Lamorinda Real Estate 2012 — Where the market is now, and what lies ahead — Part 1

21 01 2012

As we commence 2012, we are about 6 years into the current real estate cycle that saw prices hit their peak in Contra Costa County around June 2006, and then begin their well-documented decline phase.  Much has transpired on the economic front lines over the last year that has impacted consumer confidence, ranging from the European financial crisis on the negative side of the balance sheet, to the positive impact of a fourth quarter resurgence in our domestic stock markets.  Although one never knows for sure that the real estate market has bottomed until historical data shows that it has already turned up, we believe that it is doubtful that we will see any further erosion in Lamorinda real estate prices.   The bottom may have already been reached, and we think that 2012 will bring price stabilization and perhaps some slightly improved property valuations over recent years.  The downward leg of the cycle may be broken.

Although our micro-market of Lamorinda often behaves much differently than the overall Contra Costa market, and profoundly different than the “national market”, it is worth evaluating the encouraging trends we are seeing on a county-wide basis.  Keep in mind that an enormous proportion of the county sales data is comprised of Antioch and Pittsburg which have been at the forefront of the national foreclosure market.  As a result, strong positive movement in the county inventory and sales statistics serve to make an even more significant statement about the improving conditions of our market.

The December 2011 market data showed a profound 44% drop in inventory from the same period in 2010, while pending sales grew by 17%.  This resulted in reducing the 3.2 months of inventory in December 2010 to only 1.8 months in December 2011.  It’s a very significant improvement in the market, and we believe it signals price stabilization and perhaps even selective shoring up of prices in some areas.

Within our Lamorinda real estate market, the inventory decline tracks with the county, experiencing a reduction of 46% over December of 2010.  The statistic that we didn’t really expect to find is that inventory levels for December 2011 dropped to the lowest level we have seen for 5+ years!  To underscore the apparent health of the market, closed sales for December 2011 were up 36% over the previous December.  Pending sales, the leading edge of the market, were up slightly over last year.  This was likely due to the depletion of inventory and the shortage of homes in many price segments.   Prices decreased 4.7% in Lamorinda when evaluating the 2nd half of 2011 over the same period in 2010.

When this series continues… you’ll find out about the strength and weakness of particular segments of the Lamorinda real estate market, and what we believe lies ahead!


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Lamorinda Real Estate Market Forecast For 2012

13 12 2011

I’m quietly stirring my healthful cup of green tea this morning as I carefully read the tea leaves and try to carefully craft my predictions for 2012 Lamorinda real estate.  Let’s begin with the broader economy and work our way to greater specificity:

1.  Volatility will persist in the US financial markets:  Volatility is driven by uncertainty, therefore we will continue to see broad swings in the market as we work our way through financial recovery and the winds of change in world markets.  The volatility will impact consumer confidence, potentially in both a negative and positive manner as 2012 unfolds.

2.  The Bay Area economy will significantly outpace overall US economic recovery:  We are most fortunate to be living in such a dynamic area of the US — rich with cultural and business diversity.  The foundation of net job growth in the Bay Area has its origin in entrepreneurship and the creation of new businesses.  According to the Ewing Marion Kauffman Foundation research on this subject,  about 3M jobs are created annually across the US from new businesses.  Within the Bay Area, there are approximately 470 entrepreneurs per 100K in population, with a resulting significant positive impact on job growth all around the bay, including within our world of Lamorinda real estate.  A strong job market bolsters consumer confidence, and in turn, strengthens our housing market.

3.  There are clear signs of improvement ahead in Lamorinda real estate:  For those poised to pounce on my words, don’t misinterpret them to mean that prices are going to start heading up, or that 2012 won’t have its real estate challenges.  I am going out on a moderately strong limb and suggesting that the Lamorinda real estate environment will be better in 2012 than it has been in the last several years.  Let’s take a look at some empirical data that seems to support my conclusion:

Lamorinda Real Estate Through Nov 2011

The chart shows:

A.  A significant drop in inventory from 2010 to 2011.

B.  A historically healthy relationship of 2-4 mos of inventory against pending sales throughout most of 2011

C.  Improved strength in the market during Nov 2011 when the market is normally sluggish.

4.  The strongest market segments will be homes priced under $1.5M:  Once one crosses the threshold into Lamorinda real estate’s “upper” price ranges of about $1.5M+, the market changes dramatically, as vividly shown by the following chart:

The following facts apply to this segment:

A.  The upper market segments were the last to be impacted by the housing downturn, and will be the last to recover.

B.  They are the least affordable homes in the present market, therefore simple supply and demand relationships suggest that it will be softer than more affordable segments.

C.  ”Shadow inventory” held by banks may still impact this segment.  We really don’t know how many homes the banks are holding in various states of foreclosure.  Until this inventory is cleared, the market cannot fully recover.  Fortunately, Lamorinda real estate has been only lightly affected by foreclosure properties.

5.  Investors and home buyers will seek investment in real estate as an asset class.  Real estate is a very attractive asset class given the volatility of the stock market, it’s seemingly unpredictable behavior, and our extraordinarily low interest rates.  As we saw happen in late 2001 and 2002, investment money flowed into real estate following the extreme volatility of the financial markets.  While I don’t expect a repeat of that volume of activity, I do foresee that confidence in real estate will increase in 2012, which will result in more people investing in the asset class for both cash flow, capital appreciation, and for home ownership.

6.  The imbalance of “power” will still reside with the buyer.   Just to be clear, sellers who have been “waiting out the market” hoping to get “their price” will be disappointed.  This is no time to be “testing the market” or looking for “that one right buyer” who will pay an over-market price.  We’ll be in a recovery mode in 2012, but that does not mean that prices will move up.  For buyers, interest rates will likely stay close to the present ultra-low levels throughout 2012, so your timing may never be better to jump into the market.

Let me know what YOU think!


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Categories : Lafayette CA Real Estate Forecast, Lafayette CA Real Estate Market, Lafayette, CA Real Estate, Lamorinda Housing Market, Lamorinda Real Estate Forecast, Lamorinda Real Estate Market Statistics, Lamorinda Real Estate Pricing, Uncategorized

Will the Changing Loan Guidelines Impact the Lamorinda Real Estate Market?

12 05 2011

The subject for today’s post has its origin in a comment posted by one of our readers, asking whether the changing guidelines for federally backed mortgages (FannieMae and FreddieMac) will impact our Lamorinda real estate market.   The person posting the comment believes our market is due for another downward leg.  For those unfamiliar with this subject, via Fannie and Freddie, the federal government backs loans below the current “high value area” limit of $729,750 .  These are referred to as “conforming” loans, whereas loans above this amount are privately backed as “Jumbo” loans.  Many politicians and voters believe that the government should get out of the mortgage business and should not be, in effect, subsidizing the purchase of “high value” homes that exceed the national median price.

It is not my intent to enter into a debate about whether Lamorinda real estate owners should get more federal loan support than someone buying in Witchita, Kansas or Detroit, Michigan.  Due to the desirability of this area and the richness of the economy, this is a MUCH more expensive area to live in than most places in the US.  The basic market force of supply and demand has pushed housing prices and almost every other necessity of life to higher price points in the overall Bay Area, than what is commonly found elsewhere.  Take gasoline as an example, it costs considerably more in Lafayette, less than 10 miles from the refineries, than it does when trucked down into the central valley.  Companies will charge what the market will bear, and that’s just the way it is in a free market system.  Housing is no different.

The person who raised this issue referenced a very recent article in the NY Times “Federal Retreat on Loans Rattles Housing.”  The article is definitely worth reading, but the question is whether a September 30, 2011 reduction in the conforming loan limit from $729,750 to $605,000 will cause further decline in our market.  My initial gut reaction is that although this is certainly not a positive for our market, I don’t believe that it will have a significant impact on it.  Let me explain.

The average home buyer in Lamorinda is purchasing a home for just under $1M.  With the requisite 20% down, the current $729K conforming loan doesn’t quite get them to where they need to be, so they either dive deeper into savings or borrow more money via a second mortgage.  We saw numerous cases of the latter in 2009 and 2010 where the lender packaged a conforming first with a variable rate line of credit that gave the buyer an extremely low blended rate.  Obviously, they had to qualify for the total debt servicing.

For more expensive homes, reachng north of the million dollar mark, we saw a number of lenders carefully working their way back into the jumbo loan market.  Some even went out of their way to market their jumbo loans to the real estate community and consumers.  In a recent conversation with a direct lender from a major bank, I was told that the bank was packaging up and selling off its first large portfolio of jumbo loans.  If it went well, as he expected it would, he felt that they would be even more aggressive in seeking jumbo loan originations.

Although loan origination fees may increase as more private lenders step in, that may not be a foregone conclusion.  I will be the first to admit that I don’t know the answer, and can’t predict how financial markets will react.  With private lenders, I will welcome a departure from the regid, often ridiculous underwriting guidelines of the Fannie/Freddie loans — many of them have been the subject of my posts over the last couple of years.  What we all want is fiscal sanity, with banks making good business decisions about offering credit, employing rational decision making criteria and not just intractible guidelines hoping to make one size/flavor fit all.  Life and business simply aren’t like that.  What we may find is that loans are just as accessible following the reduction in the conforming loan amount, and that any increase in cost doesn’t significantly impact home affordabiity.  I guess only time will tell.  In the meantime, we just need to cognizant of the possible headwind we may face in the housing market’s recovery.


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Categories : Lafayette CA Real Estate Market, Lafayette Real Estate Forecast, Lamorinda Housing Market, Lamorinda Real Estate, Lamorinda real estate loans, Uncategorized

Emerging from Summer — A Look at the Lamorinda Market

9 09 2010

Although some would suggest that with this year’s weather, we never had a summer.  We have, indeed, just emerged from the summer real estate season and the market statistics have just been officially published.  Let’s take a look.

It is encouraging that we saw some absorbtion of inventory in August, either through net sales activity or withdrawal from the market.  The number of months of inventory across the entire market stands at almost 5 months.  Let’s drill down and look at the various segments to get a more detailed look, beginning with the sub-$1M market:

As we’ve seen all throughout this market cycle, the sub-million dollar market is very strong as numerous young buyers have seized the downturn and record low interest rates to get into our community at price points that haven’t been seen for many years.  There is about 4 months of inventory in this segment, however about 30 percent of available inventory went “pending” during August — a very good showing of strength.

Moving up market, let’s evaluate the $1M-$2M segment:

With just 3.7 months of inventory, this has been a very active and relatively healthy market segment in Lamorinda real estate.  With a forward view, approximately one in four homes went “pending” in this segment during August.

Let’s now look at the Lamorinda upper-end market at $2M+:

The graph speaks for itself.  It is the most challenging area of the Lamorinda real estate market with 9 months of inventory — a net reduction from July due to several homes being taken off the market by their owners.  August showed some encouragement with about one in five homes going “pending” during the month.  It is a segment that we know and understand well.  One of the three homes that sold in this segment was our listing, and we are well aware of the limited pool of buyers and their expectations in the present market. 

Looking ahead, there are some encouraging economic indicators, reflected in this week’s stock market performance.  There are  also outstanding variables that could have a very positive impact on the economy and consumer confidence — proposed acceleration of capital equipment write-offs for business, as well as what might end up being the extension of the “Bush” tax cuts.  There’s a lot at stake in the coming months.  Markets can turn quickly, and we never know we’ve hit bottom until we’re on the ride up.


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Lamorinda Real Estate… When Market Statistics Don’t Fit.

27 06 2010

In recent months, I’ve talked a lot about the performance of Lafayette real estate and the surrounding areas, often drawing upon objective sales statistics to underscore and substantiate the points I’ve made in the post.  With that said, statistics work best when there’s a large pool of data available.  So, in the case of Lamorinda real estate, we have seen a lot of transactions at the lower end of the market, and fewer at the upper end.  In terms of reaching conclusions about pricing, it’s easier to rely upon the segments of the market where there have been lots of transactions than it is at the upper end where there have been fewer.  In other words, drawing conclusions about the average price of 200 transactions is a lot more meaningful than if there were hypothetically only 10.

Another related consideration is what I’ll refer to as the “Zillow Problem”.  This popular website simply doesn’t work in 95+% of Lamorinda because of the non-conformity of the properties.  Our communities aren’t built as homogeneous subdivisions with similar homes.  One of the reasons that we cherish this community is because of the unique characteristics and beauty of the land, and also because that uniqueness is reflected in the homes.  It’s not uncommon for a $3M home to be next door to a $2M home, and around the corner from a $1M home.  It’s what makes this community special and it’s what also causes the use of simple price/sq. ft. mathematical algorithms to be inherently problematic.  In simple terms, that’s why Zillow doesn’t work in this community.  It is also why it is very difficult to use statistics on a “thin” market to draw conclusions on price trends.  This is where statistical analysis doesn’t “fit”.

Let’s look at the upper end of the market where there have been the fewest transactions and the homes arguably have the highest level of differences in style, construction quality, aesthetics, amenities, etc.  Using $/sq. ft. analysis to determine pricing of one home vis a vis another is almost impossible.  Ultimately, it comes down to a MUCH more subjective analysis driven from one’s interpretation of the relative merits of the factors noted above.  Just because one of the rare upper end foreclosure properties closes escrow at a hypothetical $2.5M for 6500 sq. ft. doesn’t mean that suddenly a 5000 sq. ft. home may only be worth about $2M.  You MUST look at the relative characteristics of each home, and ultimately ask yourself whether YOU would have bought that “other” property for $2.5M.   In more cases than not, the answer will probably be “NO”, since you place a higher inherent value on the home that you are considering for purchase.  You have to ask yourself, over the long term, which property will be the better investment… the foreclosure property with a suboptimal location that a spec builder never finished, or the one with a coveted location, high quality finishes and emotionally compelling aesthetics?

Will a small number of financially-driven sales put pressure on the upper end market for about another 18 months?  The national trends suggest this will be the case, however that doesn’t mean that any given upper end property is over-priced because it hasn’t sold in a month or even two months.  That’s more reflective of the nature of a segment with fewer buyers than in lower price ranges.

Simple supply and demand relationships have had their impact all across the Lafayette real estate market and the surrounding communities of Lamorinda… just as they have across the US.  Unlike most other markets, the supply of NEW inventory is constrained in our geography.  Over the long term, almost no new inventory can be built due to lack of land availability, and it is for this reason that we have not been impacted as substantially in the market downturn as other areas.  Once the overall economy improves, that supply/demand relationship will work in our favor and our area will see a faster, steeper rebound.  Additionally, our local economy is “fed” by a very diverse set of industries… from technology, to healthcare, to biotech and financial services.  The diversity of our economy should help us to continue to outperform most other areas of the country.  Lastly, Lamorinda real estate is still undervalued relative to comparable areas in the SF peninsula and in Marin County.  Over time, I expect to see these price differentials tighten to the benefit of our Lafayette real estate and surrounding area valuations.


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More Thoughts on What’s Ahead for Lamorinda Real Estate

31 03 2010

According to a recent Wall St. Journal article, California housing prices have been on the rise, and the Bay Area has experienced a 20% rise in the median price of homes since February 2009 — now standing at $354,000.  Naturally, this price level bears no resemblance to Lafayette real estate or home prices found in Orinda or Moraga.  It does, however, align with what we have seen in our market area, where the highest velocity of sales is in the sub-$1M price range.

Counterbalancing this is the fact that default notices rose almost 20% in February and roughly 11% of all California homeowners with mortgages are 90 days or more delinquent on their payments.  With an “official” unemployment rate standing at around 12.5% for the state, we’ve still got a rough road ahead.  The market and consumer confidence are improving, but we have not yet shed the remnants of the enormous financial fire pit from which we are slowly climbing out.

More thoughts on trends/issues to contemplate over the coming months:

  • An increasing number of “down-sizers” who will be selling their larger Lamorinda real estate holdings and buying smaller single level homes within Lamorinda, but also taking advantage better value propositions in areas such as Alamo, Walnut Creek and Pleasant Hill.
  • As reported in the Wall St. Journal, “The Fed confirmed that it’s ending its $1.25 trillion purchases of agency mortgage-backed securities, which enabled Fannie Mae and Freddie Mac to help keep mortgage rates low by buying mortgages.”  This means that there will be increasing upward pressure on interest rates… not substantial by historical comparison, but nevertheless significant enough to potentially impact demand and prices.
  • At the upper end of the market, we are observing and hearing from other agents about Lamorinda real estate owners who are not yet delinquent on their mortgage payments, but their combined first and second deeds of trust exceed the market value of their property.  The new loan modification programs being introduced will hopefully help these people stay in their homes long enough to make the necessary adjustments to their personal finances.  Absent modifications helping them, these properties could find their way to short-sale or foreclosure.  This is something to watch closely as the 2010 market unfolds.
  • This will be the “year of the move-up buyer”.  With the greatest pressure found on higher priced homes, significant demand for lower priced homes, and historically low interest rates, most won’t find a better time to make the move up.
  • It may also be the best time to make the move out of Lamorinda real estate.  For empty-nesters considering retirement in out-of-state communities, California foothill communities, or other California secondary markets, the timing may never be better than right now.  Markets in “second home” communities have been pummeled over the last couple of years, selling at incredible discounts to where they were just a short time ago.  In the end analysis, its the delta between the equity netted from your present home sale and the cost of buying the replacement home that counts.

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A Finger on the Pulse… A Current Look at the Anatomy of the Lamorinda Real Estate Market

30 03 2010

The year is shaping up to be a relatively strong one for Lamorinda real estate. With  a few 2010 transactions closed and behind us, several properties on the market, more on the way, and several active buyers as clients… I feel like we’ve got a pretty good gauge of the market’s “pulse”.  Naturally, time will tell, but here are the current early stage observations:

  • Corporate America has greatly increased the flow of employees  into the Bay Area with paid relocation plans  – a very expensive endeavor, but a sure sign that big business is feeling more confident about the economy and their profitability.  We are aware of many agents with clients obtained through relocation company affiliations — more than we’ve observed in at least a couple of years.
  • Consumer confidence appears to be much stronger than it has been in a long time.  People are out looking at homes and seriously evaluating making decisions to purchase across a broad range of Lamorinda’s home inventory.  We have found this to be true among our own clients , observed it to be the case based upon numerous conversations with people coming through Open Houses this year, as well as noted it based upon discussions with agents who have showed our listings.
  • Price sensitivity is still keen, but buyers are acting upon what they believe are fair market value acquisitions.  No one is willing to pay 2006 prices, however if priced in a manner that buyers perceive as  a “good value”, homes are selling.  The greatest market velocity is at the lower end of the market.
  • It’s a more normalized, rationale market… Except in extraordinary situations, there is a relatively low sense of urgency to buy.  People are taking their time making decisions, and as a result, homes are taking longer to sell.  The exception to this generalization is in the sub-$1M market of Lamorinda noted above.
  • Even with excellent, below market pricing, we are not seeing “irrational exuberance”.   I recently represented a client who wrote an offer on a Lamorinda property priced at least 10% below market, perhaps more.  There were only3 offers on the property.
  • The latest Fannie Mae underwriting guidelines have slowed the market.  A multitude of 2010 changes to underwriting standards have made it extremely difficult for a buyer to purchase a replacement home PRIOR to selling their existing home.  There are obvious exceptions for people with well above-average wealth, however there are many who could have qualified for the purchase of a replacement home or bridge loan even a year ago, and now they can’t.  As a result, I believe the peak period of activity in this year’s market will shift out a couple of months.  Also… expect to see more offers being made contingent upon the sale of another property, particularly in the $1.5M+ market segments.

That’s it for your Monday market observations and predictions!  Hopefully, I’ve shed provided some degree of incremental clarity to what has clearly been a confusing, muddy period in the world of real estate… even in Lamorinda!


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Categories : Lafayette Real Estate Forecast, Lafayette, CA Real Estate, Lamorinda Real Estate, Lamorinda Real Estate Market Statistics, Orinda Real Estate Forecast, Uncategorized

The Lamorinda Real Estate Market and Buffett’s Housing Predictions…

2 03 2010

The “Oracle of Omaha”, Berkshire Hathaway’s Chairman Warren Buffett, went on record Saturday in his annual letter to shareholders stating that residential real estate market problems will be substanitally behind us within the next 12 months:

  • “[Within] a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below “bubble” levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst.”

 

 

 

Even though Buffett didn’t specifically mention the Lamorinda real estate market, this a reassuring prediction for those who have have been sitting on the sidelines waiting for the market to bottom.  As I have said before, one will never know the market has bottomed until it heads up and we are looking back.  Although there are dire predictions of a “double dip” in the market due to forthcoming foreclosures, it appears thus far that those predictions have been over-stated and we are presently bumping along the market’s bottom… with relatively normal seasonality.  If Buffett is right… and he usually is… 2010 will be a very good time to be a buyer of real estate.

The “official” market stats have not been published yet by the various MLS boards, however that doesn’t mean we can’t take an early peek at the Lamorinda market for the month of February:

  • 162 homes “Active” on the market compared to 172 homes in 2009.
  • 78 “Pending” in escrow compared to just 21 in 2009!!
  • 28 “Sold” with closed escrows compared to just 12 in 2009!!

These aren’t the “official” stats, however I don’t expect that there will be much variation from what the Contra Costa Association of Realtors publishes in the coming week.  Clearly, 2010 will be a MUCH better real estate year than 2009.  It is also clear that we could begin to see some firming up of prices, and perhaps some price increases in certain segments of the market.  More about this in subsequent posts…


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Categories : East Bay Housing Market, Lafayette Real Estate Forecast, Lafayette, CA Real Estate, Lamorinda Housing Market, Lamorinda Real Estate, Orinda Real Estate Forecast, Orinda, CA Real Estate, Uncategorized

Further Thoughts on the 2010 Real Estate Market… Lafayette, Orinda, Walnut Creek …

23 12 2009

Through the trials and tribulations of life, I’ve learned to trust my “gut” when it comes to people and investment decisions — including what we are likely to see in the forthcoming 2010 Lafayette, Orinda, Walnut Creek real estate markets, as well as the surrounding communities.  I’m not suggesting that we toss empirical date out the window, rather that we assimilate it and then use our “gut” to make the right decisions.

With that said, I’ve written quite recently about the fact that we are in the “middle innings” of the mortgage melt-down crisis. There is nothing out there to suggest that 2010 is going to see any type of “rebound” in the market. I wish it wasn’t so, but the data and my “gut” both tell me to face reality here. As a matter of fact, after reading the latest stats on the economy, my gut is telling me that the window of opportunity for both buyers and sellers may lie between now and mid-2010.  Yes, it’s very nice to see the encouraging US housing market numbers published in the national press.  Like everything else in the news, you need to read the fine print.  The improvement is on a national basis, not local, and the average national home price is quite a bit different from what we see in our local markets.  The improvement in the market has been largely associated with affordable housing for investors and first time buyers.  Very little inventory in the Lafayette, Orinda, and/or Walnut Creek markets fits this profile.  Eventually, we’ll see a “trickle-up” effect, but I don’t see it as imminent in 2010.  If I’ve captured your interest, read on…

Of course, the latest economic news is very encouraging, but it doesn’t necessarily translate immediately into an improved local housing market. Most economists now believe that the US emerged from the longest recession in decades sometime within the last several months. As one would expect, California is still lagging behind, and has not seen the resurgence that many other states are beginning to feel.

The third quarter report on gross domestic product (GDP) is expected to show an annualized expansion in the US economy of close to 3 percent… a very healthy improvement. According to the Wall St. Journal, economists from JP Morgan Chase and the Credit Suisse Group are predicting 4th quarter growth up in the 4.5% range. The all important consumer confidence numbers also appear to be on the rise — very important to the economic recovery process.

So, where is the bad news and why do I think that the window of opportunity for buyers and sellers may be between now and mid-2010? The potential “bad guy” in 2010 may be The Fed as they assess what they are going to do with the unusual convergence of sound economic growth and low interest rates. Continued high unemployment may temper any temptation to raise interest rates, but since its still possible that prices may rise, inflation will be closely monitored. According to a report in the Wall St. Journal, former Fed Vice Chairman Alan Blinder believes that The Fed may have to boost interest rates as soon as June of next year.

If that occurs, then the effective cost for homes in the Lafayette, Orinda, & Walnut Creek real estate markets will increase as the cost of borrowing moves up. Within an already weakened housing market, any sort of substantial increase in interest rates will have an exaggerated negative impact.

So, as we enter the coming year, keep an eye on The Fed and what they may do to try and tame inflation. Hopefully, they’ll also be mindful of the potential impact a rise in interest rates will have on the all-important housing recovery, but that doesn’t mean that will dissuade them from bumping rates. Just keep in mind that markets are ultimately determined by simple supply and demand. If less people can afford a home, demand drops along with prices. So… a seller’s best bet for the upcoming 2010 market is to sell during the traditionally most active real estate season of late winter through early summer, while interest rates are still at all-time lows. Buyers will find a plethora of long-term solid buys now and for the foreseeable future, although a bump in interest rates could impact overall cost for a short period until market prices reflect the new cost of money.

So… if you find yourself in the Lafayette, Orinda, Walnut Creek real estate markets, or the surrounding communities, prime time real estate season may lie just ahead.


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Chapter 4: Lafayette, Orinda, and Walnut Creek Real Estate… The Current Market, Foreclosures, and Beyond.

21 12 2009

Overall inventories in Contra Costa County have been on a steady decline over the last 12 months, and now stand at a slimmed down 40% of where they stood last year.   To give a sense of perspective, the county inventory for this past month is down a whopping 2900 units from where it stood exactly one year ago.  There’s no negating the positive nature of these numbers, however the overwhelming majority of these sales represent the lower end of the county market that was most impacted by the subprime loan meltdown.   Many of the homes were foreclosures, REO properties, or otherwise sold by financially distressed sellers.   As I pointed out in the earlier “chapters”, we’re still in the middle innings of the mortgage meltdown, and it’s too early to begin celebrating any sort of victory over the crisis.

Contra Costa County Inventory

 

The real news in this segment is being made at the upper end of the market.  For those who have read my previous posts, this comes as no surprise.  For the purpose of this discussion, we’ll define the “upper end” market as being comprised of any home over $1.5M.  That’s fairly conservative for communities where $2M+ homes have historically been considered the starting point for this domain.

Lafayette and Orinda $1.5M+ Homes Inventory

 

So, what’s going on in this segment?  “Not much” is the correct answer to this question.  Based upon the latest data available for November,  we have a robust 21 months of inventory on the market at $1.5+ in Lafayette and Orinda!!  It also doesn’t look like the situation is going to turn around anytime soon.  With NO homes in this segment reported as “pending sales” during November, we aren’t going to see any type of a bounce in “sold” properties in December.  January is not exactly the time of year when we see buyers rush into the market, yet we often see inventory start to flow in by mid-month.  In the upper end, I suspect it’s going to get worse before getting better.


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Categories : Lafayette CA, Lafayette Real Estate Forecast, Lafayette, CA Real Estate, Orinda CA, Orinda Real Estate Forecast, Orinda, CA Real Estate

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