California Association of Realtors (CAR) reported this week, the state's median home price rose to $304,520, a 5.8 percent increase from the $287,880 median for November 2008.

A smaller supply is helping push up prices. CAR's Unsold Inventory Index fell to 4.5 months in November, compared with 7.1 months in November 2008, according to the association.

"The median price for most regions hit bottom during the first half of the year, and the statewide median home price now is nearly $60,000 higher than its lowest point in the current cycle," said CAR President Steve Goddard.

"First-time buyers continued to drive the market in November, as many opened escrow to take advantage of the federal tax credit prior to its original Nov. 30 expiration," said Goddard, who expects further price boosts due to sales generated by the extension of the first-time home buyer tax credit and an expansion of the credit to include qualified move-up buyers.

Meanwhile sales statewide were up 4.7 percent from a year ago.

"With sales bottoming out more than two years ago, and the median home price reaching its trough in February 2009, California remains ahead of the nation in market recovery," said CAR's Vice President and Chief Economist Leslie-Appleton-Young.

The condo segment is, by far, both the price and sales leader, with prices are up 12.1 percent from a year ago and sales jumping by a whopping 26.3 percent, according to CAR.

Statewide, the cities with the greatest median home price increases in November 2009 compared with the same period a year ago were: Cupertino, 37.8 percent; Poway, 35.8 percent; Morgan Hill, 33.2 percent; Lake Forest, 25.6 percent; Atwater, 24.4 percent; San Rafael, 23.8 percent; Atascadero, 22 percent; Vista, 21.2 percent; Tulare, 19.8 percent; Fountain Valley, 18 percent.

Year-to-year regional sales leaders were Santa Barbara South Coast, up 115 percent; Santa Cruz County, up 50 percent; Santa Clara County (Silicon Valley), up by 45.5 percent; San Luis Obispo, 40 percent and Orange County, where sales were up 28 percent from last year.

Prices and sales appear well on their way in the Golden State to live up to CAR's projections for 2010.

In October, CAR said California's median single family home price in California will rise 3.3 percent to $280,000 in 2010, up from the projected median of $271,000 this year.

Sales for 2010 were expected to decline 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

During the current boom-bust cycle, California's median price for single family homes peaked in 2007 at $560,300 and sales rose to 625,000 units in 2005.

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© 2009 DeadlineNews.Com

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Silicon Valley Buyers Could Strike Gold

A convergence of high inventories, low interest rates and sellers motivated to move their homes is giving Silicon Valley buyers opportunities they haven't seen in years.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - There's a growing pot of gold in Silicon Valley's housing market, a region that could very well become one of the nation's first major metropolitan areas to take some of the rust out of the housing bust.

Ground zero for high-tech innovation and even higher incomes, Silicon Valley has a growing abundance of homes for sale, sellers in the area are more motivated to sell and mortgage interest rates are cooperating, according to local real estate leaders.

On average, homes in the Silicon Valley area are selling for 98 percent of the asking price.

During boom times, the average selling price was more than 100 percent of the asking price, according to the Bay Area Real Estate Market Newsletter, produced by Richard Calhoun, broker of Creekside Realty in San Jose, CA.

Silicon Valley's ground zero, California's Santa Clara County, revealed that December 2007 home sales were more than 40 percent below the number of sales a year earlier, allowing inventories to remain near the record high levels set in October 2007, according to Calhoun.

It's the volume of homes for sale that is creating price breaks in a growing number of communities, generally represented by the yellow and green areas of softening prices on Trulia.com's "Heat Map".

December's median price for Silicon Valley's single-family homes, $799,000 was well off the record $880,000 median set in May 2007. Condo prices have likewise seen a down turn, from a record of nearly $550,000 in November to $520,000 in December this year, according to Calhoun's Bay Area Real Estate Market Newsletter.

Giving buyers more leverage, mortgage interest rates are the lowest they've been since September, 2005, according to Freddie Mac.

Silicon Valley buyers with high credit scores, unblemished credit reports, steady employment, low debt-to-income ratios, and ample savings can do even better than average rates, according to David Walsh, president of the Santa Clara County Association of Realtors.

Check DeadlineNews.Com's coverage of the Silicon Valley Market

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Silicon Valley's Micro Markets

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – If you are buying or selling a home in Silicon Valley, now is the time, perhaps more than ever, to be sure you hire someone who has his or her finger on the pulse of a specific micro-market.

That micro-market -- not general statistical trends -- will determine how you should proceed.

Local experts are saying, statistically speaking, when it comes to home sales and most prices, the Silicon Valley real estate market is, by and large, long past the boom. Sales have plunged and prices are slipping, but at different rates in different areas.

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"There are lots of mini-markets around and you can find pockets of homes in areas that are good homes, but you need to find a good Realtor to sell it and market it," says Warren Winsness, president of the Santa Clara County Association of Realtors.

"There's just a lot of supply out there and that's good news. There is also a stricter set of guidelines from lenders, but they really do want to make loans," says Winsness, also broker/owner of Winsness Realty in Los Gatos.

Santa Clara County-wide, closed single-family home sales came in at only 575 for the month of October, the second lowest in recorded history and down from 892 a year ago. Condo sales were 227 in October, down from 375 last October, according to Richard Calhoun, real estate broker with Creekside Realty in San Jose and publisher of the Bay Area Real Estate Market Newsletter.

Even as sales have fallen and inventories for both types of housing combined have swelled from 5,151 a year ago to 6,451 in October this year, the median price has continued to rise. The median price on closed sales of single-family homes came in at $861,500 in October, up more than 11 percent from $775,000 in October. Condos were up more than 6 percent to $520,000.

Or so it would seem.

The median price is rising because of the larger-than-normal share of sales in more expensive communities. However, prices and real value are falling in some sectors. And the fall is gaining momentum.

Calhoun estimates that in October, 27 percent of closed sales on single-family homes were in the Saratoga and Los Gatos markets; 17 percent in Los Altos and Palo Alto; 15 percent in Cupertino and Sunnyvale; 14 percent in Santa Clara, Campbell and the Willow Glen and Cambrian areas of San Jose; 8 percent in the Santa Cruz mountains and the Evergreen and Almaden Valley areas of San Jose; 7.7 percent in east, central and south San Jose; 6.3 percent in Milpitas and the Santa Teresa, Blossom Valley and North Valley areas of San Jose and 5 percent in South County (Gilroy, Morgan Hill and San Martin).

"Silicon Valley is currently performing like three separate and distinct markets," added Stefan Walker, a broker with Alain Pinel Realtors in Los Gatos.

"The lower peninsula and upper south bay markets are on fire. These are the markets that are keeping the average county value figure in positive territory. The mid-county areas are experiencing that rare market status of equilibrium. In the lower-county areas, we find inventory in these areas has exploded, mostly due to the incredibly weak sales," Walker said.

Calhoun says the middle market portion that includes Santa Clara, Campbell and the Willow Glen and Cambrian areas of San Jose are beginning to join the less expensive sectors' trend of price declines. He says if sellers don't quickly adjust prices to match the trend, they will find themselves chasing the market down.

Generally, while high-end markets still enjoy multiple offers -- within reason -- low-end market sellers already have to price ahead of the market or pull their listing and wait it out.

Buyers at the upper end still must be ready to compete, while buyers in the low end, and more and more often in the middle market as well, are finding bargains -- if they can get financing, if they don't decide to wait it out.

The key is, those are general, broad based considerations. A real estate agent in a given market should reveal to buyers and sellers conditions that will help them make a "buy" or "sell" decision specific to the location.

"I have a fiduciary duty to my clients to council them that there is every indication some areas will go soft. I show them the data about the potential for negative direction of prices or depreciation," said Calhoun.

• Silicon Valley Home Improvement Bargain Alert
• Silicon Valley Bullish On Buying, Not Selling
• SF Bay Area Home Sales Nose Dive"

© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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