May 19, 2013

Real American Area: No Bubble. Real Bay Area? Otherwise.

Here’s part 1643 of Proof there is indeed a Bay Area Bubble 4.0.

Housing Bubble Unlikely, Home Price Appreciation Should Slow – CoreLogic

BY JANN SWANSON, Mortgage News Daily
May 16 2013, 11:10AM

CoreLogic said today that home prices are projected to increase 3.9 percent on an annualized basis between the fourth quarter of 2012 and the same quarter in 2017.  However, a new housing bubble is not likely as market dynamics shift for both supply and demand.  Prices rose 7.3 percent in 2012.

The CoreLogic Case-Shiller Index report notes that the increase in 2012 was the strongest rate of appreciation in nearly seven years and projected that prices will continue to improve in 2013 and beyond in the more than 380 U.S. markets it tracks.  The company’s current analysis says that, "Cities at epicenter of housing bubble/crash are clocking highest rate of appreciation, largely driven by investor demand."

130518-homeprices-map

This map comes to us thanks to Burbed reader PKamp3 over at DQYDJ.net, who linked us to the story in Business Insider. However they got the story from Jim the Realtor’s BubbleInfo blog, who in turn got it from Mortgage News Daily.  And it’s a good thing we traced the map (and story) all the way back to the original article, because it has some seriously amusing conclusions to anyone who lives Where It’s Special.  And that’s without making fun of the name of the Chief Economist for CoreLogic/Case-Shiller.  Nah, we’ll just make fun of his opinions of whether there’s a housing bubble:

Dr. Stiff tamped down concerns of another housing bubble. "Even if double-digit price appreciation were to continue in the former bubble metro areas, there is no reason to believe that new home price bubbles are forming. That’s because single-family homes in these markets are still very affordable, even after last year’s large price gains. Consider Phoenix, where home prices rose 27 percent since the market hit bottom in 2011, making it the strongest residential real estate market in the U.S. Yet, home prices there are still 45 percent below their 2006 peak," Stiff continued.

Yes, if you would consider living in a hellhole like Phoenix with summer daytime temperatures routinely above 110 degrees Fahrenheit, of course you’d note that these markets are still very affordable. But nobody uses the words “Real Bay Area home prices” and “affordable” unless they are separated by some sort of negating construction.

Lest you think we are making this up, the San Francisco-San Mateo-Redwood City metro is the least affordable in the entire country, with only 28.9 percent of homes affordable by a median income household. That’s right, we’re Number One again, beating out 221 other metros for the crown!  Santa Cruz-Watsonville is #4 (37.1%), while San Jose-Sunnyvale-Santa Clara isn’t far behind at #6 (43.3%) and Salinas (44.4%) at #7.

130518-homeprices-paragonWhere’s Phoenix, the brick oven that’s still 45 percent below their 2006 peak? They’re at number 57 in unaffordability.

Let us remind everyone that San Francisco and San Mateo Counties never dropped 45 percent below peak. The reason the San Francisco Case-Shiller numbers dropped as much as they did is because they’re completely weighed down by Alameda and Contra Costa Counties.

It’s the East Bay that dropped like a rock after 2006, not the Real Bay Area.  And like a pair of cement overshoes, the East Bay took the whole SF Case-Shiller index down with it. Even the upper tier (the top third of home prices) is affected by this home distribution.

130518-homeprices-paloaltoAnd let’s check those East Bay numbers.  Oakland-Fremont-Hayward turns in a respectable #24 in the You Can’t Touch This index, showing it’s no Phoenix, either.

So we have some words for that Stiff Doctor: There is too a Bay Area Bubble 4.0. We see it every single day even outside the Real Bay Area. We see peak pricing. We see bidding wars. We hear from readers reporting lines to enter Open Houses, or appraisals coming in higher in just a few weeks, or as-is cash overbids on homes where the would-be buyers didn’t even bother going inside.

Inotherwords, Dr. Stiff, maybe you need to get over your Phoenix fixation and check out the parts of the country where the housing bubble is very much back.

Comments (4) -- Posted by: madhaus @ 5:04 am






February 13, 2013

We’re Number Two! We’re Number Two!

The good news: We beat LA and Chicago and New York and Washington DC and even SAN FRANCISCO. W00t!

The bad news: We lost to Connecticut. Connecticut? Haven’t they been in the news enough already?

The US Metropolitan Areas Packed With The Most Rich People

Rob Wile | Business Insider | Feb. 11, 2013, 8:24 PM

The U.S. Census has published its list of U.S. metropolitan areas with the highest concentrations of wealth in the country.

These are places where a large percentage of your neighbors earn incomes in the top 5th percentile.

Here are the top five.  For the full list, see the article at Business Insider.

Rank Metro % MSA households in US Top 5% Primary Industry
5 Trenton/Ewing NJ 11.6% Protection, extralegal goods, beating the shit out of rivals
4 San Francisco/Oakland/Fremont CA 13.0% Social Media, Investment (hypothetical shit)
3 Washington/Arlington/Alexandria DC-VA-MD-WV 14.1% Lobbying (access to shit)
2 San Jose/Sunnyvale/Santa Clara CA 15.9% Inventing new shit
1 Bridgeport/Stanford/Norwalk CT 17.9% Insuring shit
Comments (3) -- Posted by: madhaus @ 5:07 am

August 19, 2012

Bye Bye Bubble

Here’s some sobering news for those of you expecting the Facebook Effect to rescue the Real Bay Area’s housing values.

Zuckerberg Admits Facebook’s Plummeting Stock Is ‘Painful’ To Watch During A Company-Wide Meeting

120817-facebook-zuckerbergSeth Fiegerman, Business Insider  | Aug. 17, 2012, 6:43 AM

Facebook is finally acknowledging that its employees may be just a little bit concerned about the company’s plummeting stock.

According to The Wall Street Journal, Facebook CEO and cofounder Mark Zuckerberg admitted that the stock’s decline is “painful” to watch for some employees during a company-wide meeting earlier this month.

The meeting itself was reportedly part of a larger initiative to boost company morale. Zuckerberg had previously avoided talking about the stock with employees, preferring that everyone stay focused on their work, but in recent weeks, Facebook’s senior management started worrying that the stock’s poor performance might hurt employee performance.

Guess watching Facebook’s plummeting stock is just fine from the comfort of your own office.  But don’t count on cashing in those options to buy yourself an RBA mansion.  The employee lockup period is still in effect, but early investors are dumping shares now.

Now check out this article, from the same publication.

DEAR FACEBOOK EMPLOYEES: Here’s The Truth About Your Stock Price

120817-facebook-zuckerberg-2Henry Blodget, Business Insider  | Aug. 17, 2012, 11:59 AM

Facebook’s stock has dropped by half since the IPO three months ago.

And the stock price is now well below the level at which most employees have been granted stock in the past 18 months.

This means that most current and former Facebook employees are worth far less than they were a few months ago.

Facebook’s stock crash is also hurting morale at the company, and damaging perception of the company’s business and brand. The impact is big enough that Facebook CEO Mark Zuckerberg, who has been crystal clear about his desire to ignore the stock price, admitted at a company meeting that the stock crash has been “painful” for everyone.

Here’s the important consideration from this more in-depth piece:

With the Facebook employee lock-up releases coming in October and November, this isn’t just an issue of morale and “paper net worth.” Current and former Facebook employees have been counting on the stock to buy things (houses, for example). So it’s a matter of near-term financial planning.

So, are home values dropping in Facebook-friendly commute zones?  Let’s have a look.  First, here are Redfin’s stats for Palo Alto home sales.  The advantage of Palo Alto over Menlo Park is that there are very few questionable areas in the former.

120817-facebook-pa-redfin

120817-facebook-mp-altosYou could look at the listing prices one of two ways.  Either the 22% post-IPO listing per-square-foot increase was nothing but irrational exuberance, or Spring Bounce was unusually quick this year.  If we exclude the May and June numbers, we could look at the chart as showing a slow climb for 2012.  That’s if you ignore the 18% drop between mid-January and mid-February, though.

120817-facebook-mv-zillowAltos Research’s Market Action Index agrees with this graph, showing a peak right at IPO time and falling back almost (but not quite) to 30, which is a balance between a buyers and a sellers environment.  (31 indicates the ball is still in the sellers’ court.  Mostly.)  The MAI graph above is for Menlo Park, or ground zero for Facebook.

Unfortunately Zillow’s valuation tools are too laggy to show the post-IPO collapse, with the most recent valuation dated to June.  We’re looking at Mountain View this time, which is no doubt polluted by the conflicting Google Effect.

How would you recommend we best demonstrate whether Facebook stock’s disappointing results are affecting the RBA housing market?  What statistics would you recommend, and from where?  One thing we’re seeing is fewer homes going into Double-Secret-Probation Pending-Do-Not-Show status where the listing photos get yanked until the home closes.  And that’s good news for all fans of this site.  Not only does a picture equal a thousand words, it also equates to many more thousands of dollars.

We aren’t going to say in which direction those thousands are moving.

 

Comments (28) -- Posted by: madhaus @ 5:01 am