Bay Area Housing Sales Jump, CRE Indices Dip

Where in the United States did housing sales actually go up in December? The San Francisco area, bastion of exceedingly high housing costs throughout the early- to mid- 2000s, saw home sales spike upward 19.7 percent in the last month of 2008, compared with November, according to MDA DataQuick, which specializes in compiling real estate information. Compared with December 2007, last month saw 36 percent higher home sales in greater San Francisco.It’s no coincidence that the spike comes after a sharp drop in the Bay Area’s median home price, which is now a shade more than 50 percent lower than it was in mid-2007: $330,000 versus $665,000. Thus bargain-hunting was a factor in the jump, but so was the continuing credit freeze. “Sales patterns also reflected continued problems for buyers looking to finance purchases in the upper half of the market’s price range,” the firm said in its report. Nationwide, commercial property price indices are down. Moody’s/REAL Commercial Property Price Indices for November, which were released this week, were down 14.3 percent from a year earlier. Not only that, “transaction volume also continues to fall,” noted Moody’s. “With upheaval and confusion in the marketplace, and prices falling over the last year, commercial mortgage lending is at a virtual standstill, contributing to sharply declining sales volume. As measured both by dollar value and number of transactions, repeat sales volume has fallen to levels not seen since 2004.” Yet investment deal are getting done, some of them in specialized niches. Earlier this week, Gross & Cohen Purdue L.L.C., a Brighton, Mass.-based student housing investor, completed its acquisition of the Fairway student housing apartments in West Lafayette, Ind. The 167-unit/298-bed complex is located about a mile from the Purdue University campus and is adjacent to the university’s golf course. “Student housing is still a strong niche for investors and is getting more popular due to the perception of it being recession-resistant,” Michael Cohen, senior vice president of Gross & Cohen, told CPN. “The underlying fundamentals that have attracted buyers to student housing haven’t changed, and in many cases have gotten better with rising unemployment sending people back to school.” Gross & Cohen is a specialist in the acquisition of value-add student housing properties located within a mile of major universities, Cohen said. Though still popular as investments, he added that the current climate nevertheless makes student housing deals tougher to do than they once were. “Our biggest challenge today is finding sellers who understand the current investor expectations and the financing requirements needed to get deals done,” he said.The yo-yo market might be back for now. Or maybe it was a day’s delayed Obama bounce or a better-than-expected earnings report by tech stalwart IBM that did the trick. In any case, in the wake of Tuesday’s steep drop, investors rushed in to buy on Wednesday, driving the averages up again. The Dow Jones Industrial Average rushed back into positive territory Wednesday, ending up 279.01 points, or 3.51 percent–most of what it lost the day before. The S&P was up 4.35 percent and the Nasdaq gained 4.6 percent.