Altos Research Real Estate Insights - Bay Area real estate

Home Prices in Oakland vs. Berkeley

Mike Simonsen — Sat, 14 Jun 2008 13:18:02 -0700

Checking out Andy Kaufman's blog this morning, I couldn't help but noticing the contrasting AltosCharts he's showing for Oakland and Berkeley California.

Oakland of course is the bigger city, but these next-door-neighbors share some parts that are virtually indistinguishable from each other. There are some spectacular parts of Oakland and sketchy parts of Berkeley and vise versa. But look at the home price trends over the last year.

Real estate prices in Oakland and Berkeley, California as of mid-June 2008. Data for single family homes.

Likewise look at the trends in inventory levels for the same to cities.

Real estate inventory levels of homes for sale in Oakland and Berkeley, California. Data for single family homes through mid-June 2008

You couldn't have a clearer picture of the real estate pricing phenomenon we're seeing all over the country. It works like this:

Demand is off everywhere and everyone knows it.
So if you're a home buyer in the East Bay with good cash and good credit, you get your pick. In this case, Berkeley has generally better schools, more cachet, etc., so the buyers go there first.
There's enough demand to keep the market afloat.
If you don't have good cash and good credit, you get nothing. There is literally no spillover demand for Oakland.
A few years ago, a home buyer might look to the nicer neighborhoods in Oakland for additional inventory or a lesser school-premium price. Not the case any more.

Actually, I'm sure we could dig through the zip code level data in Oakland and illustrate a similar phenomenon within the cities themselves. But this particular story jumped out at me this morning, so that's what gets covered.

Altos Links: Oakland real estate data, Berkeley Real Estate Data

Charts around the Bay Area for April 14

Mike Simonsen — Mon, 14 Apr 2008 15:12:38 -0700

Spent much of the day looking up data for press requests. Everybody wants to know if we're at a bottom. Thought I'd drop some in here. Not a lot of time to write today, so here are some comparison charts for homes around the Bay Area. San Francisco, Burlingame, Walnut Creek, and San Jose. All Data as of April 11 2008.

Median Price Trends for homes in San Francisco, Burlingame, San Jose, and Walnut Creek.

Days on Market for the same cities. Note the seasonal decline still leaves us higher than last year at this time.

Our Market Action Index for the same cities. This is a composite of market demand statistics rolled into one number. Under 30 implies demand weakness, or "buyer opportunity." Under 20 is frigid. Given the tight scale on this chart, conditions are not worsening considerably in the last few months.

Chart of the Day: Price Per Square Foot San Francisco Condos

Mike Simonsen — Mon, 31 Mar 2008 07:48:39 -0700

A couple of charts to chew on this morning.

How's the condo market in San Francisco? Are all those new developments flooding the market yet? Let's look at pricing and value trends for Condos in the city.

Median Price Per Square Foot for condominiums and TICs in San Francisco. Data as of March 30 2008.

Looks like pricing trends are holding nicely in the past year. Why is that? A quick hypothesis is that despite the fact that there are tons of new developments coming on line, the existing inventory of condos is actually very low relative to the population and immigration in San Francisco.

SocketSite shows some year over year inventory charts for real estate in San Francisco today. Here's how the inventory breaks out between single family and condominiums.

Inventory of homes for sale in San Francisco as of March 30 2008. Includes pendings.

Altos links: San Francisco real estate reports

February 2008 National Housing Market Report

Mike Simonsen — Tue, 12 Feb 2008 12:41:34 -0800

Last week we published the February editition of our National Housing Market report [PDF download]. I was traveling and forgot to add it to the blog, so here it is. We've expanded the coverage this month and added a few more cities ebyond the initial 20 covered by the Case Shiller Index. We'll add a few more important cities in the upcoming versions of the reports too.

Here are the highlights from this month's report.

Listing prices declined in 19 of 22 markets during January. Prices only increased in the New York metro area during January and were flat in Dallas and Phoenix.
The largest monthly decline of 3.6% occurred in San Francisco. Over the three month period, listing prices in San Francisco have fallen by 6.1% from $708,551 to $665,100. The other California markets of Los Angeles and San Diego logged declines of more than 2% for the month of January.
Property inventories declined in most markets except in the Northwestern markets of Seattle and Portland. Inventories tightened sharply in the Midwestern markets of Cleveland and Detroit with decreases of 10.4% and 5.4% respectively during January. Seasonal declines in listing inventories are typical during the winter months.
Markets with the longest time-on-market are Miami and Minneapolis at an average of 144 days-on-market. Miamiâs days-on-market only increased slightly from the previous monthâs 143 days while Minneapolis jumped over 5% from 136 to 144 days. Sixteen of 22 markets had an average days-on-market of over 100.
Denver led all markets with the fastest rate of inventory turnover at 61 days, followed closely by Dallas and San Diego at 80 days. The sharp decrease in Denverâs days-on-market indicator â almost 39% during the past three months â coupled with an inventory reduction of over 11% during the same period, should be a positive for listing prices in the coming spring selling season.

Getting Some Attention!

Mike Simonsen — Fri, 04 Jan 2008 09:54:09 -0800

We've had some really nice attention in the press and blogosphere the past week or so. Here's a quick summary so you can see what people are saying about Altos.

O'Reilly Radar: Tim O'Reilly highlights our real-time data products for Wall Street and the housing derivatives markets. I'll be presenting on this topic at the O'Reilly-sponsored Money:Tech conference in New York February 6-8.

In SFGate.com / San Francisco Chronicle Carol Llyod finds her friends in the market for a home in San Francisco - everyone is surprised how hot the market is. I love this kind of analysis. The data reveal so much more than the headlines can capture. Carol - have your friends email me and I'll set them up with the neighborhood level and insights that we do in our detail reporting.

Dustin thinks we're going to get acquired. And Robbie gives us a nice plug on Rain City Guide.

The bloggers at Redfin have been especially prolific lately. I like the approach Redfin uses for their blogging work. They've got a team of bloggers, each with an intelligent voice, tackling the local real estate markets they're in. None of it is too controversial, but it's solid content, targeted well for their customers.

Altos Links:

National Data for the Housing Derivatives and Case Shiller markets

San Francisco housing market

South Beach vs. North Beach San Francisco

Mike Simonsen — Tue, 20 Nov 2007 15:04:55 -0800

Our friend Alex at theFrontSteps is hosting his occasional Battle Royale this week. He's comparing the North Beach vs. South Beach neighborhoods in San Francisco. Your job is to pick the winner. Where would you rather live, and why? As Alex points out, this debate really boils down to whether you're old school or new skool San Francisco.

I've never been a North Beach guy. Maybe it's the Italian food thing. On the other hand, when I moved to the city almost 10 years ago, there was essentially no such thing as a "neighborhood" in South Beach. So I lived in Potrero, which shares the 94107 zip code with South Beach. As I zip through the ball park area these days, I'm blown away by the changes. It's all so new that it feels a little soul-less. That's such a surprise in San Francisco. I have a feeling though, maybe if I were migrating today, I'd wind up there. I'm clearly not old-school San Francisco.

Anyway, check out the Battle and let Alex know your thoughts.

Bonus: Altos client Mark Choey blogs all about the new development condos in the South Beach area.

Damned Lies and Median Home Prices

Mike Simonsen — Mon, 24 Sep 2007 07:39:17 -0700

The bubble is bursting all around us and the National Association of Realtors comes out with a report that San Francisco Bay Area median home prices increased by 13% in the second quarter. Nooooo, can it be? If you can't trust NAR, who can you trust?

Stephen Bedikian of RealIQ has a nice piece today over at Inman News sorting through the confusion. He cites some Altos numbers to help make sense of the turmoil. Stephen concludes:

So what actually happened? Sales transactions increased with a greater proportion on the high end versus the previous quarter. There appears to have been little actual appreciation as evidenced by the Case Shiller and OFHEO numbers, while inventory increased and prices of many listed properties were reduced. So next time you read that median house prices have increased in your area, don't celebrate prematurely. Conduct more research before you reach a conclusion about market conditions in your area.

In addition to Stephen's suggestion of diversifying your stats, I'll add that if you're not looking local, you're not looking anywhere. The Bay Area market? Are you kidding? This spring, you could indeed watch a few key markets, like Palo Alto and up the Peninsula stay strong. But look even a few miles inland, say Antioch, and the carnage was everywhere.

To be fair to NAR, we reported the same trends for some of those parts of the Bay Area in February, March, and April. We also noted that by May, the Spring price growth had already begun to recede. (Notably correlated, by the way, with the widening spreads on jumbo mortgages that started at that time. Surprise! The high-end starts to fade when fat mortgages get more expensive.) So here we are five months later and NAR is telling you that San Francisco had a strong spring. Thanks guys.

[ps. sorry about the long hiatus from the blogosphere. Hope you've been enjoying Scott's posts on real estate e-marketing tactics. Our plan is to intersperse both topics together. Thanks to Stephen for getting me off my ass and posting. I like his work, we'll have to do more together in the future.]

Super Cool Bay Area Real Estate Market Mashup

Mike Simonsen — Tue, 31 Jul 2007 08:50:56 -0700

Client, friend, and indefatigable blogger Kevin Boer has a really slick map mashup of our AltosCharts housing price charts for the Bay Area, using our price quartile data. Kevin uses Zeesource and the result is prettier than our own map mashup (though ours covers all our markets and has a zoom-in-to-the-zip-codes feature.)

AltosCharts map mashup by Kevin Boer at 3OceansRealEstate.com

Our AltosCharts service is up for the Most Innovative Technology award at the Inman Connect conference this week. It's partners like Kevin that really illustrate the power of using market analytics to inform. We're proud to count him as a client. I'm not sure how the winners are selected for these awards, but maybe fans of Kevin's work will stuff the ballot box for us.

And while I'm patting myself on the back, here are a couple of other Altos clients that use AltosCharts really well to bring value to their readers, and boost their own marketing return:

The Harper Team in the East Bay

Pat Kapowich in Sunnyvale

SeattleHome.com

(BTW - I don't mean to exclude any other clients and your sites. There are too many to mention. Feel free to add your site to the comments of this blog if you want to show off your AltosCharts work. I'll work up a post highlighting other sites soon.)

Podcast Interview with Me

Mike Simonsen — Mon, 02 Jul 2007 10:30:08 -0700

Drew Meyers from Zillow called up last week and interviewed me about last week's Carnival of Real Estate. If for some reason you don't get enough of my pontificating in written form in this blog, you can hear Drew and I chatter on about Altos Research, the contributors and articles in last week's Carnival of Real Estate, blogging in general, and the state of the real estate market.

Bay Area Price Reductions Heat Map

Mike Simonsen — Wed, 06 Jun 2007 10:15:19 -0700

We've been talking for a while about how the market strength in the Bay Area's housing market has been focused on the economic centers, San Francisco and down the Peninsula, with the market notably cooling the farther you reach into the exurbs.

Thanks to the folks at FortiusOne, who launched GeoCommons at O'Reilly's Where2.0 conference last week, we finally got around to illustrating the heat map of this phenomenon.

In the following snapshot we've created a heatmap of price reductions. Specifically this is our percent-price-reduction stat--for a given zip code, the percent of properties that have had their asking prices reduced. We have some color tweaking to do still, but you can see the picture pretty clearly. The brighter red, the higher the percentage (and the weaker the market).

San Francisco Bay Area Real Estate Market. Percent Price Reductions. Single Family Homes. June 1 2007. Brightest red is over 50% reductions, darkest red around 10%, which indicates strong demand and healthy turnover rates.

If we zoom into the San Francisco, San Mateo County Peninsula and the north end of Santa Clara County, you can see the strength in Mountain View, up through Palo Alto, and in the San Mateo/Burlingame areas. Also, demand levels in the City have stayed strong.

San Francisco and San Mateo Counties, with parts of Alameda, Contra Costa, and Santa Clara Counties. Affluent neighborhoods are seeing robust demand this spring.

You can get details of the markets in Burlingame, San Mateo, Palo Alto, Mountain View etc. on our free research page. From that page, you can go to our map view and look at price trends for each zip code. (Heatmap not yet included.)

Case Shiller March 2007 Price Uptick San Francisco Bay Area

Mike Simonsen — Tue, 29 May 2007 10:58:47 -0700

The S&P/Case-Shiller index for March 2007 was released today. The San Francisco Home Price index showed it's first increase in a year and came in at 211.09 vs. 210.78 in February. This increase should come as no surprise to our clients (or readers of this blog for that matter.) We whispered to clients on February 26 that the March numbers looked like they were heading higher.

(For the uninitiated, the Case Shiller index tracks existing single family home prices. The index compares prices now to January 2000 where the index = 100. These indexes are then traded as options and futures on the Chicago Mercantile Exchange.)

Broadly speaking, this is not a big surge in San Francisco Bay Area home prices. No

Tracking Home Prices for the San Francisco Bay Area.

cause for celebration of the end of the bubble burst yet. We see the light trend sustained for a couple more months and then reversing back down by the time the June numbers are announced later this summer. The seasonal spring surge appears to wearing thin already.

In other notable markets reported today with the S&P Case Shiller Index: Los Angeles, Miami, and San Diego were down the biggest of the 10 major metros that are traded on the Merc. Full data table is here.

Google MyMaps Mashup for Silicon Valley

Mike Simonsen — Tue, 22 May 2007 10:52:52 -0700

We got a cool email from a subscriber today.

Rajul Vora put together a Google Maps MyMaps mashup of our AltosCharts for the markets where he's shopping for his home.

Our own map mashup is here with charts available for all our markets around the country, and info on our free AltosCharts is here. Rajul took advantage of Google's new MyMaps feature, crammed lots of AltosCharts on to his specific zip codes, and doesn't have to host any software. Rock on.

Google MyMaps mashup by Rajul Vora.

The Definitive Blog on San Francisco Neighborhoods

Mike Simonsen — Sat, 21 Apr 2007 12:08:00 -0700

Our friends at SFNewsletter have published a blog dedicated to their Tour De San Francisco. This is a series of articles, one on each nano-market in the city. Lots of pictures, a highlighted neighborhood map, and commentary on the homes currently on the market. Just outstanding. I'd encourage our realtor friends in all cities to undertake this kind of approach. Alex at SFNewsletter is really building the definitive San Francisco neighborhood tour with this site.

This week's post is about little west-side Merced Manor. Here's a taste of some of the images.

Merced Manor San Francisco

Homes in Merced Manor San Francisco

And as a bonus for our readers, here's the latest pricing charts for that part of the city.

Home prices in San Francisco 94132 as of April 2007. Click for the San Francisco market reports.

Altos Research clients beat the market by 4 months (again)

Mike Simonsen — Fri, 20 Apr 2007 11:08:00 -0700

The best part of taking a real time approach to market analytics is when the market hits an inflection point.

The AltosResearch.com home page uses this chart, which illustrates one of the catalyst insights for us to form our company. When we first saw our analytics platform illustrating these insight, we realized we had to bring the technology to the world. (Give, give, give. We're all about altruism.)

2005 Price Trends for San Jose.

And, in case you missed it, the San Francisco Bay Area housing market has reached a new inflection point. The first news media reports started emerging last week that Bay Area home prices started climbing again in the first quarter of 2007.

Of course, if you were an Altos Research client, you would have seen the inflection four months ago. Check it:

Bay Area home prices started showing a turnaround in December.

We've been discussing this market change on the blog a bit. We'll continue to do so. The better news is we'll also be rolling out some new products soon that will help our subscribers identify these regional trends.

If you're interested in previewing some regional insights, make sure you drop me a line and let me know which part of the county you're in. If you leave a Meebo message when we're off line, make sure you include your email address.

More on REX for real estate equity exchange

Mike Simonsen — Tue, 17 Apr 2007 10:01:27 -0700

A couple of months ago we pointed out a firm called REX & Co who are offering a unique approach for refinancing your home.

For anyone considering this kind of equity investment financing, here's a marvelous analysis posted in the comments to that post.

The bottom line is that the fees and deal terms are significantly high enough to make the option profitable as a hedge against declining home values. Akin to selling a call option on your home, you get the cash immediately and if the property value declines, you get to keep the cash (minus fees.) Of course, if just want access to cash but aren't hedging against a downturn, take a HELOC. The interest payments will be significantly lower than the fees and cut that you give to Rex.

After reading about REX here, I was curious about the terms so I contacted them and asked for more details. REX has two similar products: one is for purchasing a new home, and the other is for taking equity out of a home you already own. The home must be your primary residence. I mostly asked about the second product. Here's an abbreviated version of what I learned:

REX will pay you up to 13% of your property's current appraised value in exchange for you signing a contract that gives them their money back when you sell the property plus a 3.5% interest in the change in value (up or down) for every 1% that they paid you. There is also a fee of 18% (!!!) of REX's money due when you sell the property. The up-front costs include you paying for an appraisal, and I think some other small fees, probably comparable to a normal refi, but I didn't get specific numbers. Apparently you have to use third-party appraiser selected by REX.

Here's an example: say your home is worth $1 million today and you want to use REX to take out 10% ($100,000) of the equity. At some later date you sell the house for $1.5 million. The appreciation since the REX transaction is $500,000. At closing, REX will receive 35% (10% x 3.5) of the appreciation, $175,000 plus their original $100,000, plus the 18% fee (18% x $100,000 = $18,000) for a total of $293,000.

If the property went down in value, and you were only able to sell for $900,000, I believe REX would receive their original $100,000 minus 35% of the depreciation ($1 million - $900,00 = $100,000 depreciation, 35% of which is $35,000), plus the 18% fee, for a total of $83,000.

If you improve your property after the REX transaction, you can ask for an appraisal when you sell the property to determine the value of the improvements, and REX will not receive a percentage of the appraised value added by those improvements. You can buy out the contract by getting a current appraisal and paying REX the same amount as they would receive if you were to sell the property for the appraised price.
The 18% fee is going to be much worse for you than just paying interest on a home equity loan unless you hold the property for at least several years after the transaction, and that is without even considering the large percentage of any increase in value that you are signing over to REX.

In the example transaction above, you end up paying REX $193,000 in addition to paying back them back the money they paid you. If you took out an interest-only home equity loan of $100,000 at 8% it would take over 24 years for the interest payments to add up to $193,000. Of course, you would have to be making those interest payments every year. And if the loan had an adjustable rate, you'd be subject to interest rate risk. If you are retired and don't have sufficient cash flow to make the interest payments, perhaps REX is an interesting alternative to a reverse mortgage. Also, if you think your home will stay flat or decrease in value, and you are going to own it for many more years, maybe this is an interesting product.