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Over the course of February in the Bay Area, 4,354 new and existing homes and condominiums were sold, up nearly 13 percent from the previous month, but the year-over-year trajectory is trending downward, according to a report issued Thursday by CoreLogic, a housing research firm.
February’s sales represent a drop of 12.8 percent from the 4,993 sold in February 2018. The year-over-year fall in sales has continued for the past nine consecutive months. This February’s numbers are the lowest for that month since 2008, when 3,989 homes were sold, according to the report.
Sales of newly built homes in particular fared even worse this February, with a decline of 43.9 percent from the month’s historical average of new home sales. Additionally, resales of existing houses were down 25.3 percent from the February average.
Andrew LePage, a CoreLogic analyst, said in a statement, “For the third month in a row, Bay Area home sales were at an 11-year low for that month. However, the year-over-year decline in sales has ratcheted down the past two months.”
“The lessening of the declines likely reflects, among other things, a significant drop in mortgage rates since they hit a seven-year high last November, as well as more listings compared with early last year and an improving stock market in early 2019. Those factors are likely putting some would-be buyers back into home-shopping mode,” LePage said.
The homes sold in the Bay Area in February commanded a median price of $770,000. This represents an increase of 5.5 percent from $730,000 in January and 2.7 percent from $750,000 in February 2018.
Year-over-year, median home prices have been rising since April 2012, a streak of 83 consecutive months. And of homes sold, prices over $500,000 have accounted for increasing shares of the market: 76 percent of all sales in February, up from 74.8 percent of sales in February 2018.
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The writing has been on the wall for a while.
The fact is that home ownership is not like investing in stocks. It is much more risky given the current trends. California has a a net loss of population growth. There is such a serious housing crisis that price controls are going to increase. And the current values are still way over inflated.
This is not going to go away quickly.
That must be the shortest post ever for TBM. So short I actually read it. However, the TBM post fails to take into account the horrendous three and four hour commutes into Silicon Valley, which will bolster housing prices, even in a recession.
In response to Waldo you said:
“However, the TBM post fails to take into account the horrendous three and four hour commutes into Silicon Valley, which will bolster housing prices, even in a recession.”
But if you look at the news from CNBC titled “Manhattan real estate sales fall for sixth straight quarter — longest losing streak in 30 years”
The story states:
Manhattan real estate had its worst first quarter since the financial crisis, capping the longest losing streak for sales in over 30 years, according to a new report.
Total sales fell 3 percent in the first quarter, according to the report by Douglas Elliman and Miller Samuel. That marked the sixth straight quarter of declines, which is the longest downturn in the three decades that the appraisal and research firm has been keeping data.
THE DROP STEMS FROM AN OVERSUPPLY OF HIGH-END APARTMENTS, a lack of foreign buyers AND THE NEW FEDERAL TAX LAW THAT HAS HIT REAL ESTATE IN HIGH-TAX STATES. A new “mansion tax” approved by New York state legislators over the weekend will layer another tax on the sale of multimillion-dollar homes and add further pressure to a market already under stress, according to real estate experts.
The pain is being felt at all levels. While the entry-level market in New York, below $1 million, had been holding up for most of the past year and a half, IT HAS STARTED TO SUFFER AS THE TROUBLE AT THE TOP CASCADES DOWN.
“It’s like a layer cake,” said Jonathan Miller, CEO of Miller Samuel. “WHEN YOU HAVE SOFTENING AT THE TOP, IT STARTS TO MELT INTO THE NEXT LAYER AND THE NEXT LAYER AFTER THAT, BECAUSE THOSE BUYERS FURTHER DOWN HAVE TO COMPETE ON PRICE.”
Prices in Manhattan continue to remain soft. While the average sale price got a big boost from hedge fun billionaire Ken Griffin’s $238 million condo purchase, hitting $2.1 million, the median sales price in Manhattan declined slightly, to just over $1 million. Griffin’s purchase was part of a more than $700 million spending spree the CEO and founder of Citadel has been on in recent years, as he’s scooped up homes in Chicago, Miami and London.
SELLERS WHO STILL HAVE UNREALISTIC PRICE EXPECTATIONS ARE THE BIGGEST BARRIERS TO SALES, BROKERS SAY. That has led to more listings piling up and sitting on the market for longer periods. There is now a nine-month supply of homes on the market, with inventory up 9 percent. THE GLUT IN NEW DEVELOPMENT IS EVEN WORSE: THE SUPPLY OF NEWLY BUILT CONDOS JUMPED 56 PERCENT OVER LAST YEAR, TO A 19-MONTH SUPPLY.
Does this sound like the situation we are going to have in Mountain View?
Does the story describe the same problem we have in the Bay Area?
Does the fact that people can work in places like Virginia, Maryland, Massachusetts, Texas, and Florida and get paid only 10-15% less but the cost of living is as much as 40% lower? Are the jobs in the Valley that unique? The answers are pretty obvious.
And the fact is that even I now work as a traveling expert for the government. But, I am in a position to be able to keep my place in Mountain View and afford the cost of travel because as a contractor, I subtract those costs from my earnings.
Thus I will get a large Tax Refund due to itemized costs as a contractor.
The fact is the area is about to see a significant reduction in property values, and it has already started.