Danville, California
Observations and information of interest to home buyers and sellers in San Ramon, Danville and surrounding areas in Contra Costa's San Ramon Valley. Real estate market updates, happening's and reviews of local area restaurants.
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May. 7, 2009
Have you been waiting for the bottom of the market to be passed before committing to a home purchase? If so, it looks like now is the time to make your move. Certainly that is the case if your target area is San Ramon or Danville. Take a look at the graphs below.
Both of the graphs relate to real estate activity over the past year in Danville and San Ramon. The upper graph is the strongest indicator of what is happening in the market as it tabulates all sales agreed of single family homes and condominiums on a month by month basis over the past 2 years. Certainly, there was an effort at recovery in the beginning of 2008 but it was half-hearted at best and the real estate market continued to decline.
This year we see quite a different picture. Not only has there been a solid four month pattern of rapidly increasing sales contracts but also, as can be seen from the lower graph, inventory has declined at an amazing rate. There are just insufficient numbers of homes being listed for sale to meet the present demand.
As we enter May, there is just a 2.5 month supply of homes available. In any situation, this is what would describe a strong sellers’ market.
The question on everybody’s lips is “Will this recovery continue?”. Economic news suggests that it will.
Last week, the Fed signaled that the recession may be easing, and this news was echoed by the Economic Cycle Research Institute (ECRI), who also said that the recession would probably end by the time Summer is over. The ECRI, whose leading indicators have a solid track record of predicting turns in the business cycle, said that enough of its key gauges have turned upward to indicate with certainty that a recovery is coming.
Stocks in general also had a great April. In fact, the S&P 500 had its best month in nine years, gaining 9.4%, led by the financial sector.
In addition, there were several good economic reports to note as Consumer Confidence for April came in at its fourth largest gain in the history of the survey, while Consumer Sentiment also came in better than expected. The improvement in the way consumers are feeling is likely influenced by the improvement in Stock prices. And people are buying homes.
So how does this affect you and what action should you be taking now?
Well if you are a potential buyer, these are good times. Interest rates are at historic lows and homes are more affordable than they have been in years, although unless we see more homes coming on to the market, prices are likely to start moving up so any delay in action could cost you money.
If you are a seller, the good news is that there are lots of buyers about at last. And as most sellers are also buyers, the news is good for you as well. Get your home on the market now and get ready to move forward with your plans.
The above analysis is specific to Danville and San Ramon. If you would like to see the graphs for other areas, give me a call on (925) 997-1585 or email bernard@bernardgibbons.com and I will be happy to get them to you.
Apr. 3, 2009
I just carried out an analysis of real estate activity in San Ramon (using Clarus Market Metrics of course - what a great tool!). I was just considering detached single family homes. The results were encouraging to say the least.
We have seen an increase in median sales price for 3 straight months now. And in numbers of sales agreed for 4 straight months. These are not just small increases and this is despite the fact that we are seeing increasing numbers of home for sale. The inventory is being taken up faster than new homes are listed.
At the end of March there was only 3.3 months supply of inventory in this market segment. We would normally say this is a sellers market. Obviously buyers are coming off the fence. The next few months will be interesting to watch.
Feb. 6, 2009
Gloom, doom and despondency, are all you seem to hear about on TV and radio or read about in the press regarding the real estate market. Yet is all the news really so bad? Sure, the economy is in a bad way but at least the powers that be seem to recognize that fact and they are working to correct it. As far as the real estate market goes, we always have to remember that real estate is local and what is happening to the market in Cleveland is probably very different from what is happening to the market in Danville or San Ramon.
I thought it would be interesting to compare some statistics about our local market in the boom year of 2005 compared with today. As the common belief is that, even here, the market has tanked, I was really not prepared for what I found.
It’s Not As Bad As I Thought!
In order to get as representative a picture as possible, I looked at sales of all types of homes in Alamo, Danville and San Ramon in January 2005 compared to January 2009. The results are shown below.
| |
No. of Sales |
Median Sales Price |
Median Days on Market |
| January 08 |
96 |
$777,000 |
8 |
| January 09 |
46 |
$720,000 |
70 |
Transaction volume is down by almost 50% which will probably surprise nobody. People are very hesitant to sell their homes when they are losing value and this change would be even more dramatic if it wasn’t for the considerable number of bank owned foreclosures and short sales, but look at the other two columns. The median sale price has fallen by just over 7% in 4 years. I would wager that many people, if asked for an opinion, would tell you that they thought home prices had fallen by that much last year alone!
What is also interesting is the time on the market. 8 days on market in 2005 is indicative of a wild sellers market and we all know what happened to prices shortly after that. 70 days on market is more than we are accustomed to seeing in our area but this is not anywhere near some of the figures we see in other parts of the country.
What Happens Next?
That’s the $64,000 question of course. Will this year be better than last year or will it be worse? Personally, I am encouraged by the fact that the new Administration appear to be focused on fixing the economy and hopefully they realize that housing is what drives the economy in the USA. Fix housing first and everything else will fall into place.
A Good Time To Buy?
Do you need a larger home than your present one? If so, now could be a great time for you to buy. Get your own home sold first of course, because then you know exactly how much you can afford to spend on your next one. I know you won’t get anything like the price you may have got a few years ago but those days are gone. The good news is that the home you will be buying will cost you a lot less than it would have a few years ago. Focus on the difference. You are really benefitting from the current market. And don’t discount today’s great interest rates and the fact that your property taxes will be less.
Are You Down-Sizing?
If you are moving to a smaller home or moving out of the area, it could also make sense for you to move now. You probably have a reasonable amount of equity in your home and you want to get on with your life. If you delay your move, there is a real possibility that your home could be worth less in a few months time. At best, it will keep its current value for a year or two. Home values are not very likely to increase significantly any time soon.
Good News For First-Time Home Buyers
Now more than ever, more first-time buyers can legitimately qualify to buy a home than for many years. Condominiums can be found under $200,000 in the San Ramon Valley and even detached single family homes are available at reasonable prices. The availability of FHA financing means that you can buy a home with 3.5% down and a 30 year fixed rate mortgage. And interest rates are still low. Also note that the government will give you a $7,500 tax credit if you are a first-time buyer and although this is effectively an interest free loan, repayable over 15 years, there is talk of making this non-reclaimable. There will be more information on this available shortly so send me an email if you want the latest updates on this. Some restrictions apply.
The Broader Picture
In the past, people often moved because they wanted to, rather than because they needed to. I am pretty sure that those days are over. People are realizing that Bigger does not necessarily mean Better any more. A smaller home can meet many of our needs and we should choose the right-sized home rather than the biggest we can buy. Times are changing and I would never advise anybody to over-stretch themselves but if the time is right for you, you will find a greater selection of homes for sale at affordable prices than at any time in the last 10 years.
Dec. 31, 2008
As we enter a new year in the real estate market, when we look back at 2008 there is no doubt that this was a year we will be happy to see the back of. The economy is struggling and unemployment is also a problem. What positive changes can we reasonably expect to see in the next 12 months?
There is no doubt that 2008 was a challenging year for many people. Nationwide, home prices continued to plummet and short sales and bank owned foreclosures dominated the market. Bad news abounded and the Press appeared to love every bit of it.
Not Bad News For Everybody
I’ve said it before and I’ll say it again. Real Estate is Local. Sure, everybody was affected by the fact that questionable practices by lenders in previous years resulted in the melt-down of the financial markets but it is still true to say that some parts of the East Bay have escaped relatively unscathed when compared to other areas.
Everybody is affected to some extent of course but those homeowners in Lamorinda, for example have seen little erosion in home values, especially when compared to, say, Antioch and Pittsburg, just a few short miles away.
The Big (Local) Picture
Where do we stand today? The Contra Costa Association of Realtors publishes an impressive array of statistics every month for the use of their members. An examination of the end-of-November issue (just published) is quite enlightening. Data covers Contra Costa and Alameda County as a whole.
At the end of November, 375 detached single family homes were listed for sale that month. 268 had sales agreed and there were 220 closed transactions. The relationship between new listings and sales agreed is a key indicator because when we begin to see more sales agreed than new listings, it means that inventory is reducing and we are heading towards a more balanced market.
At the same point a year ago, 410 detached single family homes were listed for sale. 211 had sales agreed and there were 193 closed transactions, so two years ago, more homes were coming on to the market and less sales agreed. Certainly this is a step in the right direction.
Increasing Affordability
The median sales price for a detached single family home was $800,000 a year ago compared with $550,000 today. That is a substantial drop. And the average figures are $857,676 and $661,697. The positive aspect to this is that home ownership is now in reach of more people than before. 55% of families can now afford to buy a median priced single family home compared with 44% a year ago. It is worth noting that 109% can now afford to buy a median priced condo.
The Housing Supply
It is generally considered to be a balanced market when there is roughly a 5 to 6 month supply of housing in any sector. Currently, we have 8 months supply so it is a buyers’ market. Yet in the $300,000 -$500,000 price range there is only a 3.6 month supply. These are mostly condos or townhomes. Activity here appears to be increasing and I have had personal experience of writing offers on such properties that have been rejected due to multiple, higher offers being received.
What Happens Next?
Ah, if only I could answer that question with some degree of certainty. Unfortunately, my crystal ball is no better than anybody else's but I can, and will, give you my personal opinion together with the reasoning behind it.
In the past few weeks I have observed a major upsurge in visitors to my web site who are looking at homes for sale. This is unusual in December although it is common in a normal January and February. I have also had a lot more phone enquiries December than in most months in 2008. Some from potential sellers but most from buyers. From that I conclude that there is a considerable amount of pent-up buyer demand.
Increased Buyer Activity
Interest rates are at historical lows. Amazingly, they will probably drop even further. We also have a new Administration coming to power, which appears to be creating a certain amount of euphoria. Adding all these factors together, I predict that we will see considerably increased buyer activity early in 2009. And because it is human nature to “follow the herd”, I expect this to accelerate as the year goes by.
Prices To Remain Steady
Will prices increase this year? I doubt it. They may even fall a little further before they start to level out. There will still be many bank-owned foreclosures and short sales on the market and these will continue to hold prices down until the relatively high levels of inventory have been absorbed. Areas where the housing supply becomes balanced will be the first to experience price increases and I anticipate Danville leading the way in that regard. Maybe not in 2009 but certainly in 2010. Then as supply is taken up in other areas, probably from later in 2010, they will follow suit.
Will we see a return to the time where it is a strong sellers’ market and multiple offers abound? I believe we will, although not in the next couple of years. Real estate is cyclical. People have short memories. But we have seen it all before and we will see it again.
Nov. 5, 2008
To say it has been a tough year for home owners in The San Ramon Valley is something of an understatement, yet here, as in other areas, some have suffered more than others.
Yet even in the more affluent neighborhoods of Danville, Alamo and Lamorinda, home values have fallen significantly in recent months. The question on everybody’s lips (especially potential buyers of course) is “When will prices hit the bottom?”.
Activity Among Detached Single Family Homes
For some encouraging news, take a look at the table on this page. This is an analysis of real estate activity in the southern end of the San Ramon Valley in Contra Costa County over the past 6 months, the area from Alamo to San Ramon. This just covers detached single family homes.
What is immediately interesting to me is that there is no real trend in any of these columns. The total number of homes for sale over this period varies from 609 to 691, a variance of a little over 10%. Now take a look at the actual activity in the market, Sales Agreed. Relating Sales Agreed to Total Listings provides what is known as the Absorption Rate, or in simpler terms, the number of months of inventory.
Months of Inventory is generally accepted as a key indicator in real estate terms. When there is less than 3 months of inventory, this is a strong sellers’ market. More than 6 months and it is considered a buyers market. Anything in between is considered to be neutral.
|
Alamo, Danville (inc. Blackhawk, Diablo), San Ramon
|
|
MONTH
|
Total Listings
|
Sales Agreed
|
Sales Closed
|
Average Sale Price
|
Months of Inventory
|
|
MAY
|
649
|
128
|
97
|
$1,043,904
|
5.1
|
|
JUN
|
677
|
103
|
110
|
$977,287
|
6.6
|
|
JUL
|
691
|
113
|
128
|
$1,069,935
|
6.1
|
|
AUG
|
640
|
134
|
112
|
$951,224
|
4.8
|
|
SEP
|
609
|
102
|
112
|
$1,008,072
|
6.0
|
|
OCT
|
609
|
90
|
99
|
$995,604
|
6.8
|
Are We Moving To A Sellers’ Market?
So what is to be made of that? Two of the past 6 months suggest a sellers’ market. Certainly we appear to be far from a strong buyers’ market so what is really happening?
In reality, there needs to be a “trend” developing to decide what kind of a market we are in. If we saw less than 6 months inventory for a 6 month period, we could safely say that we had an established sellers’ market but as things stand right now, this is not the case. It is possible that we are in the early stages of development of a sellers’ market though. The next few months will show us.
Real Estate Is Local
It has to be emphasized that this analysis relates only to a specific geographical area. I have no doubt that an examination of the same figures for the north end of the San Ramon Valley (Pleasant Hill, Concord and Martinez) would show a very different picture, strongly favoring buyers. Doing the same for Lamorinda would also tell a different story but almost certainly showing that a sellers market was getting established there.
Will Prices Rise?
Does this mean that we can expect to see price increases? Probably not. It generally takes a long-established sellers’ market with low levels of inventory before that becomes a reality. What we probably can look forward to in the near future in areas such as the one in question is a period of stability. Average sales prices will fluctuate a little just as they have over the past 6 months. Home sales will continue around their present rate for the coming months and sellers who price their homes for sale at fair market value will sell them reasonably quickly, say in 30-45 days.
The Effect Of Distress Sales
There has been some suggestion that we can expect an influx of Short Sales and Bank Owned Foreclosures coming on to the market. It is suggested that the re-setting of adjustable rate mortgages to a point where home owners can’t afford the payments make this inevitable. The proponents of this scenario say that this will drive prices downwards as lenders are prepared to agree to low sales prices. In reality, it looks likely that this will not come to pass. Major lenders such as Countrywide and J.P. Morgan Chase have recently placed a moratorium on foreclosures and have stated that they are committed to working with home owners to restructure their loand rather than see them lose their homes. Other lenders are likely to follow suit. It appears that there really may be a light at the end of this tunnel and we will eventually return to a period of stability in the real estate markets.
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