Don't look now, but the housing market might actually be ready to rebound after a seven-year slump.
An article in the Los Angeles Times reports that a leading index showed home prices in the United States' 20 largest cities rose 1.6 percent in July to their highest level in two years.
The rise was the fourth straight monthly increase and the third straight month prices rose in all 20 cities, according to the Case-Shiller Price Index.
That trend is also apparent in the East Bay.
Wayne Gregori of The Gregori Group real estate company said home prices in various parts of the East Bay have shown improvement recently.
"It's happening all across the board," Gregori said.
Gregori said prices in general did show a bump in July, then slid a little in August and are back on the upswing this month.
In San Leandro, for example, the median price for a single-family home is $385,000, up from $350,000 in July.
In Pleasanton, the median price has increased from $960,000 in July to $1.01 million this month.
In Oakland's Rockridge area, the median price has jumped from $705,000 in July to $745,000 today.
There are some exceptions. In Danville, the median price has slipped from $1.05 million to $1.03 million.
In Livermore, it has dropped from $685,000 to $676,000.
Gregori, however, said the seven-day trend is showing an uptick in East Bay home prices.
He said the biggest problem is a lack of homes for sale. Banks are limiting the number of houses they put back on the market.
"We have very little difficulty selling a house. It's a good time to sell," said Gregori. "There just isn't a lot of inventory."
Gregori said there are low interest rates, pent-up demand and still reasonable prices to fuel the market.
He noted he believes the housing market is heading for recovery, but it may take as long as 10 years for the backlog of foreclosures to be cleared.
Point to any house in Livermore sold between say, late 1998 and now, and I will show you a bad investment. It either lost money or has gained no value. Now, if you're just looking for a place to live in, that doesn't matter much, as an investment, its lousy.
Shorten the window and then yes, I agree.
But overall, if you have the down payment saved and plan to stay in the house for 5 years or more, it makes more sense to buy than rent at the current time.
Also understand the psychographics - Asians tend to do what their friends do. They are closely knit. if one does something the rest follow ("herd" mentality) PS: All my comments are applicable only to 94582. I am not a Real Estate agent. I am just a lay man observing the world around me.
Don't make sweeping generalizations. Real Estate, like the weather is a micro market. What you say may apply to particular cities, particular areas in cities or even particular streets!
Your argument assumes someone could qualify for the additional $5K per month in mortgage payments, which a majority of people cannot. Local private schools don't run $20K per year per student. They run closer to $8K to $10K even on the high end. Don't forget that many people that invested in local markets, including is San Ramon and Pleasanton, not only did not get their money back by owning, they lost hundreds of thousands of dollars when their equity disappeared after putting 20% down on a home. Most buyers in Pleasanton and San Ramon are conventional, and not FHA, where less than 20% down would be required. Finally, a full one third of homes in Alameda County, including Pleasanton, and in Contra Costa County, including San Ramon, were ALL CASH ;last quarter so the mortgage argument is not relevant in 1/3 of all transactions. Not saying it's good or bad, but there has been a surge in the number of Asian and Indian families moving to the tri-valley and most will openly say it's due in large part to the excellent public schools. Look at demographic data over the past decade and you'll see what others have pointed out. I'm not necessarily opposed to this because I think there's been a greater focus on reading and science in the last decade as the community had become more diverse.
1) of course they'd have to qualify. Of course, if they're looking to spend $40k/year on 2 kids, they would qualify. 2) Private, non-sectarian schools in the Bay Area *start* at $20k and go up from there. Only Catholic schools are as cheap as you describe. 3) I'm not making a mortgage or loan or whatever argument. I'm making the argument that if you have kids and you're looking at private school (assuming you can afford it) or public school, the math often times strongly favors buying a house in a good public school district.
HSBC published a massive review of local housing markets across the country. The clearest correlations are: 1) in "land constrained" areas (here, NYC, Hawaii, Seattle, etc), home prices are correlated to rent. 2) in areas will little barriers to building (Texas, ex-urban areas outside of California, etc), home prices are correlated to income. Curiously, prices are *not* correlated (or as well correlated) to: 1) the larger economy as defined by business cycles 2) interest rates 3) inflation rates 4) outlook for appreciation except, of course, as those factors relate to rent and income trends, depending on the location.
Technically a true statement in a normal market. However, if people are pulling back on these items you can have no expectation of increased sales of anything else. Wages are stagnant. GDP was just revised down. There is nothing that indicates prices will rise and even Schiller of Case Schiller predicts a 20% price fall. Now the Tri-Valley area is in a somewhat unique situation with the mall. However, since 600 or so got laid off from comcast, this will put pressure on these good readings. I guess we will see what the employment numbers are tomorrow.
Pending home sales slip in August, mortgage rates hit new lows. http://www.usatoday.com/money/business/story/2012/09/27/pending-home-sales-slip-in-august-mortgage-rates-hit-new-lows/57847752/1
Wages don't matter in the Bay Area. Indeed, San Francisco is has the highest percentage of homes owned with no mortgage. What matters is rents. Rents are rising in the Bay Area. Even during the tech crunch, which was worse for wages and employment than the recent crisis, rents dropped 8%, and that was it. Sure, we'll see. I don't see rents collapsing here. And if rents don't collapse, neither will home prices, now that they're at the current levels where it makes more sense to buy than rent.
That is preposterous! In 2008 when the meltdown happened, rents in this area fluctuated around 2% up and down for two years. Rents never collapsed. House prices did. I assumed they would follow home prices to some degree. They never did. Staying pretty much the same the whole time. At the third year they started clipping about a 5% rise. And have done so every year after.
To make this even simpler: In the Bay Area home prices are determined by a *RATIO* of price/rent. Get that. A *RATIO* If the numerator (price) goes far higher (as it did from 2002-2007), and rents don't follow, prices will collapse until we hit a "normal" *RATIO*. We're at that "normal" ratio now, more or less. As rents continue to rise (or even stay flat), prices will follow. Got it?
Oh, I've got it. I just think you are wrong. But I do always enjoy a healthy debate. It lets people make up their own minds. I agree with your principle in normal market. I'd actually love for you to be right. I just don't think you are currently with the current atmosphere. Companies everywhere are starting to warn. And we still have to get through the rest of earnings season. But I guess salaries don't matter. So maybe that doesn't matter either. All I know is when caterpillar warns - you better steady yourself.
By all means make up your own mind. *: The most expensive words in the English language.