Wednesday, August 22, 2012

Rebounding Bay Area Job Market Leads State

The Bay Area continues to lead California’s economic recovery, and that’s good news for the region’s housing market.

The four California counties with the lowest unemployment rates in July are all in the Bay Area, according to the latest report from the state Employment Development Department. Marin County led the state with an unemployment rate of just 6.7 percent, followed by San Mateo County (7.0 percent), San Francisco County (7.6 percent), and Napa County (7.7 percent).
They all also beat the U.S. average of 8.3 percent unemployment in July.

Other Bay Area counties also posted strong numbers in the EDD’s employment report, with Sonoma County unemployment at 8.6 percent, Contra Costa County at 9.4 percent, and Alameda County at 9.5 percent — all well below July’s statewide average of 10.7 percent, which was unchanged from June.

While California’s overall unemployment was significantly higher than the U.S. average, it was a marked improvement from the state’s 11.9 percent unemployment rate in July 2011.
San Francisco posted the greatest month-over-month improvement among Bay Area counties, with unemployment dropping two-tenths of a percent from June to July. It dropped one-tenth of a percent in Napa and Sonoma Counties, was unchanged in Alameda and Contra Costa counties, and rose one-tenth of a percent in Marin County.

THOUSANDS OF NEW JOBS

Looking beyond improvements in unemployment, the Bay Area also led the state in the number of new jobs created last month — promising stronger economic growth in the months ahead.
San Francisco employers added 4,600 new jobs in July, accounting for 18 percent of all new jobs in California, according to the EDD. Alameda County had the second highest new-job growth in the region with 2,600, followed by Contra Costa County (1,700), Marin County (1,400), Sonoma County (800), and Napa County (500).

“The Bay Area remains the state’s job growth leader,” with more than 90,000 jobs created in the past year in the San Francisco, East Bay, and San Jose metro areas, according to Stephen Levy, director of the Center for Continuing Study of the California Economy (CCSCE) in Palo Alto.

“The state economy is in strong recovery mode after a deep and painful recession,” Levy wrote in a report analyzing the EDD’s July employment numbers. “The pattern of industry growth speaks well for continuing future job gains. Construction has added 27,300 jobs and the firming housing market gives hope for larger gains in 2013. Job gains returned to the finance and real estate sectors as well with the growth in housing sales.”

July marked the third straight month of strong job growth in California, and Levy noted that the state’s 2.6 percent job growth in July, year-over-year, was double the 1.3 percent recorded nationwide.

“The high unemployment rate of 10.7% reminds us that California still has a long way to go to recover the jobs lost in the deep construction led recession,” Levy wrote. “But today’s report is another sign that the state economy is on the recovery road.”

In a June interview with Pacific Union International, Levy said the Bay Area’s economic growth is tied to “the three Ts” — technology, trade, and tourism jobs — and all are continuing to expand. Our rebounding economy, in turn, drives consumer confidence and residential real estate demand.
We noted last week that Bay Area home sales are on track to record their best year since 2005. The latest jobs report confirms our optimism.

Saturday, April 28, 2012

In marked contrast to the national reports, we're not seeing these gloom-and-doom numbers here in California or the Bay Area.
In fact, first-quarter results here at Pacific Union International  show a recovery well under way and all signs are pointing to our best year overall since 2005.
Please click on the image below to review the Pacific Union International Q1 Bay Area Report. 


Thursday, April 12, 2012

To Get a Mortgage, Start With the Perfect Loan File

Getting a mortgage approval isn’t what’s tough for most consumers. Rather, it’s the challenge of meeting the new documentation requirements that sends most people screaming for the hills.

So says Mark Greene in Forbes. Greene argues that most lenders aren’t looking to underwrite the perfect loan (e.g., one that pays back the lender on time). Instead, they are looking for the perfect loan file. Here’s how to make sure yours is up to snuff.

Read more: To Get a Mortgage, Start With the Perfect Loan File


Sunday, March 4, 2012

A Real Estate Conversation re: Listing Aggregators

Dear Friends,

As many of you are aware, there has been a burgeoning dialogue in my industry about listing aggregators such as Zillow, Trulia, and Realtor.com. We’ve closely followed the debate about how these aggregators are using our listing data, whether they’re fairly and accurately displaying our information, and how they are representing our brand.

After a few weeks of discussion,we have crafted a well-balanced and thoughtful “open letter” to Trulia that details our concerns as a brokerage and describes the changes Trulia could make that would allow us to feel like we have a mutually beneficial partnership.

I thought it would be helpful to share this letter with you so that you can also understand the pros an cons of these aggregators;

Dear Trulia,

We’ve been partners for years now. We remember when you first started back in 2005, right here in our very own Bay Area, and we joined up with you shortly thereafter.

We loved your value proposition: Put our listings in front of people we wouldn’t otherwise reach, for free. In return, you got content that would allow you to grow — and eventually monetize – that audience. It was a win-win agreement. But things have changed and frankly we’re not thrilled about it.

With size and success come challenges, and one of the challenges we’ve seen you struggle with is keeping listing data current and correct. While we were happy to lend you our information – even our own intellectual property, such as photographs and custom-written descriptions — we did so with the expectation that the integrity of our data would be preserved and that your standards of quality would be similar to those of Pacific Union’s brand promise.

That hasn’t been the case.

We work hard to build the client relationships that create property marketing opportunities (listings) and we stake our professionalism on every one. And when the information displayed to consumers is wrong, through no fault of our own, that hurts both our brand and reputation. And it sure doesn’t properly serve a consumer looking to buy a home.

We’re glad that you’re making an effort to improve accuracy with your recent pledge. But the fact is, if you had to follow the same rules we do as licensed brokers, you wouldn’t need a pledge. It would be much simpler: If your data was inaccurate, you’d be out of business.

Speaking of how hard we work to build those relationships and property marketing opportunities, it’s disconcerting and frustrating to find someone else’s face plastered all over them. Yes, we understand these are sponsored placements. And we’ll give you the fact that you identify, in tiny type, who the listing agent is and label display ads as such. And yes, we know you need to make money, but so do we.

Our real estate professionals earned those property marketing opportunities. We earned the trust of our clients. Invested years in analyzing market conditions and comparable sales and put in the long hours to clearly understand our clients’ objectives. It’s fair to say that for each property, the client has anointed us the subject matter expert.

We know the homes and the neighborhoods inside and out. As a result, our clients prefer we answer questions and receive inquiries on their homes – which is why we have an exclusive listing agreement rather than an open listing agreement. And yet, we see other smiling faces next to many of our listings. We’d guess that the average person browsing this site never notices that tiny disclaimer text. We’ll bet that most people make the assumption that this is in fact the listing agent. And that they believe the person who gets the “lead” is also the subject matter expert.

This shell game also does a disservice to the buyer. If the agent who paid for placement doesn’t know the property, and in some cases doesn’t even know the neighborhood, how can they provide relevant guidance to the buyer? That’s not win-win for anyone. In fact, it’s a losing proposition for our exclusive clients.

Look, we know this isn’t an easy business in which to succeed. And we see the value in what you offer and want to keep supporting it. But the balance has tipped too far in favor of your interests over ours, and we’d like to ask you make things right.

Here are three things that we think you should do for us, and for any brokerage that gives you their listings.
1.Take down our listings when they’re off the market. Why?
- Because presenting a sold home as an available option when it’s not is misleading to consumers (and disrespectful to the new owner). You don’t sell ball bearings. You display hearth, homes, shelter – the most emotional purchase most people make. Misleading the user with incorrect details about price, location, and status frustrates and disappoints consumers.
- Erroneous information creates undue hardship for your real estate partners. When every “lead” begins with us having to first correct a caller’s assumptions about a property they just fell in love with, we end up spending time we don’t have to defend ourselves as a result of your loose policies. This may help you sell ads, but it hurts our brand – and yours.

2. Make the listing agent’s information clear and prominent. Why?
- Because, as your partner, this is important to our business and our clients. We should not have to pay you to maintain the basic integrity of our listings. And, fine print or not, you’re leading consumers to assume the large agent photo adjacent to the listing is actually the listing agent. And most often, it isn’t.

3. Put our logo on our listings – and don’t charge us for it . Why?
- Because they are our listings. And because our logo is the official mark of our brand and has very clear standards – it must be displayed everywhere.
- Because by removing our mark you are misrepresenting our brand, which has a value in our marketplace. If you were a shopping site, you wouldn’t carry Nike shoes or apparel with the trademark swoosh airbrushed out. We’d ask for the same respect.
We’re not asking for the world here. We understand the value you can deliver. And we recognize that you’re a profit-making enterprise.

But what we want, at the end of the day, is to feel confident about how our listings are displayed.
When this happens, we’ll feel like the balance has tipped back to neutral. And that’s a win-win proposition I think we can all live with.

Tuesday, February 7, 2012

Jobs Are Driving Bay Area Real Estate

Things are looking up for the country’s job situation and are even rosier in the Bay Area. And that’s great news for the real estate markets – because a healthy Bay Area job outlook drives consumer confidence, purchasing, borrowing, and home buying.
The highlights from last week’s U.S. Labor Department employment report:

• The nation’s jobless rate dropped to a near-three-year low
• Unemployment fell to 8.3 percent in January from 8.5 percent in December
• The drop marks the fifth consecutive monthly decrease
• Job gains of 243,000 (net new) blew away economists’ expectations of a gain of only 150,000

As good as that sounds, things in the Bay Area are even better. There are three factors swinging our way that are pushing us onward and upward.

1. We’re Not California
At the risk of sounding flippant, Northern California – and specifically, the Bay Area – isn’t “California.” There’s an important distinction between our state as a whole and our little slice of home. AlthoughCalifornia’s overall unemployment rate of 11.1 percent is still higher than the U.S. average, that doesn’t hold true for the Bay Area. According to the December county data from the California Employment Development Department,which were released last week, the six Bay Area counties we serve outperformed the California unemployment rate – and Marin and San Francisco rates were even lower than the national average.

Location & December 2011 Unemployment Rate
Marin County = 6.5%
San Francisco County = 7.6%
United States = 8.3%
Sonoma County = 8.9%
Alameda County = 9.3%
Contra Costa County = 9.3%
Napa County = 9.0%

California TOTAL = 11.1%

In all cases except in Napa County, the rates had dropped from the previous month — and without exception all represented decreases from December of last year.

2. The Rolling Tech TideWe have an added stimulus in our thriving technology industry, which is continuing to power healthy movement across various economic sectors. If this keeps up, we might even be willing to use the word “recovery” in tones louder than a whisper.Bloomberg reported last week that hiring in the technology sector is gaining momentum. Among U.S. technology companies with a market value of more than $100 million, almost 50 increased employment by more than half in the most recently reported two-year period. And 74 expanded their workforces by more than 10 percent – more than any other industry group measured by Bloomberg. The continuing trend of job creation in the tech industry should serve to support the declining unemployment rates and instill increasing confidence in Bay Area real estate markets.

3. The Facebook Factor
Finally, you can add the coming Facebook IPO into the mix. It’s an event expected to turn about 900 Facebook employees into instant millionaires (and a few billionaires) and will surely cause a ripple effect in spending on real estate, travel, and consumer and luxury goods.

In addition, the IPO will likely spur additional job creation, both within Facebook and in new start-ups as well as in companies already working with or leveraging the platform. The Facebook IPO effect could boost other sectors and even the U.S. economy as a whole, a position articulated by the DailyFX, a publication by the foreign exchange market (Forex), last week:

“With a history of acquiring companies that it believes could be complementary to its core business, investing in new developments and vast overseas expansion, many investors believe that the additional cash raised by Facebook could flow into other sectors such as advertising and marketing. The potential for job creation could help boost the U.S. economy, and accordingly the U.S. dollar.”

What’s Ahead for Us?T
his is likely the first time since 2007 that we have enjoyed consistent and positive trends in economic indicators. Most of our markets currently have more qualified buyers than we do realistically priced homes, and we are seeing the return of multiple serious offers on well-priced homes.
We see this optimistic economic news as a stabilizer to our local real estate markets, although it’s not yet a catalyst for price appreciation.
However, the increasingly positive employment outlook coupled with our somewhat supply-constrained real estate environment will likely encourage home owners to list their properties and make the trade-up, relocation, or lifestyle changes that they have previously deferred until now.

Monday, February 6, 2012

Happy New Year and Welcome to 2012!


The local real estate market is already off to a more vibrant start than this same time in 2011. This past year was filled with extraordinary global events including significant shifts in political, economic and social fundamentals that "normally" would have violently rocked our confidence, if not our real estate markets.

Our year in real estate effectively followed very similar movements in the equities markets, specifically the Dow Jones Index. We experienced fairly predictable, seasonal trends until late July and early August when S&P down-graded the US Treasuries. This resulted in closings falling below season averages in September before regaining momentum through a strong month of December
'11.

This could be one of the finest times in the past twenty years to be a buyer of real estate (assuming a five-plus year hold). The Marin County market fundamentals, single family home prices and historically low interest rates have created opportunity that will be reflected upon years down the road as, "the time to buy". I have provided links to four recently published economic/housing reports that support this observation.

As we see new inventory come into the market, we know that the right location, floor plan and pricing are attractive to the most motivated buyers. Our partners in the mortgage business remind us that it is the sub4% (and in some cases sub3%) mortgage rates that can create home ownership opportunities where monthly payments (principal and interest) can be aslittleas$4,000 per million borrowed on a 5/1 at a 2.5% interest rate (APR).

Marin County real estate fundamentals were fairly stable in 2011, especially when compared to the equity markets. Single family homes sold in 2011 increased by 3% to 1,912 closings. The average days on market improved by 9% for homes over $1 million, but decreased by 7% for homes under $1 million. Average and median prices for single family homes below $1 million decreased by 5% and 6% respectively; while over $1 million saw modest decreases of 2% and 1%respectively. The links below to tables and charts more specifically reflect market conditions in Marin County.
Downloadable Market Data

Thursday, August 11, 2011

Real Estate Downturn v2? Probably not.

August 2011


Since 2008 both the economy and the real estate markets have been put through a roller coaster of both real and perceived threats. It is safe to say with a large degree of qualitative and quantitative hindsight the ’08 crisis as it related to real estate was very real and there is some lingering, although greatly diminished, effects of that today. So what does the current crop of economic news mean to the real estate market?? That is the question we will try to better understand here.


The first thing to do is look at the 2008 market. The cause of the Fall 2008 crisis was predominately driven by two colliding failures:


1. The residential housing bubble finally collapsed deflating values by 25% - 40% depending on the region of the country.


2. Many of our financial institutions were undercapitalized and near a state collapse. Largely as a result of poorly underwritten residential mortgages.


The good news from this is that our country’s economic fundamentals are far stronger today than those present during the Fall 2008 and Spring 2009 financial crisis. We have consolidated our financial institutions into larger and arguably healthier banks due to more internal and government oversight. The Federal Reserve has made access to capital both plentiful and affordable. The residential housing market remains unpredictable; however, new home building is nearly a zero in our GDP so clearly the broader real estate market is not poised for a collapse.


In fact the volatility we are now navigating is not from a lack of economic confidence; it is one of a complete lack of political confidence. To quote Moody’s it is “the risk of political polarization and uncertainty that are among the drivers of our negative outlook”…on the USA and its debt. The Chief Investment Officer shared thoughts illustrating that our underlying real (or adjusted) GDP growth might be 3% v the recently reported 0.8%. Three phenomena seem to have constrained GDP from 3% to 0.8%. They were:


· The disruption in global supply chains as a result of the Japan earthquake (.25%)


· The increasing cost of oil which resulted in reduced consumer spending (1%).


· USA government fiscal policy, or lack thereof (1%).


If we believe the above are somewhat temporary and political rhetoric can be channeled to fiscal responsibility, then we may see GDP increase in the second half of 2011 to over 2%.


While all of this macroeconomic news is interesting, it certainly affects our local real estate markets. In the San Francisco Bay Area, we are a largely supply constrained market. In the six counties Pacific Union serves, only two counties really experienced over building in the pre-2007 housing boom. As a result, inventories are manageable and not causing downward pressure on pricing. Pacific Union (PUI) has representation across all of the Bay Area’s major markets and our regional managers weighed in with the following observations from our San Francisco, Marin and other selected regions:


· San Francisco – The market seems stable with typical light activity as expected in summer. Multiple new escrows in process and mainly in $1.25 to $2.25 million range.


· Marin – High-end of market is performing well. The larger share of sales activity is priced over $2m and all buyers seem stable, committed and feel values are still appropriate.


· Napa – The high-end of market is very active with multiple deal closing in excess of $7m.


· Sonoma – Like Napa there is no evidence of stress in this market as well.


As we look forward hopefully our politicians have read a few recent headlines and now feel the demand for fiscal responsibility to start stabilizing the markets. As for local real estate, as our children return to school we expect to see an increase in listing inventory and increasing units sold through Thanksgiving. Interest rates remain at historic lows (mortgages are “on-sale”) and real estate is relatively inexpensive. While many will retreat and wait for the comfort zone (near the next peak), now is the time to seek opportunity and buy! That said, for those who have high quality homes in good locations that are looking to sell expect price pressure, but nothing like we saw a couple of years ago.