I arrived in California (suburban San Diego) a bit over two months ago and chose to lease a home for the time I've committed to be here. The house I leased had been on the market for almost a year, and there are many others "for sale" in the neighborhood. So far, none of the signs have come down.
The guy who owns my house said he had "nine offers" for it, but none were "adequate."
My hunch is, as one of the other posters noted, that sellers just aren't willing to reduce their prices. Foreclosures may force them to do so. Doesn't matter to me, though. I'm heading back to the less-exciting, but oh-so-much-more-affordable South (or Texas) to retire when that time comes.
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9 offers in a year isn't great, assuming I read your post correctly. My husband had 8 offers on his house in San Jose 3 years ago (height of frenzy) from one open house. He got 60K over asking. Crazy.
pssst: the rental market will become increasingly strong. Great news for the landlords in this area
Not sure about this one. True, that rental will have less vacancy, but won't the rent price decrease significantly? Pure speculation on my part, as I could never understand these highly speculative markets.
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Join Date: Feb 2004
Location: Portland, Oregon
Posts: 7,113
Re: Prediction: California Real Estate
I read a related article on that site, the % of owner occupied is increasing, investors and flippers decreasing.
There is relatively low turnover of homes in the Bay area because if its tax structure (if you inherit you keep the tax limitation), thus a pent-up demand. As a result locals remain in rental housing longer than the norm and those who do buy often have long commutes to find an afordable home.
When gas prices increase those long commutes decrease the afordability of those houses, and if there is an opportunity to move closer to work they will.
Another factor for the up-scale segment are stock options from the likes of Google.
I think it's still too early to bargain hunt now. But this guy, Gene Burns, thinks "the time for buying is almost ripe", only to be questioned by one of his student "How do we know that, if we buy now, it won't drop even lower?"
Thanks cube_rat. You're right, rental prices is going up!
Excerpt from the first article: The average price of a one-bedroom apartment in the area that includes San Jose, Sunnyvale and Santa Clara jumped 11.4 percent to $1,296, while the rent for the same-size unit in the region that includes San Francisco, Oakland and Fremont climbed 7.3 percent to $1,268.
Interesting forecasting, boldfaced.* Let's revisit a year from now.* I bet the forecast is wrong.
SAN FRANCISCO, Sept 28 (Reuters) - The slowdown of California's housing market has become a drag on the state's economy as home building and financing payrolls thin, but the most populous U.S. state will avoid recession through 2008, according to a UCLA Anderson Forecast report.
The report, released on Thursday, projected California will through 2008 post overall payroll growth of around 1 percent, a rate similar to that in the first half of this year.
"The housing market has continued to soften and real estate-related employment has moved from a major engine of growth in 2005 to a drag on growth in 2006," the report said.
"Looking forward, the forecast calls for a similar picture," the report said. "Real estate sectors will continue to decline, but without significant declines in another sector, the net result will be a slowdown, not a recession."
Building permits in California will continue to decline, hitting bottom in 2008, the report noted.
A separate report by the economic forecasting group predicted that while home sales in California fall, home prices will not.
The report said California's homes market is "very far from a Great Comeuppance in which the extraordinary appreciation of the last five years is taken away."
"Here in California, though sales rates have plummeted, prices overall continue to push upward, though at a much slower rate, while some cities have experienced modest price declines," the report said.
Without severe job losses forcing home owners to sell houses, home prices in California in five years will be about the same as today, the report added.
Well it's been a year. I know quite a few of you have predicted the top (2004) and the fall of CA real estate. Thought I'd confuse you with some facts.
1920 Jones Street condo sold 8/2004 $1,250,000 Resold 8/07 $1,750,000
12% compounded yearly appreciation since the TOP?
461 2nd St 102G condo sold 2/2003 $650,000 Resold 7/2007 $1,029,000
12% compounded yearly appreciation.
Check this out. In July 1995 429 Baker condo sold for $255,000. In August 2003 it resold for $651,000. $255K compounded at 12.5% yearly to 2003 would be $654,275!!! $3,275 off the mark. You could almost set your clock by it. But wait, it sold again in August 2007. 12.5% compounded would be $1,042,776.
Who wants to guess the sales price??
Yep! $1,039,000 $3,776 off the mark.
My 21 years of 11% annual compounded appreciation is sucking! Maybe I should buy a bond or stock or something.
pssst: the rental market will become increasingly strong. Great news for the landlords in this area
My landlord is offering a one-bedroom in my building (S.F.) for $2,350 which I'm sure he will get. A year and a half ago it was rented for $1,600. Scary to know that Google is busing people to their apts. into the city. Rumor has it that the buyout offers for one bedroom apts. are $24,000 and up to mid-five-digits.
Bay Area home sales plummet amid mortgage woes October 18, 2007
La Jolla, CA.----Bay Area home sales sank to their lowest level in more than two decades in September, the result of a continuing market slowdown and borrowers' increased difficulties in obtaining "jumbo" mortgages, a real estate information service reported.
A total of 5,014 new and resale houses and condos were sold in the nine-county Bay Area in September. That was down 31.3 percent from 7,299 in August, and down 40.1 percent from 8,374 for September a year ago, DataQuick Information Systems reported....
The median price paid for a Bay Area home was $625,000 last month, down 4.6 percent from $655,000 in August, and up 0.8 percent from $620,000 for September last year. If the jumbo-financed portion of the market had remained stable, last month's median would have been $654,000.
The San Francisco-Oakland-Fremont Metropolitan Statistical Area approximation has 21,894 total listings of which 18,801 are either Single Family or Condo homes (browse San Francisco homes). The area includes the major cities of Berkeley, Concord, Daly City, Fremont, Hayward, Oakland, Redwood City, Richmond, San Francisco, San Mateo and many others. See also housing affordability for San Francisco, California
Weekly Data
Weekly inventory and median asking prices for Single Family and Condo homes (together) are displayed in the trend box below. 25th and 75th percentile prices for the last ten weeks are shown in the table. For a longer history of trends see the averages data further down.
San Francisco, however, has become a new market of sorts with a large migration of former Hong Kong citizens, which led to more properties without financing than at any other time in The City’s history. But appreciation has all but stopped in the City by the Bay and it is projected to fall another 8.9% in 2007.
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This morning getting ready for w*rk, I saw an infomercial for Trump's "proven real estate investment techniques" for making money on foreclosures. Now I'm no expert, but that looks like an indicator to me that folks are still way too optimistic about RE.
LGFNB Don't you get it? There is no bubble! All this talk about asking prices dropping but no one in 4 years has posted a verifiable resale at a lower price. I can only find resales that support 12% YOY appreciation.
The big reported decreases (11-12%) in the "Bay Area" were Napa and Solano counties (wine country). These are not highly populated areas. So Mr. and Mrs, well or Mr. & Mr./Ms. & Ms. San Francisco realize their home is up $500K and think it would be nice to buy a place in the country for $300-400K. Things look so cheap so they have no problem driving the prices up and probably overpay. Things settle out and people read the paper so 2nd homes in Napa and Solano drop 12% so their $400K country home is only worth $352K. Life as we know it stops...or maybe not. Their SF condo that has increased in value $500K in the last 3 years. They're down $48K in Solano. Still up $452,000 in three years!!!
Alameda County got hit almost 6%. There's a huge new "manufactured" town called Mountain House about 60 miles from SF. Probably alot of money spent out there that shouldn't have been. Values are going down out there because the developer is underselling earlier buyers. I suggest never buying into a new development unless it cannot be duplicated elsewhere.
Then there are all the people who undersold in fear after seeing some unanalyzed graph and those who paid too much trying to save on a REALTOR fee and then sold for too little trying to save on the REALTOR fee.