Bernard’s Danville Real Estate Blog

  From its peak in 2005/2006, the real estate market fell at an alarming rate for 3 years. Now, most people are of the opinion that the market bottomed out at some point in 2009.             By examining and analyzing recent sales in different parts of the San Ramon Valley, I hope to be able to show what is happening right now. As for the future, this should help you to draw your own conclusions.

Don’t Believe What You Read In The Papers

The national press continues to report doom and gloom in housing markets across the U.S. and they may be right when the country is considered as a whole but this is somewhat meaningless. Real estate is local. Even the East Bay comprises a number of micro-economies such that a blanket view can’t possibly tell the whole story.

Developing A True Picture

If we take an average home, say a 4 bedroom 1800-220 sq.ft detached single family residence with a 2-car garage, and look at the changing price per square foot over the last two years, we should be able to see which way prices are trending.

If we then do the same thing for different areas within the San Ramon Valley, we should be able to see which ones, if any, are experiencing higher rates of increases in prices. So this is what we can see in the first chart below. The area covered is the San Ramon Valley from Concord to San Ramon.

This paints what looks like a fairly clear picture. A steady decline from 2007 through the first half of 2009 when prices appear to have bottomed out and from what we can see, prices are presently stable.

So now lets take a look at two very disparate markets, Concord and San Ramon, specifically San Ramon’s zip code 94582 (notably Gale Ranch and Windemere) which has seen an amazing amount of activity recently. The results are in the two charts that follow.

Real Estate Is Local

Now we can really see what the phrase “Real Estate Is Local” means. To all appearances, prices in Concord may still be headed downwards despite an apparent recovery towards the end of 2009. San Ramon, on the other hand, is now experiencing rapid growth in the 94582 zip code.

Finally, let’s take a look at San Ramon 94583. This should demonstrate if real estate price trends can vary within a city, let alone a county.

In 2007, both San Ramon zip codes were valued at similar levels. Now, the 94582 zip code is clearly outstripping 94583. Will this last? I suspect it may as the schools appear to be the big attraction here.

In the 94583 zip code, prices appear to have stabilized faster than in the San Ramon Valley as a whole though, and this should be seen as a good indication that the worst is now over.

What a year! Maybe not quite so bad as 2008 for some, but many home owners will remember 2009 as the worst year of the decade.
 I think relatively few people will look back on 2009 with a good feeling. The recession continued to bite and the repercussions of the  “creative” home financing products that came about because of a lack of banking industry regulation forced many people out of their homes as a result of foreclosure or bankruptcy. Some home owners avoided this by selling as a “Short Sale” but they still lost their homes. Hopefully the worst is now over. This therefore looks like an appropriate time to take a look at what has happened to home values over the past couple of years in our area.
Analyzing The Value Of The “Typical” Home
 I am very wary of just looking at average or median sales prices of homes unless it is obvious that the comparison is of like with like. It always makes more sense to take a specific type of home and see what has happened to it’s value over a period of time.
 So let’s consider a 4 bedroom detached single family  home with between 1800 and 2500 square feet of living space (as depicted in the chart below).

Surprising Results
 The figures are interesting to say the least. Although prices continued to fall into the second quarter of the year, the third and fourth quarters increased in this popular segment of the market.
 These price increases are most likely due to a combination of factors. Interest rates fell to the point where homes became more affordable, the government incentive plans began to have an effect and buyers gained confidence that prices had bottomed out. And then inventory levels started to fall. Supply and demand kicked in. Note that as interest rates increase, home prices will probably settle down though.
 Now look at the second chart, this time for 3 bedroom homes, and we can see exactly the same pattern. Many of the buyers in this segment are first time buyers and there are still a lot of these about. Expect to see this trend continue until interest rates increase also.

 Finally, let’s take a look at the higher end - the luxury home market. Even here, as can be seen in the bottom chart, prices seemed to enter a recovery period in the third quarter, yet now it looks like this may not be quite so sustainable as in the other market segments. Prices here are certainly lower than at the start of last year.

Not Such A Bad Year
 There seems little doubt that most home owners in our area will have seen a small increase in value through 2009. This is not what you will read in the newspapers but you can’t argue with the facts. This data is actual sales figures from the Multiple Listing Service. So at least some of us may be on the track to real estate recovery. Only time will tell for sure.