Market Update 2008

In our society’s addictive thirst for media gossip and recession era statistics, gloom, doom and Brittany are what seem to be the current favorites to market products on television and in the newspapers.

Our distaste for being bludgeoned with bad news has lead us to search for a contrarian view, one that from our little corner of the world uses realistic statistics and a more optimistic outlook on the local real estate market. Frankly, the rumors of the death of our housing market are highly exaggerated. Nationwide, the foreclosure rate at the end of 2007 was slightly over 1% and those areas hard hit are not in the Tri-Valley area. Even among the top 100 foreclosure areas in the United States ranked by RealtyTrac, as reported by MSN Money, fifty-one had rates of 1% or less, and foreclosure rates actually fell in 14 of the top 100 foreclosure areas. Obviously, a 1% foreclosure rate nationwide is too high and it will take some time to work that rate downward to a historically acceptable level. The Bay Area’s further outlying towns such as Stockton, Modesto, and Brentwood have been overbuilt during the previous boom by developers’ successful search for cheap land on which to build huge developments. Saddled by a less economically secure population and “funny money” sub-prime loans, those areas have many months or years of inventory available which will put pressure for a downward slide in prices for those towns, but will have little impact on the Bay Area core markets.

Locally, the Tri-Valley area towns of Dublin, Livermore and Pleasanton have a diversified population base with a relatively high level of socio-economic status, including education and occupation. Our residents seek local amenities, good schools, and low crime rates which have attracted and will continue to attract families interested in satisfying long term housing situations.

Statistics from the Bay East Association of Realtors provide a perspective on the current state of the real estate market in the Tri-Valley area. For single family homes, sales activity for Dublin was down from 302 in 2006 to 300 closed in 2007. Pleasanton sales activity fell from a total of 654 in 2006 to 626 in 2007, a dip of 4.3%. Livermore’s total sales dropped from 968 in 2006 to 722 in 2007, or 25.4%. However, these sales declines did not signal much of a decline for sales prices in 2007 compared to 2006. Dublin’s median sales price dropped about 2.6% from $750,000 to $730,000. Pleasanton’s median sales price declined from $850,000 in 2006 to $835,000, or about 1.7%. Even though total sales were down in Livermore from 2006 to 2007 by over 25%, Livermore’s median sales price for single family homes dipped only slightly from $645,000 to $641,000.

Condominium median sales prices in Dublin dropped 4.5%, in Livermore 6.2%, but Pleasanton’s condominium median sales price increased 5.1% from $513,000 in 2006 to $539,475 in 2007.

The outlook for 2008 is mixed. Certainly the “sky is falling” cries from the nightly news and the print media are scary, but probably inaccurate for our Tri-Valley area. We will be experiencing slower sales volume, and homes will be on the market for a longer time while finding a buyer. In the near future, we expect to see some softness in prices primarily in homes under $600,000 in Livermore. Higher end properties over $1,200,000 continue to sell well, especially in Pleasanton. With interest rates at historically attractive levels, and lenders finding a constructive path to invest in solid buyers and mortgages, we believe that the real estate market in the Tri-Valley will weather this storm well, as it has in the past.