The Local Alameda Market Needs Volume

I wanted to take a step back and look long term at the Alameda home sales market. With all the different reports that come out on an almost daily basis forecasting everything from doom and gloom to a new housing bounce, I wanted to see how sales are impacting our local housing market.

I started with two questions:

What are homes selling for compared to the list price?

What is the Dollar Volume of homes sold in Alameda?

The answer to the first question is pretty good news. Homes for the past 18 months have been selling between 96 to 98 percent of the list price. This means that the Alameda market has not been very volatile in terms of a glut of low ball offers. I also think it means that sellers have been realistic in pricing their properties in the current market.

You can see in chart below that the First Quarter of the Year was very tough for sellers with the average sale price at 95 percent off the list price. This ratio climbed in the second quarter as sale prices have seemed to stabilize and the market has started to see homes selling at or above list price.

The Answer to the sales volume question is not very encouraging, especially if you are a Realtor or the Tax Man.

Just looking at the second quarter volume is down 22 percent year-over-year. The prior year saw the same steep decline when the second quarter in 2008 recorded a 23 percent decline. In dollar terms the volume in 2007 was almost $116 Million compared to 2009's $69 Million for the quarter; a 40 percent decline.

The second showed that sales in Alameda continue to lag compared to past quarters.

The second and third quarter of 2007 were very strong and the decline started in the fourth quarter of that year. The first quarter of 2008 saw sales drop to just over $39 Million, its lowest point in a review of the last 10 quarters.

Even though July is not over, sales in dollar volume is way down. With 22 days in the books it would take a lot of the end of the month closing to cut into the 76 percent deficit it has with 2008.

Link to Chart

. July 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Q2 2008 Q1 2008 . List to Sale Ratio 97.99% 97.09% 95.56% 97.37% 98.07% 97.66% 96.61% . Year-Over-Year Change -0.67% -0.58% -1.09% -0.87% -1.42% -2.58% -2.05% . . Sales Dollar Volume $9,038,900 $69,335,177 $40,153,150 $67,469,255 $90,676,705 $88,933,852 $39,160,900 . Year-Over-Year Change -76% -22% 3% -11% -20% -23% -49% .

Distressed Property: 28-Percent of Alameda Sales

The reports keep coming.

The National Association of Realtors reported today that existing-home sales made a small step-up in April. Buyers around the country are taking advantage of foreclosures and snapping up property that carries a large discount.

Home resales rose by 2.9% to a 4.68 million annual rate from 4.55 million in March. The NAR originally reported March sales fell 3.0% to 4.57 million. The April resale level of 4.68 million reported Wednesday by NAR was above Wall Street expectations of a 4.67 million sales rate for previously owned homes.

About 45% of the 4.68 million in April sales were foreclosures and short sales. The large number of these distressed property sales has driven prices lower, year over year. The median price for an existing home last month was $170,200, down 15.4% from $201,300 in April 2008.

In Alameda, we have seen sales increase steadily since January. The month-over-month change between March and April was a 40% increase. The difference between the two months is just 10 sales.



Link to Larger Chart


Distressed property sales, January 1 to May 27, are 28% of the sales the homes sold in Alameda. The short sale or foreclosure sale of Alameda properties recorded on the Multiple Listing Service show that the number is much smaller than the national number, but still significant.

Alameda buyers are now facing two big issues: lack of changing inventory and tighter lending standards. Weak demand has kept Alameda inventories of unsold homes low and unchanging. The inventory has been very static, it appears low priced homes are being snapped up but the weak inventory is depressing prices as buyers wait to see what direction the market will head.

Combine the inventory issue with tighter mortgage lending standards, which have made it harder to finance a purchase and pricing will be continue to be difficult to predict in the near future. The uncertain economic outlook is also hurting the existing-home market as unemployment rate rose to 8.9% in April from 8.5%.

Given California’s budget crisis, and assured job cuts it could be a long dry summer for the home market.