From San Francisco Association of Realtors:

 (Editor’s Note: Appearing below is the press release accompanying the Association’s Market Focus report for March. The report can be viewed by clicking on the link next to the press release. A report is issued each month jointly by Rosen Consulting Group and the Association. The reports are intended to provide the media and REALTOR® members of the Association with monthly analyses of the state of the local economy and the housing and mortgage markets.

The reports are issued ahead of reports from CAR and NAR and, hopefully, will go a long way to dispelling the notion that the San Francisco residential real estate market is little different than other markets in the country experiencing stagnation and significant price declines.

Rosen Consulting Group is an economic and real estate consulting firm providing clients with high-level strategic consulting services. Founded in 1990 by Dr. Kenneth T. Rosen, he and Arthur Margon are currently the firm’s partners and active managers. Rosen Consulting Group consists of 20 research professionals based in Berkeley, CA and New York.)

San Francisco Housing Market Tightens; Median Sale Prices Rise

Sales activity in San Francisco’s housing market rebounded during the second half of 2009 and into early 2010, resulting in a significantly tighter housing market from a year ago, according to the most recent Market Focus report released jointly by the Rosen Consulting Group and the San Francisco Association of REALTORS®. The report states that completed home sales in March 2010 increased 58 percent from the same month a year ago, absorbing much of the excess inventory in the market and intensifying competition among buyers for desirable properties.

John Lee, president of the San Francisco Association of REALTORS®, notes that the scarcity of housing units for sale has driven up the median sale price of single-family homes. “In March,” he notes, “the median single-family home sale price increased by 19.4 percent, compared to a year ago, to $791,000.”

In a welcomed development for a city known for the high value of its real estate, the report indicates that the sale of luxury property has gained traction in recent months. The Rosen Consulting Group attributes this development to sentiment among high-end buyers becoming more positive.

The condominium market also gained ground during March with the median sales price rising to $670,000, a 4.9 percent increase from the March 2009. Stimulated by the availability of FHA financing, tax-credits, and attractive pricing/concessions in comparison to recent periods, completed condominium sales reached 206 units in March, a 76 percent increase from the previous year.

The report sounds an optimistic note about housing sales activity in the near-term future by noting that the market’s return to supply and demand fundamentals as a result of a decline in the number of foreclosures is likely to drive home price appreciation. California’s $200 million home buying tax credit program should continue to incentivize home buying, supplanting the expiring federal tax credit. While mortgage rates are expected to increase in coming months, with the end of the Federal mortgage-backed security purchase program, rising interest rates from private investments should help offset the rise in mortgage rates.

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Sales in new-home communities of 10 units or more in California declined 12 percent in January compared with a year ago, according to the monthly California Building Industry Association (CBIA)/HanleyWood Market Intelligence report (HWMI).  Though still at a lackluster pace, the decline was less steep than the 15 percent year-over-year decrease experienced in December, according to CBIA.  Sales of single-family homes declined 17 percent, while sales of townhomes and multiple-unit homes rose 8 percent.  Condominium sales declined 4 percent compared with a year ago, according to the report.

“As California’s broader economy still struggles with myriad of challenges, it is unlikely we will see any dramatic recovery in coming months,” said Jonathan Dienhart, director of published research for HWMI.  “Nevertheless, as we head into the spring selling season we expect to see incremental improvements and an end to year-over-year sales volume declines.”

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The median home price of an existing single family home in California rose 14.1 percent to $279,840 in February compared with February 2009 and home sales decreased 11.7 percent during the same period C.A.R. reported yesterday. 

“The federal tax credit for home buyers, low mortgage rates, and affordability at record levels have contributed to an unprecedented opportunity for many first-timers in the market for a home of their own,” said C.A.R. President Steve Goddard. “Although sales have declined from the unusually strong levels we experienced a year ago, they’ve remained above the 500,000-unit threshold for 18 consecutive months, while home prices continue to firm in the regions of the state most attractive to buyers taking advantage of today’s favorable market conditions.”

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Editor’s Note: Appearing below is the press release accompanying the Association’s Market Focus report for March. The report can be viewed by clicking on the link below the press release. A report is issued each month jointly by Rosen Consulting Group and the Association. The reports are intended to provide the media and REALTOR® members of the Association with monthly analyses of the state of the local economy and the housing and mortgage markets.

The reports are issued ahead of reports from CAR and NAR and, hopefully, will go a long way to dispelling the notion that the San Francisco residential real estate market is little different than other markets in the country experiencing stagnation and significant price declines.

Rosen Consulting Group is an economic and real estate consulting firm providing clients with high-level strategic consulting services. Founded in 1990 by Dr. Kenneth T. Rosen, he and Arthur Margon are currently the firm’s partners and active managers. Rosen Consulting Group consists of 20 research professionals based in Berkeley, CA and New York.) 

Market Tightens in San Francisco but Median Home Sale Price Dips

A jump in residential real property sales in San Francisco in February 2010 has led to a significant decline in for-sale inventory levels and a tight real estate market in the city, according to the latest Market Focus report, issued jointly by the Rosen Consulting Group of Berkeley and the San Francisco Association of REALTORS®. For the month of February, the months of supply inventory now stands at the lowest level in more than a year.

The median home sale price for the month, however, declined 2.5 percent to $695,000 for both single-family homes and condominiums after increasing 18.4 percent in January. During the month, 113 sales were closed, nearly matching sale activity in the same month the previous year. But 217 units went into contract, a 65 percent increase over last year. With only 571 single-family homes on the market at the end of February, the jump in pending sale activity reduced the months of supply inventory to 2.6 in February 2010, compared to 5.3 months of supply for the same month last year.

With longer lag times between contract signing and closing in the current environment, the median sales price figure is more likely to reflect contracts signed in late 2009.

Condominium sales continue at a rapid pace, though much of the sale activity has come at the cost of reductions in asking price and increasingly attractive concessions. Completed sales totaled 137 units in February 2010 up from 90 units in February 2009, while pending sales reached 228 units from 116 units during the same time period last year.

The jump in sales activity for condominiums brought down the for-sale condominium inventory to 848 units from more than 1,000 the same month last year. The condominium median sales price was $650,000, an increase from recent months, but 8.9 percent less than the median sale price in February 2009.

“The problem for buyers right now is that there is an absence of choice in the marketplace. It’s a shame because the months of March, April and May are traditionally strong months for real estate sales. If a greater variety of properties were available, the likelihood is that they would find buyers in less time than any other part of the year,” says John Lee, president of the San Francisco of REALTORS®.

Going forward, the Rosen Consulting Group believes that, despite anticipated bumps in the road, the San Francisco housing market has turned a corner and should continue to improve through 2010. The reasons it cites for its positive outlook are rising household net worth, improving—though limited—job prospects, and a potential extension of some government-facilitated home-buying programs.

“As companies begin rehiring after severely cutting payrolls through 2009, the group says, “The net increase in jobs across the metropolitan area in 2010, and more so into 2011, should accelerate the housing market’s recovery. While the market will surely face hurdles in the form of continued job cuts, higher mortgage rates, and distressed property sales during its path to recovery, 2010 is still expected to be a positive year for the San Francisco housing market.”

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Market_Focus_ Report.pdf

-  Market Focus

Affordable home prices, tax credits for home buyers, historically low interest rates, and a large number of distressed properties prompted many first-time home buyers to enter the market in 2009, according to C.A.R.’s 2009-2010 “State of the California Housing Market” report released today.

California’s median home price hit bottom in February 2009 at $245,170.  Since then, the median home price has increased steadily in month-to-month comparisons, but remained below 2008 levels throughout 2009.  The annual median price is projected to increase to $280,000 in 2010 from $271,000 in 2009.

Homes priced $500,000 or less dominated the sales mix throughout 2008 and early 2009, but peaked at 85 percent in January 2009.  Meanwhile, the market share of homes sold for more than $500,000 increased from 15 percent in January 2009 to 25 percent in July 2009, holding steady around that figure for the remainder of last year.

C.A.R.’s “State of the California Housing Market 2009-2010” report is free to members of C.A.R. Click here for download instructions.

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U.S. home prices declined 0.1 percent on a seasonally adjusted basis from the third quarter to the fourth quarter of 2009, according to the most-recent Federal Housing Finance Agency’s (FHFA) monthly House Price Index (HPI). FHFA’s seasonally adjusted monthly index for December decreased 1.6 percent compared with November.

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From the Wall Street Journal – The number of homes listed for sale increased in many metropolitan areas in February.

To read the full story, please click here.

From CNN Money- The combination of affordable home prices, low interest rates, and the federal tax credit for home buyers have created an opportune time for many buyers to purchase a home.  Many real estate analysts also believe that most housing markets have stabilized, but that some markets may decline further.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Buyers should keep in mind that housing markets are local and can vary greatly from one neighborhood to the next.  Working with a REALTOR® familiar with the area in which the buyer is searching can help the buyer select a house that best suits their needs.
• California’s housing market has shown signs of stabilization since early last year.  Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009.  In January, California’s median home price was 17.2 percent above the low for the current cycle.
• The federal tax credit for home buyers was extended and expanded late last year.  Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010.  Repeat buyers may be eligible for a tax credit of up to $6,500.  Visit http://takeaction.realtoractioncenter.com/ct/HpLiI8s1zreC/ for more information about the federal tax credit for home buyers, including eligibility requirements.
• The Federal Reserve has helped maintain low interest rates, which, in turn, has assisted home buyers.  However, the agency plans to stop purchasing mortgage-backed securities at the end of this month, which likely will increase rates on 30-year fixed mortgages.  Buyers may be able to lock in a low interest rate by working with their lender.

To read the full story, please click here.

San Francisco Chronicle: The Federal Reserve is poised to turn off a major money spigot that has helped sustain the ailing real estate sector, as an extraordinary program under which the Fed has pumped $1.25 trillion into the mortgage market is slated to end March 31.

To read the full story, please click here.

Washington Post: 

Numerous articles have reported that homeowners are underwater and that strategic defaults are increasing.  However, a little known statistic by the Federal Reserve shows that home equity again is on the rise.

MAKING SENSE OF THE STORY FOR CONSUMERS

• The Federal Reserve conducts substantial research on mortgage balances and home-value changes in hundreds of local markets nationwide and reports its finding quarterly.  According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity increased by nearly $1 trillion compared with the recession’s lowest point between the first and third quarters of 2009.  From June 30 to Sept. 30, net equity rose by $418 billion.
• According to a report by Zillow.com, the overall negative equity rate among U.S. homeowners remained flat in the fourth quarter at 21.4 percent.  This report, combined with other housing factors and studies, may indicate that the unprecedented reduction in home equity is shifting.
• Some homeowners, especially those in areas with high foreclosure rates, are choosing to strategically default on their mortgages, even though they can afford the mortgage.  Many homeowners who choose this approach do so because they do not see an economic rationale in continuing to make their mortgage payments.  Homeowners considering this option should be aware of the negative effect it will have on their credit status.  Foreclosures can remain on credit reports for up to seven years, likely increasing the interest rates the consumer pays for credit, and making it more difficult to receive approval on a new mortgage loan.

To read the full story, please click here.