August 25, 2009

Breaking News: Bay Area house prices are soaring!

Hot off the presses! Stop what you’re doing!

http://blog.redfin.com/blog/2009/08/first_broad_price_increase_seen_in_case-shiller_index.html

redfin

Thanks to Herve for sending me a very similar mail. Thanks to redfin for the update!

Oh my god, the Bay Area is coming back! Prices are soaring! We’re beating out New York and Seattle!

Hallelujah! Hallelujah! Hallelujah!

Comments (22) -- Posted by: burbed @ 1:55 pm

22 Responses to “Breaking News: Bay Area house prices are soaring!”

  1. Joe Says:

    I’ll be the first to say today: Useless Aggregate Data.

  2. bob Says:

    Groan…

  3. toto Says:

    Houses in Mountain View (old MV) don’t look like 40% off 2006 peak.
    I have seen 5% off asking price at best. A little more if the asking price was really high. But that was off asking price not 2006 peak price.

    Houses are still selling at close to asking price.
    The one which didn’t went for rent.

    If the SF area has an average 40% down from 2006 price then some houses in other city must have taken a hell of a beating (-50%).

    So what is SF area?

  4. nomadic Says:

    CS index: San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., greater MSA)

    Doesn’t include Santa Clara County.
    Contra Costa County really drags the index down for SF.

  5. toto Says:

    OK I found the answer in this San Jose mercury news article:

    http://www.mercurynews.com/realestatenews/ci_13199565?nclick_check=1

    —————————-
    The San Francisco metro area includes San Francisco, San Mateo, Alameda, Contra Costa and Marin counties. Information for Santa Clara County isn’t included in the S&P 20-city index, but a recent report from MDA DataQuick found an upturn in the Silicon Valley real estate market last month
    —————————-

    So the Santa Clara county isn’t included …

  6. toto Says:

    Thanks nomadic.

  7. SiO2 Says:

    Yes, it’s unfortunate that C-S doesn’t include Santa Clara Cty. My best guess fromis that RBA is down 10% from peak, and I think the peak was mid 07. but I don’t have a great way to prove it. I’d guess that mid-tier Silicon Valley (e.g. Sunnyvale/Santa Clara non CUSD, Cambrian, Campbell, etc) is down about 15%. And bottom tier is down more, but had experienced more price inflation earlier. ($650k for EPA? Really?)

    so, either RBA is doomed to follow CC Cty and go down 43% or more, or it’s immune, or somewhere inbetween.

    now that I read it, this post is pretty useless. I can’t even say that it’s useless aggregate data, there’s no data. Hopefully at least it makes someone laugh.

  8. nomadic Says:

    lol – you’ve certainly covered all your bases. :-)

    At the moment, even the high tier in the SF MSA is on an uptick, so I’d guess SCC RBA is also marginally up. The question is how big the new avalanche of defaults will be (after all of the moratoriums expire), if it exists at all. Even the Case-Shiller dude (don’t remember which) says we can’t completely discount the power of momentum in the market.

  9. Pralay Says:

    Houses are still selling at close to asking price.
    —–

    Does not mean much. Sellers also reduce asking price accordingly depending on market condition.

  10. Top Dog Says:

    If houses are selling at 40% off, I don’t think we need this site anymore.

  11. BuyersAreIdiots Says:

    My best guess fromis that RBA is down 10% from peak, and I think the peak was mid 07. but I don’t have a great way to prove it

    In my area (Los Gatos) I have seen a much larger drop than some other areas when you take the entire Los Gatos area into account. The LG Mountains have taken a big hit (probably 30% drops) with areas closer to the center dropping less.

    An interesting check is to see the area in Los Gatos that sits just outside the main school district. It still has good schools but has dropped much farther than areas within the central area. Although areas in the Monte Sereno corridor have dropped quite a bit as well. Most are multi-million dollar homes.

    Based on my guesses, the areas that are them most desirable will be the last to fall. But from what I have seen statistically based on previous bubbles, everything in the end normalizes. It will just take time to play out.

    Most people don’t realize just how long and drawn out this bubble was in the Bay Area. We started this upswing in housing around 1998 and then peaked in 2007. Being that most booms and busts are symmetrical, a 9 year boom will likely be followed by a 9 year bust. Of course, that is aggregate (there’s that word again!) so it is hard to say which areas will correct sooner and which will correct later.

    Austin anyone? California is turning into Texas anyway based on this article:

    http://news.yahoo.com/s/nm/20090826/us_nm/us_climate_heatwaves

  12. SHBH Says:

    Speaking of useless aggregated data, 94301 actually went up 8+% y-o-y and is at the highest level in 10 years according to Zillow. This is pretty amazing since Zillow also logged double digits losses for most of the other RBA areas.

    Does it mean (1) Zillow’s data is wrong/misleading, (2) 94301 is so desirable that it’s bulletproof or (3) 94301 has more to fall before it “normalizes” with the rest of the region.

    No comments from RE please.

  13. nomadic Says:

    Without doing any analysis, I’d say Zillow’s data probably isn’t good. A lot of what they do is a bit suspect. Here’s Redfin’s data for 94301:

    http://www.redfin.com/zipcode/94301

    Median up over 3% YOY, $/sf down almost 10% YOY.

    Altos Research clutters things up by aggregating (word of the day!) all of PA into one lump:
    http://www.altosresearch.com/research/CA/palo-alto-real-estate-market

  14. nomadic Says:

    Surprising data (from Zillow) on the LG zips:
    http://www.zillow.com/local-info/CA-95030-home-value/r_97936/

    95032 is the worst hit so far.

  15. Herve Estater Says:

    > now that I read it, this post is pretty useless. I can’t even say that it’s useless aggregate data, there’s no data. Hopefully at least it makes someone laugh.

    I see you’re adopting my style :-D

  16. Top Dog Says:

    n my area (Los Gatos) I have seen a much larger drop than some other areas when you take the entire Los Gatos area into account. The LG Mountains have taken a big hit (probably 30% drops) with areas closer to the center dropping less.

    What about your area (just Los Gatos itself)? I think Los Gatos Mountains is not a good area.

  17. DreamT Says:

    Grandiose contribution by our newish troll!
    BTW Los Gatos Mountains rule! See, I contributed.

  18. DreamT Says:

    #7 – SiO2 – I posted this a little while back, my belief is that (as RE routinely points out) well-maintained properties with no location issues have not budged much, while poorly located properties have comparatively crashed much more. So in the same street, some property values may have decreased by 20% and others by 5%, simply because the former were artificially lifted by the latter during the boom as people couldn’t afford to be as choosy as today. The small percentage of properties that everybody still would prefer to buy in a given neighborhood have proven particularly resilient.
    That said, your 15% figure looks a bit optimistic to me (I’d have said 20%) because the ’07 peak was stratospheric if short-lived.
    The worst-hit areas have lost ~ 70% while some areas haven’t decreased at all, all this within a few miles. It’s instructive to live through all this.
    Also there’s an interesting fable going on in Portola Valley these days. Every single house for sale there is because the owner is moving to downtown Menlo Park. Because, you know, the kids. I wonder what the tale is in downtown Menlo Park. Maybe the owners there are moving to Portola Valley.

  19. SiO2 Says:

    DreamT,
    my 15% is just an estimate, based on looking at what you can get (or could get) in the $1.3 to $1.6 range. I’m sure you are right, and some properties would be down 20% nowadays. There’s probably less demand for the all original 1950 houses with 1600 ft in los altos nowadays.

    I suppose that the fate of RBA depends on a few things;
    1. can the owners hold on until employment picks up. Some will, some who spent a lot on consumer goods cannot.
    2. will the state budget problems hit the revenue limit schools more than the basic aid schools, and how long will that last? (for me, a key factor for RBA is schools, and the better ones are usually basic aid)

    If you have one kid, private school can be a better deal than an RBA house. If you have two, RBA house is cheaper. But if the gap grows, then private school is better for two, or three kids – and that’s probably where people would start to choose that option. Hmm, maybe now’s a good time to invest in a private school. Is Challenger listed on NASDAQ?

  20. BuyersAreIdiots Says:

    95032 is the worst hit so far

    That zip encompasses a good portion of Los Gatos, including the outskirts. The Monte Sereno zip would be 95030 which would include most of the downtown area. But it also includes the corridor between Los Gatos and Saratoga which has numerous multi-million dollar joints. I’ve seen some huge price drops on some of those.

    The majority of the LG Mountains would be the 95033 zip. Those should have also taken a pretty good hit. Based on the price drops I have seen.

  21. sonarrat Says:

    The house across from my parents’ place in Morgan Hill just sold to a bank for about $650K. Jeez! It’s 5000 square feet! They had paid $1.3M for it.

  22. toto Says:

    #9-pralay

    Houses are still selling at close to asking price.

    Does not mean much. Sellers also reduce asking price accordingly depending on market condition.

    True, I have not done the research to find out how the asking price compared to the peak of the market.

    I found it difficult to compare a house to an equivalent size/location and then adjust for layout/age/renovations …

    Even more difficult when the area (old MV) has low transaction volume and its surrounding area price vary significantly.

    I have tried a few times and based on my far-from-perfect method the asking price was shockingly close to peak.

    The only hope is in the trend which very slowly went from 0% off asking price, to 5% and I have seen a 10% off for the first time a couple of weeks ago.


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