What were the results of the 2012 predictions?
What are the top four key factors in 2013 for Bay Area real estate?
How did 2012 home sales turn out in the Bay Area?
My annual predictions the coming twelve months of 2013 are ready for your review. However, let’s look back at my predictions for 2012: 1) Consumer Confidence actually increased to a point of creating a Seller’s market. 2) The world of distressed home sales did change dramatically for the better as predicted. There were 23% less distressed sales in the Bay Area than in 2011. 3) Home rental rates did increase to record levels as predicted, however they flattened out by year’s end because it was cheaper for Buyers to make a purchase than to rent because of the low mortgage rates. 4) Foreign investors made up much less of the Bay Area property purchases because of the monthly increase in home prices. We are way beyond the bottom of the market so there are very few bargains left for investors. So, only 50% of my 2012 predictions were on target.
Here are my top four predictions for 2013: 1) Home values will increase. 2) Inventory of homes for sale will continue at record low levels. 3) New Home sales will be the highest in the past five years. 4) Mortgage interest rates will stay at record lows.
Home Values: In the next twelve months the home values in our region of the Bay Area will increase between 10% and 12%. The factors impacting prices are a vibrant jobs market in the Bay Area, a large Buyer pool that currently exceeds available homes to purchase = a “Seller’s Market”, and the extreme quality of life that causes families to focus their home buying choices from Orinda to Pleasanton.
Inventory of Homes For Sale: As we begin 2013 the inventory of homes for sale in our region is at record lows. This condition will remain through 2013 which will continue a Seller’s Market. Competition for the ‘turn-key’ homes will be a challenge for home Buyers. They will need to have effective strategies for multiple offers as they prepare their purchase agreements. One of the key reasons for the low inventory is that potential home sellers do not yet have enough equity to make their next purchases. With today’s lending requirements the majority of the home purchases in our region require a 20% down payment. Prices have not increased enough over the past five years to create the quality of life move-up sales that have been typical in the past.
New Home Sales: We view new home sales as a key indicator of a healthy real estate market. And, you may be noticing that foundations are being poured and framing is going up in new home communities throughout our region. This is happening in all price points, from $400,000 to $1 million+. We will not get to the all-time high of new home sales, however this will be the highest new home sales year in five years. Just smile every time you drive by a new home construction site that is covered with carpenters. This is a good sign – promise.
Mortgage Interest Rates: Interest rates will continue to hover around 3% for the next 12 months. This is great for Buyers, however it is an artificial interest rate subsidized by the Feds. No matter, it will continue to allow home buyers to lock in the lowest mortgage rates in history. If you are considering buying a home in 2013, start now. There are always ‘economic wild cards’ that show that dramatically change conditions. And, home values continue to increase each month.
NOTE: 2012 Home Sales Results: Home sales results for the San Ramon Valley in 2012: 2,289 homes sold in 2012 compared to 1,974 home sales in 2011, an increase of 16% for the past 12 months!!! – Orinda, Moraga, Lafayette, Walnut Creek, Alamo, Danville, Diablo, Blackhawk, San Ramon, Dublin, Pleasanton, Livermore. Last year home values in our region increased over 6% compared to 2011. The “HOT” market in our region is still the homes priced between $700,000 and $1,000,000. In this price point there were a total of 1,786 sales in 2012 compared to 1,452 in 2011. This represented 33.3% of all home sales in the Tri-Valley compared to 27% in 2011 – Orinda – 96; Moraga – 78; Lafayette – 102; Walnut Creek – 243; Alamo – 58; Danville – 338; Diablo – 2; Blackhawk – 34; San Ramon – 332; Dublin – 114; Pleasanton – 229; and, Livermore – 159.
The 2012 $1 million+ market in the Tri-Valley represented 22% of home sales compared to 16% in 2011, and it continues to be where ‘Days On Market’ continues to be less of a challenge compared to 2011. We expect 2013 to be the year where this slice of the market continues to gain momentum – maybe 27% of the home sales in 2013. And, remember that all markets are ‘micro-local’ so specific neighborhoods will have higher prices and more sales such as the Westside of Danville and Alamo. Here are the 2012 million dollar+ sales results; Orinda – 98; Moraga – 61; Lafayette – 102; Walnut Creek – 243; Alamo – 168; Danville – 153; Diablo – 11; Blackhawk – 49; San Ramon – 76; Dublin – 114; Pleasanton – 229; and, Livermore – 154. (The only community that had a decline in home sales in this price point was Blackhawk. In 2011 they had 51 sales.)