Friday, May 25, 2018

Is it a better financial decision to rent or buy?

Zillow has published a study based on first quarter 2018 data that estimates how many years of home ownership would be required before it becomes less expensive to own than to rent.  Here's a quick breakdown of the Bay area counties:





Here's a sample of their data:


The entire article can be found at:
https://www.zillow.com/mortgage-learning/trends/breakeven-horizon/

There are all sorts of assumptions made when doing these calculations so use with caution.  Nevertheless, if a buyer can actually purchase a home in the Bay area and if they plan on holding it for 3-4 years minimum, it's likely they will come out ahead compared to renting a similar property, according to this study.

It's worth noting that the main part of the article compares the 25 largest "metro areas".  This phrase usual means "metropolitan statistical areas" as determined by the federal government.  For some reason the San Francisco/Oakland/Fremont MSA is not included and nor is Phoenix.  But a city like Portland is included even though the city of Portland its MSA are both smaller than San Francisco.  However, if you use the interactive map on the Zillow link above it provides data by county.



Tuesday, May 22, 2018

New Listings -- Following the Usual Seasonal Trends

The number of new listings in the past two weeks is only 2% higher than during the same period last year (355 vs 347) and most of the increase was in condos (210 vs 203) compared to single family homes (145 vs 144).


The percentage of those new listings that went into contract during the same two week period was very close to what it was during the prior period (16.6% vs 15.2% for single family homes and 14.3% vs 14.9% for condos).  Compared to a year ago a higher percentage of single family homes went into contract during the past two weeks compared to a year ago (16.6% vs 11.8%) but, for condos, there was no appreciable difference (14.3% vs 14.8%).


The number of price reductions compared to the prior two week period is about the same for single family homes (19 vs 18) but higher for condos (34 vs 23).  Compared to a year ago the numbers are approximately the same (19 vs 16 for single family homes and 34 vs 39 for condos).

The full report can be found at our website:
http://www.boldsf.com/Statistics%20test/Statistics.html

Wednesday, May 9, 2018

Millenium (leaning) Tower

Here's an example of what can happen to values when your building becomes notorious:
https://www.sfchronicle.com/bayarea/matier-ross/article/Pricey-retrofit-proposed-for-sinking-Millennium-12833795.php

Unit 304 (two bedroom, two bath, approx. 1,200 sq. ft.) last sold in in 2012 for $1,235,000.  Last fall (2017) the owners listed the unit for sale with an asking price of $1,959,000.  It was withdrawn without a sale after 75 days on the market.

The property was listed again this January (2018) for $1,435,000.  After 43 days it went into contract but that transaction failed 7 weeks later.  The unit is now back on the market at a reduced price of $1,300,000.

16 units in the building have come on the market since the first of the year.  3 have sold.  3 listings have been withdrawn or expired without a sale.

A contributing factor to the falling values is that financing is very limited.  Many lenders simply won't make a mortgage for units in the building.  A few lenders may be willing to write a mortgage but will probably require a very large (think 50%) downpayment.




Highlights from our monthly reports


  • Single family homes currently comprise 28.8% of residential sales in San Francisco and condos/TICs make up 71.2%.
  • Through April 30th 71.3% of all residential sales closed escrow at or above $1,000,000.
  • Luxury homes ($2.5 million and above) made up 10.6% of all residential sales.
  • Homes closing below $500k made up 1.8% of residential sales.
  • The largest number of closed sales (29.5%) were in the $1 million - $1.49 million price range.  The next largest group (21.9%) was in the $1.5 million - $1.99 price range.


Tuesday, May 8, 2018

New Listing Report

New listings during the past two weeks are up slightly from the prior period (326 vs 318).  All of that increase is in single family homes (138 vs 129).  New condo listings remained essentially unchanged (188 vs 189).

Compared to the same two week period a year ago there was a somewhat larger increase (326 vs 299) but again the difference is mostly in single family homes (138 vs 118).  Condos were up slightly (188 vs 181).




The percentage of those new listings going into contract in the same two week period remained mostly steady compared to the prior period.at about 15%. However, that is much higher than the same period a year ago where only 3% went into contract in the same two week period.


Finally, price reductions were up slightly for single family homes compared to the prior two week period (18 vs 13) but down slightly for condos (23 vs 29).  Compared to the same period a year ago the number of price reductions is down both for single family homes (18 vs 21) and condos (23 vs 36).


Monday, May 7, 2018

Perspective on Interest Rate Increases


Although the median price used in this example is too low for much of the Bay area real estate market, it still makes the point that even a full point increase on interest rates from 4% to 5% only increases the monthly mortgage payment by $262.