Have We Seen The Bottom

On Tuesday, the National Association of Realtors released Pending Home Sales are up for the fifth consecutive month, the first time in six years for such a streak. In addition an assortment of economic reports and news articles have suggested that the U.S. housing market has bottomed out, but before you believe the experts I would like to take a wait and see attitude.

Given that there are so many unknown factors like shadow inventory, alt-A loans, loan modification, Jumbo Loan Market and job security -- the state of the housing market has very little stability and makes these claims that are very hard to believe.

Our little Island of Alameda, has been able hold off the cataclysmic events that have hit California and the Nation, but we have not been immune to falling home prices and loss of home value.

According to Zillow’s Home Value Index, Alameda peaked at $697,200 in late 2005 and has dropped $155,800 to $541,400 by early this year. The price per square foot for sold homes reached $449 and has fallen over $120 to $326. This has rebounded the last couple months, but the numbers have not been consistent.

This trend continues in other part of the San Francisco Bay where residential real estate has fallen dramatically in areas like Antioch, where the Zillow Price Index went from $516,800 to $203,100 a 61 percent decline. The Antioch prices per square foot dropped from $240 in late 2007 to around $100 today. The ratios are similar for Vallejo and Richmond.

It appears high valued areas still have plenty of room to fall. Affluent communities like Piedmont, Marin, and Palo Alto that also saw a doubling or tripling of home prices during the boom, even though their residents' salaries have not followed suit.

For many part of the Bay Area residential rents are not aligned to reflect the home prices. This is a sign that home prices may have further to decline. Alameda has a situation where rent on a home is roughly $2,500 and the mortgage of a $550,000 home with 10 percent down payment is over $2,900 not including homeowners insurance or taxes. My guess it will cost you about 30-percent more to own than rent an equivalent home. This type of ratio makes it difficult for people to make the move.

So before people start declaring that we have hit bottom continue to watch employment, inventory and interest rates. These factors will let you know when we hit bottom and have begun to recover.

May Sales for Alameda Down

The May sales for Alameda were just 26 for the month (chart below), a year-over-year decline of 37% and a month-over-month decline of 26%. The numbers are showing that currently there is not much interest in the Island housing market. Five of the last six months sales were below 30-units.

Alameda has not follow the national trends in regards to foreclosures, declining values and sales volume. Yesterday, the National Association of Realtors announced pending home sales for April that had a dramatic increase. Alameda had a nice increase for April but followed with a big decline. The number of home buyers who agreed entered into a contract to buy resale home rose to its highest level in nearly eight years in April and the median sales price dropped by about 15 percent.

The pending contract number far exceeding analysts' forecasts with NAR's seasonally adjusted index rose 6.7 percent, to 90.3, . It was the biggest monthly increase since October 2001, when pending sales rose 9.2 percent. The increase most likely reflects big declines in pricing and the first wave of home buyers that took advantage of the $8,000 tax credit that was included in the economic stimulus bill.

With the tax credit deadline looming NAR expects sales to ramp up by the November 30 date to claim the credit.

''we expect greater activity in the months ahead,'' Lawrence Yun, the chief
economist of the National Association of Realtors, said in a statement.

The sales of low-end foreclosures and short sale homes drove the national median sales price down 15 percent for April from the prior year, to $170,200. That was the second-largest yearly price drop on record, according to the association. Alameda's median home price hit bottom in January at $457,000 and has fluctuated in the $500K range in the following months.



Link to larger chart

. Sale Date Address Zip Type List Price Sale Price % Sq Ft . 5/1/2009 351 MAGNOLIA DR 94502 SFR $699000 $670000 96% $312 . 5/4/2009 1535 LINCOLN LN 94501 SFR $589000 $570000 97% $386 . 5/5/2009 30 AUGHINBAUGH WAY 94502 CONDO $630000 $586000 93% $387 . 5/7/2009 1420 FERNSIDE BLVD 94501 SFR $659000 $630000 96% $402 . 5/12/2009 1311 WEBSTER ST. #E118 94501 CONDO $235000 $235000 100% $279 . 5/13/2009 47 BANNISTER WAY 94502 SFR $639000 $605000 95% $341 . 5/14/2009 104 INVERNESS WAY 94502 SFR $729000 $688000 94% $452 . 5/14/2009 3001 FLORA VISTA 94502 CONDO $489000 $489000 100% $300 . 5/14/2009 1030 BROADWAY 94501 SFR $585000 $555000 95% $550 . 5/14/2009 15 OAK PARK 94502 CONDO $549000 $500000 91% $302 . 5/15/2009 1917 KITTY HAWK PL 94501 SFR $599000 $602000 101% $411 . 5/15/2009 39 LAWRENCE ROAD 94502 SFR $929000 $860000 93% $358 . 5/15/2009 549 SANTA CLARA 94501 MFR $595000 $520000 87% N/A . 5/15/2009 951 POST ST 94501 SFR $395000 $395000 100% $298 . 5/15/2009 1810 CENTRAL AVE #310 94501 CONDO $418000 $415000 99% $355 . 5/15/2009 992 POST ST 94501 SFR $535000 $546000 102% $541 . 5/15/2009 2709 CENTRAL AVE #A 94501 CONDO $335000 $336000 100% $352 . 5/18/2009 1128 ADMIRALTY LN 94502 CONDO $469000 $469000 100% $286 . 5/19/2009 2207 SANTA CLARA AVE. 94501 MFR $728000 $686500 94% N/A . 5/19/2009 2205 SANTA CLARA AVE. 94501 SFR $728000 $686500 94% $264 . 5/21/2009 1305 WEBSTER ST #C200 94501 CONDO $258000 $258000 100% $306 . 5/22/2009 1901 EAGLE AVENUE 94501 SFR $499000 $540000 108% $367 . 5/22/2009 1132 BROADWAY 94501 SFR $525000 $582000 111% $342 . 5/27/2009 2101 SHORELINE DR #344 94501 CONDO $424000 $424000 100% $289 . 5/27/2009 2117 ENCINAL 94501 SFR $579900 $605000 104% N/A . 5/29/2009 258 JACK LONDON AVE 94501 SFR $750000 $680000 91% $268 . Average $560381 $543577 98% $354 .

California Homes Become More Affordability: New Record Set

With home prices dropping across the country the result has been more homes have become affordable for families and now we are see Pending home sales have edged up, hinting at a possible pickup of sales activity in coming months.

The National Association of Realtors® just released their Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 2.1 percent to 82.1 from a reading of 80.4 in January, but is 1.4 percent below February 2008 when it was 83.3. This is a complicated way of say a lot of people have signed on the dotted line and are looking to buy homes.

The news is encouraging but the trade organization is hedging on calling this a recovery.“Pending home sales have a way to go for there to be a meaningful increase,” says Lawrence Yun, the NAR’s chief economist, but the market is continuing to underperformed, he adds.

Also in February, NAR’s Housing Affordability Index2 rose to a new high. the West index fell 13.5 percent to 89.6 and is 1.7 percent below February 2008. This is real interesting because the West with Phoenix, Las Vegas, Los Angeles and the Bay Area have seen steepest drop in prices across the country.

Home sales had been surging in California, thanks to steep price declines and foreclosure sales. But according to Dataquick, February home sales in California actually fell from January. Of the homes that sold, 58 percent were foreclosures, compared to 33 percent a year ago. Ity is not surprising that prices statewide are down 40 percent from a year ago. California, the Bay Area and Alameda residents are still search for the bottom in this housing market.

In Alameda we saw median home price drop 11% from February 2008 to 2009. The current sales year is at a pivotal month; April. Sales jumped from March to April 2008 saw a big bump in sales from 20 to 53. Early number show that March 2009 was very similar to last year and if we have hit bottom April will need to be a very busy month.

I do believe that buyer traffic is picking up, and if we believe the reports, so are sales. On the way down, a drop in sales came before the price crash. Hopefully sales are leading the same way on the way back up.

NAR Video on the two reports