August 22, 2010

Nobody Move! Bay Area Home Sales Seize Up (July Insider Report)

Nobody Move! Bay Area Home Sales Seize Up (July Insider Report)

Redfin’s monthly Bay Area real estate insider report draws from our proprietary database of information on homes for sale and that just sold, along with insight from our agents to get a sense of what’s going on in the market right now. If you’d like to receive the report via email, just sign up.

Howdy Bay Area Redfinnians!

Even though we’ve been busy adding school ratings to our website’s map, Redfin just cranked out our latest analysis of the Bay Area housing market, based on proprietary data and local broker insights.

The news is not good, at least for real estate agents: as federal and then California home-buying credits expired, the overheated Bay Area market began to cool in July, except where technology-driven employment continues to be strong.

From June to July, the mix of buyers has likely shifted away from the first-timers responding to the tax credit. In these situations, you expect to see median prices increase, but even so median home prices were down or flat from June to July in five of six counties.

While inventory declined slightly except in the beleaguered East Bay market, across all six counties sales volume fell through the floor. We think demand is going to continue to ease for the rest of the year, as buyers now take their time, unhurried by either interest rates or tax credits.

Whoops, this is a bit dated as I should’ve posted this earlier, but do click on the link to read more about the situation from Redfin!

Obviously, as we head into Fall bounce, and then Winter bounce, everything will change for the better!

Comments (16) -- Posted by: burbed @ 5:34 am

16 Responses to “Nobody Move! Bay Area Home Sales Seize Up (July Insider Report)”

  1. anon Says:

    2010 sure is shaping up to be a great year.

  2. nomadic Says:

    I tend to be pessimistic, but I don’t think this makes much difference to the middle or high end of the market. There will be fewer move-up buyers from entry-level to the next level, but movement within the rest of the market didn’t depend on tax credits and that won’t change now that they’re gone.

  3. nomadic Says:

    Kudos to this Redfin agent for this funny quote:

    “Fewer folks are making offers, but it still feels like there’s a ton of buyers out there hunting for the best-priced listings,” said Miawand Bayan, Redfin team lead for the East Bay. “Once a listing hits the market in decent shape and at a good price, it’s as if a group of hyenas found a carcass: they all attack.”

  4. SEA Says:

    If you are going to reside at an address outside of the RBA, is it better to rent?

    On the one hand Real living requires high priced mortgages, but outside the RBA the acquisition costs are not expensive, but the market losses (housing price depreciation) are probably present, once the non-RBA “owner” seeks to buy a place inside the RBA.

    Inside the RBA the prices are initially higher, but the prices double every 10 years, so market losses are not a problem.

    Please note:

    1. Prices are going up in the RBA (doubling every 10 years or sooner)
    2. Prices are going down outside the RBA (the suckers and fools who purchased near power lines, but not Real Power Lines, busy streets, moving parts, etc.)

    So it should be 100% obvious that the ratio of RBA prices to non-RBA prices is increasing.

    Let’s assume that initially 1 RBA home is worth 2 non-RBA homes. It won’t be long until 1 RBA home is worth 5 or 10, or more, non-RBA homes. If the non-RBA homes weren’t going down in value, it’d take 10 years for 1 RBA home to equal 4 non-RBA homes, but since many non-RBA homes can go down in value to 1/2 over the same time, the ratio becomes 1 RBA home to 8 non-RBA homes.

    I’m thinking, “If you buy outside the RBA, you’ll be priced out of the RBA forever, even if you cannot afford to buy in the RBA today.”

    All of that said, I’m thinking of opening the “Bank of RBA.” The FDIC might be closing down banks because of poor performing loans, but I would not have to worry about any of that in the RBA. I could underwrite multi-million dollar properties with negative amortization loans. Based on the guaranteed price doubling every 10 years, I’m thinking 6% interest, so the “owner” has a 1.2% (or more) interest in keeping the place up. We’re talking risk-free investment here–nothing could possibly go wrong, since I am only investing inside the RBA. After 12 years the loan comes due, which is twice the amount initially loaned. My Bank of RBA money doubled in 12 years, and the underlying asset doubled in 10 years–risk free and everyone wins!

    What could possibly go wrong?

  5. nomadic Says:

    What could go wrong? Ask the former owners of 1227 Fulton.

  6. SEA Says:

    nomadic- Let’s not ruin the RBA spirit.

    :-(

  7. nomadic Says:

    SEA, take heart, they were probably “bad people.” ;-)

  8. anon Says:

    The owner of 1227 Fulton probably purposely sold at a loss so as to offset some other gains that they had. It is UNpossible for someone to lose money by buying and selling 94301 real estate.

  9. Pralay Says:

    “Once a listing hits the market in decent shape and at a good price, it’s as if a group of hyenas found a carcass: they all attack.”
    ——

    That’s what Real Estater and Realtor(TM) friends dream every night.

    Not long ago Real Estater was dreaming very similar scenaro:

    it’ll be very sudden and furious as buyers cave in after a period of low inventory, slow sales and flat prices.

    Think about those days when one could earn 3% commission just filling up couple of forms or without making any effort to have an open house.

  10. SEA Says:

    It’s possible they were “transient guests,” and we all know if a transient guests lives in what would otherwise be a RBA property, it’s automatically excluded.

    Of course I would never loan money to a transient guest.

  11. madhaus Says:

    You forgot about the danger of buying a house in the RBA that decides to move to the non-RBA, or to a busy street, power lines, railroad tracks etc. you would think these homes came with wheels and license plates.

  12. SEA Says:

    “In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.

    With minor swings in sentiment, the latest results reflect what new buyers always seem to feel. At the boom’s peak in 2005, they said prices would go up. When the market was sliding in 2008, they still said prices would go up.

    “People think it’s a law of nature,” said Mr. Shiller, who teaches at Yale.”

    http://www.nytimes.com/2010/08/23/business/economy/23decline.html?_r=1

  13. Real Estater Says:

    >>Alameda County near San Francisco

    Looks like folks in Alameda County really want to feel they belong in the Real Bay Area.

    Notice how they don’t say “Peninsula near San Francisco”.

  14. SEA Says:

    Isn’t it a little strange how people outside the RBA think like people inside the RBA?

  15. Pralay Says:

    Looks like folks in Alameda County really want to feel they belong in the Real Bay Area.
    —–

    For one more time, our favorite Real Estater demonstrated his comprehension skill (or lack of it). The article wasn’t written by “folks in Alameda County“. It’s quite common for national media to identify nearby suburbs by the major metropolitan city. Didn’t read “Orange County south of Los Angeles” in same article?

    BTW, associating OC with LA is ironic. OC always wanted to be un-LA. But yet they are known as a place “south of Los Angeles”. :(

  16. Pralay Says:

    Notice how they don’t say “Peninsula near San Francisco”.
    —–

    Just google “Palo Alto near San Francisco“. You will be enlightened.


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