The Greater Oakland-Berkeley Region September 2019 Report

Home Prices by City & Neighborhood; Migration In & Out of Alameda & Contra Costa Counties; Price Reductions; Supply & Demand Statistics.

After the heat of the spring market, activity typically slows down markedly in July and August. In September, listings start pouring on the market again to fuel the relatively short autumn selling season. What occurs in the next 2-3 months will be the next major indicator of market conditions and direction.

Median Home Price Appreciation Trends

Except for Piedmont, whose median house sales price was basically flat at about $2,300,000, all the other cities included in our Inner East Bay market have seen median sales price increases in 2019 YTD over those in 2018, though the scale of the increase varies from tiny to substantial. Full-year 2019 median prices may well vary from those for the first 8 months of the year.

Home Prices by City and City Submarkets

The way the local MLS system breaks out submarkets within Oakland and Berkeley – using zip codes and “map areas” – is not ideal, as they don’t correspond that well to specific neighborhoods. But we’ve included the submarket maps, as well as identifying, as best we can, the submarkets with their predominant neighborhoods.

Migration: People Moving In & Out
of Alameda & Contra Costa Counties

Using new U.S. Census estimates released 8/29/19, this chart attempts to identify U.S. counties, states and international regions with the highest number of residents migrating to and from our county. In the Bay Area, there is a general trend outward from more expensive to more affordable places, while in-bound migration is deeply affected not only by exchanges between Bay Area counties, but people arriving from other parts of the state, country and world. Areas often have large two-way exchanges of residents, as seen between Alameda and Contra Costa Counties.

Foreign in-migration is a huge issue in the Bay Area, but it will be another year before any impact of new U.S. immigration policy on foreign in-migration in 2018 shows up in census numbers.

Longer-Term Trends in Alameda County
Median House Price Values

As illustrated at the beginning of this report, the cities in the Inner East Bay region have generally seen 2019 YTD median home value increases over 2018, as compared to the small declines seen in Alameda and Contra Costa Counties in their entireties – graphed below.

Longer-Term Trends in Alameda and Contra Costa Median Dollar per Square Foot Values

Selected County Market Statistics

The inner East Bay market has been outperforming Alameda and Contra Costa Counties as illustrated in the second chart below, in which the the percentage of listings reducing price is broken out for the 2 counties and then just for Oakland.

The first chart below compares Alameda County supply, the number of active listings on the market, with its buyer demand, as measured by the number of sales. This is a seasonally adjusted graph that smooths out normal monthly fluctuations to provide clearer historical trend lines. Again, for the most recent period, the Inner East Bay market, if broken out, would have a significantly smaller gap between listings and sales.

The percentage of listings reducing price in Contra Costa and Alameda Counties, and then just for Oakland (as an Inner East Bay indicator): For the full counties, the percentages jumped in the second half of 2018 and have remained somewhat elevated since. In Oakland, the increase was much less significant, illustrating its higher-demand market.

The next chart measuring unsold inventory in the 2 counties helps give greater context to market conditions and changes. The ups and downs since 2012 are relatively minor compared to the situation that prevailed during the 2008-2011 market recession, when monthly unsold inventory figures were highly elevated.

Lamorinda & Diablo Valley Real Estate September 2019 Report

Home Prices by City; Short-Term & Long-Term Appreciation Trends; Migration In & Out of the County; Price Reductions & Unsold Inventory.

After the heat of the spring market, activity typically slows down in July and August. In September, new listings start coming on the market again to fuel the relatively short autumn selling season. What occurs in the next 2+ months, before the mid-winter holiday doldrums begin, will be the next major indicator of market conditions and direction.

Migration: People Moving In & Out
of Contra Costa County

Using new U.S. Census estimates released 8/29/19, this chart attempts to identify U.S. counties, states and international regions with the highest number of residents migrating to and from our county. In the Bay Area, there is a general trend outward from more expensive to more affordable places, while in-bound migration is deeply affected not only by exchanges between Bay Area counties, but people arriving from other parts of the state, country and world. Areas often have large two-way exchanges of residents, as between Contra Costa & Alameda Counties.

Foreign in-migration is a huge issue in the Bay Area, but it will be another year before any impact of new U.S. immigration policy on foreign in-migration in 2018 shows up in census numbers.

Median Home Prices by City

Median House Sales Price Trends

Short-Term & Long-Term Trends
in Median Home Values

Selected Market Indicators –
Regional & County

Price reductions spiked at the end of last year and remain somewhat elevated.

The next chart measuring unsold inventory helps give greater context to market conditions and changes. The ups and downs since 2012 are relatively minor compared to the situation that prevailed during the 2008-2011 market recession.

Economic Straight Talk: How are lower interest rates impacting Los Angeles housing markets?


economic-straight-talk

Executive Summary

After a large dip in housing market activity starting in the last quarter of 2018 and first quarter of 2019, housing markets in recent months have mostly bounced back to where they were last summer. The number of home sales trends about the same, home prices have recovered to again show annual increases, inventories are scarce, and absorption rates have returned to the same rates. Buyers, however, remain more constrained than last year leading to fewer bidding wars and longer time on the market. Still, last summer marked a cyclical peak in the most recent housing market renaissance.

Detailed Analysis

Housing markets in Los Angeles have been oscillating this
summer. Home sales activity picked up speed in July, after some slowing in
June, bringing activity back in line with stronger numbers seen in May. In
July, total sales in Los Angeles County trended at the same level as July of
last year, with an increase in sales of homes priced between $1 million and $2
million, up 5 percent year-over-year, being offset by slower sales in other
price segments.

Strong activity among homes priced between $1 million and $2
million bring the levels of homes in that price range to the highest level in
the last five years. Homes priced below $1 million declined 2 percent after
some strong months seen in April and May. This suggests that while lower
interest rates may be helping spur some refinance activity, the positive
spillover on home sales activity has not fully realized. On the other hand,
sales of homes priced over $3 million have picked up significantly in July, down
only 1 percent after the average 17 percent year-over-year declines in the last
eight months.

Consequently, some West Side communities, which experienced
slower market conditions since last year, have finally seen more activity. Most
notably, sales in Malibu and Beach Communities North have posted the first
annual increase since last summer, up 11 percent year-over-year. The impact of
wildfires has had a considerably negative impact on the area with overall
year-to-date decline in sales of 26 percent. The most recent uptick was driven
by strong sales of homes priced below $2 million while higher priced sales
continue to lag.

In contrast, several more affordable communities, such as
Eastside (East LA communities of El Sereno, Lincoln Heights and Boyle Heights)
and NELA have seen a notable slowdown in sales in July, down about 30 percent
year-over-year.

Figure 1 tracks total home sales in Los Angeles County over
the last five years. Note that in the last three years, July sales dipped below
June and August sales. That was not the case this year when July sales
outperformed June sales. The monthly increase from June was driven by
relatively stronger increases in the Malibu region, West Side/Central or Mid
City, and Mid LA/Baldwin Hills. Again, relatively more affordable communities in
Los Angeles, such as Eastside and NELA, saw large negative declines on a
monthly basis, down about 20 percent. Nevertheless, monthly data can be
volatile and are not indicative of longer lasting trends.

Figure 1

Source: Source: Terradatum, Inc. from data provided by local MLSes, August 7, 2019

Unfortunately, however, availability of for-sale inventories
continues to pose concern for housing market activity going forward. As Figure
2 suggests, for-sale inventory is once again trending below last year’s levels
with July’s year-over-year decline for the overall inventory down one percent,
and inventory priced below $1 million down 5 percent. Declines follow almost a
year of year-over-year increases. And the lower priced inventory is now 24 percent
below the 2015 levels.

Figure 2 Year-over-year change in for-sale inventory by price range

Source: Source: Terradatum, Inc. from data provided by local MLSes, August 7, 2019


Interestingly though, while the lower priced inventory is on
a decline again, some relatively higher-priced communities have seen gains in
that inventory. Figure 3 illustrates 3-month average inventory change from last
year for total inventory and inventory priced below $1 million. Blue
highlighted fields for West Side communities including Brentwood, Hollywood
Hills, Malibu and Silicon Beach show significant gains from last year. Overall
inventory in the lower priced segment is relatively smaller in those
communities, thus overall lower priced inventory is still declining. Looking
forward, the growth of new listings suggests overall inventories, particularly
lower priced inventories, will continue declining.

Figure 3 

Source: Source: Terradatum, Inc. from data provided by local MLSes, August 7, 2019

On the other hand, home prices have made a comeback in July
after a period of no changes and some declines. In July, median home price in
Los Angeles County reached another peak at $655,000 (see Figure 4). Last
summer, the highest seasonal price was reached in June at $640,000. The 4
percent year-over-year increase in July was the first such increase this year.
Nonetheless, variation in home price changes is notable with some areas again
seeing strong acceleration in price growth. 

Figure 4 Median home prices in Los Angeles county

Source: Source: Terradatum, Inc. from data provided by local MLSes, August 7, 2019

Figure 5 lists median home prices and year-over-year changes
since last July. Strong acceleration in price growth was seen in Mid Los Angeles
around greater Baldwin Hills and Mid City. Also, Malibu maintained the price
growth that started last month after the area experienced some weakness in
prices resulting from reconciliation of fire lots and overall weaker demand for
higher priced homes. Price growth in Beverly Hills and Brentwood areas benefitted
from a jump in higher priced sales.

July’s pick up in price growth is thus partially due to
reignited demand for luxury homes and in part a function of lower mortgage
rates which could have been a catalyst for some, as mortgage rates have been
trending at levels not seen since 2017.

Figure 5

Source: Source: Terradatum, Inc. from data provided by local MLSes, August 7, 2019

And lastly, what to expect in coming months? Market
activity, while subdued by some account, has nevertheless returned to last
year’s highs—when Los Angeles’s housing market likely reached its cyclical
peak. The return in activity is a function of solid continued economy
performance, jobs and wage growth, insufficient supply, and possibly lower
mortgage rates. While it is difficult to say to which degree rates are helping
with the demand, we also don’t know the counterfactual – meaning, where would
the market be today if it wasn’t for the lower rates? The last chart shows
year-over-year changes in units under contract (pending sales), which have been
growing since May and have reached 11 percent in July. This suggest that at
least in the month ahead, we should see continued improvement in the number of
homes sold.

Figure 6 Year-over-year change in number of pending sales

Source: Source: Terradatum, Inc. from data provided by local MLSes, August 7, 2019

Home of the Week: View-swept retreat overlooking Sonoma

Seamlessly blended into the contours of Sonoma Mountain, a tranquil private domain overlooks wine country from its forested vantage point at 19501 Brooklime Road. Inside, a symphony of rich woods and vast windows pays tribute to the mastery of William Turnbull, the renowned Pacific Coast architect whose “devotion to wood, and to the softness of the landscape, gave all his buildings an easy, relaxed grace” (NY Times).

Throughout
the flowing interior, walls of glass frame stunning vistas from the Sonoma
Valley to Mount Diablo and the North Bay. Since two adjacent parcels are
designated as preserved agricultural space, few other homes can be seen. Over
three rolling acres are home to deer and birds. Cattle graze on the pastureland
below; vineyards and olive groves add to the ever-changing tableau.

The
rooms, wrapped in walls of vertical grain Douglas fir and red oak flooring,
offer a variety of vantage points and a gentle indoor/outdoor flow over
changing levels. Sliding glass doors open onto patios and entertaining areas,
some shaded by mature trees, others dappled with sunshine. Four of the home’s
rooms are delightfully octagonal, including one of the two offices and the
breakfast room, accessed by multiple sets of wide French doors. The formal
living room, lit by a lofty atrium ceiling, is accented by a beautiful fireplace
and built-in seating along the floor-to-ceiling windows. Beyond is a spacious kitchen
with granite counters, double oven, center cooktop island with pull-up seating,
and walk-in pantry.

A subtle treehouse feeling suffuses the upper level master retreat, whose indulgent spa bathroom has a deep soaking tub, two separate vanities, and an enormous skylit walk-in shower with etched glass grape motif. Two generous closets complete the setting. The suite accesses an outdoor atrium used as an exercise room. The two other bedrooms, each closed off from the main house by pocket doors, offer unique vantage points on the property. Just beyond the two-car garage, a separate one-bedroom guest unit with full bath, kitchenette and breakfast nook has French doors to an outdoor setting.

As
part of the prestigious George Ranch enclave, the home enjoys access to tennis
courts and use of the clubhouse, ideal for meetings and social functions. Downtown
Sonoma and the villages of Glen Ellen and Kenwood are just over ten minutes away.
The Golden Gate Bridge is about an hour’s drive.

Turnbull passionately believed it was possible to design new architecture for the Pacific Coast landscape that was respectful, not intrusive. “The shape of the ground, the view, the quality and type of tree cover, the sun, the wind all have voices that I listen to and learn from,” he said. In this home, the architect realized his vision. It’s listed by Maurice Tegelaar and Matt Sevenau at $2,975,000.

The Greater Oakland-Berkeley, Inner East Bay Market August 2019 Report

Oakland, Berkeley, Piedmont, city of Alameda, Albany, Kensington, El Cerrito & Richmond. Sales & Values by City, Market Seasonality, Luxury Home Sales, Market Dynamics by City & District, Foreign Homebuyers.

Inner East Bay Sales by Price Segment

Median House Sales Price Trends by City

Average Dollar per Square Foot Values

Remember that it’s not only the “quality” of a location that affects dollar per square foot value, it’s the size of the home: All things being equal (which they rarely are) smaller homes will sell for a higher dollar per square foot value than a larger one.

Piedmont’s average house size is usually over 3000 square feet, while in Central Berkeley, it is typically below 1500. However, size in only one of many factors at play in home values.

Market Seasonality

Market activity usually slows during the late summer months, then spikes back up for the relatively short autumn selling season. This typically begins with a surge of new listings coming on market in September, fueling fall sales. Come mid-November, activity commonly begins to plunge for the winter holidays, to hit its nadir in December. Of course, homes continue to sell in every season of the year.

Luxury Home Sales

Market Indicators by City & Neighborhood

Q2 is commonly the most active market of the year, and the statistics below reflect how strong the demand was this past spring.

It is interesting that some of our highest priced markets experienced some of the strongest buyer demand, as illustrated by these standard statistics – something also seen in San Francisco in Q2. This is a switch from recent years, when the heat of the market shifted to more affordable segments.

The overbidding percentages illustrated below were the highest in the Bay Area, and perhaps in the country.

Foreign National Home Buying Tumbles

According to a new report by the National Association of Realtors – based on a survey of its member agents – the purchase of U.S. homes by foreign nationals plunged in the 12 months through March 2019. California, and the Bay Area in particular, have been top destinations for international homebuyers.

Financial Markets Hit New High

The last 12 months have been an extremely dramatic time for financial markets as illustrated below. The alternating confidence and fear generated by its swings have been considerable factors in real estate markets. A parallel dynamic has occurred with the swings in interest rates.