California’s Chief Real Estate Economist says California has a Bi-Polar Market

Leslie Appleton-Young, V.P. and Chief Economist for the California Association of Realtors, recently addressed a crowd of about 700 real estate professionals in the East Bay.

“California has a very distinct bipolar market,” said Appleton-Young. She is referring to the normal market versus the foreclosure market. Foreclosures are accounting for more than 50% of home sales in some California counties. The market dynamics and psychology for the two markets are very different.

According to Appleton-Young, California hit market bottom for real estate transactions in October of 2007. The number of transactions has been on the rise ever since, though median price is still settling.

Median home price erosion continues as a result continued foreclosures putting downward pressure on the mid to low end of the market and price decline on the high end due to financing difficulties associated with jumbo loans.

The Mortgage Bankers Association is reporting a decline in loan originations in September. This will show up in October and November sales results.

Home sales in California are improving faster than the nation.

California has seen a 24% improvement for first time homebuyers as a result of price declines.

Actually, according to Leslie Appleton-Young, Vice President and Chief Economist for the California Association of Realtors, California real estate bottomed out in October of 2007 for number of units sold.

Housing prices are still settling, but the number of homes sold has been climbing steadily since November of 2007. Contra Costa County has not suffered as much as most of the state and we are ahead of the national average on positive trending.

Does this mean sunny skies and clear sailing?

No, we are still very much in a market that is facing tough challenges. Sellers will continue to grapple with pricing it right. Buyers will still struggle with the constant changes and challenges of financing.

BUT – Contra Costa County is currently experiencing a fairly normal market for sales activity. Months of inventory is in the 5 month range.

A lot of the good news with the number of sales and the months of inventory is being fueled by the high levels of foreclosures and REO’s being purchased by investors and home buyers looking for a good deal.

What to look for in today’s real estate market if you are considering the purchase of an investment property.

• Transitional recovering/growing economy
• Positive net population migration
• New net job growth
• A short-fall of new construction and permits
• Affordable housing to wage ratios

Why do Antioch and Brentwood represent such attractive investment opportunities? It’s more than price. Contact Paul (925) 963–4246 if you would like to know why these two communities are looking so attractive to real estate investors.

California Association of Realtors reports that the unsold inventory index for existing, single-family homes in July was 6.7 months, down from 10 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. The median number of days it took to sell a single-family home was 47.5 days, compared with 50.7 days for the same period a year ago.

California's Top 10 Cities With The Highest Median Home Prices

   1. Manhattan Beach, $1.77 million
   2. Los Gatos, $1.42 million
   3. Mill Valley, $1.37 million
   4. Burlingame, $1.29 million
   5. Calabasas, $1.18 million
   6. Newport Beach, $1.14 million
   7. Cupertino, $1.04 million
   8. Rancho Palos Verdes, $1 million
   9. San Carlos, $975,000
  10. Danville, $930,000

California's Top 6 Cities With The Highest Median Home Price Increases (July 2008 vs July 2007)

1. Los Gatos - 36.6%
2. Mill Valley - 28.6%
3. Manhattan Beach - 9%
4. Berkeley - 8.2%
5. Mountain View - 6.9%
6. Cupertino - 1.1%

A couple of weeks ago I attended a meeting of the Contra Costa Chapter of the Women’s Council of Realtors in Danville, CA. Bill Brown, President of the California Association of Realtors (CAR) was the guest speaker at an early breakfast held at the Crow Canyon Country Club.

Angela Muetterties, President of Women’s Council of Realtors CCC, officiated the proceedings

When I tried to edit the video footage I had shot, I discovered a software problem that has taken me two weeks to sort out. I guess this post falls under the heading of – Better Late Than Never.

Bill spoke about the challenges in the real estate industry and the continuing impact of the subprime market collapse. Housing affordability was another hot topic.

According to news today, the challenges continue:

California and Florida continued to represent a disproportionate share of the country's new foreclosures. The two states accounted for 30 percent of mortgages starting the foreclosure process, the association said. "In states like California, Florida, Nevada and Arizona, overbuilding of new homes created a surplus that will take some time to work through," Doug Duncan, chief economist for the Mortgage Bankers Association said.