Prices are definitely stabilizing somewhat in all local areas. As you can see from the chart below, all of these areas saw an increase in median price from the 1st quarter to the 2nd quarter of this year. It's the first time since 2006 there has been a quarter to quarter increase in median price. Does that mean that home prices are increasing? No, the more likely explanation is that sales of higher priced homes that were sitting for longer periods of time are now beginning to sell. Combine that with the dramatic uptick in activity in some of the lower price ranges, and there are definitive signs that the market in most of our local areas is bottoming out and we are starting to see a floor under the price depreciation over the past few years. Despite this, it is still somewhat of a buyer's market, as homes that aren't properly priced or have some other deficiencies that buyer's can't overlook. Also, appraisers have added a wrinkle to many home sales in that they are being much more conservative in their approaches, and are reluctant to appraise a home at the contract price if there are lower comparable sales in the area, even if those comparables are distressed sales of foreclosures and short sales. Banks are still holding back a fairly large inventory of foreclosed homes, so buyers can expect more choices as some of those hit the market in the upcoming months.
|
Median Prices |
|||
|
City |
1st Qtr-2009 |
2nd Qtr-2009 |
% Change |
|
Walnut Creek |
$525,000 |
$575,000 |
+10% |
|
Pleasant Hill |
$417,500 |
$420,000 |
+1% |
|
Concord |
$208,000 |
$250,000 |
+23% |
|
Danville |
$732,000 |
$775,000 |
+5% |
|
Lamorinda |
$805,000 |
$890,000 |
+11% |
|
Martinez |
$305,000 |
$329,000 |
+8% |
|
Antioch |
$175,000 |
$185,000 |
+6% |
|
San Ramon |
$573,450 |
$629,000 |
+10% |
|
Brentwood |
$295,000 |
$299,950 |
+2% |
We're now about 3 years past what turned out to be the height of the real estate market bubble. In the higher priced areas, the number of sales remains down from a few years ago. In Walnut Creek, for example, the number of sales in the first quarter of 2009 is down 32% from the same period in 2006. What is notable though, is the number of sales in lower priced areas like Concord, Martinez, and especially Antioch & Brentwood. The number of sales in those areas is dramatically higher than we've seen in quite some time. The reason for all the activity in those areas is mainly lower prices. Prices have fallen so far in Concord, for example, that the median price of a home sold in the first quarter there is hovering around $200,000, down 63% from the median price of $535,000 back in the first quarter of 2006. Prices have fallen faster in many of the lower priced areas in Contra Costa County. This is due mainly to more foreclosures in those areas, and banks anxious to sell those homes to get them off their balance sheets. For the first time in many years, buyers that thought they might be priced out of the market and now able to find affordable homes. It's also clear that buyers in these lower priced areas sense a bottom to the market. Multiple offers and homes selling higher than their asking prices are common these days in many neighborhoods. You can see in the table how different the price depreciation has been depending on location. The number of home sales in Concord in the first quarter rose 92% over the same period last year. In Antioch, the number of sales rose 127%! Remember that the downturn started in these lower prices areas, and it's likely to see a bottom and a turnaround before sales start to increase in higher priced areas. We're also likely to see further price depreciation in the short term in many of these higher priced areas.
|
Median Prices |
|||
|
City |
1st Qtr-2006 |
1st Qtr-2009 |
% Change |
|
Walnut Creek |
$719,450 |
$547,500 |
-24% |
|
Pleasant Hill |
$622,000 |
$440,750 |
-29% |
|
Concord |
$535,000 |
$199,950 |
-63% |
|
Danville |
$950,000 |
$725,000 |
-24% |
|
Lamorinda |
$1,050,000 |
$885,599 |
-16% |
|
Martinez |
$555,000 |
$349,500 |
-37% |
|
Antioch |
$498,000 |
$170,000 |
-66% |
|
San Ramon |
$794,950 |
$573,450 |
-28% |
|
Brentwood |
$588,000 |
$295,000 |
-50% |
I remember the first time I had a home staged. It was 2001, and I was having trouble getting a nice vacant home sold. I thought that if we furnished it, and tastefully decorated it, the space would be more well defined, and easier for buyers to comprehend the floor plan and mentally move their things in. It worked well. The home sold within a few weeks after staging it. It was the first of many sucess stories I had with staging properties. By 2003, all my listings were being staged in some way, and in 2004, I actually had a full time assistant/stager on my payroll along with a large storage room of accessories and small furniture.
What I've always loved about staging was using the furniture and accessories to showcase the best parts of the home, and de-emphasize some of the drawbacks. I wanted buyers to walk in and think "this is the kind of place I want to live". I never wanted them to know that there was anything deliberate or intentional about what they were seeing, or that the home had been "staged" for their benefit, just that it was a nice comfortable space they could enjoy, and thus, they should buy it.
How things have changed. I was out with some buyers the other day in Danville. Virtually every house we looked at was "staged". Evidently, all the stagers read the same book, because instead of any of these properties standing out as special, they all looked like an IKEA showroom. In one case, the seller was home, and complained that the stager made them take their TV down from the wall in the family room so they could make the room more appealing. Since when is a nice TV on the wall in a family room a distraction that needs to be changed? Don't most people WANT a TV in their family room? At another house, the agent actually had a "this home is staged" rider on their sign. Then when you walk in, there's a giant flyer stand with the stager's info and business cards on the table. What is that supposed to accomplish? Are we selling houses or staging services?? When I bring a buyer to a home, I want them to focus on the house, not whether or not it's staged. Staging is becoming so predictable, it's almost a joke to many buyers now. The vacant house with one chair, a shawl thrown over it in the corner and a fake plant next to it in the family room? This is supposed to entice buyers? By the last house, my clients were more engaged with the checking out the similarity of the staging in each home than the houses we went out to look at.
Another common idea that's become some sort of staging law is depersonalization. Now, I couldn't agree more that Grandma's pics in the hallway of all the kid's graduation pictures from the 1970's have to go, but most stagers have taken this depersonalization to a silly level, as if every trace of the family living there has to be erased and sterlized away. Recently, I had clients with a beautiful wall of family picures, interwoven with artwork and motivational phrases in wood letters. They were going to take it down. I told them to leave it (Gasp!). It was beautiful. It made the room a better place. Was it going to prevent a buyer from mentally moving in? Not in my opinion. Exactly the opposite, I thought. This was a house that was going to appeal to a family with young kids, and to see that there was a happy family here now was inspirational, not distracting. The house sold in a week to a family with 3 kids, just like the family that was leaving.
All these endless HGTV staging shows don't help. You can't turn on a TV anymore without seeing a perfectly staged home. Sterile colors, sterile accessories. What was once something that was used to help sell a home has become a distraction in many cases. Stagers and agents need to get back to the main job at hand. Accentuate the positive and de-emphasize the negative. Each home is different, and requires a different approach and expertise. Throwing some furniture in and a few pictures from Pier One Imports just doesn't accomplish that. And please - get that silly tray with the champagne glasses and fake fruit off the bed! Who lives like that? Who wants to live like that? Stagers also need to quit promoting themselves in homes, and agents need to stand up to them on that - no staging flyers and business cards. You're trying to sell a house, not get the stager more business. If an agent thinks their stager is great, they should tell everyone in their office, and every other real estate office in town, but they don't need to have their marketing materials greeting potential home buyers. It's about selling THE HOUSE!
I've had the conversation with many a prospective home seller over the past 3 years. They'd like to sell, but don't want to do so in a "bad" market. They're going to sit it out and wait for the market to "turn around".
I'm always a bit baffled when I hear that. The reality is that even when our real estate market does bottom out, it's highly unlikely that we're going to see a quick turnaround in prices that will make them quickly rise to anywhere near the levels we saw at the height of the market in 2005/2006. Most people I talk to that are knowledgeable about the market feel that we'd be fortunate to see annual increases even in the 3-5% range for the next few years once we do reach a floor in prices. My fear is that many of these home sellers will end up selling at or near the bottom in terms of pricing. While waiting for the bottom to sell may speed up the time it takes to sell, it's unlikely to be a wise long term move. Just as many people in the stock market sell after a big market drop, and then buy again after the market appears to have recovered, it's all too easy and common to get wrapped up in fear-fear of losing more money, that can cause poor decision making and short term thinking.
Properties are selling in today's market. While it's a certainty that you'll get less today than you would have one, two or three years ago, it's also a strong possibility that you could get more today than you might in one or two years ahead of us. If you could turn back time and sell your home at the price you could have gotten a year ago, would you? At the time though, you would have been disappointed as the price was down from the year before. This can be an endless cycle that by the time you get to the end of the road and really don't want to wait any longer, some great opportunities have passed you by.
If you're thinking about selling, whether to move out of the area to retire, or simply to buy a new home locally, you may find that the present could be the best time we'll see for awhile in terms of price going forward. Whatever you're trying to accomplish in your move, consider your other goals outside of the sales price. Whether it's a different school district, a larger house, or getting closer to work, waiting for the right time can be a frustrating, and in the end, a pointless exercise. Trying to predict when and where the market will bottom out is a fool's game, and I won't pretend to be better at it than anyone else. There is a wisdom to planning for the future accepting today's circumstances rather than wishing and hoping and waiting for things to get back to where they were before.
In many local areas, the number of home sales was up in the 4th quarter from the same period last year, somewhat of a surprise given the economic climate. There are two factors contributing to the increase in sales. The first is price. The areas that have seen the highest growth in sales are also the ones that have seen the greatest price declines. Secondly, interest rates reached long-term lows again in the 4th quarter, nearing 5% for a conforming fixed rate loan. Despite the increase in activity over last year, all areas saw price declines.
|
|
# of |
Sold in last 30 days |
Months of |
|
Walnut Creek |
227 |
48 |
4.73 |
|
Pleasant Hill |
68 |
26 |
2.61 |
|
Danville |
237 |
42 |
5.64 |
|
Concord |
405 |
184 |
2.20 |
|
Lamorinda |
168 |
27 |
6.22 |
|
Martinez |
170 |
42 |
4.05 |
The silver lining in our market currently is the lack of available inventory of homes for sale. As of today, the lower priced areas are still seeing the lowest available inventory. Many buyers seem to have determined that the market is bottoming out in these areas, and with the increased affordability and low interest rates, are taking the opportunity to buy now. This is a good sign pointing to a market recovery sooner than later. The number of foreclosures in the more expensive areas have remained low, keeping prices from sinking as quickly. These areas may see further price declines before we see buyer activity start to increase dramatically.
Another interesting factor is the rental amounts have been decreasing at all price levels, and there is more availability of rentals than in quite awhile. This would seem to reflect the effects of a poorer economy as fewer people overall appear to be moving into or staying in the area. Rents are down at least 10-15% in many areas from a year ago.
In the recently passed stimulus package, there are two main benefits for housing in general. The conforming loan limits for high priced areas like ours have been raised again to $729,000, potentially enabling more buyers to qualify under the higher limit. Secondly, an $8000 tax credit has been added for first time home buyers (or those that haven't bought a home in 3 years). Unlike the previous $7500 tax credit put in place last year, this one does not have to be repaid. Please talk to your tax advisor for further information if you are considering buying a home in the near future.
I take pride in going above and beyond expectations, making sure I am on top of all current issues affecting real estate, and communicating that effectively and consistantly throughout the sale.
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