Market Update - Stephanie Witt's Blog on Marin County Real Estate

Drought-Tolerant Landscaping Rapidly Becoming a Selling Point in California

Stephanie Witt - Tuesday, May 19, 2015

Photographs of depleted reservoirs and Governor Jerry Brown’s call for mandatory water restrictions drive home the serious impact that California’s drought will have on our lives.

cactusIn real estate, properties featuring drought-tolerant landscaping will likely fetch a premium from homebuyers, particularly in the environmentally conscious Bay Area. Sellers, if they haven’t done so already, may want to take steps now to incorporate water-saving features in their landscaping.

Several weeks ago, Pacific Union discussed indoor improvements to conserve water, such as low-flow toilets, water-efficient appliances, and dripless faucets. Today’s discussion moves outdoors. Whether you are a homebuyer, a seller, or simply a Bay Area resident trying to cut back on water usage, check out the links below for smart ideas that can save you money and help the environment.

The California Institute for Water Resources has more than a dozen web pages offering advice on many aspects of landscaping and gardening. A few of the topics include “Keeping Landscape Plantings Alive under Drought or Water Restrictions,” “Growing food with less water,” and “Water-wise gardening tips for Marin County.”

The California Landscape Contractors Association offers smart, practical tips to help you survive this year’s drought and help you prepare for water shortages.

Sunset magazine, famous for its rich, color layouts of manicured lawns, does an equally fine job presenting “24 inspiring lawn-free yards.” One look at these outdoor scenes, and you may be tempted to tear out every blade of grass in your yard. Also check out the magazine’s Water-Wise Garden Design Guide and list of 12 great drought-tolerant plants.

Better Homes and Gardens, not to be outdone, offers detailed steps to create 11 lush outdoor environments with minimal water needs.

Southern California’s Las Virgenes Municipal Water District has posted a 60-page “California-Friendly Guide to Native and Drought-Tolerant Gardens” that’s every bit as useful in Northern California.

Digital First Media, which operates a half-dozen news websites in the Bay Area, including those of The San Jose Mercury News and the Marin Independent Journal, offers plenty of local advice for tending lawns and gardens without much moisture.

(Photo: Flickr/Jeremy Levine)


    Real Estate Roundup: Bay Area a Hotbed of Hefty Down Payments

    Stephanie Witt - Monday, May 11, 2015

    Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

    AFFLUENT BAY AREA BUYERS DROPPING SIZABLE DOWN PAYMENTS
    Even with sky-high home prices, Bay Area buyers are making some of the largest down payments in the U.S., with five of our local markets landing in the top 15.Hundred-dollar bills

    According to data from RealtyTrac, the average San Francisco homebuyer put down 30 percent — $305,467 – of the purchase price in 2014, the second most of any county in the nation. San Mateo County ranked No. 3, with an average down payment of 28.5 percent, followed by Marin County at No. 5 (27.8 percent), Santa Clara County at No. 7 (25.5 percent), and Sonoma County at No. 13 (22.6 percent).

    RealtyTrac says that markets where buyers can afford to make large down payments are those with the strongest economies – certainly the case in the Bay Area, where eight of nine counties were at full employment in March.


    BAY AREA HOUSING MARKETS MOVING AT BREAKNECK SPEED
    If you’re shopping for a home in the Bay Area this spring, you’d do well to make haste, as properties aren’t sticking around for long, especially in parts of Silicon Valley and the East Bay.

    Citing MLS data, the San Jose Mercury News reports that single-family homes in two Redwood City neighborhoods have sold in an average of 10 days over the past six months, down from 14 days one year ago. Buyers in Palo Alto were also snapping up homes in 10 days, six days faster than last year. In theOakland metro area, the average home sold in 12 days, down from 13.

    While attractive homes are selling fast across the region regardless of financing method, buyers who can pay all cash move particularly quick, the publication says. All-cash buyers accounted for about 25 percent of all transactions in March in Santa Clara and San Mateo counties and about 20 percent in Contra Costaand Alameda counties.


    SAN FRANCISCO RENT PRICES HIT NEW HIGH
    The news isn’t getting any better for renters in the City by the Bay, with prices recently climbing to an all-time high.

    According to a blog post at SFGate, San Francisco rents averaged $3,458 in the first quarter of 2015, up 13 percent from the first quarter of 2014. However, it’s important to consider that that figure only includes 50-plus unit buildings, which tend to be newer and more expensive.

    Rents were also rising across the rest of the Bay Area, SFGate says, averaging $2,370, a gain of 14 percent from the first quarter of 2014. Renters pushed out of the San Francisco market are helping to drive up prices in Alameda County, where rents grew by 14.6 percent year over year, the largest increase in the Bay Area.


    SAN JOSE ECONOMY, HOUSING MARKET BACK ABOVE NORMAL
    The U.S. housing market continued its recovery in the first quarter but has still not returned to a state of normalcy. In the San Jose metro area, housing and economic activity have surpassed their typical levels, thanks to the exceptionally strong Silicon Valley job market.

    The National Association of Home Builders’ latest Leading Market Index gives the U.S. housing market a score of .91, meaning that the country’s economic and housing activity is at 91 percent of normal levels based on permit activity, prices, and employment. According to the LMI, 68 of 350 metro areas nationwide have either returned to or surpassed their last normal activity levels.

    San Jose is one of those markets and ranks sixth in the U.S. among major metro areas for highest LMI scores, though the report does not disclose an exact number. NAHB Chief Economist David Crowe said that job growth is driving the return to normalcy across the U.S., while permit activity saw only a modest improvement.

    (Photo: Flickr/ 401(K) 2012)

    Buying a Home Can Be Stressful, No Question

    Stephanie Witt - Sunday, May 10, 2015

    It’s no secret that buying a home can be stressful. Just how stressful was made clear in a recent survey that found that people are more anxious about the homebuying process (70 percent) than they are about getting a root canal (64 percent)!Retro image of new homeowners

    JPMorgan Chase’s national survey of potential homebuyers also found that one-third of homebuying couples have bickered over the process (we were, frankly, expecting a higher percentage), with men more likely than women to go beyond their agreed-upon budget limit to get the home they want.

    “It’s understandable why first-time homebuyers are anxious about the process, but preparation is the best defense,” Cecelia Barbieri, senior vice president of marketing for Chase Mortgage Banking, said in a statement accompanying the survey. That’s a sentiment shared by Pacific Union’s real estate professionals, who work to bring down stress levels by helping buyers become familiar with the homebuying process and planning ahead to get the home they want.

    The Chase survey also found that a solid majority of potential buyers (62 percent) believe now is a better time to buy a home than it was last year, and 30 percent plan to purchase a property in the next 18 months.

    Rising rental costs and historically low interest rates are among the top reasons buyers are eager to close a deal in the coming months. Interest rates on 30-year mortgages averaged 3.80 percent this past week, according to Freddie Mac, and are expected to rise appreciably by 2016.

    While potential homebuyers are optimistic that now is a good time to buy, they expect challenges along the way. Buyers are concerned about finding a home that fits within their budget (56 percent) and is located in a good neighborhood (56 percent).

    Seventy-five percent worry that their offer will be outbid by others, and 60 percent anticipate that they may need to compromise and buy a smaller home, or consider other neighborhoods outside their top choices, due to rising prices.

    “Buyers are clearly concerned about housing inventory and rising prices, especially during the competitive spring buying season,” Barbieri said. “But the research shows that interested buyers are optimistic and ready to act on their goals. In fact, 73 percent said they’d give up things like eating out and taking vacations in order to buy their dream home.”

    (Illustration: Flickr/Blush Printables)

    San Francisco One of World’s Hottest Luxury Real Estate Markets in 2014

    Stephanie Witt - Saturday, May 09, 2015
    maybeck_presidio_heights

    A home in San Francisco’s Presidio Heights neighborhood.

    After astounding growth in 2013, luxury property sales returned to more normal levels in San Francisco last year, although the region still ranks as one of the top-performing high-end real estate markets in the world.

    In its 2015 Luxury Defined report, Christie’s International Real Estate gave San Francisco the second-highest score – 54 of a possible 100 – on its Luxury Thermometer metric, which tracks growth and demand at the top end of the global market. CIRE uses four factors to gauge a region’s luxury temperature, including annual sales growth and fewest average days on market.

    In 2014, sales of $1 million homes in San Francsico grew by 19 percent on an annual basis, down from a whopping 62 percent in 2013. Pacific Union CEO Mark A. McLaughlin told CIRE that the slowdown was predictable and that the region’s high-performance economy will continue to drive growth in luxury home sales.

    “The Bay Area is still experiencing a perfect storm of hot market conditions, exceptional job growth, excellent income levels, and limited supply,” McLaughlin said.

    Because housing inventory in the Bay Area remains constrained, high-end homes in San Francisco leave the market quickly. According to the report, luxury homes in our region sold in an average of 71 days as of December 2014, eight days faster than a year ago and second only to Toronto.

    And though San Francisco remains a pricey place to purchase a luxury property, it is still relatively affordable by global – and even national – standards. CIRE says the entry point for a luxury home in San Francisco is $3 million, compared with $5 million in New York, $6 million in London, and $8 million in Los Angeles.

    Luxury buyers can also get more home for their money in the Bay Area than they can in other top international destinations, says the report, which compares listings from around the globe. For $5 million, a homebuyer in San Francisco could purchase a four-bedroom, 4,800-square-foot, single-family home with Golden Gate Bridge views. In London, $5 million buys a two-bedroom, 1,300-square-foot flat, while in New York, that money fetches a three-bedroom, 1,865-square-foot condominium on Manhattan’s Upper East Side.

    Last year saw an uptick of so-called “trophy home” transactions, CIRE says, with global sales of $100-million-plus homes reaching an all-time high. According to the report, five such homes around the world sold in 2014, and there have been 13 $100-million-plus sales since 2010.

    Perhaps unsurprisingly, two of those 13 trophy sales happened in Silicon Valley, where mind-bogglingly expensive real estate is almost a given. In 2011, a single-family home in Los Altos Hills found a buyer for $100 million, while a home in Woodside sold for $117.5 million the following year.

    (Photo: Flickr/Allan Ferguson)

    San Francisco Area Sees Largest Monthly Home Price Gain in the U.S.

    Stephanie Witt - Thursday, May 07, 2015

    Home prices in the San Francisco metro area recently jumped month over month, according to the latest numbers from a prominent real estate index. And on an annual basis, the region saw the second-largest price gains in the country.perk_up

    According to the most recent S&P Case-Shiller Home Price Indices, single-family home prices in the San Francisco metro area grew by 2.0 percent on a nonseasonally adjusted basis from January to February, the largest monthly increase of the 20 U.S. regions included in the report. Month-over-month price growth was four times higher than the index’s 20-city composite of 0.5 percent and 20 times the national average of 0.1 percent.

    On an annual basis, San Francisco home prices were up by 9.8 percent in February, second only to Denver. San Francisco topped the S&P Case-Shiller index for annual home price appreciation in November and December before dropping to No. 4 in January. Across the 20-city-composte, home prices grew by 5.0 percent year over year while increasing 4.2 percent nationwide.

    U.S. home prices have grown on an annual basis for 34 consecutive months, and all 20 cities have seen year-over-year gains since the end of 2012. In a statement accompanying the report, David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said that home prices are outstripping both inflation and wage growth and that construction of single-family homes remains slow.

    Despite the price gains, only two U.S. metro areas – Dallas and Denver – have eclipsed their housing boom price peaks as measured by the index. “If a complete recovery means new highs all around,” Blitzer said “we’re not there yet.

    “A better sense of where home prices are can be seen by starting in January 2000, before the housing boom accelerated, and looking at real or inflation-adjusted numbers. Based on the S&P/Case Shiller National Home Price Index, prices rose 66.8% before adjusting for inflation from January 2000 to February 2015; adjusted for inflation, this is 27.9 percent or a 1.7 percent annual rate.”

    (Image: Flickr/Ryan Heaney)

    SNAPSHOT of THE WORLD'S TOP 10 LUXURY REAL ESTATE MARKETS

    Stephanie Witt - Wednesday, May 06, 2015
    FROM CHRISTIE'S INTERNATIONAL REAL ESTATE

    As we observed in last year’s Luxury Defined report, the world’s top cities experienced an explosion in luxury home sales during 2013, fueled by pent-up demand, increasing consumer confidence, and robust stock market returns. In 2014 however, prime property sales in these markets settled into a stable growth pattern that seems tepid compared to the year prior.

    Artificial Grass Growing as a Drought-Era Option in Bay Area

    Stephanie Witt - Saturday, May 02, 2015

    As Californians come to grips with the severity of the current drought, it may be time to explore options that even a year ago would have been unthinkable. Maybe even … artificial grass?

    Artificial grassWith Gov. Jerry Brown’s call for mandatory water restrictions, utilities across the state are imposing limits on the amount of water available for nonessential purposes such as lawn care, which accounts for more than one-third of urban water use.

    Southern California communities face the most rigorous restrictions, but several in the Bay Area could be forced to cut water consumption by 28 to 36 percent, including Sonoma, Benicia, Antioch, and Hillsborough, to name just a few.

    With the possibility of even more heavy-handed measures in the future, artificial grass has already started to appear outside homes across the Bay Area, and The New York Times reported last week that business is booming for synthetic turf suppliers and installers.

    The Times quoted a Folsom resident, Michelle Kwek, whose family spent $4,000 to lay down 600 square feet of artificial grass in their backyard. “I’m not embarrassed to say I have a fake lawn, although a few years ago I might not have wanted to say it,” Kwek told the publication. “Everyone wants to do their part and be more water conscious.”

    Artificial grass doesn’t come cheap; it can cost $8 to $15 per square foot. But subtract the cost of water and maintenance and the price becomes more competitive. And industry representatives say artificial grass has made huge advances from the prickly AstroTurf of previous generations.

    Homeowners should check with local authorities and homeowner associations, however, before replacing their natural lawn. Some communities may prohibit artificial grass for aesthetic reasons or because it can be harmful to the environment — the material is not easily recycled, may not absorb rainwater, and does nothing to improve the soil underneath.

    Still, artificial grass, even in limited uses, can offer new landscaping options to homeowners trying to conserve water. A number of companies are active in the Bay Area; an Internet search for “artificial grass Bay Area” will reveal more than a dozen such firms.

    (Image: Flickr/Perfect Grass)

    Wealthy Americans Propel Vacation Home Sales to New High

    Stephanie Witt - Friday, May 01, 2015

    One in five U.S. properties sold in 2014 was a vacation home, the result of a thriving economy and strong consumer confidence.carmel_house

    The National Association of Realtors’ 2015 Investment and Vacation Home Survey says that vacation home sales accounted for 21 percent of all U.S. transactions in 2014. Vacation home sales surged 57.4 percent from 2013 to reach 1.13 million units — the most since the organization began conducting the poll 12 years ago.

    In a statement accompanying the survey, NAR Chief Economist Lawrence Yun attributed the sizable uptick to both economic and home price growth.

    “Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment,” he said.

    NAR’s survey found that vacation homebuyers were taking home bigger paychecks, with the median household income at $94,380 in 2014, a year-over-year gain of 10.2 percent. These buyers are also overwhelmingly optimistic about the country’s housing recovery, with 85 percent saying that now is a good time to purchase real estate.

    While sales volume was up big, the median sales price for vacation homes declined to $150,000, down 11.1 percent from 2013. According to Yun, the drop in prices is the result of a trio of factors.

    First, the number of vacation homebuyers who purchased a condo or a townhouse rose from a year ago, although most — 54 percent — bought single-family homes. Additionally, distressed properties accounted for a greater share of vacation home sales in 2014 than they did in the previous year. Finally, nearly half of all vacation homes sold last year were located in the South, where prices tend to be lower than in other parts of the country.

    Regardless of property type or geography, vacation buyers prefer coastal areas, with 40 percent purchasing a home at the beach. The survey says that 19 percent of vacation homebuyers purchased properties in the country while 17 percent bought homes in mountain regions.

    (Photo: Flickr/Harvey Barrison)

    FHFA: Mortgage interest rates slightly rise in March

    Stephanie Witt - Thursday, April 30, 2015

    FROM HOUSING WIRE


    Still remain at record lows

    Interest rates on conventional purchase-money mortgages slightly increased from February to March, according to the latest housing report from the Federal Housing Finance Agency.

    READ MORE

    Real Estate Roundup: Bay Area Rental Markets Are the Nation’s Toughest

    Stephanie Witt - Tuesday, April 28, 2015

    Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

    HIGH PRICES, LOW VACANCIES MAKE BAY AREA RENTAL MARKETS NATION’S MOST DIFFICULT 
    Rising prices and few vacancies have caused Forbes to name major Bay Area cities the three worst in the U.S. for renters, another reason to consider homeownership while mortgage rates remain low.empty wallet

    The publication calls San Francisco the nation’s toughest rental market, with an average monthly rent of $2,802 in the fourth quarter of 2014, up 12.8 percent from a year earlier. Oakland ranked No. 2 on Forbes’ list of most brutal rental market, with an average monthly rent of $1,815, a year-over-year increase of 10.5 percent. San Jose followed, with the average renter paying $2,291, up 11.3 percent on an annual basis.

    But it’s not just the steep prices that makes the Bay Area so tough on renters, Forbes says. It’s also the low vacancy rates: 3.6 percent in San Francisco, 3.5 percent in San Jose, and 2.9 percent in Oakland. The publication notes while the three cities are expected to add a combined 10,000 housing units this year, construction will be unable to keep up with population growth.


    BAY AREA, CALIFORNIA PENDING HOME SALES RISE IN MARCH
    Pending home sales across California and the Bay Area were up on both a monthly and annual basis in March, a promising sign that the traditionally busy spring real estate got off to a strong start.

    The California Association of Realtors says that March pending home sales in the state increased by 16.3 percent from February and 13.8 percent from a year ago. Across the Bay Area, pending home sales rose 17.4 percent month over month and 7.2 percent from March 2014.

    CAR’s report shows that distressed sales either declined or held steady from February in all nine Bay Area counties. Solano was the only Bay Area county to post a double-digit-percent distressed-sales rate, matching the statewide average of 11 percent. Elsewhere, March distressed sales rates ranged from 1 percent in San Mateo County to 5 percent in Contra Costa, Napa, and Sonoma counties.


    LOCAL FILM ICON PROPOSES AFFORDABLE HOUSING DEVELOPMENT IN MARIN COUNTY
    “Star Wars” creator and Marin County resident George Lucas thinks the Bay Area has enough millionaires and not enough housing for the working class. To that end, he’s offered to build more than 200 affordable homes on his property, a plan that is likely to draw the ire of some of his neighbors.

    CBS SF Bay Area reports that Lucas has proposed a 224-unit development on his property, located southwest of Novato. Because the director has offered to pay for the project out of his own pocket, he would get to handpick the residents if the development succeeds.

    But that could be a pretty big “if.”  A few years ago, Lucas’ neighbors nixed his plan to expand his studio on the same tract of land he has proposed for the housing development.


    U.S. REAL ESTATE STILL UNDERVALUED BY GLOBAL STANDARDS
    Rising prices and declining inventory are making U.S. home purchases increasingly expensive for international buyers, but properties here are still a relative bargain from a global perspective, according toa blog post from the National Association of Realtors.

    Citing figures from The Economist, NAR says that U.S. home prices are 11 percent undervalued relative to income. By way of comparison, homes are 39 percent overvalued in Australia, 35 percent overvalued in Canada, 27 percent overvalued in Britain and Sweden, and 25 percent overvalued in France.

    NAR thus concludes that foreign buyers aren’t likely to face sticker shock when purchasing U.S. real estate, noting that the average international buyer purchases a home valued at roughly double the national median price.

    (Photo: Flickr/NoHoDamon)


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