The National Association of Realtors reported a 2.6% drop in sales nationally in April, while the median home price declined for the ninth consecutive month. While the national news for the resale market was less than rosy, the new home sales market showed a rebound, as new home sales nationally jumped an impressive 16.2% nationally. The median home price for new homes declined a record 11.1%, indicating that builders were cutting prices to move unsold inventory.

While this is the scene nationally, the Pleasanton and Tri-Valley real estate markets continued to show steady activity and relatively low inventory for this time of year. Indeed, the South Bay and peninsula markets are continuing to show strength (what else is new?), while the central valley and outlying areas struggle with huge inventories and sluggish sales.

Courtesy Yahoo News.

State senator Carole Midgen from San Francisco was involved in an accident near Fairfield on Friday. She rear ended another vehicle while supposedly reaching for her cell phone. Ok, it can happen to anyone. Except representative Midgen has been an outspoken proponent of enacting legislation to regulate the use of cell phones in vehicles. Looks like she was a little late in getting the law passed…

Sen. John Edwards, presidential candidate, is charging $55,000 for speaking at an event at U.C. Davis. The subject: Poverty, the great moral issue facing America. Really????

The Pleasanton real estate market showed strong sales activity in the first half of May, registering 41 pending sales for the first 2 weeks. If this pace continues, the month of May in Pleasanton will show the most sales since June of 2005. Inventory remained generally low, with available single family homes at 174 at the midpoint of the month, well below the 217 homes available at the end of May in 2006. The higher end of the market continued to struggle in the first part of May, with only 8 of the 41 pending sales over $1 million. The wild card will continue to be inventory. If inventory remains relatively low as we enter the summer, expect the market to remain relatively flat. However, if inventory increases substantially it could put downward pressure on home prices in Pleasanton, especially in the higher price brackets which are already sluggish.

The latst employment statistics showed that the East Bay job growth has slowed for the time being. The East Bay lost 1500 jobs in April, and for the past year ending in April, the East Bay showed a 1.6% growth in employment, with the Bay Area showing a 2.4% increase in jobs, and California registering a 1.8% increase.

The housing market remains mired in a slump that has dragged down employment growth in multiple occupations. Jobs in residential construction, loans and real estate have vanished by the thousands in the East Bay in the past year.

In contrast, health care, professional-scientific-technical services, manufacturing, and administrative and support services all showed strong gains during the past year.

All told, the job trends in the East Bay were mixed last month, the report by the state Employment Development Department found.

Long term, the outlook for the Bay Area, and in particular the East Bay, is promising as companies look East for expansion in order to provide better access to affordable housing for their workers.

Courtesy of the Contra Costa Times.

A Recent Article in the S.F. Chronicle displays the headline “Bay Area’s housing prices buck national trend. Median cost is up 6.6%, driven by strong upscale market, but number of homes sold is down 20%”. Further in the article the author states “Local home prices are still going through the roof”. Is this an accurate reflection on the Pleasanton CA and Tri-Valley real estate market?

I have written on this subject several times before, but for the benefit of clarification, median home price DOES NOT equal value. Medain home prices can go up while real estate values decline. This is part of what is happening with this latest round of median home price statistics released by Dataquick. It shows the median home price for the bay area up 6.6% from April of 2006, while simultaneously it shows the number of sales in the bay area down by almost 20%.

Median home price tells you the midpoint, or median, of all home sales in the bay area. Theoretically, there is an equal number of home sales above and below the median price. But changes in the market can skew these numbers. If there is a steep decline in low end sales due to economic factors or changes in interest rates, resulting in fewer sales in the low end, then the median home price can actually increase as higher end sales make up a larger share of the total homes sold. This can occur even as home prices soften up or even deteriorate. Of course, the opposite is also true. A increase in activity in the low end of the market can cause the median home price to decline, even though home prices might be rising.

The lesson is this. Real Estate does not lend itself well to statistical analysis. The best we can do is come up with broad, general statistics like median home price, but it should be taken with a grain of salt. Part of the problem is that “the real estate market” is actually made up of many micromarkets, and they can often be moving in different directions. This from the same Chronicle article:

The Bay Area numbers come with some caveats, however. The median price is skewed by strong activity at the upper end. Real estate in the region is composed of numerous micro-markets, which vary tremendously. In fact, affluent Bay Area housing markets are getting stronger, while poorer areas are softening.

“The volume (of sales) being low tells you that we’ve lost the bottom 20 to 30 percent of the market that can’t qualify for mortgages,” Rosen said. Banks have tightened lending standards in recent months since numerous homeowners started defaulting on subprime loans. Subprimes are higher-cost mortgages sold to people with poor credit.

Both Rosen and DataQuick analyst Andrew LePage said the Bay Area market is a dichotomy.

“There are dual realities emerging here,” LePage said. “There is one reality for mid- to upper-priced homes up through the luxury market. In a lot of areas, there are tentative signs of those markets stabilizing and maybe even inching up both in sales (volume) and price.” For the Bay Area, he defines mid-priced as $800,000.

When someone asks me “how’s the market?”, I inevitably reply “which market?”. I am not saying that to be flippant. In Pleasanton, there are several markets. The luxury segment (Ruby Hill, Foothill Rd custom homes, Golden Eagle, etc) is limping along, with long market times and abundant inventory. The high end semi-custom neighborhoods like Laguna Oaks and Bridle Creek are struggling right now, although the Ruby Hill neighborhoods of Premia and Ascona are doing well. The lower end below $1 million is strong overall, but especially strong in Pleasanton Valley/Birdland and The Gates, where homes sell quickly. In the Ponderosa area, the homes in original Country Fair, which feature large lots, are selling with multiple offers. But the smaller lot homes in the subsequent phases in Ponderosa are limping along. And in other neighborhoods such as Stoneridge and the West Side it is hit and miss. I have had some homes get multiple offers and sell for over asking price, while others are not getting much interest.

So be careful about making broad generalizations about the real estate market, and more importantly, drawing too many conclusions from the media and the median home price statistics. When in doubt, ask a real estate professional who is active in the market.

Article courtesy of sfgate.com

The “Dalmation” market was still the operative word to describe the Pleasanton CA real estate market in April. The market remained strong in spots, while other areas/price brackets were slow. Overall, inventory of single family homes surged in April, with inventory ending the month at 170 homes available. This is up from 157 at the end of March. Sales remained steady, with 60 pending sales in April, up from 54 in March (click on graph to enlarge)

The lower end of the market (Under $1 million) showed the most strength, with inventory rising only slightly from 72 available single family homes at the end of March, to 73 at the end of April in Pleasanton. Pending sales, on the otherhand, jumped to 44 for the month of April, the highest total since June of 2006. (Click on graph to enlarge)

The midrange in Pleasanton ($1 million to $2 million) was soft in April. Inventory of available homes in this range ended the month at 60 homes, up from 49 at the end of March, and the highest level in well over 3 years. There were 12 pending sales in April, down from 18 in March. Not bad activity, but not enough to burn through the increase in inventory. Once hot neighborhoods, such as Laguna Oaks and Bridle Creek, were seeing slow activity and price reductions, an almost unheard situation in the last 5 years. (Click on the graph to enlarge)

The luxury segment of the Pleasanton market (Over $2 million) was relatively stable, with inventory ending the month of April at 37 homes, up slightly from 36 at the end of March. There were 4 pending sales in April, up from 1 in March. A respectable showing, but off the high of 9 pending sales in February in this price bracket. (Click on the graph to enlarge).

So where do we go from here? Inventory is the key. If inventory remains low, it will help balance out the market. But large increases in inventory as we enter the summer will impact the market time, and ultimate selling price, of homes on the market, as buyers start to sense that they have the luxury of being able to choose from several homes, and the pace of the market slows. The condo market is a source for concern, both because of the subprime mortgage problems which is impacting buyers ability to qualify, and the flood of new condos coming on the market, espcially in Dublin. Look for continued softness in that segment.

Consumers, seemingly unphases by the national real estate troubles and the rising energy costs, increased borrowing by a brisk annual rate of 6.7% in March, surprising analysts. This is a good sign for the economy, which continues to see strong consumer spending.

Of course, if the borrowing was from those risky subprime mortgages, that could be another matter (sarcasm inserted).

Consumer spending is indispensable to a healthy economy. The economy grew at an anemic 1.3 percent pace in the January-to-March quarter, the weakest in four years, due to fallout from the housing slump and belt tightening by businesses. Consumers, however, managed to continue spending, an important factor in keeping the economy moving.

Use of revolving credit, primarily credit cards, rose at a sizzling pace of 9.2 percent in March. That was up from a 2.9 percent growth rate in February and was the biggest increase since November.

Demand for nonrevolving credit used to finance cars, vacations, education and other things, also picked up. Nonrevolving credit use rose at a 5.2 percent pace in March, compared with a 2.7 percent growth rate in February.

The Fed’s measure of consumer borrowing does not include mortgages or other loans secured by real estate.

Reminds me of that line from that great Stevie Wonder song Higher Ground, “Consumers… keep on spending”

Courtesy Contra Costa Times.

The vacancy rate for East Bay office space dropped for the 5th straight quarter to 13.6%. This illustrates the continued strength of the East Bay economy, and the long term outlook for business looking to move to the East Bay. While the residential market is struggling is some areas, it is wise to keep in mind that in the log run, Pleasanton and the Tri-Valley are prime communities in the path of growth with strong job creation and a vibrant economy. It’s a “can’t lose” area that will continue to shine.

Courtesy of the East Bay Business Times.

The federal unemployment rate rose slightly in April to 4.5% from 4.4%. In all, 88,000 jobs were added in April, less than the 100,000 jobs analysts expected. Still, the employment market is strong, and demand for labor is high. Most experts shrugged off the report, and expected an even stronger job market as we enter the summer and fall.

“Employers are going to continue to hire. They will be hiring at a slower pace this year than they were last year, but they’ll keep hiring,” said Nigel Gault, U.S. economist for Global Insight in Waltham, Mass. “The labor market will probably stay quite tight, and there’s still going to be a problem for employers looking around for skills.”

The economy grew by a sluggish 1.3 percent annual rate for the first three months of the year, but many analysts expect growth to be closer to 2.5 percent by year’s end, adding about 120,000 jobs a month.

More evidence that our economy is stable, and stronger than most people realize, despite the well-publicized (perhaps over publicized) troubles in the national real estate and mortgage sectors.

Courtesy of the Contra Costa Times.

The newest addition to the downtown Livermore entertainment scene has opened. Fire & Ice, located at 2300 First Street, is an “improvisational grill”. It is essentially an upscale Mongolian BBQ restuarant, where you select your own raw vegetables, noodles, and uncooked meet/fish/poultry, along with seasoning sauce, and they cook it on a huge round flat grill. I have eaten at the one in Lake Tahoe, and it is a fun, interactive place to eat. The food is good too, although it is not inexpensive. Check it out! Here is their web site.