Canaries Flying Around Our Home Values

In the 94611 zip code, the real estate market is still alive – but there might be both healthy and sickly canaries flying around this coal mine.

Home prices have begun decreasing again, through mid-February. The 94611 median values were $718,918, reflecting a 15 percent decline over last year.  By contrast, Oakland’s values were $332,688 and dropped 34 percent.  While the hills performed better, that’s nothing worth gloating about!

City Data - 946111

Here’s what a bubble and post-bubble look like, in these 2003- 2008 trends. Clearly the prices dropped at a faster pace than inventory in our zip.  Prices hit rock bottom by the fourth quarter of 2007, and increased $100k by 2008 year-end.  Inventory started to disappear as a lagging indicator, with 50 percent fewer homes sold in the same time period.  Yes, we’re still in transition now.

RealtyTrac - 946111

Foreclosures are everywhere. To make this feel quite real, look at the map depicting pre-foreclosure, bank-owned, resale and auction properties reported by the bad-news bears, RealtyTrac.  We’re seeing a visual story of single homes scattered equally across the hills, in all prices ranges.

Foreclosures - 94611

Foreclosures are trending higher, and much higher than Oakland and Alameda County rates.  This is a surprise, since we were sitting pretty between December and October.  When you examine the foreclosure rates reported today versus December, however, we’re still swinging upwards.  Maybe it took longer for available rainy-day funds to dry up?

We’ll continue to watch the local economic levers, like you.  We’re pretty sure the 94611 market will stay tamped down and there won’t be any flood of homes for sale.  But there were two ailing canaries recently:  slightly lower home prices and higher foreclosures.  Maybe these birds will continue to live, after all.

How Home Values Look These Days

For all you armchair realtors, here are the latest home values.  Since we reported at year end, both median and average prices declined but they haven’t literally crashed.  The big adjustment was last summer, so it’s about steady malaise for now.

Within our 94611 zip code, AOL Real Estate reported the average price dropped from $939,185 in mid-December to $874,040 in mid-February, or 6.9% over two months.  Cyberhomes separately reported a $786,852 median in mid-December, down 3.2% from prior month.

Since the zip code doesn’t tell a complete story, I reached out for advice from realtor Deidre Joyner.  We ended up discussing Montclair real estate over a cuppa coffee, and she recently blogged about the district.  Suffice to say, there are special challenges when selling in the hills.

Brubeck In Montclair

Our topography creates hurdles:

Montclair conjures images of a hillside forest, with houses tucked into nooks and crannies.  Often you see homes perched on the hills, which take engineering ingenuity to remain upright.  At the far end of the scale are tree houses, like the cool place where jazz great Dave Brubeck raised his family.

We love living here, but it turns out these picture-perfect perches aren’t terribly practical for buyers.  Since we’re in the downturn, these preferences become more obvious.  One perfect home won’t sell because there are too many stairs, while another one gets picked up far more quickly.

While several comps had been listed for 80+ days, Deidre Joyner recalled a listing which “stood out from the rest and every buyer knew it.”  Sure enough this home offered easy access, a flatter layout, backyard and patio – and there were multiple offers last summer.  It’s not easy to find horizontal gems among the verticals here!

We have five distinct market zones:

When trying to figure out Montclair values, everything hinges on the topography.  There are differences based on homes situated in the forests or more open spots.  Of course, the homes vary around the district, including originals, sweet renovations, newer homes or palatial estates.

Joyner took a look at Montclair statistics including recent sale prices, prices/sq ft, days on market and overall home condition.  Although there’s no “true formula,” she was able to define five distinct zones with different home values:

  • Piedmont side of Montclair – west of Rt 13 and next to the City of Piedmont
  • Piedmont Pines – between Ascot and Shepherd Canyon roads
  • Fernwood – just off Thornhill and within walking distance to the Village
  • Broadway Terrace – between Thornhill and Broadway Terr, east of Rt 13
  • Montclair – other neighborhoods known simply as Montclair

So it’s worth tuning into this hyper-local view of the real estate market.  We’ll continue to look at the 94611 trends, along with other smoke signals from these locations – realtors, please help us.  The numbers continue to soften, and who knows how long this recession will last.

When Will House Values Dive?

The short answer is…we don’t know.  Lately we have been reading about the major declines in overall house values, so we dug into what’s been happening for the 94611 zip code.  Prices are not dropping here yet.

Let’s began by checking out values right now.  AOL Real Estate reports $939,185 average and $850,500 median house values in December, which still seem pretty high.

The heated market becomes quite clear when you see the three-year trends from Cyberhomes, comparing our zip, city and state.  Prices in 94611 jumped at the beginning of 2008, dropped down quickly and have held steady for the past nine months.  Meanwhile, Oakland and overall California median prices have slowly declined since 2006.

Median-Home-Values

Home sales have bounced around, and Cyberhomes even shows a slight upward price trend since last summer.  Of course, what’s really happening is the number of 94611 properties for sale has dropped considerably between 2008 and 2007.  There are fewer buyers and sellers out there, period.

Median-Sales-Price-Volume

Because the housing numbers still remain high, we wanted to look beyond medians.  During 2007, City Data shows that 69% of our homes were worth more than $1 million, 17% between $750k-$999k, and 7% from $500k-$749k.  So perhaps there will be some downshifting among these buckets this year, while the medians hold steady.

2007-House-Values

At least for now, we’re still watching the real estate market plummet all around the Bay Area.  Just like when we looked into local foreclosures, things are sort of steady around here – as long as folks meet those mortgage payments.