Bernard’s San Ramon Valley Blog

Why You Shouldn’t Believe Everything You Read In The Newspapers

The press continue to spread doom and gloom regarding the housing market, and there is little doubt that in many parts of the country, even many parts of the Bay Area, there is much cause for concern. The problem is that these reports always focus on large areas. It is not very relevant to tell a home owner in San Ramon or Danville how much home prices have eroded in Northern California. Your home is not located in Northern California. It is in a specific city. Sometimes even which part of the city makes a difference.

Real Estate Is Local
This is a phrase that is often quoted by real estate professionals and for very good reason. Take a look at the chart at the foot of the page. This has been generated from accurate data that clearly shows how sale prices of a typical 4 bedroom 1800 to 2500 square foot home have been affected over the past year. By taking just the typical family home into account we get a much more realistic picture than when we consider overall averages. To make it even more meaningful, rather than just look at the whole of the East Bay, or even the San Ramon Valley, I have broken it down by city. The figures make interesting reading. They may even affect your decision to buy or sell now, rather than waiting until later.It is immediately apparent that many of our local markets are very resilient compared to many others.
Certainly parts of our area have suffered more than others. Average prices have fallen by 16% in east San Ramon for example. Most of the volume here is in Windemere and many of the sales are distress sales - homes that have been foreclosed and then sold by the banks at bargain prices. Banks don’t want to own homes!In complete contrast to this are areas like Danville, Pleasanton and the rest of San Ramon, where, although prices have fallen, the decrease over the past 12 months is only 4-5%.
And look at Lamorinda. I have grouped together the towns of Orinda, Moraga and Lafayette because the demographics are similar and in order to have sufficient numbers of sales to provide meaningful results. Over the 12 month period under consideration, Lamorinda values have actually risen. Of course there are far fewer distress sales in this area.
So what can we predict from these figures? We still don’t have enough data to say that we have “passed the bottom”, although it seems likely that we have done so in some locations, most obviously Lamorinda.Danville, Pleasanton and the west side of San Ramon also look to be in good shape, particularly taking the relatively small decline in prices there into consideration. Walnut Creek also looks like it may be stabilizing although it would be nice to have a little more data here.Is It A Good Time To Buy Or Sell Now?
If you are moving within the immediate area, and you are both buying and selling, now is a great time to do so. I would advise finding a buyer for your home first if possible, as then you know exactly how much you can budget for your next home, but there is plenty of choice out there and interest rates are low. If you don’t have a home to sell, it is also a great time to buy. The likelihood of home prices falling further is slim, and even if they do, any gains you make will most likely be taken up with higher interest rates. The Fed has indicated that rate cuts are at an end and there is only one way for rates to go from here.  Also remember that while there is plenty of inventory, sellers are more motivated to accept a lower price for their home. When the supply starts to reduce, you can expect to pay more for your home.

Tags: Buying, Market Watch, Selling, Statistics

This entry was posted on Friday, May 2nd, 2008 at 3:13 pm and is filed under Market Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.