Sharon Alva: The real estate year in review
No one taking even the slightest interest in real estate will be surprised to hear that in 2009, real estate was hot and the number of transactions rose. At the same time, prices dropped. While nationally the numbers reflecting this basic reality were dramatic, Alameda’s ever-resilient real estate market was in calmer waters.
We had a 3 percent increase in the number of residential units sold, from 422 to 435. But the median price fell from $650,000 to $550,000. Inside that bigger number hides some interesting information.
Single family homes overall actually rose in value by a touch. The 2.5 percent increase could be attributed to the rush of first-time homebuyers. And multiple offers were par for the course this last year. Condos did lose some value, and townhomes lost a whopping 7.6 percent of their value over last year. With significant losses to townhomes the previous two years, the aggregate loss in value since 2005 (the peak year) for townhomes in Alameda is 21.4 percent.
If you were looking to buy a home, there were a few incentives available in 2009. The interest rates were great, and will likely continue to be bright into 2010. The government credit for first-time homebuyers of $8,000 took the bite out of closing costs. The credit was extended to transactions opened by April 30 of this year, as long as they close by June 30. In fact, the credit now extends to people buying a home, even if not for the first time. That credit is now $6,000, and it is subject to income limits.
The benefits drove first-time buyers to buy. New buyers had not absorbed the credit score hit of short sales or foreclosures and could take advantage of the great rates. But once they set off to look at properties, eager first-time buyers found that Alameda’s inventory of housing had shrunk.
First-time buyers who purchased their homes three years ago, or even five years ago, could not get out of difficult loans, depreciated values from the peak period, or their changed employment, so there were fewer houses to buy. The pressure to buy bigger homes was not as great since the growing family was often trapped in their smaller home.
Inventory has been low all year. As of this writing, there are only 65 units for sale on the Island, including houses, condos, and townhouses. If I wanted to show a typical first time homebuyer a house for sale, there are only 16 houses listed at $600,000 or below, about a quarter of them quirky or very small.
If we look just a little off our Island shores, the real estate picture is very different. In neighboring San Leandro, we saw a 12.9 percent loss in value to single family houses. Buyers expecting a crash in Alameda prices were ultimately willing to leave the Island to take advantage of the drop in value next door.
There was also an obvious shift from homeowners selling their homes in traditional sales to an increase in short sales and bank owned (or REO) properties. It is hard to gauge how many sales were short sales or bank owned in 2008 since the Multiple Listing Service only required listing agents to make such notes after June 2008.
In 2009, though, we can see a steady increase in non-traditional transactions. Last year, 2.7 percent of our sales were of properties held by banks, and a few were short sales. These transactions are more complicated than traditional sales, so buyers often found themselves making more offers and eventually going in and out of more contracts than had been the case in previous years.
As for 201o, the crystal ball is still somewhat cloudy. We can assume that interest rates will stay low in the short run, but predictions for the second half of the year are for higher rates as money shifts back to the stock market.
The inventory may grow as people can no longer wait to sell due to personal circumstances. Or more happily, people will choose to sell, feeling more secure in their jobs (though negative employment news would throw all these predictions right out the window).
It seems inevitable that we will see more short sales, and the ensuing foreclosures and bank-owned sales because outlandish loans will come due. There are still negative amortization loans out there, and as they adjust, the banks will repossess and sell.
For the latest Alameda real estate and greater East Bay real estate updates, you can read my blog at www.AlvaProperties.com/realeastbay.
Sharon Alva is a Real Estate Agent with Alain Pinel. You can reach her for any East Bay real estate questions at email@example.com or on her cell at (415) 572-8759.