The Real Estate Remains Healthy while price declines recorded in rents and the price of homes sold
From the SF Chronicle Sunday Morning Edition: "Housing Market Gets Real". Pandemic-related restrictions on showings, the number of Bay Area homes sold fell by more than half in May. The median price in the Bay Area fell below $1 million. The decline is Homes sold was -51.1% and the Median Price was $965,000. In San Mateo County the decline is homes sold was -44.5%, the median price year over year was down 6.6%. The figures do not include condominiums and newly constructed homes, Source: California Association of Realtors. Thank you Kathleen Pender San Francisco Chronicle columnist.
From the Bay Area News, Louis Hansen, "Rents take a breather as techies go mobile". Prices for one-bedrooms in "techie hives" near Silicon Valley plummeted from last July. San Francisco fell 11.8%, Mountain View dropped 15.1%, Menlo Park fell 13.5%, San Jose slid 8% and Cupertino fell 15.75% according to website Zumper. Twitter told employees they could work from home permanently. Google is still working on plans. While the article states the results are not Apocalyptic, the pressure on prices will come to a point that demand will come in.
Following up on the comments, Louis Hansen of the Mercury News states, "Coronavirus: Bay Area rents drop, but not just the pandemic". "It's more complicated than techies leaving for Tahoe". Startup founder moves in with his parents with his girlfriend and finds working remote a benefit as he visits an aunt and uncle in Seattle. "A lot of people are going remote" says the founder. Techies are dumping roommates breaking leases to hang out in Tahoe, hiking and rock climbing between Zoom calls; while economists doubt the lifestyle change are not the only reason for plummeting rents. The Supply-Demand equation in housing is affected as short term rentals from vacation shops and corporate housing shift units into the long term market pushing down prices. Remote work from home has caused; a national survey states that 17% of renters more likely to move because of the pandemic. 1 in 3 were more likely to move to save money; while only 1 in 5 said they were planning to work remotely. CEO of Zumper says it is the "Brooklyn Effect", renters in pricy New York city move to flats in Brooklyn driving up rents in new neighborhoods. Facebook expects as many as a half of their employees will switch to remote work during the next decade.
My comments: While "techies" find a different home, there will be renters from the non-techie group to come in when prices fall to a level that fit into their budgets. Empty nesters may once again find their children back. The result is demand in Oakland and throughout the East Bay are proven by the move out of Silicon Valley. The growth we experienced in employment growth from Facebook, Google and like of social media companies and technology firms were bound to have an effect on home prices and rents. The Affordability Question has been solved or will be solved by the markets, not the politicians!
Zillow has reported that the typical home value in Palo Alto fell to $3,732,600 from $3,809,981 a 1.6% decline with 44 homes for sale and 14 sold recently. In the once hot area of Redwood City in the 94061 area code typical home prices fell 1.3% from $1,606,165 to $1,600,165, with 51 homes for sale and 24 recently sold.
CNBC has reported that 32% of US Households have missed their July Housing Payment. The economic fallout continues from the Coronavirus pandemic. 19% of Americans made no payment while 13% paid only a portion of their Rent or Mortgage. That is the 4th month in a row that a historically high number of households were unable to pay their rent. Worry of eviction mount while Governor Newsom has extended the moratorium until September 30, 2020. Renters have been the most vulnerable as 36% or more likely to work in industries devastated by the Virus Pandemic. More articles will surface on Renters' rights, housing apocalypse, activist pushing for rent forgiveness, how to break your lease, and what to do if you worry about paying next month's rent.
Bloomberg predicts that prices of homes will fall 6.6% by May 2021. This is the first annual decline since 2012. Economic damage deepens according to forecasts from Corelogic, Inc. This is a stark shift from the path of the market recently, where record low interest rates and tight supplies pushed up prices. The momentum was unlikely to hold as high unemployment and increasing cases of the virus force more state and local governments to delay or scale back on their reopening plans. "By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession" states CoreLogic Chief Economist Frank Nothaft stated in a report on Tuesday past.
To add to the news is a Wall Street Journal editorial his weekend edition on California's request for a Federal Bailout. Remember President Ford's response to the New York City bailout ,"Ford to City: Drop Dead". Recommended solutions once given in days of the "Governator" to drop the tax rate to 6.5%, reducing and eliminating many deductions, eliminating corporate and sales tax sales-and-use taxes and replacing them with a business net receipts tax. the proposals under Arnold were later replaced by Brown with higher tax rate of 13.3%, thus making California more subject to the volatile high end high earners and the highest individual income tax in the nation.
My comments: With 53% of Californians stating they would move from the state only indicates to me that a change and a radical change in taxation is necessary. I doubt there will be a mass exodus. More probable are the voters will cast their dissatisfaction at the ballot box.
The good news is that the urban markets have shown the greatest increase in interest and sales as the virus and the proximity of homeowners and renters to one another force a movement out to safer areas.
From the Bay Area News, Louis Hansen, "Rents take a breather as techies go mobile". Prices for one-bedrooms in "techie hives" near Silicon Valley plummeted from last July. San Francisco fell 11.8%, Mountain View dropped 15.1%, Menlo Park fell 13.5%, San Jose slid 8% and Cupertino fell 15.75% according to website Zumper. Twitter told employees they could work from home permanently. Google is still working on plans. While the article states the results are not Apocalyptic, the pressure on prices will come to a point that demand will come in.
Following up on the comments, Louis Hansen of the Mercury News states, "Coronavirus: Bay Area rents drop, but not just the pandemic". "It's more complicated than techies leaving for Tahoe". Startup founder moves in with his parents with his girlfriend and finds working remote a benefit as he visits an aunt and uncle in Seattle. "A lot of people are going remote" says the founder. Techies are dumping roommates breaking leases to hang out in Tahoe, hiking and rock climbing between Zoom calls; while economists doubt the lifestyle change are not the only reason for plummeting rents. The Supply-Demand equation in housing is affected as short term rentals from vacation shops and corporate housing shift units into the long term market pushing down prices. Remote work from home has caused; a national survey states that 17% of renters more likely to move because of the pandemic. 1 in 3 were more likely to move to save money; while only 1 in 5 said they were planning to work remotely. CEO of Zumper says it is the "Brooklyn Effect", renters in pricy New York city move to flats in Brooklyn driving up rents in new neighborhoods. Facebook expects as many as a half of their employees will switch to remote work during the next decade.
My comments: While "techies" find a different home, there will be renters from the non-techie group to come in when prices fall to a level that fit into their budgets. Empty nesters may once again find their children back. The result is demand in Oakland and throughout the East Bay are proven by the move out of Silicon Valley. The growth we experienced in employment growth from Facebook, Google and like of social media companies and technology firms were bound to have an effect on home prices and rents. The Affordability Question has been solved or will be solved by the markets, not the politicians!
Zillow has reported that the typical home value in Palo Alto fell to $3,732,600 from $3,809,981 a 1.6% decline with 44 homes for sale and 14 sold recently. In the once hot area of Redwood City in the 94061 area code typical home prices fell 1.3% from $1,606,165 to $1,600,165, with 51 homes for sale and 24 recently sold.
CNBC has reported that 32% of US Households have missed their July Housing Payment. The economic fallout continues from the Coronavirus pandemic. 19% of Americans made no payment while 13% paid only a portion of their Rent or Mortgage. That is the 4th month in a row that a historically high number of households were unable to pay their rent. Worry of eviction mount while Governor Newsom has extended the moratorium until September 30, 2020. Renters have been the most vulnerable as 36% or more likely to work in industries devastated by the Virus Pandemic. More articles will surface on Renters' rights, housing apocalypse, activist pushing for rent forgiveness, how to break your lease, and what to do if you worry about paying next month's rent.
Bloomberg predicts that prices of homes will fall 6.6% by May 2021. This is the first annual decline since 2012. Economic damage deepens according to forecasts from Corelogic, Inc. This is a stark shift from the path of the market recently, where record low interest rates and tight supplies pushed up prices. The momentum was unlikely to hold as high unemployment and increasing cases of the virus force more state and local governments to delay or scale back on their reopening plans. "By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession" states CoreLogic Chief Economist Frank Nothaft stated in a report on Tuesday past.
To add to the news is a Wall Street Journal editorial his weekend edition on California's request for a Federal Bailout. Remember President Ford's response to the New York City bailout ,"Ford to City: Drop Dead". Recommended solutions once given in days of the "Governator" to drop the tax rate to 6.5%, reducing and eliminating many deductions, eliminating corporate and sales tax sales-and-use taxes and replacing them with a business net receipts tax. the proposals under Arnold were later replaced by Brown with higher tax rate of 13.3%, thus making California more subject to the volatile high end high earners and the highest individual income tax in the nation.
My comments: With 53% of Californians stating they would move from the state only indicates to me that a change and a radical change in taxation is necessary. I doubt there will be a mass exodus. More probable are the voters will cast their dissatisfaction at the ballot box.
The good news is that the urban markets have shown the greatest increase in interest and sales as the virus and the proximity of homeowners and renters to one another force a movement out to safer areas.
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