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?


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

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).

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.

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.

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.

Diablo Valley & Lamorinda Real Estate August 2019 Report

Sales & Values by City, Price Segment & Lot Size; Market Seasonality; Luxury Home Sales; Market Dynamics by City; Foreign Homebuyers.

The May Case-Shiller Home Price Index was released in late July for the 5-county SF metro area. This chart illustrates the difference in appreciation rates between the Bay Area (higher price markets) and the entire country. Case-Shiller does not use median sales prices but its own algorithm to calculate appreciation. January 2000 home price = 100; 250 = a home price 150% above that of Jan. 2000.

Number of Sales & Median Sales Prices

Needless to say, there are many factors behind home sales and values in different communities. Home size is one of them, and median sales prices are not apples to apples comparisons: For example, in the small community of Diablo, the median home square footage is over 4000, while in Walnut Creek, it is under 2100 square feet. Lot size also plays a big role in our markets, which is illustrated a little further down in this report.

Number of Listings & Median ASKING Prices

If the median ASKING price (below) in a community is well above the median SALES price (above), it is usually indicative of some disconnect between seller and buyer expectations regarding fair market value, and/or the supply of higher-priced listings simply outweighs demand for such homes in that city.

Sales by Price Segment

Sales, Prices & Home Sizes by Lot Size

In San Francisco, houses selling for $8 million and houses selling for $800,000 can both be found on lots under 1/8 of an acre. In our market (and also in the wine country), lot size is a major factor in home size and price.

Market Seasonality

Listings and sales ebb and flow dramatically by season. In Diablo Valley and Lamorinda, the peak of activity – as measured by the number of listings going into contract – typically occurs in late spring. The relatively short autumn market – Labor Day to early November – is the last major selling season of the year before activity plunges in mid-November for the winter holiday period.

Luxury Home Sales

Market Statistics & Indicators by City

A few things should be kept in mind regarding the next 3 charts: Firstly, in or within communities of similar quality, a smaller home will typically sell for a higher dollar per square foot value. As an example, the median size of a home in Lafayette is about 28% smaller than in Alamo. Secondly, it is not unusual for higher price markets to have softer buyer-demand dynamics than more affordable areas, though this is not always the case. And thirdly, Q2 is commonly the strongest market of the year, and its statistics reflect that heat.

Foreign National Home Buying Tumbles

According to a new report by the National Association of Realtors – based on a survey of its members – 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 in recent years.

Stock Market Hits New High

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

Market Indicators by Price Segment

In recent years, within counties around the Bay Area, the heat of buyer demand has often been as strongly correlated with price segment as by the location of the home in a specific city or town.

Neighborhood Spotlight: Playa Vista’s The Collection

Playa Vista’s The Collection, in the heart of Silicon Beach, close to selling out

Most of The Collection’s 66 multi-level single-family
residences have sold with move-in ready homes ready for purchase and final
homes being built

Playa Vista, the connected urban
community on the Westside of Los Angeles, is nearing successful culmination in
the heart of Silicon Beach. The 66 homes in The Collection, Playa Vista’s multi-level
single-family residences, are nearly sold out, while only one home remains for
sale in the luxury residence development of Jewel. Meanwhile, The Campus at Playa Vista is nearing buildout of its
approximately 3 million square feet of creative space and Runway, a retail and lifestyle
development, has announced new tenants and a dynamic pedestrian-focused

12636 Millennium Drive , represented by Jennifer Petsu. Photo Credit: Salty Shutters

“We’re now seeing the fruition of Playa Vista as the highly successful
heart of Silicon Beach,” said Alison Girard, Director of Marketing at Brookfield Residential, Playa Vista’s community
developer. “We’re approaching the final new homes available within walkable
neighborhoods, adjacent to an international technology hub. With an advanced
parks system, and shopping and entertainment all part of comprehensive
community amenities, Playa Vista is approaching peak Silicon Beach.” 

12636 Millennium Drive , represented by Jennifer Petsu. Photo Credit: Salty Shutters

Girard also said the coastal community’s 10-minute drive to LAX
has helped attract a sub-set of bi-coastal buyers: “These include entrepreneurs
and executives based here in Playa Vista or in the growing creative-office
districts in Culver City and West L.A.”

12650 Sunrise Place represented by Jennifer Petsu. Photo Credit: Salty Shutters

Jennifer Petsu, a Playa Vista agent with Compass, has sold many of the homes at The Collection and currently represents three available listings in the luxe development. Highlights of these residences (approx. 2,624 – 3,666 sq. ft.) include private elevators, airy floorplans, gourmet kitchens and dramatically spacious decks for entertaining.

5927 Westlawn Avenue, represented by Jennifer Petsu. Photo Credit: Salty Shutters

More on
Playa Vista

Vista, situated between Marina del Rey and the Westchester Bluffs on the
Westside of Los Angeles, is one of the most innovative and connected urban
communities in the United States. Located on property once occupied by Howard
Hughes’ aircraft plant, runway and hangars, Playa Vista today is a thriving and
evolving mixed-use community of homes, creative offices, retail, parks and open
space as well as home to special events. More than 15,000 people now live and
work in Playa Vista, with the inclusion of The Campus at Playa Vista, featuring
creative office buildings, historic structures and innovative new parks. Playa
Vista is a Brookfield Residential community.

To learn more about The Collection at Playa Vista contact Compass agent Jennifer Petsu.