March 5, 2008 > The Real Estate Insider
The Real Estate Insider
By Melrose Forde
These are very exciting and challenging times for real estate - and I've got the best seat in the house!
In addition to being a professional REALTOR(r), I'm also the 2008 President of the Bay East Association of REALTORS(r). Bay East is the trade association for real estate professionals in southern and eastern Alameda County. Our 5,000+ members include REALTORS(r) and affiliated members who help people buy and sell homes every day. Leading this organization is a great way for me to understand what's happening in real estate all over our region.
In 2007 we faced many challenges regarding our changing housing market. The national media overwhelmed us with news of a slumping housing market. However, it is my opinion the local real estate market isn't as bleak as portrayed in the evening news.
One problem with the way the media reports on real estate is that they only look at short-term trends. As a real estate professional I know that most homeowners purchase their home to live in for at least 5 to 10 years. When one analyzes market trends they should look at not only month-to-month and year-to-year trends but also longer periods, as well.
Overall, median prices for existing homes in southern Alameda County are stabilizing.
The statistics bear this out. While prices in some markets may be down year-to-year, 2007 was still a strong year for home values. The median price for a single-family home in southern Alameda County in 2007 was $590,000. Sure, this amount is down from 2006, ($675,000) but this sales price is still the third highest over the last 10 years. It's also an increase of more than 190% since 1996.
What does the market look like in the Tri-Cities communities? In 1996, the median sales price for a single-family home was $206,000. In 2007 it was $635,050, which is a 200% increase since 1996. Again, if you're looking at real estate as an investment, it's important to analyze price trends over a long period; not just what's happening month-to-month. From this perspective, real estate values are still very strong in Fremont, Newark and Union City in spite of the recent decline in prices.
Sales activity is another statistic that gets a lot of negative press but little actual detailed analysis. Market research conducted by the California Association of REALTORS(r) show that sales activity statewide is much more volatile than sales prices. Studies that have tracked both volume and prices since 1970 show that the units sold may fluctuate wildly from year to year, yet prices have risen steadily over the last 30 years.
Closer to home, during the last 10 years, the Tri-Cities market was super hot. From 1996 to 1997 the number of units sold increased more than 150%. Yet during that same period, sales prices increased 10%. For the next 10 years, annual units sold would change significantly from year to year but the 10-year average came out to be approximately 3,400 units per year. For 2007 there were approximately 2,000 units sold which is a 28% decrease from 2006. However, there was a 46% decrease between 1998 and 1999 and a 35% drop from 2000 to 2001. No one was writing about a real estate collapse then and I don't see a collapse happening in the Tri-Cities area now.
Regardless of what's happening in the market, people are still working with REALTORS(r) to find and purchase homes. It's in today's real estate market that buyers and sellers need help - and we're here for you.