Case-Shiller Reports Measureable Home Price decline in October 2010

I was awakened from my long winter nap by the predictable sensational reporting of the latest Case-Shiller home price indices.

The latest press release by Standard and Poor’s states:

New York, December 28, 2010 – Data through October 2010, released today by Standard & Poor’s for

Home Price Indices, the leading measure of U.S. home prices, show a deceleration

in the annual growth rates in 18 of the 20 MSAs and the 10- and 20-City Composites in October

compared to what was reported for September 2010.  The 10-City Composite was up only 0.2% and the

20-City Composite fell 0.8% from their levels in October 2009. Home prices decreased in all 20 MSAs

and both Composites in October from their September levels. In October, only the 10-City Composite

and four MSAs – Los Angeles, San Diego, San Francisco and Washington DC – showed year-over-year

gains. While the composite housing prices are still above their spring 2009 lows, six markets – Atlanta,

Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to

Fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent

lows seen in most other markets in the spring of 2009.

The index showed a decline in the Bay Area from October to September’s numbers but a year-over-year increase for the same period.

What does this mean? It means that compared to last year home values are up in the San Francisco MSA (metropolitan statistical area) which includes San Francisco down to Redwood City. It also means that the values dropped from September to October. How much? 1.9% to be exact. Not what I would call earth shattering  and I certainly wouldn’t describe it as one of our local TV stations did as “Bay Area Prices Plummet”.

Later in the evening a competing station had the headline “Bay Area Prices up”, referring to the year over year statistic.

Neither news headline tells the whole story.

The much ballyhooed double dip in fact did occur but it was much more pronounced in other parts of the country and more akin to a glitch than a dip—and likely it was caused by the cessation of government subsidies which helped to prop up home values in 2009.

 

SF MSA

Case-shiller October 2010

 

The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

 

Belmont Home Sales – November 2010

We love the holidays as much as anyone, but a little less red in the chart would be nice too.

Belmont home sales for November of 2010 continued the trend of the last two quarters with fewer sales and declining home values as compared to the same period in 2009. 

November 2010

(Click on the chart to see a full-sized image)

Clearly consumer confidence is woefully short of normal. While consumer confidence does not in and of itself control the direction of the economy it does reflect consumer sentiment. Consumer sentiment is well represented by consumer spending—when consumers are comfortable with their view of the future they tend to spend more. Considering that some estimate consumer spending to represent 2/3rds of our nation’s domestic product (GDP) suffice to say that consumer confidence is necessary for a sustained recovery. For consumer confidence to rebound there needs to be more jobs and of course the feeling that the job one has won’t go away soon either. On a positive note the consumer confidence index rose to 54.1 in November from a revised 49.9 in October. It was the highest level in five months. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.

How does this affect the housing market? The tenuous job market is taking its toll on nervous home buyers. Buyers are still purchasing homes but fewer can qualify for a loan and when they do it’s usually for less home than before. Those who are willing to purchase a home seem to want only exceptional deals—building into their offer price a buffer against further price declines.

SALES

Home sales in Belmont remained fairly strong considering the aporetic feelings among buyers.

This November we saw 16 homes trade hands in Belmont as compared to 22 in 2009.

Of the 16 sales, six sold for on average $21,350 more than the seller’s asking price in 17 days, one sold at the asking price, and nine sold for on average $16,500 less and took 82 days to sell.

Six sellers also reduced the price they were originally asking  for their home by on average by $149,342, while last year there were only three homes which had price reductions during the same period and for on average only $13,590.

MEDIAN PRICE

The median price (on paper) went up 5.4% to $843,475 from November 2009 when it was $800,000. However, in 2009 the median size home which sold was only 1,558 square feet as compared to this November when the median size home sold was 1,920 square feet—a difference of 352 square feet. At the median price per square foot that homes sold for during November, $466 and the difference in the size home sold, 352 sq. ft. one could make an argument that if all things were equal (the same size home selling in the two periods) the adjusted price for 2009 would be closer to $964,032 ((352 Sq. Ft. x $466 per sq. ft. = $164,032) + $800,000) =$964,032. This allows us to estimate that home values dropped around 12.5% year over year in the month of November. How much the median price changed for the year as a whole is yet to be determined. Remember, just because homes dropped 12.5% in the month of November, earlier increases in the year can mean at year's end the median price could be up for down from the previous year.

It’s also interesting to note that although the median size home which sold in November of 2010 was much larger, only one home sold over the one million dollar mark as compared to three in 2009.

 

DAYS ON MARKET (DOM)

Not surprisingly it took more time to sell a home this year than last–on average 62 days—up dramatically from 38.5 days in November of 2009. One also must be cognizant that last November the first-time buyer tax credit was in effect which skewed the numbers in favor of more sales, selling faster, and for more.

When home values are dropping, the time it takes to sell a home typically increases as sellers often price their home based on recent past sales. But when home values are falling, recent sales were worth more. Eventually most sellers get the idea that they must get ahead of the pricing curve and lower their home more than the market suggests it might be worth. This has an ancillary effect of lowering home values rapidly and perhaps more than they would otherwise drop.

Noting the huge difference in not only the number of homes which had price reductions, but the steep adjustments that were made, illustrates the difficulty in pricing a home in a declining market and underscores the importance of introducing your home to the market at the right price.

Summary

There’s always some danger in looking at a small market sample such as Belmont with only 16 sales in a given month. Seasonal factors play heavily in the statistics which is why we choose to compare each month we examine to the same month a year before. However, it’s important to note that other factors can effect comparing these two periods. For example, last November the first-time buyer tax credit was expiring, causing many buyers to rush to the bargaining table. This increased competition for homes undoubtedly buoying the prices while increasing sales.

Our leading indicators of future market conditions indicate a gradual recovery in the housing sector.

  • The Institute for Supply Management reported that the monthly composite index of manufacturing activity fell slightly to 56.6 in November after reaching 56.9 in October. A reading above 50 signals expansion. It was the 16th straight month of expansion.
  • Total construction spending rose 0.7% to $802.3 billion in October, following a revised 0.7% increase in September. Economists had anticipated a drop of 0.4% in October.
  • The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 10.4% in October after a 1.8% decrease in September.
  • The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity rose to 55 in November from 54.3 in October. A reading above 50 signals expansion. It was the 11th straight month of expansion.

On a local level our professional staging company has reported to us that their orders for staged homes are booking up fast for January, indicating that Sellers are interested in getting a jump on the spring market.

If you are considering selling your home next year you may want to consider doing it sooner rather than later before inventory rises to levels which make price reductions necessary to attract Buyers.

If you are considering selling your current home and/or purchasing a new one be sure and contact us for your real estate needs.

Now for the inevitable disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

 

 

 

 

Carlmont Associates Partners with Re/Max Star Properties

Most of you know we’ve been operating out of the Carlmont Associates office in Belmont. Effective today, Carlmont Associates has joined a partnership with Re/Max Star properties.  

Our level of service and commitment to our clients will be unaffected except that we'll have access to the benefits the number one real estate franchise in the world can offer.LuxuryHomes

FOR IMMEDIATE RELEASE:

(Redwood City, CA Nov. 20, 2010)—Re/Max Star Properties, a real estate leader in San Mateo County with projected sales of over 200 million dollars for 2010 announced today that it has added the premier Carlmont Associates team and premium location in central Belmont to its local group of Peninsula offices.  â€œCarlmont Associates is a well established, centrally located real estate firm serving the Belmont area for over 50 years and we’re proud they’ve chosen to join forces with us”.

“We are both pleased and excited by this merger”, said Tom Diridon, one of the principals of Carlmont Associates. He, his wife Eda Diridon and partner Gary Rossetto couldn’t be happier”. Mr. Rossetto mentioned, “It will bring state of the art systems, services and global name brand recognition and lead generation systems of RE/MAX to Carlmont Associates allowing us t better serve our clients.”

“This move will bring major benefits to the local consumers and its agents by the ability to offer more marketing solutions, exceptional financing opportunities and unmatched after the sale protection”.

Houston’s Thai Beef Salad – or a Close Approximation

Anyone wondering where the beef was in the Ranger’s hitting squad during the 2010 world series need look no further–we’ve got a recipe for you to chew on straight from Texas.


When I was traveling to Austin in 2009, I would contemplate where I could dine next to pass my culinary time. A friend of mine and local Austin REALTOR, Jeff Niemeyer, recommended I try Houston’s near the arboretum; trying to stick to lighter fare when on the road, I’d often eat salads for lunch and or dinner, so when I arrived and found a Thai Beef Salad on the menu I was set.

Many of you may have already experienced restaurants by the Hillstone Group, who own, among other restaurants, own the Los Altos Bar and Grill.

Once, I tried the Thai Beef Salad at Houston’s in Austin, but I never ventured any further down their menu. It was absolutely one of the best salads I have enjoyed. People who know me know I enjoy the challenge of deconstructing something I have tasted while dining out to detect what ingredients were employed. Often, it’s fairly easy as some flavors overpower the dish and are easily identified. But every so often, a chef develops a recipe that is so complex, so well balanced that it titillates the taste buds with a mosaic of contrasting flavors where one could spend days attempting to deconstruct the recipes–or, as in my case, eating the salad many times and taking copious notes.

First and foremost, the salad plays with all the senses of taste- bitter, sweet, sour, and salty- and introduces spice with perfectly contrasting flavors of just enough heat and spice, followed by refreshingly chilled mango. It satisfies your sense of umami with refreshing rice noodles and a perfectly grilled beef filet.

The salad starts with a bed of rice noodles cooked, fried lightly, and brought to room temperature, then ever so lightly tossed with sesame oil. A medley of julienne red bell peppers, carrots, tomato wedges, shredded cabbage, and cubes of mango add complementing textures and wonderfully wild flavor combinations, which serve to enhance the colorful presentation further and add more depth with each irresistible bite.

The dressing offers spice and bitterness with fresh lime, orange juice, and fish sauce, while Sracha adds a kick and is well paired with shiso to create depth to the dressing. Finally, the scallions and crunchy dry roasted peanuts offer a nice contrasting crunch.

While each ingredient has been carefully chosen to perform its respective role of adding texture and color and smacking all the senses of taste, the warm cubes of medium rare beef filet lightly marinated in the dressing, then charcoal grilled, adds the ultimate umami to finish the dish.

When I returned home with my notes in tow, I checked on the internet to find out if Houston’s posted the recipe—no luck. But I found an interestingly close approximation written by Kayla Williams (with my notes added in pen as to what brought it closer to the recipe I had in Austin). For example, the shiso, which is most often associated with sitting alongside your plate of sushi as the Japanese equivalent of parsley, is introduced in the salad as a complex version of what might be confused as a mint and cilantro combination, and, if you can’t find shiso, that’s a relatively logical substitution.

So, without further ado, here’s my collaborated best approximation of one the best salads I’ve had:

https://morganhomes.com/recipes/Thai_Salad.pdf

Belmont Home Sales – October 2010 Where’s the Beef?

With the election behind us and the stock market rallying to the excitement and anticipation of more economic stimulus and legislative gridlock, Belmont’s housing market continues to show signs of what could be viewed as stagnation at its best, or a double dip at its worst.

This October, housing sales for Belmont revealed a slower market and softening prices compared to October 2009.

 October 2010 Belmont4 
 

(Click the picture for a larger image).

SALES

Thirteen home sales—one shy of last year’s 14, would not normally give great cause for consternation—especially since the sample size in Belmont is so small.  However across the board indicators are eluding to a reluctance on the part of buyers to commit to purchasing a home.

 In light of comments like that of John Paulsen who made a fortune betting on the sub-prime market collapse proclaiming “this is the best time to buy a home in fifty years, exclaiming that, "If you don't own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home” clearly job security is the number one reason buyers are waiting before taking on any new debt.

MEDIAN HOME PRICE

The October median home price in Belmont was $864,200 and appears to have dropped only slightly from October 2009 when it was $865,000. Once again though larger homes sold this October. The median size home sold was 2010 square feet as compared to last year when the median size home sold was only 1760 square feet. Put another way, this year you could buy a home 250 square feet larger (14%) for the essentially the same price as last year.

DOM

The average time it took to sell a home in Belmont this October also went up from 38 days last year to 46 this October.

% RECEIVED

Seller’s also enjoyed getting 99.6% of their asking price last year while this October dropped to 98%.

PRICE REDUCTIONS

Six of the 13 sales this year had lowered their price on average $92,000 to attract a buyer while last year only three sellers reduced their asking price for on average $40,000.

This October while three homes sold for on average $29,000 more than their asking, last October six homes sold over asking for on average $23,000.

The last thing any seller wants is to get less than their asking price and this year more sellers were disappointed as nine homes sold for on average $34,000 less compared to last October when only seven homes sold for on average $30,000 less than their asking price.

In October of both years just one home sold at the seller’s asking price.

COMMENTARY

This fourth quarter slowdown in real estate is not all that unexpected. It’s a fairly mild hiccup at this point which may be attributed in part to election jitters but certainly it’s exacerbated by our own government when they announce they are re-visiting the home mortgage deduction. Of course every year some committee wants to reexamine if they could do away with it to be replaced by a flat t tax, but to do so in a year when the government is spending billions of dollars trying to stimulate the economy, and particularly the housing sector, one wonders why they wouldn’t just table any further debates on the home mortgage deduction until after they economy was on track.

NEWS FLASH– Belmont Measures I and N Pass

With a needed 55% voter approval for each measure both passed handily with each measure receiving well over 60% of the votes.

Measures I and N from the San Francisco Examiner:
Five schools in Belmont would get new classrooms, repairs to leaky roofs and other improvements if voters approve two bond measures on the November ballot totaling $70 million.

Measure N would give the Belmont-Redwood Shores School District $35 million to spend on facilities at four Belmont elementary schools – Nesbit, Fox, Central and Cipriani.

Measure I, a companion measure, would generate $25 million for Ralston Middle School. Both need a 55 percent majority vote to pass.

Measure I would cost property owners about $11 per $100,000 of assessed value annually, and Measure N will cost about $27 per $100,000, according to the school district. *With the median price in Belmont at $850,000 right now that would mean an additional $110.50 per year.

Measure N only impacts Belmont schools, so voters in Redwood Shores would not be affected.

 

Belmont Schools Want Your Vote…And Your Money.

Two measures are on the November ballot which would allow for assessments in Belmont to generate funds for school improvements.

During difficult economic times, many people choose not to vote for increases to their parcel tax. We’re not sure if there’s ever been study showing a direct correlation between subsidizing school improvements and higher API achievement scores, or if it’s strickly empirical evidence, but there certainly is ample evidence that homes in areas with great schools have higher property values.

With these two measures on the ballot we’re interested to see how people are considering voting–anonymously of course. Answering this short poll will allow you to see how others might cast their vote as well.

Measures I and N from the San Francisco Examiner:
Five schools in Belmont would get new classrooms, repairs to leaky roofs and other improvements if voters approve two bond measures on the November ballot totaling $70 million.

Measure N would give the Belmont-Redwood Shores School District $35 million to spend on facilities at four Belmont elementary schools – Nesbit, Fox, Central and Cipriani.

Measure I, a companion measure, would generate $25 million for Ralston Middle School. Both need a 55 percent majority vote to pass.

Measure I would cost property owners about $11 per $100,000 of assessed value annually, and Measure N will cost about $27 per $100,000, according to the school district. *With the median price in Belmont at $850,000 right now that would mean an additional $110.50 per year.

Measure N only impacts Belmont schools, so voters in Redwood Shores would not be affected.
Read more at the San Francisco Examiner:

Orion in the night sky in Belmont

Just thought I’d share this with everyone.

Orionweather 

We’ve always enjoyed astronomy and love it when there’s a new moon and we can get a good look at the night sky.

In Belmont, we’re pretty close to the city (San Francisco) and get a lot of city light which tends to wash-out the night sky.

If we look south-south-west however it’s much darker as we’re looking towards the Santa Cruz mountain range.

When I got up early this morning I had to grab my camera and capture one of my favorite constellations—Orion.

This was taken today, October 9th 2010 just after six in the morning.

I used our Nikon D70 with a shutter speed of 30” at f4.8 and ISO of 1600.

Belmont Housing Price Report – September 2010

September means fall has arrived and nowhere did we see more falling than in the number of home sales in Belmont for this time of year.

Belmont September 2010 copy 

(click here for a full-sized image).

Here are the details:

MEDIAN PRICE:

Once again we had an increase in the median price over last September.  The median price in Belmont for September 2010 was $865,000—an increase of 8% over last September’s $795,000. And this was once again mitigated (or negated) by the size homes which sold in the two periods.

This September the size home sold in Belmont was 1,900 Square feet compared to last year when it was only 1,600. The 300 square foot differential accounts for approximately $144,000 in price variance if you multiply it based on the $480 per square foot that homes sold for over the two periods. Effectively the size home which sold was 18.75% larger but only garnered an 8% higher price tag.

Does this mean that Belmont’s median price is still dropping? Well it certainly means it has dropped in the past two months—but price drops this time of year tend to be seasonal.

NUMBER OF SALES:

Sales of homes in Belmont last month were down by 33% from a year ago. And a year ago sale were down from normal levels. Now 33% wouldn’t mean a lot if we had only three sales a month but we had 18 last September and only 12 this year.

This is no doubt a hangover from the housing stimulus bill that ran out earlier this year and attracted many of the buyers to move earlier in the year.

PRICE STABILIZATION:

It could be temporary, but of the homes which sold, three sold for on average $10,000 over asking (even though one only sold for a dollar more), two sold for the seller’s asking price and seven homes sold for less—by on average $66,000. Compared to last year when no homes sold for more than the seller’s asking price, eight homes sold under and 10 sold at the asking price, this is relatively good news.

DOM:

The time it took to sell the homes increased over last year—up from 45 days to 73.

INVENTORY:

With 64 homes available for sale in Belmont right now prices are sure to remain flat unless buyers begin to feel more comfortable with their job stability, or in some cases, the prospect of a job at all.

PERCENT RECEIVED:

Once again the numbers are down from last September. A year ago the seller could happily receive on average 98% of their asking price and this year that number dropped to 96.65%.

September is typically a month that begins the fall push for housing before buyers go into their winter hibernation mode with brisk sales and sellers typically getting more for their home than during the summer months. This was clearly not the case this September so it will be interesting to see how the October numbers come in.

There are a lot of buyers still sitting on the fence. It’s our opinion that at the end of the year Belmont’s median price will be higher than in 2009 and we expect that to continue at a tepid pace through 2011.

If you are a buyer thinking of making a move, statistically the winter is the best time to snag a deal. Call us is you’d like to get started early!

 

 

Belmont Home Values – Report for August 2010

There’s little change to report for sales in Belmont for the month of August 2010 but the Case-Shiller report which was released on September 26th showed another increase in the Bay Area metropolitan index for the sixth straight reporting period. This index follows the change in home prices across the country in 20 metropolitan areas. Their complete methodology can be found here.

Belmont August 2010 copy 

(click here for a full sized image)


MEDIAN PRICE:

The median price rose to $885,750 over $837,500 in August of 2009. That represents a 6% increase but is partially negated because the pool of homes which sold were also 14% larger.

SALES:

Home sales remained flat as compared to the previous month but the 20 sales in August 2010 were four more than August 2009.

DOM: (Days on Market)

The days a home took to sell were on average 44—almost half of what it was a year ago.

Of the 20 sales in August only three homes sold for over their asking price for an average of $15,000 more, while four sold right at the asking price and 13 sold for on average $30,000 less.