December Existing-Home Sales Down but Prices Rise; 2009 Sales Up

Some very sobering news from the National Association of Realtors® today, after a rising surge in sales due to the November deadline for the tax credit in September through November, existing-home sales fell as expected in December. First-time buyers rushed to take advantage of the tax credit and created a nice surge in sales in the prior three months.

In Alameda, we saw real estate sales follow the same pattern as the National trend. The Island’s sales peaked in October with 75 sales. September through November accounted for 168 of Alameda’s 491 sales for last year; 34 percent.

NAR reports prices rose from December 2008 and annual sales improved in 2009. This was also true for Alameda. Alameda reported an 85 percent increase in year-over-year sales for the month and a $4,000 increase in the median home price. Alameda’s median home price for December was $569,000.

Nationally, NAR report existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate1 of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008. That is a big number a 16.7 percent drop. As reported in other news organizations economists expected an 11.6% decrease in sales during December, which was a big shock to the markets.

For all of 2009 there were 5,156,000 existing-home sales, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005. Alameda saw an increase in sales with an 11 percent increase.

The national median existing-home price for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008. Alameda’s median was a marginal increase, but is still significantly higher the national median.

Total housing inventory at the end of December fell 6.6 percent to 3.29 million existing homes available for sale, which represents a 7.2-month supply4 at the current sales pace, up from a 6.5-month supply in November. Raw unsold inventory is 11.1 percent below a year ago, is at the lowest level since March 2006, and is 28.2 percent below the record of 4.58 million in July 2008. Alameda’s inventory continues to decline; a year-over-year comparison of December show at the end of 2009 there was a 35 percent decline in the number of homes for sale. Today Inventory, shown below, shows that the decline continues.

Inventory Data -- January 25, 2010

. . 1/25/2010 . Total 93 . 94501 77 . 94502 16 . SFR 51 . Condo 20 . Multi-Family 20 . Short Sale 15 . Foreclosure 9 . Price Reductions 29 . High List $1,999,000 . Low List $239,900 .

2010: a time of stabilization | Real Estate and Technology News for Agents, Brokers and Investors | Inman News

2010: a time of stabilization Real Estate and Technology News for Agents, Brokers and Investors Inman News

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“Cramdowns”: Will they work?

I get a lot of good Real Estate information from First Tuesday. They are a Real Estate education firm, but they have an online newsletter that summarizes some of the big issues in real estate for the wee and in this week’s newsletter they wrote about “Cramdowns” and it was a very interesting take.

A cramdown is the involuntary imposition by a court of a reorganization plan over the objection of some classes of creditors. Basically the court tells the bank these are the new terms of the loan so a borrower can stay in a home.

First Tuesday’s take was basically the since the New York Times reported housing prices in the U.S. flatlined in October, 2009 despite low mortgage rates and a homebuyer’s tax credit, the housing market has a new wave of foreclosures on the horizon and the only way to cure this ill is to force banks to take court institute financial terms.

Section from the First Tuesday article:

A combination of high unemployment and the failure of the current administration’s foreclosure prevention measures will result in an estimated 2.4 million foreclosures this year.

Considering the fresh wave of foreclosures expected, what will happen to prices in the coming months when the Federal Reserve Bank (The Fed) begins to raise interest rates and the government tax credit extension has expired?

Prices are predicted to fall by another 10% nationwide. Another price drop would push more homeowners into underwater situations. The only timely and affective way to deal with an underwater home – negative equity and homeowner insolvency – is to reduce the principal balance on the home loan, or in other words, a cramdown.

It is an interesting take, and I agree that high unemployment, a new wave of foreclosures, and falling prices will continue to add pressure to the market. But forcing lenders with cramdowns will not improve the entire situation. Future buyers could then pay more for loans, because banks will make up the losses by charging more.

A national policy would be difficult, because in high demand areas like the Bay Area and Alameda a 10 percent decline would most likely impact those who purchased in the last five years, but not a majority of homeowners. The lack of inventory in California has become and issue and allowing homes to come on to the market could actually improve the housing market.

Buyers have an opportunity with low interest rates, low prices (compared to three years ago) and goverment assistance, but they lack inventory to select from in the current environment.

Big Change in FHA Loan Requirements

The The Federal Housing Administration (FHA) has made some big changes to their loan policy. First off, just so everyone understands the FHA does not make loans, but rather offers insurance against default so lenders have a fallback position. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment.

Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.

FHA loans are popular because borrowers are only require a down payments of 3.5 percent of the purchase price, that requirement did not change.

The new policies announced today are designed to bring more revenue into the agency, while at the same time keeping loans available. FHA's popularity has grown and the agency is seeing dramatic financial pressure with the increase of foreclosures (the need to payout on bad loans) and the increase in popularity of the FHA loan. The FHA has seen an increase of popularity in this product they now back nearly 30 percent of loans.

The changes:
Borrowers pay an upfront mortgage insurance premium of 2.25 percent of the total loan amount, up from the current level of 1.75 percent. A home buyer will still be able to wrap these fees into the total amount borrowed. FHA officials also plan to ask Congress to increase the maximum annual premium that FHA can charge.

Need a credit score of at least 580 to qualify. Borrowers with a score lower than 580 will need a down payment of at least 10 percent.

For California and our local Alameda housing market this will make it more difficult for first time buyers that have little for a down payment. If they have a poor credit score they may not be able to buy at all, and for many this is a good thing. People who could not afford houses over the past five years were getting loans they could not afford.

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Alameda Inventory For January 18

Just a quick update on weekly inventory. As you can see after a slight uptick last week, inventory fell back to 95 units this week. The good news is all categories of inventory are shrinking, that includes distressed. If the market can get rid of the distressed properties this is good news for our local Alameda real estate market.

The tough part of the market is the single family residence. There are only 54 SFRs listed
for sale today. The Single family market is Alameda's biggest driver of home sales, so a lack of inventory makes the market a difficult one for those looking to buy, with limited choices.

Inventory is very volatile, but in my opinion it is the best way to get a quick pulse of the market. The pulse, right now, is telling me we have very little activity and sales continue to stagnate. The numbers are broken out below.



Alameda Inventory January 18, 2009

. . 1/18/2010 . Total 95 . 94501 79 . 94502 16 . SFR 54 . Condo 19 . Multi-Family 20 . Short Sale 14 . Foreclosure 10 . Price Reductions 30 . High List $1,999,000 . Low List $220,000 .

Alameda Snapshot - Early Morning Golfers

Since the Chuck Corica Golf Course has been a Hot Topic this week, I thought I would re-post this Flickr photo from Jassy-50.

Have a great weekend.

photo - Early Morning Golfers
Originally uploaded by Jassy-50

2009 Was The Year of Foreclosure in Alameda and Nation

RealtyTrac, released its Year-End 2009 Foreclosure Market Report™, which reported a record 2.8 million U.S properties with foreclosure filings in 2009. The report shows a total of 3,957,643 foreclosure filings — default notices, scheduled foreclosure auctions and bank repossessions — were reported on 2,824,674 U.S. properties in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007.

The report also shows that 2.21 percent of all U.S. housing units (one in 45) received at least one foreclosure filing during the year, up from 1.84 percent in 2008, 1.03 percent in 2007 and 0.58 percent in 2006.

Foreclosure filings were reported on 349,519 U.S. properties in December, a 14 percent jump from the previous month and a 15 percent increase from December 2008 — when a similar monthly jump in foreclosure activity occurred. Despite the increase in December, foreclosure activity in the fourth quarter decreased 7 percent from the third quarter, although it was still up 18 percent from the fourth quarter of 2008.

In Alameda, RealtyTrac currently reports 94 pre-foreclosures, 86 auction properties, and 82 banked owned properties. In 2009, Alameda had 74 foreclose sales and 36 short sales, these 110 sales accounted for 22 percent of the sales on the Island.

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Nevada, Arizona, Florida post top state foreclosure rates in 2009 with more than 10 percent of Nevada housing units received at least one foreclosure filing in 2009, giving it the nation’s highest state foreclosure rate for the third consecutive year.

Nevada foreclosure activity in December increased 27 percent from the previous month but was still down 22 percent from December 2008. Fourth quarter foreclosure activity in Nevada was down 37 percent from the previous quarter thanks to substantial decreases in October and November.

Arizona registered the nation’s second highest state foreclosure rate in 2009, with more than 6 percent of its housing units receiving at least one foreclosure filing during the year, and Florida registered the nation’s third highest foreclosure rate, with 5.93 percent of its housing units receiving at least one foreclosure filing during the year.
Four states accounted for more than 50 percent of the nation’s 2009 total, with more than 1.4 million properties receiving a foreclosure filing in our own California, Florida, Arizona and Illinois combined.

A total of 632,573 California properties received a foreclosure filing in 2009, the nation’s largest state foreclosure activity total and an increase of nearly 21 percent from 2008. After four straight month-over-month declines, California foreclosure activity in December increased nearly 9 percent from the previous month, but the state’s fourth quarter foreclosure activity was still down 17 percent from the previous quarter.

Although Alameda has not had numbers close to the State averages, we have seen an increase in distressed activity. Given the RealtyTrac numbers for Alameda there appears to be even more distressed sales on the horizon.

A Peak Into 2010 Alameda Home Sale

Since I spent the last two days looking at Alameda Home sales for 2009, I thought it would be good to see how January is shaping up.

To date the Island has seven sales logged. Last year we had 21 total sales for the month of January, but the first was not record until the ninth day of the month. So Sales have started a little earlier this year, but the pace is behind last year.

The majority of the sales sold below asking price, a trend that is continuing from 2009. The range of ask price to sale price ranged from 92-104 percent. It appears that a few high end homes are still selling with 16 Callen Place receiving $1,795,000.

January is traditionally slow for home sales, but if we can get a strong start to the home selling season that usally jumps into high gear in the Spring, this could be a springboard for a more productive 2010.

. Sale Date Address Type Beds Baths Sq Feet List Price Sale Price % . 1/6/2010 1428 UNION ST SFR 3 2 2375 $825,000 $801,000 97% . 1/12/2010 1367 HANSEN AVE SFR 3 1 1620 $679,000 $679,000 100% . 1/8/2010 1547 B SANTA CLARA AVE SFR 2 2 1325 $575,000 $530,000 92% . 1/8/2010 2815 OTIS DR SFR 2 1 1152 $459,000 $426,000 93% . 1/5/2010 1041 CAMINO DEL VALLE TNHSE 3 2 1584 $365,000 $378,000 104% . 1/6/2010 1533 MOZART ST SFR 2 1 1095 $350,000 $335,000 96% . 1/8/2010 16 CALLAN PL SFR 4 4 4251 $1,850,000 $1,795,000 97%

Alameda Tranfer Tax Revenue Update – Final for 2009

With the end of the quarter and the end of the year, I want to give a final update to Alameda's Transfer Tax for 2009.

I wrote about the Transfer Tax back in March and in one of my first posts was about Measure P, so I just thought I should continue to update how much money the "Tax" is generating throughout the year. First the disclosure: all of the numbers reflect residential housing sales recorded on the MLS. Commercial building and private sales are not included so the numbers are higher than reported. The intent is to get a reflection of what is happening.

Sales were up this past year, but the total dollars spent on homes was down, (See yesterday’s post) and if the council had not changed the transfer tax they would have seen more than a $50,000 decline in the transfer tax.

From January 1 to December 31, 2009, there were 492 sales that represent over $278,995,615 million dollars in transactions. Under the newly enacted $12 per $1,000 the transfer tax generated $3,347,947 in revenue. If the Council had not made the change ($5.40 per $1,000) the revenue would have been $1,506,576; a difference of $1,841,371.



The final quarter of the year made a huge difference in the amount of money generated for the city coffers. Over a million dollars was generated by the tax in the final three months. October alone generated over $500,000.

Given all the factors putting pressure on the housing market foreclosure, a soft job market, tight lending and scared buyers/sellers the impact is has been harsh in the number of sales and the revenue generated.In the last blog post I said that in the short-term the tax may be one more factor for people not to buy, but given the stress on the City’s General Fund the tax may have been a necessary step. I think that this continues to be true.

I followed this topic for a year, instead of a quarterly update I will be changing to a semi-annual.

Wrap On 2009 Alameda Home Sales

So it is time to wrap up 2009 Alameda Homes sales with December’s numbers and the totals for the year. My disclaimer: The data is what is reported on the Multiple Listing Service and is not a complete picture of all sales, but it does give a good image of what (or did not) happened in terms of sales.

First the December 2009 sales numbers were good, with 39 transactions recorded. This is one more sales than November, and an 85 percent year-over-year increase. The median sale price for the last month of the year was $569,000 and the average was $610,741.

December recorded two million dollar sales. Twenty eight of the sales were single family residences, nine condo/townhome and two multi-family.

The last half of the year really picked up in terms of sales volume and made 2009 much better than 2008.

The total number of sales for 2009 was 492 units for a total dollar value of $278,995,615. Compared to 2008 when the Island had 463 sales for $288,519,712. So we had more sales, but less dollar volume.


The median sale price in 2009 was $555,000 and the average was $567,064. Alameda had 298 property sales under $600,000.

Single family residences accounted for 332 sales in 2009 with 14 properties selling for more than a million dollars. A home on Bay Street was the top sale at $1,917,828; the low sale was $135,000.

As the year moves forward it appears that Alameda market did make a turn towards recovery, but the only thing I can say is 2009 was better than 2008 and my hope is 2010 will be even better.

Weekly Inventory

. . 1/11/2010 . Total 102 . 94501 83 . 94502 19 . SFR 59 . Condo 21 . Multi-Family 20 . Short Sale 19 . Foreclosure 11 . Price Reductions 32 . High List $1,999,000 . Low List $215,000 .

Alameda Housing Stock Falls Below 100 Units

I am on vacation this week, but I did want to make a quick post with the weekly Alameda MLS homes for sale inventory data. It was significant that the inventory fell below 100 units to start 2010.

The graph that goes back to November 2008 shows a steady increase from February 2009 to July of last year. From July it has been a steady decline reaching an all time low since I started tracking the data.

The Island has just 56 single family homes for sale and just 27 under $600,000. Of those 27 on 15 have three or more bedrooms listed. That is a very limited selection for home hunters.

Short sales and foreclosures continue to make up a good portion of the Alameda inventory for sale; distressed properties are 38 percent of the inventory.

If you compare the first week of 2009 to 2010 the Island had 149 units for sale compared to the new low of 97. This is a 34 percent decline year-over-year.

I will try and get one more post in this week, but next Monday I will have December 2009 sales and Thursday the results of 2009.






Alameda Home Inventory January 4, 2010

. . 1/4/2010 . Total 97 . 94501 80 . 94502 17 . SFR 56 . Condo 19 . Multi-Family 20 . Short Sale 18 . Foreclosure 12 . Price Reductions 33 . High List $1,999,000 . Low List $215,000 .