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Real estate markets in the East Bay seem to be defying Economics 101 as the supply of homes for sale and sales prices are both on the rise.
“Sellers are getting the message that real estate is back,” said Jennifer Branchini, president of the Bay East Association of Realtors. “It really is a good time to sell for homeowners who are looking to make a move up to a larger home, or to ‘downsize’ into a smaller home or even move out of the area.”
The inventory of single-family homes for sale during May increased throughout the region compared to one year ago.
“While there are more homes on the market it doesn’t mean that real estate is on sale,” Branchini said. “Even with more homes for sale there is still really strong demand from buyers who have been actively shopping and bidding.”
The strong demand is driving prices up in all markets.
“The real estate world has certainly changed, but what hasn’t changed is that people really want to own a home in the East Bay,” Branchini said.
The high sales prices are having a mild chilling effect in some markets as sales activity has stabilized or actually slipped compared to a year ago, even with more homes on the market.
In the Tri-Valley, Danville, San Ramon and Dublin all saw a slight reduction in the number of homes sold compared to May 2013. In Danville’s case this drop could be driven in part by the fact that the median sales price for a single-family home topped $1.1 million in May, explained David C. Stark, Bay East’s public affairs director.
The realtors in the tri-alley area will keep manipulating higher and higher prices until we have another economic crash like several years ago. They can laugh all the way to the bank now with their ginormous commission checks but be warned, I hope they all end up unemployed for what they are doing and have done.
I am confused by the comments made by Barbara. i was a Mortgage broker for several years..and I cannot even fathom a way that the realtors can set artificially high prices on houses or even drive the prices up. If they price it too high, buyers go elsewhere not to mention these days there is a strict appraisal process before a bank will lend money on a house. a Realtor cannot just arbitrarily decide a house is worth more and get the bank to fall in line. The realtor only receives a commission if the hoiuse sells..so buyers and sellers are setting the price, not the realtor. I agree that they are probably making a bit of money right now but that is only because the market is so hot. as soon as it cools off, they will be back to scrambling to make the same commissions.
Barbara is right- real estate brokers (“realtors” are a private club)
are right up there pushing prices up, and often selling houses to people who eventually lose them because they cannot afford the payments. Banks and lenders had a part, too. Often they “sold” the mortgage, and kept a big fee. The sold substandard mortgages were the cause of the crash, and the gov’t bailed out the banks, but did nothing for the people losing their homes and all the money they paid into them.
But I just got a flyer left at my doorstep, from an Erika Vieler of Alain Pinel, trying to sell a house that she withheld from the Multiple Listing Service. This way one agent can get fees for both the listing and the sale, and pocket more money for themselves. Seems like this cheats everyone but the real estate agent. Fewer people will know about it, so probably fewer offers, and a lower price for the seller.
And people who would be interested but never saw it will buy something else.
No wonder Real Estate agents are disliked.
IF you are going to pay a real estate agent, be sure to negotiate up front, for a lower rate (most honest agents will agree, esp. now when the market is so hot) and what services, ads, listings are included. Or if you look around, you can just hire someone to handle the paperwork, and pay only for the actual time taken.
If they house is already listed,
then the buyer’s agent’s fees come out of the sale.
The seller’s agent is primarily representing the seller, NOT the buyer.
Oh geez, let’s demonize someone again to protest the law of gravity! Realtors act as your agent. Supply and demand are the realities. I am not a realtor.
In Pleasanton as elsewhere, housing prices tanked and have slowly returned to pre-recession levels. But look at the location: with so many people commuting very much farther than Pleasanton, demand is always going to be pretty strong here. Plus little increase in supply. Did you see the other article today, stating the assumed trends of large employers to move here in response to high costs in SF? If that materializes (and it makes sense), it is another factor for Pleasanton home prices to increase.
When I was a young married person in the 1960s, we complained with equal fervor about house prices rising to $30k and $50k levels. Just shocking, compared to prices of the past, esp our parents’ homes in the Midwest. Same drama today. I bet someone will blame President Obama for it next.
Back in 2011 I was actually starting to feel sorry for some of the realtors I saw at the open houses. They were very desperate and eager for business then since buyer sentiment was down. There weren’t many people visiting open houses then, and the realtors would really perk up when they saw us step in the door. What a difference a few years makes.
NOLO Press: Sell your home with the help of a realtor!
http://www.nolo.com/products/for-sale-by-owner-in-california-fsbo.html
Correction: For sale by home owner without a realtor! tee hee hee…
Pocket listing
You are mis-informed, realtors who list a house do what the seller asks of them and in my case, I didn’t want my home on the market, nor have to clean and stage it to make it ready for market due to personal reasons. The agent had qualified buyers who were willing to give me top dollar based on recent sales in my neighborhood and the agent reduced the commission too! It was a win-win all around.
by the way, I personally know the agent you mentioned and for the record she a mother of 5 and gets no support from her ex-husband…give a gal a break here!
Nolo Press will offer information that will help you sell your property.
Well said, Al. I’m surprised the blame hasn’t fallen onto the unions somehow. Perhaps the teachers? I’m sure I won’t be disappointed. I’ll stay tuned…
Thx, blame game. Re “price fixing”: the latest approach I see is to make the asking price low, and then let it just become an auction. Which a house sale really is, anyway.
A SF house was recently sold for 170% of asking price. It was reported in SFGate. An attractive fairly modest 2 BR house. Seems easy to explain via simple supply and demand issues. There’s a trend for Silicon Valley employees — some of whom have giant windfalls from start-ups, IPOs, and stock — to move to SF, what with the easy commute due to the controversial private commute buses. For a well-paid techie, who really mainly likes to work a lot, and who has tens of millions in loose cash, it seems totally understandable that once such a person finds a house s/he likes, it’s like deciding whether you want a cup of coffee for $1.00 or $1.70 — the difference in cost just doesn’t matter, but you do want that particular cup of coffee, right now.
A conspiracy? Price fixing? crooked realtors? Some other dark reason? Not at all. Just the market doing its thing.
Right Al, now that guy needs to find a greater fool than himself.
if you don’t sell you property, then where in the world are you going to plant you new onion garden…duh
i rest my case…
To C-Student: You missed the point. When it’s time to sell, this buyer won’t care if it’s at a loss. If s/he was going to care, s/he would not have bid so much over the zillow/trulia price (over the price of comparables).
Instead of coffee, let’s use cake as the example. You are a wealthy person in a restaurant. At the end of the meal, you wonder whether you want the $5.00 slice of one cake or the $8.50 slice of another. You make your decision entirely on which one sounds more delicious. The price is irrelevant. If you know you will not eat more than a few bites, that’s okay too. You will give the rest to a tablemate, or leave it — not sell it. You don’t care about recovering the 70% of the cost that you blew off by eating only 30% of the cake. You just wanted the bite, whatever it cost, and now you are done. It is simply irrelevant because the $ amount is so small relative to your total wealth. (Yes, there can be other factors, like an obsession with thrift, etc.) Same with the house. It’s about having the exact right place to live, NOT making a profitable investment.
For most of us, this is not the case. We DO care about overpaying. We should. But in SF now, there is trend of overpaying because some buyers are not as price sensitive as the rest of us.
We will see much more of this because of the huge redistribution of wealth in the U.S. over the past 30 years — the most wealthy among us will find they are not that price sensitive (as the rest of us become MORE price-sensitive). So we see the emergence of wildly high prices toward the top of many markets (incl housing) at the same time that workers of the WalMart type do not earn enough to sustain themselves without aid, and the folks in between must also increasingly cut back.
The “greater fool” theory applies when it is important to break even or make a profit. That is not the case with non-investment purchases of negligible monetary value — like a cup of coffee, a slice of cake, and even a house (“negligible value” as defined by the buyer, not you).
Normal move-up and move out tri-valley transactions mostly fit the “willing buyer – willing seller” principle that determine price. However, we still get some Chinese all-cash buyers who often buy by neighborhood and don’t even visit the property, just video. Investors, who severely damage our
‘local’ movement among families.
If somebody puts their property up for sale, blame the seller not the buyer…the seller is about profit…duh…besides, how is any of your business if somebody else makes money?
To Native: All-cash buyers come in all ethnicities. As do low-ballers and investors who will turn the house into a rental. If the seller’s house isn’t moving (i.e., none of those “local movement among families” folks want it, or bids high enough), the seller must make the tough choice to sell or not to sell to someone the neighbors might not like. Been there. My situation permitted me to wait, but not everyone can do that, just to please someone like you — who is after all concerned about a neighborhood the seller is leaving rather than entering.
If you see an ethnic group who regularly can make all-cash buys, I would think we might want to emulate a culture whose thrift and savings habits make that possible. Sure wish I had a habit of saving more.
It’s about ‘cash’ NOT ethnicity !! Except some ‘groups’ have more cash than others!!! It’s about having ‘investors’ in the neighborhood. Most townhouse HOA neighbors get dinged by lenders IF there are too many ‘rentals’ in a neighborhood, harming those not yet selling. On the high end, it unrealistically elevated prices into bubbleland. The ‘crash’ was caused by lender REfi appraisals inflating prices beyond reality, plus those buying homes they did not have sufficient income to qualify for for lenders & government wanted everybody in a house…an impossible fairytale. Home ownership is not for everybody.
@native — “plus those buying homes they did not have sufficient income to qualify for for lenders & government wanted everybody in a house…an impossible fairytale. Home ownership is not for everybody.”
Almost, but not quite right. The government had no cares about who did or did not own homes. The realtors and lenders are the ones who conspired to lie about income and get people into homes with no chance of ever making the payments.
Realtors tell buyers that “you can deduct all of your interest and taxes”. Really? Not if you pay alternative minimum tax or have total mortgage debt exceeding the deductible limits.
Mortgage brokers tell buyers that they should not worry about that 30 due in 5 loan that will jump exponentially in payments because they can just refi and get another teaser rate. Really? Not if the property goes down in value.
I have a solution for the real estate meltdown. Every time a realtor or a lender collects a commission they remain on the hook to pay that entire commission into a special fund if the buyer defaults. Lie to a buyer to make a sale, pay back your commission. Lie to a buyer to fund the loan, pay back your commission. The real idiots in the meltdown were the realtors and the lenders who sold greedy and stupid people homes that they never intended to pay off. Those of us who actually PAY our debts will be paying this one off for eternity.
resident, you’re right that we’ll all be paying it off for a century, but it was our government’s FANNIE & FREDIE who were insuring those bad loans with our money….and I think the new guy Obama just put in there will continue insuring the insurable.
@resident, I’m not a real estate professional but the cause of the meltdown lies directly with the government and the borrower. If you want to reduce the defaults in home loans all you need to do is make the loan recourse.
The government rolls out all these plans to incentivize people to act, such as tax laws and then when too many take them up on their offer they call it a loophole.
If the real estate business were as simple as “supply and demand” there would be nothing to discuss here – NO financial meltdown and economic burden resulting from it that we are and will be dealing with for a generation. The ‘supply’ in the drive-up to the meltdown was in houses as commodities for the mortgage industry to trade in. Talking about the financial meltdown without mentioning the sub-prime lending and deliberate profits made by processing and dumping bad loans as soon as possible makes no sense. Government programs to help people afford homes, those were small potatoes. The size of those loans and the number of borrowers would have barely touched the real estate economy as a whole. After the Glass-Steagal act was repealed mortgage lenders had a way to make money and sell the risk. Realtors were maybe just innocent participants profiting from the market forces, but there were bad actors who knew they were helping home buyers off a cliff – they just chose to believe the market would ALWAYS keep going up, just like it was irrationally exuberantly doing, and it would all be OK.
The changes made post-meltdown to the banking, mortgage, and real estate industries are weak and insufficient to prevent another run-up and crash. The profit incentive is way to powerful to moderate with a few vauge changes. The pressure on the housing market is increased now with “investors” getting back into the market again, not families looking for a home. As long as houses can be used as investment commodities, people trying to find a place to live will be at the back of the line.
If the real estate business were as simple as “supply and demand” there would be nothing to discuss here – NO financial meltdown and economic burden resulting from it that we are and will be dealing with for a generation. The ‘supply’ in the drive-up to the meltdown was in houses as commodities for the mortgage industry to trade in. Talking about the financial meltdown without mentioning the sub-prime lending and deliberate profits made by processing and dumping bad loans as soon as possible makes no sense. Government programs to help people afford homes, those were small potatoes. The size of those loans and the number of borrowers would have barely touched the real estate economy as a whole. After the Glass-Steagal act was repealed mortgage lenders had a way to make money and sell the risk. Realtors were maybe just innocent participants profiting from the market forces, but there were bad actors who knew they were helping home buyers off a cliff – they just chose to believe the market would ALWAYS keep going up, just like it was irrationally exuberantly doing, and it would all be OK.
The changes made post-meltdown to the banking, mortgage, and real estate industries are weak and insufficient to prevent another run-up and crash. The profit incentive is way to powerful to moderate with a few vauge changes. The pressure on the housing market is increased now with “investors” getting back into the market again, not families looking for a home. As long as houses can be used as investment commodities, people trying to find a place to live will be at the back of the line.
C-Student is also mostly correct. A recourse loan that is fully taxable to the buyer if not paid is the way to go. Allowing these greedy idiots to buy what they could never afford, walk away from the loan and pay NO TAX on any of the forgiven debt is nothing less than grand theft.
Realtors and brokers are still the biggest thieves in this whole process. I personally know of a family that had a paid off home and wanted to pay cash for a second home. They are retired and could afford it, they really did not want to have to make a payment on the home. The realtor and broker convinced them to take a half million dollar new first mortgage on the principle residence. Stupid, stupid stupid. They had no “acquisition debt” as the home was paid for. The only interest they can deduct is what they pay on the first $100,000 of the loan. The rest is not deductible. Brokers and realtors try to play tax lawyers too and the only ones hurt are the buyers and sellers — who pay huge commissions to be cheated out of their money.
We need strict laws that require people to pay for what they promise to pay for — or be taxed on all of the forgiven debt as income. No different than running up credit card debt and walking away from it. The CC company issues a form making all of that forgiven debt taxable. As it should well be. Manage your spending or pay the price, but stop expecting me to pay it for you.
@resident, I don’t see in your example where the family was cheated out money. They purchased a vacation home, the real estate commission is the same whether you pay cash or finance it. They made a decision to finance it and there are cost associated with loan origination. I can only assume they made the decision to purchase the home through refinancing their primary residence because they didn’t like the higher interest rate associated with a vacation home. Also if your statements are true they are sitting on $500K and they can simply pay-off the outstanding loan and only be out the cost to originate, which is mostly tax deductible.
To “Resident, C-student and All Over Again”..thank you. It is nice to see a healthy intelligent conversation on this forum that educates the rest of us as well. Very refreshing.. the constant back and forth that usually goes on here gets a little old…
Lenders more than Realtors. I know more than a few in Pleasanton, who liked living larger than they could, and made the decision to ‘pull money out of their homes, for world trips, purses, and ‘keeping up a front’. I also know some of them no longer own homes at all. Homes that use to have sizeable equities. It’s good there are better lending requirements now. But appraisals are now as wrong on the ‘tough’ side, as they were when they ‘always met the selling price’, regardless of excessive sales price.
Native is right about the people who lived large by using their homes as ATMs. The real crime is that when those people walked away from their debts they did so with absolutely no consequences at all. No tax owed on the forgiven debt, no lasting damage to their credit reports, nothing to keep them from doing this all over again. Who pays for it? Those of us who actually PAY our taxes and PAY off our debts.
People who did that should be prevented from ever owning a home without a down payment of half or more. The debts need to be recourse (bank can take everything you own, not just the house) and they need to cause huge tax consequences when walked away from. There need to be such awful economic consequences for refusing to pay debt that it would take a lifetime or more to recover and do it again.
Not sure who I would let sell my home but that mother and son duo are big time crooks.
Yes, something’s wrong by allowing those who walked without consequences. My mechanical engineer son was without jobs twice during peak, (employer closed doors)but he stayed and depleted savings making 6% interest house payments. Couldn’t REfi when rates dropped because of unemployment. Paid the price to ‘keep’ his only asset. So any talk of taxpayers ‘helping’ those who got themselves in ‘fixes’ or weren’t playing by established rules, is not well received!
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I thought buyers and sellers set the market. I cannot imagine what mechanism a realtor has to fix prices.
Buyer (talking to Realtor): What should we list it for?
Realtor: Let’s look at the comps
Buyer (after looking at comps): Ok I feel comfortable with $x
Realtor: Ok
Then the games begin.
This is hardly price fixing.