Friday, March 12, 2010

Bay Area Housing Market Starts to Pick Up

This is an interesting article by the Wall Street Journal about the pockets of real estate that continues to bloom.  This is especially true in areas like San Francisco and Palo Alto, where there is always limited supply and ever increasing demand. 


Bay Area homeowners haven't had much to cheer about in the past few years amid the nationwide housing-market meltdown. Now there's a glimmer of good news: The local housing market last year began showing signs of a tentative, albeit uneven, recovery.

Cities closer to the coast such as Palo Alto, Belvedere and Tiburon saw a return to year-over-year price gains of previously sold homes in 2009, according to MDA DataQuick, a data provider in La Jolla, Calif. But other towns in harder-hit inland areas like Vacaville and Vallejo mostly lagged.

Overall, though, the region last year fared much better than in 2008. In 2009's fourth quarter, 29 of 91 cities or communities around the Bay posted gains in the median price of an existing single-family home from the same period a year earlier. In contrast, only two cities or communities logged such gains in 2008, according to DataQuick. The 2009 quarterly data didn't include the last week of December.

"We appear to be in the early stages of a fragile recovery," said Andrew LePage, a DataQuick analyst. Still, he noted that the median home prices in most Bay Area cities and communities remained well off their peaks.

Coastal communities with lower inventories of homes for sale dominated the increases, accounting for 24 of the 29 areas that posted price gains. They included San Francisco, with a 4.8% year-over-year rise in the median home price to $715,000, Oakland, up 11.1% to a median $211,000, and San Jose, where home prices rose 4.4% to a median $470,000. The biggest gainer was Palo Alto, where the median home price more than doubled from a year ago to $1.1 million.

Inland cities with more foreclosures, such as Vallejo and Vacaville, were among the top decliners, though the biggest drop was in Marin County's Greenbrae, where median prices plummeted more than 27% to $1.02 million last year.
Journal Community

DataQuick cautioned that the sharp price fluctuations in some cities are partly attributable to a shifting mix of homes sold and a low number of transactions. For example, more high-end homes sold in Palo Alto would help boost its median price, while a shift to more lower-end homes in Greenbrae could depress its median.

When shown by another indicator—the median change in the price per square foot sold—some communities that gained in overall price didn't fare quite as well.

The ritzy Belvedere-Tiburon area, for example, saw its median price per square foot dip 4% year over year, even though its overall median price jumped 30.8% last year to $2.55 million, according to DataQuick.

Still, Palo Alto's price per square foot soared 98.7% last year, and real-estate agents there have reported brisk sales. Agent Ken DeLeon said he sold 21 homes in Palo Alto in 2009, up from 14 in 2008. Palo Alto's median price had fallen in 2008 as much as 55% from 2007, helping to fuel the upsurge, he said.

Agents Lianne Pinkston and Gary Winzeler at a property in Morgan Hill, an inland area that is less competitive in the housing market.

In another hopeful sign in the market, bidding wars have returned. In Palo Alto, Jay and Jen Borenstein bested 21 other bidders in November to buy a two-bedroom, two-bath home near Stanford University's campus that was listed for $729,000. Their winning bid: $1 million, or 37% above the asking price. The property was valued at about $1.5 million in 2008, according to estimates by

"My feeling is this is a good value," said Mr. Borenstein, 39 years old, a computer-science lecturer at Stanford.

Less competitive are parts of inland areas like Morgan Hill, where a couple this month closed escrow on a five-bedroom home they bought for $585,000, which was $15,000 below the asking price, said their broker, Lianne Pinkston. Ms. Pinkston said the bank-owned property, on 3.8 acres outside Morgan Hill and zoned for horses, drew only one other bid. "Properties like that out of the city are less competitive," Ms. Pinkston said.

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