A welcome leap in home prices for many East Bay cities
By Pete Carey firstname.lastname@example.org
Posted: 11/26/2013 04:34:39 PM PST
Updated: 11/27/2013 09:25:02 AM PST
For map, see http://www.contracostatimes.com/business/ci_24607454/welcome-leap-home-prices-many-east-bay-cities.
The East Bay watched from the sidelines last year as housing prices soared in the South Bay and Peninsula, propelled by Silicon Valley's unstoppable growth. This year its turn to rebound finally came.
"It was like somebody walked in and flicked on a light switch" in mid-March, said Jason Crouch of All East Bay Properties in Emeryville.
The gains have brought cities closer to their peak prices before the 2007 housing crash, restored positive equity to tens of thousands of homes that had been underwater for years, and given many homeowners a chance to refinance high-interest loans. But they also reflect a tight inventory of single-family homes for sale that have set off bidding wars and have forced homebuyers to trim their expectations.
Oakland -- which Realtor.com dubbed the nation's No. 1 "turnaround town" in the second quarter -- saw its median sale price rise 56 percent in a year, reaching $450,000, according to DataQuick, a real estate information service that compiled 2004 to 2013 median sale prices per quarter for this newspaper.
Pittsburg, another community hit hard by the housing bubble's collapse, was up 54 percent to $270,000; Richmond, a town racked by foreclosures, rose 52 percent to $230,000. Martinez jumped 27 percent to $422,000; Antioch was up 31 percent to $275,000, while Oakley was up almost 39 percent to $303,500.
Those cities had some of the lowest home prices to begin with and were recovering from the biggest post-bubble declines. In pricier Orinda, where homes sell for $900,000 to $1 million, the median gained less than 5 percent in the same period.
Across the bay where some places had already reached their pre-bubble peaks, there were smaller percentage increases in sale prices over the year. Palo Alto was up only 6.6 percent to $1.82 million, for instance. San Jose, with more lower-priced houses, gained 22.8 percent to reach a median price of $660,000.
The East Bay's big gains
File photo of a home for sale in Union City. (ANDA CHU/Staff)
of the first three quarters of the year are not likely to be repeated in the final quarter of this year, according to DataQuick.
"It's possible that in lots of these communities, the biggest gains for a while have been made," said Andrew LePage of DataQuick. "It's not that we won't see gains next year, but not as many areas will see 20 to 30 percent year-over-year gains."
Not everyone is happy with the run-up in prices. The gains -- welcomed by homeowners -- meant lowered expectations for many who were looking for a home.
Christine Cochrane, who works for the nonprofit Berkeley Repertory Theatre, began looking for a new home in June with her partner, Nicole Dickerson, who works at an animal hospital in Berkeley. With a limit of $400,000, they quickly realized they'd been priced out of Berkeley.
"So then we were hoping we could get into the Richmond Annex neighborhood, but since June we've gotten priced out of the Annex," said Cochrane, who lives in Richmond.
Now the market may be working in their favor. "The last house we offered on only got three offers. It seems like things are maybe slowing down a little bit," she said.
Taking advantage of the drop in interest rates and the rise in home values, Rich Overby, a staff manager for AT&T in Walnut Creek, was able to lower his mortgage payments by refinancing his two-bedroom, two-bath home in Concord, which ended the third quarter with an annual gain of 38 percent to $520,000.
Overby said he bought his house for $409,000 in April 2011 with an FHA loan. "The bottom hadn't quite been reached," Overby said, and he watched the home slide to $380,000 before shooting up again over the past year.
"In April, I had it reappraised, and it appraised at $450,000," he said. He refinanced and got out of the FHA loan's expensive mortgage insurance premiums.
Cities where prices were pumped up by shoddy lending have the longest climb back. Even with this year's gains, Oakland and Concord are about 28 percent below their peak sale price; Pittsburg is 42 percent below; Concord is 28 percent below, and Richmond is nearly 50 percent below its peak. In contrast, Sunnyvale and Los Altos in Santa Clara County have already regained their peaks, and Belmont and Burlingame in San Mateo County are less than a percentage point from their highs.
Still, the run-up in home prices has pulled tens of thousands of homes in Alameda and Contra Costa counties out from underwater since September 2012, according to CoreLogic. The East Bay ended the first quarter of this year with 22.3 percent of its homes having negative equity; by June that had dropped to 15.7 percent, CoreLogic said.
Contact Pete Carey at 408-920-5419 Follow him on Twitter.com/petecarey.
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