Happy Labor Day

I needed a break to review our present situation and look at the various forecasts for real estate values.  The markets I follow indicate to me acceptance of buyers at levels below what has been posted.  The cuts represent the buyers reluctance to accept the idea that prices are going higher.  The buyers do want homes in areas that require move in condition and conditions that they are looking for based upon today's buyer's attitudes.

The comments below are those from 2 weeks ago when I decided to stoop and re-evaluate.

After the remarks I will post my closing comments based upon my research.

TWO WEEKS AGO:

 With the movement out of San Francisco and New York City and if we are to believe the media, out of big cities.  Where are they going?

Redfin has a great site for those of you who like to do some research in price and market analysis redfin.com/blog/data-center.

In the San Jose Silicon Valley market center 77.8% of the searches are within the Bay Area.  22.2% elsewhere with the leader Seattle with 6.75 of searches and Portland with 4.3%, Texas a close 3rd of the searches the remainder are in lower % numbers.

That tells a most important point.  With all the complaints on home prices, the Bay Area is still the place to be.

That takes it to price, we have the weather, we have the quality of life, we have home styles that suit the new buyer and all those looking to move out of rentals to a new home.  Let's ignore the fires, smoke and pandemic as a passing event.  To business we have a highly educated population and investment funds willing to back startup and transitions to new markets into a new Silicon Valley economy.  The ability to transform is the key asset of Silicon Valley.

Cuts in home prices I regularly put on Linkedin, Twitter and Facebook.  They tell a story of 10% price cuts in communities that were once immune.  Los Altos, Palo Alto, Menlo Park. (Get yourself on my Facebook Page, McKae Properties, or Linkedin & Twitter as gmckae to get my selections)

Now it will become a period of buyer and seller battles.  

The Covid 19 restrictions keep buyers off the market, on the virtual tours.  When it comes to muli-million properties and first time buyers, they really want to know the property.  

With all that, inventory must decline, and prices decline to a level that inventory is eliminated and prices move back up.  But it is not!

As I review the cities within our area there are some notable instances.  For example Palo Alto a formerly insensitive city to price declines did a head dive in January from just over $3.2 million to under $2.6 million.  

UPDATED REMARKS:

Zillow's calculations are beginning to show an estimated increase in home values for 2021.  Redwood City in the 94061 zip code is estimated to see home prices increase 1.3%, in Woodside and parts of Redwood City in the Farm Hill and Emerald Hills area with a 94062 zip code there is an expected 2.3% increase in 2021.  On the Coast in Aptos area there is an expected 3.1% increase for 2021.  Palo Alto in the 94301  zip code a 2.7% increase is expected for 2021.

The latest issue of Realtor.com magazine notes that home prices are increasing on a national level but notes the increases are in the nation's hottest zip codes.  Sorry to tell you the Bay Area is not in the list.  This further confirms to me that the movement out of the area in Redfin of 22.2% is most likely being seen in Realtor.com searches and Zillow searches.  

I have had several buyers who were formerly or are now renters looking outside the area.  It was interesting to see where they wanted to move.  (They all have the ability to work from home)  The Big Island in Hawaii was one choice and another was Reno and surrounding area.  I put those areas in my watch list and discovered some interesting patterns.  The Big Island has seen a number of price cuts.  Most notably in property over $1 million. ( By the way, you can get some unbelievable homes on the water for over $1 million in Kona.)  The price cuts were from the County of Hawaii, the Big Island, decision to raise property taxes on all homes over $1 million.  This reason, my colleagues in the Kona area tell me, is aimed at the High End owners who come to the Big Island as vacation homes.  The other is aimed at the BNB homes that represent visitors not residents.  In Reno and surrounding area home prices are strong in the starter home area and will vary when viewing the gated communities with golf courses and or tennis and exercise clubs.  Lake Tahoe is strong and again my colleagues tell me there are a number of Bay Area buyers looking for homes in a rather limited market.  Let me say that does not included the multi-million homes on the lake and vicinity.

That puts buyers in a very good position in our area.  Prices are not going to run away.  20% of the former completion is looking elsewhere.  Sellers who believe their homes are worth more than the market will require a price cut to get them sold.  When that happens they sell. 

To me this is an even market place for buyers and sellers.  That also bodes well for the builders who can work on their calculations of cost and profitability without concerning on future price movement against them.

On virtual tours hers is what I recently read

Buyers are 49% more likely to write a contract on a listing with a 3D Virtual Tour

1 out of 2 properties with a virtual tour sell in less than 30 days REALTOR.com says listings with a virtual tour get 40% more clicks  75% off buyer prospects prefer listings with 3D tours Buyers spend 130% more time on an agent's website if they have recorded voiceover virtual tours

A good market makes me recommend buyers to act now and look for the 10% cut.  To sellers, don't let what you think what you believe your home is worth.   Or what higher price the realtors you interview with can get you.  Sellers don't let the realtor "buy" your listing with a high price.  Go with the realtor who is rational in their price for your house and can show you statistics of where the market is and where it will be in the future.   Of course, I hope that realtor is me!

New York Real Estate Market Takes Massive Hit!

 Two places I enjoyed living in my youth was New York and San Francisco, or "The City" as it was called.  

Lord Toynbee wrote the HISTORY REPEATS ITSELF.    So have no fear.  What we see happening will create opportunities   New York went Bankrupt and the US bailed them out with muni bonds referred to as Big Mac's  For Municipal Assitant Corporation.  New York cleaned up their act and it became the destination spot of the world.  Have no fear it will happen again.

The same is for San Francisco.  I came there in 1983 bought a flat in Pacific Heights out of foreclosure and fixed it up and 11 months later sold it for $110,000 more and bought in Woodside at same sales price of SF but $225,000 less than list.  The place in SF is worth more now than the place in Woodside.

New York is a repeat of last weeks article on SF: 56% fewer sales compare to a year ago, 30.8 months of supply and 11.3% discount from list.  West Chelsea built a high end boutique condo known as the Getty and slashed sales prices by 46%.  Adding to the "eye poppers", Chelsea Mansion sells for 59% less than asking, Michael Price's Upper East Side Townhouse sold for 52% less than asking...great neighborhood!!

Los Altos is having 10% cuts on a regular basis; as is Cupertino and the Willows, all matching a trend throughout the region of sales price cuts.

How about 251 Middlefield in Palo Alto cut 42.86%!  Sounds like NYC!

While we are seeing price cuts and movement out of the area the Census reports that New Residential Sales for July are +13.9%.   Looks like that movement out to affordable new homes is the trend.

Realtor.com the CheerLeader for the Real Estate Industry is beginning to be a doubter. Home Prices Hit a Record High.

Are We in a Bubble?

 

Home prices have defied logic, rising to record highs amid a pandemic and a recession. Is the housing market overheating—and is a correction looming?

Outside the area La Honda has gone from a Zillow forecast of a 6%+ increase in a year to 8.5% increase in the next 12 month period.  While the country goes higher, Redwood City forecasts a 1.2% increase in 12 months.

While we see list cuts and days on the market in our area, the California Realtors Association saw a 28% increase in July.  Further supporting my theory that they are moving east.

For all those looking for value, we have it now!  Start your search.  There is no bell that rings at the bottom of a market.  Find the home of your dreams, make an offer 10% under list and see what happens.

Sellers, you waited too long, but do not fear.  Don't try in put in a high list in hopes that you cn negotiate an offer.  They will not come it.  Price the property 10% under the closest market and hope for multiple offers.

By the Way...I would take it as a complement for a referral of any friend or relative.

Gary

Understanding the Market

 Some time ago I stated that the Stock Market and the Real Estate Market are related.  They move together on a longer term basis.  Looking back at that comment had me wondering why we are seeing a strong report on housing price increases nationally and how that relates to our Silicon Valley Market.

To summarise the inconsistencies I can say that we are in a perfect storm situation.  It is not a buyer's market nor a seller's market.  The perfect market where sale prices are stagnant and buyers do not fight with other buyers in over bidding the home of their choice.  Pushing prices too high puts transactions at risk as lenders and appraisers are under pressure from a risk standpoint and homes do not pass.  The seller is now faced with putting the home back on the market and having to deal with a property that must cut prices to sell.

In our present situation we are in a situation where there have been a record number of price cuts on a weekly basis.  Generally speaking for the Silicon Valley cities we follow to get 50 price cuts a week is extraordinary. Some reasons could be the agent does not want to place the home on the market for what the owner wants as a price, but agrees if the owner cuts the price in 30 days without action.  30 days later with no action it is cut to the price the agent wanted.  That situation is bad, it is a sign of weakness.  The better of the strategies should have been price it 10% under the object price and get the multiple offers over to the objective price. 

Let me give you an example of where the market is going over the next year per Zillow:

    Zip Code 94062 which is Woodside and parts of areas Redwood City in proximity in to Woodside the rate of increase is .8% from $2,135,439 to $2,168,312.

    95003 is Aptos on the coast.  1.8% increase from $947,856 to $953,083.

    94301 is Palo Alto.  +.3% from $3,698,486.  Last year the typical value was $3,718,799

    94020 is La Honda. +5.6%  1-year forecast from $821,575 to $875,718

    94027 is Atherton. +.4% from $6,236,092 to $6,388,640.

    95125 is the sought after Willow Glen market in San Jose.  +.75% increase from $1,295,356 to $1,318,068

Do you notice anything?  The out of the area markets are increasing.  La Honda is going to be up 6% and Aptos on the coast up 2%. The areas that were once the hot areas have minimal appreciation.  Buyers are seeking lower price homes away from the crowded urban areas.

I looked at a 10% price cut today in the hot area of Redwood City near San Carlos.  The promotion is the shops and restaurants of San Carlos.  Doubt that will be a draw as Covid has made it impossible to use them.

Do you have an explanation as to why home prices are increasing nationally and we have a stagnant home price situation?  While that is good for buyers and sellers there is something that must be observed and used is: where to in the following years, where to on rentals, where to on new developments?

The "Exchange " section of the weekend Wall Street Journal front page is 'THE SILICON VALLEY EXODUS".  I made mention of this in prior releases.  This time the WSJ has gotten the message.  

1.  96% increase in the number of listings in San Francisco in the first week of August.
2. 11% decline in the median rent for a 0ne-bedroom apartment in San Francisco in July compared to the prior month.
3. 42% of Bay Area Tech workers who said they would move to a less expensive city if their employer as them to work remotely full time.

"There are sign that the exodus is happening.  Silicon Valley the hub of innovation, may never be the same".  While it is too soon to measure the total outflow from the area it is already happening.  Rents are falling for the first time in years. Rents are the function that determine housing prices.  They call it a "cap ratio"  When rental income falls and interest rates remain the same the only offset is lower value of the asset.  Those assets are already under pressure.  Eviction and the shut down has affected more than the lower income wage earners.  It has seeped into the middle income earner as they are faced with the demand of lower rents or leave. the middle income wage earners can afford to leave the lower income have no resources to do so.  They want to work!  They are the same people +100 years ago who created what we have today.  They cannot go onto the streets as landlords have "For Rent" signs out until they get the message.  

The situation can be bleak if the movement is out of the state.  The loss of high income earners will deplete the income base that support our state and local governments.  I believe that is why the values outside the Valley are appreciating.  that is why realtors in Tahoe are saying there is not enough home for sale to meet demand.  Look at the local paper if they have reports of the Virus.  Tahoe and counties like El Dorado have minimal afflections and deaths.  I'd trade a hot summer in El dorado and Cold winter in Tahoe to being DEAD!  Wouldn't you?

Statistics and Fake News

The San Jose Mercury News recently wrote that the Bay Area home prices continue to rise, in the face of a pandemic.

WOW!  That was hard for me to fathom.  All I experienced are price cuts and selective demand.  The Ultra Luxury Market is soft. Sales occur below list and many tie the sale to a recent cut.  This Monday there were 56 price cuts in Woodside, Atherton, Palo Alto, Redwood City, Menlo Park and Portola Valley.  Palo Alto was the greatest hit with price cuts from 7-11%.  Two cities saw price to list increases.  they were Menlo Park and Los Altos.  The other took hits.

The article goes on to say that the "median" sales price for an existing home rose 3.4% from last years "median" of $925000!  WAIT A SECOND!  $925,000?  Okay, where in our Silicon Valley is there a home for sale for $925,000?  When they went into various counties the number became a bit more realistic.  San Mateo median is $1.65 million.  I live in Farm Hill Estates.  The only $1.65 million sold here was a tear down.

Further into the article the quote is homes sales fell 8%, condo's dropped 19% and condo prices fell 4.5% to $687,000.  If they can show me a condo in Menlo Park for that price, I WILL TAKE IT!

Now the article gets interesting to me.  Livermore had an upgraded 4 BR home with pool selling with 21 offers and a significant premium over the $1.15 million asking price.  That tells me something.  There was a time not too long ago I would suggest an east bay and central valley home to struggling buyers..."are you crazy, you know how hot it is there in the summer?  100 degrees!"  That certainly tells me that buyers do not want the high rices of the Valley and they do not want the Virus spread about in the Valley.

Moving out of the area?  Zillow predicted a 5.6% price increase in La Honda from $821,575 to $875,718.  Affordability and proximity rule with an hour to 101 down highway 84 to Woodside Road.  New owners leave the peace and tranquility of the Giant Redwoods, knowing they are their family is safe and healthy.

News papers are a passing industry.  More and more of us use the cloud for our news.  We are able to get feed back from communities using "neighbors" Facebook and other social media sites.  Newspapers rely on ads to survive.  The largest advertiser are the real estate related industries.  Real Estate agents put out large sums in ads promoting listings.  It would be bad business to hit the industry newspapers rely on with "bad press".

Rents and home sales will soon see inventory expansion.  How long can bars, restaurants, barber shops, hair salons, nail shops and their employees take economic hits until they walk away and move.  The large apartment complexes in Redwood city are still empty and there is a very, very large hole on El Camino Real in Menlo Park where once were Auto Sales.  The fact that Livermore is getting multiple offers is a clear indication that the move is out of the Bay Area.

The past history of our real estate economic cycle is dead.  Year end and beginning of the year dead Spring and fall hot.  The Pandemic, the Shelter in Place in shut down of businesses and communities are and will take near term and long term tolls.  

The Chinese curse..."may you live in a changing world" certainly has its place with us, doesn't it?

The New Normal Will Become An Older Normal

This past Monday I opened the MLS website for agents and hit what I call is my "Hot List".  The "Hot List" is a summary of all the new listing, pendings, solds, price cuts or raises, withdrawn and expired properties for that day. or week.  24 price cuts for my universe of real estate.  11 price cuts in Redwood City, for an average 5.62% price cut for an average list price of $1,830,000.  A 6.78% price cut in Palo Alto in 5 listings at an average list price of  $3,756,000.  Menlo Park has 3 cuts to average 5.63% on an average list of $2,498,000.  Atherton has 3 cuts to average 7% on an average list of $7,848,000 and 2 transaction fell through.

Summer clean up of inventory?  With inventories low it would seem that prices would remain stable.  Too many cuts to warrant a low inventory market. 

The week has been loaded with news articles on renters, both residential and commercial.  The jury is out on this one.  Stories abound on landlords that will not relent on renter non-payment to landlords who forgive a month or so, and even cut rents.  The recent bill from Congress deals with halting evictions, California has done so until September 30 and San Mateo County until the end of August.  In the meanwhile; county by county have gone back into lock downs. 

This recovery is looking more protracted than many had anticipated.  The good news is the real estate residential market remains vibrant.  Low interest rates are the main benefit to buyers.  With 30-year rates below 3% buyers can look at affordability as attractive.

Two articles came across my desk. 

One from the Saturday/Sunday edition of the Wall Street Journal.  The article spoke of work from home after 5 months and the results on family life.  The article stated that employers were surprised that employees were more productive.  So much so, employers looked to keep the work from home option.  Now we had the picture of Dad in his shorts with a shirt and tie on a video call.  What was missed in the cartoon was the back ground static.  The kids were noisy, the dog barking and Mom was yelling.  The children and home schooling, Dad and Mom working from home soon became a chore and hard to accept.  Slowly the move back to the office started.  this time the desks were 6 feet apart.  Meeting and decisions became easier as the parties were in the office.  The long process of video calls and recalls of participants to one another to talk over the ideas lengthen the decision chain.  Back in the office decisions could be make and acted upon as they were talked out. 

I thought back to my first job as a Financial Analyst at General Electric Medical Systems Department.  Our desks were far apart to allow the mail room to deliver items to us, or they were in cubicles with glass partitions.  As one moved up the food chain offices replaced cubicles. 

That's the way things were in the 70's and onward until we get to the Dot Com and social media revolutions and open floors with full out flow of ideas among employees.

The virus changed all that and we all went home to work.  The single employees soon became like a  criminal is solitary confinement.   Not only stuck in their $3400 one bedroom, they could not go out!  Soon the idea of renting in a hot neighborhood became a burden and off they went to open country.  Larger homes with room for an office.  Rental markets soon collapsed as the well paid renters departed.

City dwellers are now looking to the suburbs to own.  Old suburb owners finally can get out of their homes to smaller homes in locations near children, that place in the desert or Hawaii.

The other article was a presentation from John Dione, Senior Lecture at Harvard Business School and Senior Advisor to Blackstone Group, The Pandemic World Before, Now and After.

The new economy will become the old economy of the 70's.  The high budget deficits and debt load will only be paid by higher taxes.  Income tax rates will go up, capital gains taxes will go up, estate taxes will go up.  Property taxes have to go up!  Municipalities are over loaded in debt.  Hawaii just passed a tax on the Big Island to increase property taxes on all homes over $2 million.  Friends have told me of rate increases of $20,000 to $1 million per year.  WOW! 

Taxes will put a halt on economic growth.  We will see years of slow growth to no growth economy.  Investing ideas as buying an index will become a loser.  Picking stocks will become the better ploy and only for pro's.  Real Estate will be a chosen investment of the masses.  At least for those who have a job and money to invest after taxes.

Historically it takes 31 months for employment to return to past lows, except the Great Financial Crisis which took 76 months.

The presentation is attached below.

https://isvr.acceleragent.com/usr/1024408819/CustomPages/The_Global_Coronavirus_Recovery_-__John_Dionne_-_Final__1_20219.pdf

The key to Mr. Dione's presentation is the Democrats take the presidency, house and senate and key red states.

I don't like the forecast under that assumption.  But we will see what the people think.

Transition in Buyer Attitudes

Daniel Chinni of NBC News wrote on July 19, 2020 on the way the Pandemic has changed the way Americans live, ..."but the long-term repercussions may be in our world even after the virus eventually is controlled".  The way we shop and spend money began to change before the virus hit.  The virus only accelerated that movement.  More people found acceptance to online shopping, home delivery, working from home, with serious movements out of the congested urban environments. 

In June, Visa reported American volume of spending on credit cards declined 21% from May 2020.  Debit card spending increased by 12%!  Good news, as credit card debt will decline, and spending only on money in the pocket.   Bad news for the banks.

Spending habits are declining and people are more careful with their money.according to McKinsey and Company.  40% of Americans were becoming more mindful of where they spend their money.  31% were changing to less expensive products to save money.

IN OTHER WORDS, THE COVID CRISIS IS CHALLENGING AND CHANGING LONG-HELD CONSUMER PATTERNS!

Realtor.com reported this June 2020 to June 2019, that homes in the rural and suburban zip codes saw the biggest jump in average views per property.  Property views are not sales.  It is still hard to imagine the trend not stopping for views and turning into sales.  It is impossible to ignore the larger impact of Covid 19.  Communities that are spread out have the lesser impact of the virus and social distancing is a natural occurrence.  Away from the crowded streets and mass transit are part of everyday life in urban areas.  Working from home is becoming a greater  attraction of an occasional long term commute to 5-days commute stuck in traffic.

My Comments:  I have seen more buyers look outside the area as they became disenchanted with home prices and the quality of life; most importantly, forced upon them from Shelter in Place and Covid 19 guidelines.  As I pointed out in previous commentaries there is a trend.  Irrespective of the movement, there will be movement into the Bay Area as it is highly beneficial to new careers and those advancing up in their career ladders.

The San Francisco Chronicle reports more home buyers are becoming selective amid pandemic concerns.  The rumors of SF residents fleeing the city have been exaggerated.  A robust market is in San Francisco quotes the Chronicle, but home buyers are becoming ever-pickier!  The demand is a must have private outdoor space.  Outdoor living is becoming a big trend in San Francisco. 

The Chronicle further states that Single Family Market for Single-Families are being stimulated by declines in the demand in the rental and condo markets.  Those buyers eye the outdoors of rural and suburban areas that offer outdoor space.  Rents may continue to decline and condos without private outdoor space are likely to see a drop in value.  The Chronicle goes on to state that the Ultra-Luxury market is seeing a slow down in San Francisco.  Days on the market are increasing, offers are few, and buyers are becoming more discerning when they consider the additional construction and inspection costs.  Summer is becoming the new Spring as the shutdowns have forced buyers out in time.  This is very different than a typical spring as buyers will not compromise on what they want.  Over pricing and selling homes with flaws are passed over by buyers.  Buyers want the perfect mix of outdoor and indoor space with work at home capabilities.

My Comments:  San Francisco is a reverse market to the Peninsula.  Weather patterns make looking for homes pleasant in summer in the peninsula compared to the cold, foggy summers in San Francisco.  The other issue of condos and renters moving can be seen from previous remarks on the movement to rural and less expensive areas where there is outdoor space and costs of living are much less.

MSN reports that Bay Area home sales rebounded 70% from May 2020 to June 2020.  The surge in June represents a sharp turn around from May 2020, April 2929 and March 2929 when home sales fell 51%, 37% and 12% respectively.  The market for condos was generally weaker than for single-family homes.  The median condo was down 6.5%.  OLD NEWS!

Yahoo Finance Sarah Paynter reports that Americans delayed buying homes during the coronavirus.  22 million or 9% of the population delayed buying a home.  "If there is one thing we have in abundance right now, it's uncertainty".  For those who put off purchasing 62% said they would wait more than 6 months, including 20% who have stated they have delayed indefinitely. their searches.   Mortgage forbearance is prevalent but is declining.  4.2 million Americans were in forbearance as of July 10th.

My Comments: The trend in America is changing.  Homes with outdoor space whether it is condo, townhouse or single family are chosen, but with more pickier conditions.  The days of multiple offers maybe behind us. 

Zillow reports as of June 2020 a .3% decline in one year in Atherton, .7% decline in Portola Valley, 1.3% decline in Aptos.  Opposing the slight declines from the Mercury News reports that Marin has shaken off the coronavirus slump with a 5.3% jump in June.

My closing comments:  Judging by the news reports it is easy to see the move to outdoor space.  The value of living in a small space with neighborhood spots to hang out with friends are gone.  Marin with its outdoor space, trails and easy access to SF by Ferry make great sense.  I listed in June, 4 properties in the Middleton Tract next to Portola State Park.  The interest, views and requests for disclosures were unbelievable.  Selling one property in a little more than 30 days with multiple offers was high and exceptional.  Something I have not experienced in 14 years of dealing with Middleton Tract.  1-3 years DOM were more likely.  Trends are changing, buyer attitudes are changing.  I seriously doubt that the buyers want to live in fear once the epidemic ends.   Near terms fears take very long to remove and new attitudes accepted take even longer to change.


 

The Real Estate Remains Healthy while price declines recorded in rents and the price of homes sold

From the SF Chronicle Sunday Morning Edition: "Housing Market Gets Real".  Pandemic-related restrictions on showings, the number of Bay Area homes sold fell by more than half in May.  The median price in the Bay Area fell below $1 million.  The decline is Homes sold was -51.1% and the Median Price was $965,000.  In San Mateo County the decline is homes sold was -44.5%, the median price year over year was down 6.6%.  The figures do not include condominiums and newly constructed homes, Source: California Association of Realtors.  Thank you Kathleen Pender San Francisco Chronicle columnist.

From the Bay Area News, Louis Hansen, "Rents take a breather as techies go mobile".  Prices for one-bedrooms in "techie hives" near Silicon Valley plummeted from last July.  San Francisco fell 11.8%, Mountain View dropped 15.1%, Menlo Park fell 13.5%, San Jose slid 8% and Cupertino fell 15.75% according to website Zumper.  Twitter told employees they could work from home permanently.  Google is still working on plans. While the article states the results are not Apocalyptic, the pressure on prices will come to a point that demand will come in.

Following up on the comments, Louis Hansen of the Mercury News states, "Coronavirus: Bay Area rents drop, but not just the pandemic".  "It's more complicated than techies leaving for Tahoe".  Startup founder moves in with his parents with his girlfriend and finds working remote a benefit as he visits an aunt and uncle in Seattle.  "A lot of people are going remote" says the founder.  Techies are dumping roommates breaking leases to hang out in Tahoe, hiking and rock climbing between Zoom calls; while economists doubt the lifestyle change are not the only reason for plummeting rents.  The Supply-Demand equation in housing is affected as short term rentals from vacation shops and corporate housing shift units into the long term market pushing down prices.  Remote work from home has caused; a national survey states that 17% of renters more likely to move because of the pandemic. 1 in 3 were more likely to move to save money; while only 1 in 5 said they were planning to work remotely.  CEO of Zumper says it is the "Brooklyn Effect", renters in pricy New York city move to flats in Brooklyn driving up rents in new neighborhoods.  Facebook expects as many as a half of their employees will switch to remote work during the next decade.

My comments: While "techies" find a different home, there will be renters from the non-techie group to come in when prices fall to a level that fit into their budgets. Empty nesters may once again find their children back.  The result is demand in Oakland and throughout the East Bay are proven by the move out of Silicon Valley.  The growth we experienced in employment growth from Facebook, Google and like of social media companies and technology firms were bound to have an effect on home prices and rents.  The Affordability Question has been solved or will be solved by the markets, not the politicians!

Zillow has reported that the typical home value in Palo Alto fell to $3,732,600 from $3,809,981 a 1.6% decline with 44 homes for sale and 14 sold recently.  In the once hot area of Redwood City in the 94061 area code typical home prices fell 1.3% from $1,606,165 to $1,600,165, with 51 homes for sale and 24 recently sold.

CNBC has reported that 32% of US Households have missed their July Housing Payment.  The economic fallout continues from the Coronavirus pandemic.  19% of Americans made no payment while 13% paid only a portion of their Rent or Mortgage. That is the 4th month in a row that a historically high number of households were unable to pay their rent.  Worry of eviction mount while Governor Newsom has extended the moratorium until September 30, 2020. Renters have been the most vulnerable as 36% or more likely to work in industries devastated by the Virus Pandemic.  More articles will surface on Renters' rights, housing apocalypse, activist pushing for rent forgiveness, how to break your lease, and what to do if you worry about paying next month's rent.

Bloomberg predicts that prices of homes will fall 6.6% by May 2021.  This is the first annual decline since 2012. Economic damage deepens according to forecasts from Corelogic, Inc.  This is a stark shift from the path of the market recently, where record low interest rates and tight supplies pushed up prices.  The momentum was unlikely to hold as high unemployment and increasing cases of the virus force more state and local governments to delay or scale back on their reopening plans.  "By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession" states CoreLogic Chief Economist Frank Nothaft stated in a report on Tuesday past.

To add to the news is a Wall Street Journal editorial his weekend edition on California's request for a Federal Bailout.  Remember President Ford's response to the New York City bailout ,"Ford to City: Drop Dead".  Recommended solutions once given in days of  the "Governator" to drop the tax rate to 6.5%, reducing and eliminating many deductions, eliminating corporate and sales tax sales-and-use taxes and replacing them with a business net receipts tax.  the proposals under Arnold were later replaced by Brown with higher tax rate of 13.3%, thus making California more subject to the volatile high end high earners and the highest individual income tax in the nation.

My comments: With 53% of Californians stating they would move from the state only indicates to me that a change and a radical change in taxation is necessary.  I doubt there will be a mass exodus.  More probable are the voters will cast their dissatisfaction at the ballot box.

The good news is that the urban markets have shown the greatest increase in interest and sales as the virus and the proximity of homeowners and renters to one another force a movement out to safer areas.