Recession: Canceled home sales tripled in San Jose, doubled in Oakland last year

The State is going to run a deficit of approximately $2 billion this year—even with higher taxes.  In December taxes collected were 12% lower than predicted.  It is now estimated that the unfunded liability of CalPERS will go up 20% this year, equaling $280 billion added to the $1.4 trillion.  Prices for rents and homes in the Bay Area have stabilized and in some areas, coming down.  Now more bad news.

“Take, for example, San Jose. In 2015, only a very modest 3.2 percent of tentative sales ended in a snafu, placing it 70th out of the nation’s 100 largest cities.

In 2016, that figure more than tripled to 9.7 percent, according to Trulia. Suddenly, San Jose ranks seventh in the nation in this peculiar phenomena.

San Francisco (not mentioned on the Trulia blog, but in a separate spreadsheet of MLS data) saw an uptick in this behavior too, but only from 3.8 percent to 5 percent. In Oakland, on the other hand, the rate more than doubled, from 3.9 to 8.5 percent.

The report notes that cheaper starter homes and first-time buyers are more likely to fall victim to the phenomena.

In this area “cheaper” is homes under one million dollars!  Looks like the California economy is going bad.  In another story it will be noted that nine of ten jobs created in December were “service or retail jobs”, meaning minimum wage.  Not good for the future.

Canceled home sales tripled in San Jose, doubled in Oakland last year

Buyers are backing out of deals more often all over, but the South Bay took it the hardest in 2016

by Adam Brinklow, SF Curbed,  1/11/17

Sometimes, a deal is not quite a deal. A home sale may go kaput at the last minute and rudely jilt a seller right back onto the market. In fact, it happens in about four percent of all home sales nationwide, according to the real estate site Trulia.

In San Francisco the number of such incident is pretty small relative to the rest of the country. But in a report titled “Sale Fail,” San Francisco-based Trulia compared the number of times buyers bolted at the last minute in 2016 to the previous year.

Turns out failure figures are up all over the Bay Area—sometimes up by huge margins.

Take, for example, San Jose. In 2015, only a very modest 3.2 percent of tentative sales ended in a snafu, placing it 70th out of the nation’s 100 largest cities.

In 2016, that figure more than tripled to 9.7 percent, according to Trulia. Suddenly, San Jose ranks seventh in the nation in this peculiar phenomena.

San Francisco (not mentioned on the Trulia blog, but in a separate spreadsheet of MLS data) saw an uptick in this behavior too, but only from 3.8 percent to 5 percent. In Oakland, on the other hand, the rate more than doubled, from 3.9 to 8.5 percent.

The report notes that cheaper starter homes and first-time buyers are more likely to fall victim to the phenomena.

What does it mean? Trulia analyst Felipe Chacón doesn’t draw any particular conclusions from the data. Sometimes, of course, buyers or sellers can just plain get cold feet, or sometimes the seller can run into trouble with something like title insurance.

But the most common reason is inability to secure financing, either because of mortgage rejection, failure to sell a present home, or both.

It’s probably not a coincidence, of course, that this occasional problem became less occasional in markets where prices exploded in 2016.

On Zillow, for example, the median price of a home in San Jose spiked 11 percent during the course of 2016, before cooling down for an eight percent rise year over year in December.

On Trulia itself, San Jose’s median home price surged over nine percent from the beginning of the year through the end of August. It later dipped down to about a five percent increase for the year overall.

And the National Association of Realtors reported at the end of the summer that San Jose homes were averaging over $1 million, “The first time that the group has registered such a high figure in a metro area,” the San Francisco Business Times noted.

San Francisco home prices, on the other hand, were mostly flat throughout the year on the same platforms, increasingly noticeably but not catastrophically year over year.

According to the Census, San Jose enjoys a higher median income than San Francisco by over $3,000. But San Francisco income is rising faster, jumping 3.8 percent between 2014 and 2015 (the most recent years available) here, versus just 1.2 percent in the South Bay.