The Tide is Turning - at least statistically...

The statistics are beginning to indicate a general turn-around in the base home market. While it's still difficult to assess the high-end direction, the low-end is beginning to turn around and that should help investors feel better about the mid- and high-end market very soon. In the meantime, housing is undoubtedly becoming more affordable for most of America (and California...).

From CAR's Market Matters:

The percentage of households that could afford to buy an entry-level home in California rose to 44 percent in the first quarter of 2008, up dramatically from only 26 percent in the same quarter a year ago and 33 percent in the final quarter of 2007, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ First-time Buyer Housing Affordability Index. Households needed an income of $67,830 to purchase a home costing $356,350, which is 85 percent of the statewide median home price. The income requirement was 30 percent lower than a year ago and is closer to the state’s median income of $50,700 – good news for first-time and other homebuyers considering a home purchase. Sacramento and the High Desert regions topped the list of most affordable regions at 64 percent, with Monterey and San Francisco the least affordable at 29 and 30 percent, respectively.

Everybody knows job growth helps drive demand for homes. One of the reasons the San Francisco Bay Area continues to experience a softer real estate market decline is the fact that San Francisco created an estimated 10,000 new technology and other professional jobs and continued to experience population growth, adding more than 12,000 new residents in 2007 alone, the “San Francisco Chronicle” reported. Parts of the Silicon Valley kept pace in job growth, and both areas had a significant increase in new home construction. San Francisco added 2,500 new homes, the most in almost two decades. That trend is expected to continue this year and next with 3,281 units approved for construction in areas like Rincon Hill, the Transbay Terminal Area, Hunter’s Point Shipyard and Candlestick Point.

The Chronicle also noticed that foreclosure figures published by various organizations sometimes contradict one another. So it was last week when RealtyTrac reported a 4 percent increase in foreclosures and the highest level of foreclosure activity since it began tracking those numbers in 2005, while Foreclosures.com reported that its figures showed a drop in preforeclosures of more than 5 percent. What gives? It all depends on how you count them and how you choose to interpret the results. RealtyTrac’s foreclosure numbers combine preforeclosure activity with actual foreclosures, while Foreclosures.com separates preforeclosures from foreclosures on the theory that not all preforeclosures ultimately end up as foreclosures. That’s why RealtyTrac trends point toward a continued foreclosure problem while Foreclosure.com’s figures tend to be more optimistic.

Housing starts were up 8.2 percent nationally in April, their largest increase in two years, and that good news spilled over into parts of California. In San Diego County, 224 multi-family building permits were issued in April, up from only 17 in March. Single-family permits, meanwhile, climbed from 193 in March to 484 in April, the largest one-month total since July 2007. Despite the increases, economists expect new construction growth to continue to be stunted while the significant backlog of foreclosed existing homes is reduced in the coming months.