Ever Thought of Owning a Vacation Home?

Vacation Homes Offer Great Income-Generating Potential

The arrival of summer is always a popular time to scout for the perfect vacation home, whether it be in the mountains or near the beach. Many people dream about purchasing a vacation home and there are many benefits to owning one. Not only can the home serve as a family retreat, it can also serve as a dream home for eventual retirement.  Additionally, vacation property owners who are open to renting their properties during peak season will often discover that the rental income generated can help offset the cost of the mortgage.

In the recently published National Association of REALTORS® (NAR) 2017 Investment and Vacation Home Buyers infographic, 42 percent of vacation home buyers plan to use their property for vacations or as a family retreat. The same chart shows that 37 percent of investment property buyers purchased to generate income through renting the property.

Given the rising popularity and availability of online resources for owners to manage short-term and long-term property rentals throughout the country, it’s no surprise that there was increased interest in purchasing second homes in 2016.  According to NAR, 44 percent of investors, and 29 percent of vacation buyers, did or tried to rent their property last year and plan to do so in 2017 – saving them hundreds or thousands of dollars.

Regardless of the reason, over the decades owning a second or more homes has typically generated income because real estate offers a tangible asset that appreciates with time, and offers many tax and practical advantages. You can’t live in a mutual fund, stock or bond, but you can live in a vacation property whenever you want or need to.

If you are considering the purchase of a vacation home, it helps to find a real estate agent who has a deep understanding of the local market. Contact me today for a great referral!

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The Strongest Selling Season in a Decade

Real estate is currently booming and experts attest that this is the strongest market since the 2006 price peak, but with the added benefit of market stability. The latest National Association of REALTORS® Confidence Index concluded that much of the country has experienced very strong, or strong buyer traffic. This is an indicator of demand, but not necessarily supply, which has been short in many states across the county. The latest highlights according to NAR indicate:

  • First-time homebuyers accounted for 34 percent of sales.
  • With fewer new foreclosures, distressed properties accounted for five percent of sales, purchases for investment purposes made up 15 percent of sales, and cash sales accounted for 21 percent of sales.
  • Amid tight supply, half of the properties that sold in April 2017 were on the market for 29 days or less compared to 39 days in April 2016. The April median days on market measure is a new low since 2011.
  • Lack of homes for sale was the main issue reported by REALTORS®. Respondents reported a mixed effect from the uptick in mortgage rates since November 2016; some buyers are encouraged to act quickly while others are discouraged by diminished affordability.

First-time buyers made up a large portion of activity in recent home sales, meaning it’s a great time to sell that investment condo or townhome if you’ve been holding on to it for more than a decade (12-15 years). According to NAR, buyers 34 and younger accounted for approximately 30 percent of residential buyers in April 2017, compared to 26 percent in 2013.

We’re now seeing many parents help their adult children make their first home purchase. Presenting cash for a 20 percent down payment isn’t the norm in this market.  According to NAR, among first-time buyers, only 21 percent managed that and among all buyers, only 37 percent could avoid PMI (private mortgage insurance).

As interest rates are expected to rise, buyers are currently hitting open houses and searching for prime buying opportunities. There are currently no deals or steals, but a strong, stable market that both sellers and buyers can be confident in.  Summertime is notorious for seeing an influx of buyers, so if you’re considering selling it’s an opportune time. The combination of near-peak real estate prices, and still-low interest rates, makes it a great time to get top-dollar for your home, whether an investment property or primary residence.

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Bay Area Real Estate Competitive Market

Price it for a Competitive Market

 

The real estate market in Northern California is seeing varying activity depending on the counties, cities, neighborhoods and homes. This issue of Market Watch is a strong indicator of this shifting dynamic. Competitively-priced homes in any range are expected to sell steadily and swiftly, and properties under $750K are not sitting on the market for long. The sub-$750K homes are also seeing tighter inventories than higher-priced homes.

 

With additional inventory expected to appear over the coming days and weeks of summer, buyers who have been waiting for new listings will be competing for homes that are priced right and primed to sell. Sellers testing the market with listing prices above the competitive range will see their homes sitting longer, and the perception among buyers will be unfavorable. It’s critical even in this market to list at the right price for the county, city, neighborhood and home. Now more than ever, sellers and their agents need to be mindful in determining a listing price.

 

Hot markets like San Francisco will continue to experience more buyers competing for less properties, which will drive up closing prices significantly in desirable communities. Here’s what was happening in our local Northern California offices since the last issue of Market Watch:

 

East Bay – In the Berkeley area there has been a steady increase of both listing inventory and sales activity. Some of the largest markets in the region include Oakland with 248 available properties and 279 under contract; Richmond/El Sobrante with 81 active houses and 94 under contract. Pleasanton has also seen steady listing inventory increasing by 22 properties.

 

El Dorado County – El Dorado Hills has solid inventory at the high-end market. Although properties are selling, some are overpriced due to the message of an inventory shortage. There have been multiple offers on properties under $500,000 and cash proves king in this range.

 

Monterey County – Monterey launched Coldwell Banker Global Luxury since the last update and it has been well received. The high-end market had recent price adjustments of $1-3 million. The mid-range market has slower activity at open houses, limited listings and tight supply. However, the market is expected to pick up as we enter summer and more listings appear.

 

North Bay – North Bay has seen a market favoring sellers, driven by demand and an increase in sales activity. Areas such as Marin saw homes going 15-22 percent over asking price. With approximately 365 available properties, only 65 are listed under $1 million. Although Santa Rosa Bicentennial had an increase in sales activity, it also experienced a slowdown in offers. The development indicates that the trend is home-specific in this area as opposed to a market indicator.

 

Placer County Tahoe offices saw a decrease of approximately 18 percent in sales for luxury properties over $1 million from 2016. This is also reflected in the year over year sales; 2017 had 75 sales while 2016 sold 92 properties for the same period. The median sales price for luxury properties in 2017 is $1.4 million, a five percent decrease from 2016.  The average sale price of luxury homes in 2017 stands at $2.1 million compared to $2.3 million in 2016, an eight percent decrease. As more homes are expected to be listed, savvy buyers and investors will be searching over the coming weeks as mortgage interest rates remain favorable.

Sacramento County – Folsom has experienced increased listing inventory and an increase in sales activity with 35 ratified offers. Fair Oaks saw decreases in listing inventory and sales due to a surplus of sellers and a lack of buyers. In the $450,000 price range, there were multiple offers on properties indicating a continued sellers’ market. Elk Grove has seen a 12 percent increase in listings with a 25 percent increase in pending sales. Homes under $350,000 have been in especially high demand with less than .2 months of inventory.

 

San Francisco – San Francisco has had mixed results since the last update. SF Lakeside saw a slight slowdown in overall activity including open houses. SF Lombard had slowdowns in the $2.5-$3 million range and high-end markets. However, single family homes have remained hot with multiple offers and sales over asking price. SF Pacific Heights had tight inventory with decreased listings, but still had an increase in sales activity.

 

SF Peninsula –Burlingame, Half Moon Bay and Menlo Park each saw steady listing inventory and steady sales activity, but with different results. Burlingame’s tight supply prompted multiple offers on properties and many sold above asking price. Half Moon Bay also had tight inventory and carefully managed pricing. Overpriced properties linger on the market and typically bring in lower offers, so appropriate pricing is key. Palo Alto had increased listings and sales, but comparisons show inventory and sales are down from 2016. Redwood City had a slight decrease in inventory and sales activity, but remains competitive. One local buyer finally purchased a home after losing out on 14 previous properties, so demand remains high for competitively priced homes. San Mateo saw an increase in listings and sales, a good sign for a hot summer sales season.

 

Santa Cruz County– In Santa Cruz, the price of high-end homes is currently $3-$4 million. Single family residences were in low supply with 320 active properties and demand remained steady. Overall, the county saw the number of properties that have gone into contract continue to be nearly as high as the number of new listings to the market.

 

Silicon Valley – Cupertino reported multiple pre-emptive offers with a hot market and high activity. Listing inventory and sales activity increased and the area ended the period with 30 ratified offers.

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How To Price Your Home

Trying to price your home to sell? Not sure how much it’s worth? Read some of these pointers and determine the right price for your home.

You’re contemplating listing your home on the market, but you’re not sure how much its worth. You have a vague idea about a general price range, but you want a more accurate understanding.

Don’t worry – you’re not going to need to determine the price of the home yourself. Your real estate agent is a listing price expert! Your agent will guide you through the process, helping you understand how much your home may be worth and how quickly it may sell, based on a wide and complex array of market conditions and variables.

Your agent will consider factors like the home’s characteristics and market comparables when they’re determining a price. Here are some of  some of the factors that agents consider when they’re pricing your home.

1. Your Agent Will Look for Comps

Let’s take a moment to explain the concept of ‘comparable’ properties, and how these relate to the unique features in your home. This is what your agent will weigh when he or she is determining a price for your home.

Let’s illustrate this with an example. Imagine that you own a 3-bedroom, 2-bath single-family home built in 1990. Three neighboring single-family residences have recently sold for $280,000 to $330,000, so you presume your home value is somewhere within that range. But that assumption might not be accurate.

Your neighbor’s homes feature different qualities than yours. Your neighbor’s house has 4 bedrooms; another neighbor has only 1.5 baths. One house has a fireplace and swimming pool; another has a larger yard. One has Viking appliances. One neighbor has hardwoods throughout, while another has wall-to-wall carpet. One is sold as-is. Are you starting to see the differences?

Your agent can’t just look at the raw sales numbers for these houses. To arrive at an accurate pricing picture, your agent must adjust the sales numbers based on variables such as:

  • Property age
  • Square footage
  • Bedrooms and bathrooms
  • Condition of property
  • Upgrades and features

Real estate agents are professionally trained in adjusting for these variables to arrive at a true comparison.

Ask your real estate agent to walk through the comps with you, explaining how he or she arrived at the final numbers. You might find yourself pleasantly surprised at how much your property is worth.

2. Ask About CBx

CBx is a proprietary platform that homebuyers, home sellers and real estate agents use in order to make the process of determining an accurate valuation of your home run more smoothly.

Ask your agent to explain the many special features of CBx when you’re pricing your home. Your agent will explain how it is a useful solution for determining the best price for your property.

3. Understand the Trade-Offs

Finally, initiate a conversation with your real estate agent about a critical question: Do you want to sell your home for top dollar, or do you want to sell it as quickly as possible?

Some homeowners and agents jointly make a strategic decision to slightly underprice their homes, just by a small amount, to facilitate a quick sale. These are self-described “motivated sellers” who want to unload their home as quickly as possible. They may be moving to another state, for example, or they may need to sell their current home before they can buy another one.

That being said, however, there are many ways you can position your home for a quick sale at full price. Making small improvements, such as fresh paint and exterior landscaping, can be effective at creating a ‘wow’ factor. Staging your home is another great way to entice buyers to make an offer.

Speak with your agent about how you can price your home for top dollar, without sacrificing speed.

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Bay Area Real Estate Market Update

Northern California Starts Spring Homebuying Season Strong

Northern California had a strong start to the Spring home buying season notwithstanding low inventory. The housing market continues to experience an abundance of buyers, and in most cases, multiple offers on reasonably priced listings. New listings continue to come on the market, but not at a rate that meets buyer demand.

According to the National Association of REALTORS® (NAR), existing-home sales reached their highest pace in 10 years during March largely due to low inventory.

“The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home,” said Lawrence Yun, NAR chief economist. “Sales will go up as long as inventory does.”

Northern California continues to sustain a sellers’ market due to its low inventory. Most reasonably priced listings receive multiple offers because buyers continue to outnumber the listings. However, there are not as many buyers for luxury properties in most regions.

Northern California has continued to maintain its strong Spring start into May. Here’s what was happening in our local Northern California offices earlier this month:

 

East Bay – The year-over-year first quarter statistics for the East Bay area: Alameda saw its overall median sales price increase 4 percent from $818,500 to $849,500 reflected in a 6 percent leap in short sales and foreclosures from $935,000 to $990,000 and a 10 percent jump in condos and townhomes from $655,500 to $722,250. Oakland’s overall median increased from $550,000 to $625,000, representing a 14 percent increase. Short sales and foreclosures moved from $550,000 to $650,000, representing an 18 percent increase, and condos and townhomes moved from $556,144 to $561,254, representing a 1 percent increase. Berkeley now has an overall median price of $1,055,000, representing a 21 percent leap. Short sales and foreclosures grew from $901,000 to $1,100,000, showing a 22 percent increase. Condos and townhomes went from $565,900 to $762,500, increasing 35 percent. Albany grew from $733,000 to $870,000, showing a 19 percent increase, with single-family houses jumping from $848,888 to $975,750, which is a 15 percent increase, and condos and townhomes moving from $418,000 to $525,000, which is a 26 percent increase. El Cerrito also saw significant gains with the overall median moving from $740,000 to $885,000, representing a 20 percent increase, and short sales and foreclosures moving from $775,000 to $915,000. Buyers continue to outnumber the listings as inventory remains less than a one-month supply.

Monterey County – The top five companies in Monterey County for the month of May saw a 25 percent decrease in units and sales. The average price is hovering around the $1 million mark. The last seven days, 14 properties went into contract in all price points, but the under $1 million price point still continues to be the most competitive. The inventory has tightened and prices seem to have peaked. As a result, buyers appear to be waiting for price adjustments or making low offers to get the negotiations started.

North Bay – For Greenbrae, inventory continues to be outpaced by demand, and multiple offers continue to be prevalent. Buyers are negotiating more once they get into contract, which has led to more escrows falling out than normal. In Novato, the luxury market over $1 million has improved. Currently 50 percent of the inventory is in contract with the majority in the $1 million to $1.5 million range. A new listing in Novato this week priced at $1.2 million sold less than seven years ago for $600,000 with little remodeling done. Prices will continue to trend upwards as inventory remains low. During April, the number of units sold in Novato was slightly higher than last April and prices were up 5 percent to a median price of $915,000. The average days on market went down 10 percent to 26 from 29 last year. There has been an increase in listing inventory, but it only equates to two months of available inventory. Currently Novato has 55 active properties and 80 properties in contract. In Santa Rosa, many properties are receiving multiple offers and many buyers continue to write offers even though their previous offers have not been successful. Total sales for April were 15 percent below sales from April of last year and more than 4 percent below sales from March of this year. April over April median price in Sonoma County is up just under 10 percent. In Sebastopol, listing agents are seeing offer dates come and go on properties in all price ranges, but buyers’ agents are still competing for properties. Interest rates still remain low, and more buyers are heading north from the Bay Area.

Placer County In Tahoe, the luxury sales for properties priced above $1 million are down 20 percent from 2016. For 2017, there have been 65 luxury properties sold as compared to 82 sold last year for the same period. The median sales price for luxury properties in 2017 thus far is $1,425,000, which is down 3.5 percent from the median sales price of $1,476,405 in 2016. The average sale price of luxury homes in year to date stands at $2,148,121 as compared to $2,371,101 in 2016 and is down almost 10 percent.

There continues to be considerable interest in the market as many buyers and investors are actively looking for homes. With the continued favorable mortgage interest rates and inventory coming, buyers will be able to acquire homes in many of the Lake Tahoe and Truckee resort communities.

Sacramento County – In Fair Oaks, the market is bifurcated. There is more luxury inventory than buyers, but the under $400,000 market is still a sellers’ market with listings receiving multiple offers. In Sierra Oaks, the luxury market is strong with an increase in activity. Overall, there are more listings and buyers moving forward. In El Dorado Hills, there is luxury market inventory for up to a year, but the luxury market has slowed. Four luxury homes were listed and only two luxury homes went into escrow. None of the homes that closed during this period were in the luxury market. There is little inventory of homes under $600,000. Open houses have anywhere from six to 35 groups each week, which produce many leads. There are still numerous buyers from the Bay Area, especially East Bay, but there has also been an increase in buyers from the Elk Grove to El Dorado Hills area. There was a large open house held at Serrano last week with a great turn out with people from the Bay Area. These large open houses happen every second Sunday of the month—weather permitting. Land seems to be selling at a greater pace than seen in recent years. Builders are looking at buying several lots. New subdivision lots are selling as well as previously sold lots. There is some seller financing on some of these lots that is very attractive to many buyers. There is still little affordable workforce housing available in many areas. Programs are being proposed that would streamline some of the processes and fees to aid in the construction of new homes as well as second homes on properties that already have one home. In Elk Grove and West Sacramento, there has been an increase in the number of listings in the past two weeks. However, inventory remains below one month and is down 25 percent from last year at this time. Average sales prices in Elk Grove for the month of April were over $400,000, which is up 11 percent from April 2016. The average days on the market has continued to decline and is 45 percent less than the 2016 average days on the market. There is a huge demand for homes in Elk Grove in the under $350,000 range and a lack of homes available in that price point. In several cases offers on properties have come in well above asking. For example, a listing at $450,000 received offers as high as $45,000 over asking price while a property listed at $390,000 received offers as high as $30,000 over asking price. In many cases, buyers in the under $400,000 price point marker must submit several offers before one gets accepted. Open houses have continued to see huge turnouts with several this past weekend including up to 25 or more attendees. There have been many buyers from outside of the local market, with the majority from the Bay Area.

SF Peninsula – In Burlingame, the demand for all properties is once again high due to low inventory. Inventory is growing, but it is still historically low. Almost all of the properties that sell are receiving multiple offers and are selling for much more than the list price. In Half Moon Bay, there are 45 listings currently for sale. Most experience an average 60 days with a low of four days and high of 365 days. There are currently 17 pending listings. Most experienced an average of 42 days on the market with a low of one day and high of 269 days. There were a total of 32 recently sold listings. They spent an average 31 days on the market with a low of one day and high of 220 days. Half Moon Bay has a little over a two-month supply of inventory. Menlo Park continues to have low inventory. Listings in the lower price ranges of $2 million and below, and listings above $2 million sell very fast. For Palo Alto, inventory in year-to-date is substantially lower in the area as well as in the North and South. In Redwood City, there continues to be low inventory but each mid-peninsula city and town is gradually gaining a little more inventory. Buyers are becoming a little more cautious with their offers, which means there are not as many multiple offers, but most property listings still receive two to five offers. In San Mateo, inventory is picking up. Woodside and Portola Valley still have very low inventory and most homes receive preemptive offers.

Santa Cruz County– The number of homes listed for more than $1 million is approximately the same as 2016. The number of sales for properties over $1 million dollars is slightly lower than those of April 2016. There have been several additional sales this April compared to last year, which appears to be a trend that will sustain through the summer. The real estate market in Santa Cruz County is still showing attributes of a sellers’ market. There are multiple offers on well-priced properties, primarily for properties listed under $1 million dollars. There are approximately nine single-family homes hitting the market per day. However, the total inventory of single-family homes in Santa Cruz County is 317, which is quite low. Inventory is approximately 20 percent below 2016.

Silicon Valley – In Cupertino the luxury market remains steady. Last week saw the most sales pending in Santa Clara County for year-to-date. Inventory has increased but there is still high demand for more inventory to satisfy buyer needs. New home developments are springing up all through Morgan Hill and Gilroy. Many developers are offering upgrade incentives and mortgage assistance to attract more potential buyers to their new homes. As a result, house tours now include new home developments as well as lived in properties. In Los Altos, the luxury market — homes priced over $4.5 million — is steady, but multiple offers continue to be the exception. Overall, inventory levels are still very low compared to buyer demand. Currently, there is less than one month’s worth of inventory in Los Altos. Most homes are receiving multiple offers, which typically leads to a sales price that is over asking. The market in Mountain View is even hotter with barely two weeks’ worth of inventory. The number of homes coming on the market for sale each week is slowly on the rise in both the Los Altos and Mountain View areas. However, these homes are being absorbed quickly and are selling very fast. Most homes coming on market are priced to induce offers and are selling in less than 10 days. The markets of Los Altos and Mountain View are still very strong and extremely robust.

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Bay Area Real Estate Market Update

Low Inventory Preserves Sellers’ Market in Northern California

Northern California continues to experience a healthy sellers’ market with median and low priced properties and, in some areas, with reasonably priced luxury properties. Due to the limited inventory and high demand for median priced properties, most reasonably priced listings receive multiple offers above asking price.

According to the National Association of Realtors® (NAR), in March there was a 0.8 percent decline in the Pending Home Sales Index based on contract signings from February to March, but there was a 0.8 increase in the Pending Home Sales Index based on contract signings compared to March 2016.

“Sellers are in the driver’s seat this spring as the intense competition for the few homes for sale is forcing many buyers to be aggressive in their offers,” said Lawrence Yun, NAR chief economist. “Buyers are showing resiliency given the challenging conditions. However, at some point—and the sooner the better—price growth must ease to a healthier rate. Otherwise sales could slow if affordability conditions worsen.”

Competition is high in most of Northern California because there is an abundance of buyers seeking affordable family homes, which are in low supply. Most open houses for new listings are seeing attendance as high as 50 people on weekends. The low inventory is also keeping some sellers from listing their property out of fear that it will sell before they are able to secure a new home.

According to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.), “Even with a strong performance in March closed escrow sales, a shortage of available homes and robust price growth that’s eating away at affordability stifled pending home sales for the third straight month.”

Unless inventory remains low, buyers may find some relief in the coming months as the Spring Market continues to bring new listings to the market in hopes of meeting the high demand.

Here’s what was happening in our local Northern California offices in late April:

 

East Bay – The year-over-year first quarter statistics for the East Bay area: Alameda saw its overall median sales price increase 4 percent from $818,500 to $849,500 reflected in a 6 percent leap in short sales and foreclosures from $935,000 to $990,000 and a 10 percent jump in condos and townhomes from $655,500 to $722,250. Oakland’s overall median increased from $550,000 to $625,000, representing a 14 percent increase. Short sales and foreclosures moved from $550,000 to $650,000, representing an 18 percent increase, and condos and townhomes moved from $556,144 to $561,254, representing a 1 percent increase. Berkeley now has an overall median price of $1,055,000, a 21 percent leap. Short sales and foreclosures grew from $901,000 to $1,100,000, showing a 22 percent increase. Condos and townhomes went from $565,900 to $762,500, increasing 35 percent. Albany grew from $733,000 to $870,000 — a 19 percent increase — with houses jumping from $848,888 to $975,750, a 15 percent increase, and condos and townhomes moving from $418,000 to $525,000, which is a 26 percent increase. El Cerrito also saw significant gains with the overall median moving from $740,000 to $885,000, representing a 20 percent increase, and short sales and foreclosures moving from $775,000 to $915,000. Inventory supply remains low with almost all areas reflecting a level of less than a one-month supply, thereby indicating that buyers will continue to outnumber the listings.

Monterey County – April is trending to close the month almost even with last year with the luxury price point seeing more of a slow down. The $1.5 million and under market is seeing a shortage in available properties. New buyers are coming from the Bay Area looking for that special property to spend some time in the Monterey Peninsula. Multi-residential investment properties are currently a hot category. Rents are at a record high, and cities such as Pacific Grove are most desirable for young families moving to the area. Additionally, the new Monterey County office is opening at 618 Lighthouse Ave in Pacific Grove, Calif.

North Bay – With only 187 active residential listings in Santa Rosa, the market is tightening again. Many homes are receiving multiple offers and time on market is decreasing. Open homes are busy, indicating that the buyers are here and are looking around hoping to find more sellers. Average days on market for March fell 14 percent from February. For Sonoma County wide, the number of new listings fell more than 10 percent in the first quarter. There is a lot of new inventory that came on to the luxury market. There was a 40 percent increase in listings in the luxury market from February to March. Pending sales increased by approximately 40 percent and closed sales for the first quarter this year compared to 2016 are up 31 percent. The market remains ultra-competitive in the lower middle to the upper middle price ranges. There are still more buyers than sellers. In the luxury end of the market, it is still competitive but there’s not quite the sense of urgency as in the lower price levels. Sebastopol is seeing an increase in available properties, but they are all going quickly. Because they have been priced out of the market, buyers are relocating from the Bay Area and are attending various open houses. The market is currently down 7 percent in listing inventory and 29 percent in sold listings compared to last year. However, the average sales price is up 17.04 percent. The Southern Marin office closed the highest price listing ever in Mill Valley at $7,200,000 and the highest price per square foot ever at $1,650 per square foot. The luxury market is strong. About 25 percent of homes listed over $2 million are under contract. This percentage typically runs between 10 percent and a max of 20 percent. The general market continues to experience a strong seller’s market. With 75 percent receiving multiple offers, this market will continue as is until there are more listings. In downtown San Mateo, listings are increasing and sales are getting stronger.

Sacramento County – There are many luxury listings. Overall, the market is bifurcated with listings under $450,000 experiencing a seller’s market and listings over $750,000 experiencing a buyer’s market.

San Francisco – The market continues to experience an abundance of buyers with too few listings. When a new property comes to market, the first open houses and broker tours are well attended. As is always the case, pricing remains critical. If the property is presented and priced well, multiple offers are the usual outcome. If not, the property sits and attendance trails off.

SF Peninsula –There is still low inventory and nearly every listing is receiving multiple offers and selling for more than the asking price. Open houses on the weekends are having more than 50 individuals attend. In the Half Moon Bay area, the average days on the market are 17 days, an active listing’s average price per square foot is $675, the pending contingent sale average price per square foot is $671 and the pending sale average price per square foot is $603. There are less multiple offers in Half Moon Bay Area. In the Menlo Park area, open houses are showing a slight slow down and turn out in some areas while other areas particularly in the lower price ranges of under $2 million are still experiencing very busy open houses. Well-priced homes are still selling quickly, typically in less then 10 days in many price ranges while homes that are not priced correctly tend to sit for up to 30 days, which is considered a long time. Many agents are using the 30 days as the point in time to suggest or ask for price reductions. In the Palo Alto area, activity has been very good for listings priced up to $4,000,000. They tend to receive multiple offers on every sale and have sales prices upwards of 20 percent over the list price. Entry-level inventory is very low, and there is more selection in the luxury price points.

Santa Cruz County– The luxury market is in need of supply because demand is still very high. Compared to 2016 there have been approximately just as many sales year-to-date, and inventory is just about the same. The average price of a home in Santa Cruz County is close to $900,000, which is close to the benchmark of what is generally considered to be a luxury property, so when reviewing statistics it is becoming necessary to consider homes closer to the $1.5 million plus range as being part of the luxury market. The inventory of single-family homes active on the market is steadily increasing and is currently at about 271. Historically, this is still quite low for this time of year, but there are approximately seven to eight homes being listed every day. The number of homes changing to contingent and pending status is approximately seven per day, so at this rate it will take time to build supply. Inventory is so low that some potential sellers are not listing their home due to the lack of availability for a replacement property.

Silicon Valley – In Cupertino, the luxury market is steady and open houses continue to be well attended. Some agents are having excellent success with preemptive offers. South County agents are reporting that it is not uncommon to have 20 to 30 groups walk thru an open house on either Saturday or Sunday. Even though inventory remains low, agents are reporting that they are not receiving as many offers, and the offers they have received have not been for the full listing price. In Los Altos, the luxury market — homes priced over $4.5 million — is steady, but multiple offers continue to be the exception as opposed to the rule. Overall, inventory levels are still very low compared to buyer demand. Currently, there is less than one month’s worth of inventory in Los Altos. With such a limited number of homes available for sale, most homes are receiving multiple offers, which typically leads to a sales price that is over asking. The market in Mountain View is even hotter with barely two weeks’ worth of inventory. The number of homes coming on the market for sale each week is slowly on the rise in both the Los Altos and Mountain View areas. However, these homes are being absorbed quickly and are selling very fast. Most homes coming on market are priced to induce offers and are selling in less than a week. The markets of Los Altos and Mountain View are still very strong and extremely robust.

South County – The luxury market is seeing a lot of inventory sit on the market, causing an excess of inventory in the luxury range. They are getting a few showings but no offers. In the below $500,000 market, there are multiple offers on most listings. Sellers are excited to receive higher offers but are less likely to agree to buyers’ requests for repairs and do not like giving extensions. Additionally, property lots are selling, but there is a shortage of new home construction.

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Bay Area Real Estate Market Update

California’s First Quarter Foreshadows Strong Sellers’ Market

As the first quarter of 2017 comes to a close, California continues to show an abundance of active buyers throughout its markets while dealing with consistently low inventory. Reasonably priced homes spend minimal days on the market, often having received multiple offers, while overpriced homes are taking longer to sell.

According to the National Association of Realtors® (NAR) Pending Home Sales Index, in February there was a 3.1 percent increase in the pending home sales index in the West, rising to 97.5, which is a 0.2 percent hike from last year.

“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” said Lawrence Yun, NAR chief economist. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.”

A healing economy continues to increase the number of new buyers nationally and locally, while low inventory decreases many buyers’ options and increases their competition.

“While it’s encouraging to kick off the year with back-to-back yearly sales increases, moving forward, California’s housing market could lose steam in the long term as the Fed begins to adjust the federal funds rate,” said C.A.R. President Geoff McIntosh. “In the short term, however, the specter of higher interest rates may push buyers off the fence to purchase a home before mortgage rates move even higher.”

Moving into the rest of 2017, the number of buyers will continue to rise at a faster rate than new listings. Cash offers will continue to be more successful and popular because they stand apart from the abundant offers most listings receive.

Here’s what was happening in our local Northern California offices in late March:

 

East Bay –As we approach the end of the first quarter, the market remains incredibly strong with low supply and high demand reflecting continued price increases throughout the East Bay. Sales activity has picked up this month with homes continuing to sell at a fast and furious pace. More of the homes for sale are receiving offers in the double digits, yet several homes listed for $1.5 million or above are taking a little longer to receive offers than those selling within 14 days or less. Buyers are still coming in to our market and are willing to pay well over the asking price to get a home with a yard, but still close to amenities. Preemptive offers now have agents publishing offer dates within a few days of the first open house.

Monterey County – The Monterey Peninsula market had shown signs of a slowdown at the beginning of the month but is seeing more activity at open houses. The under $1 million price point has been especially active. Affordability is always a factor on the Monterey Peninsula especially for first time buyers. New listings are incoming as homeowners prepare their properties after the storms. The month is slightly up in unit sales over March 2016 and even with dollar volume. The Monterey Peninsula continues to be one of the most desirable destinations on the central coast. The Carmel Chamber of Commerce Executive leadership committee reported that there were several repeat visitors that had been visiting the area for several years, and that there were seven home purchases that they knew from out of area visitors.

North Bay – A Tiburon listing of $2.3 million closed a million over list price. All levels are hot as inventory is still quite limited. Buyers are out en mass and ready to buy. There are approximately 300 available properties in Marin and only 60 are listed under $1 million and 15 are under $750,000. This price range is flying out the door, selling with multiple offers, waiving off contingencies and many in cash. One of our Mill Valley listings, which was a complete teardown, was listed at $725,000 on a busy street and received 13 offers, going well above list price. A property listed at $945,000 in Novato had hundreds of visitors over the weekend. There are indications that more units are getting ready to come on to the market in the near future. The market looks and feels remarkably similar to last year during this same period: low inventory, slightly less pending sales and less closings. The luxury market is stronger than it has been since the recovery began in 2011. We continue to experience a sellers’ market with multiple offers on most properties listed under $1,500,000. Overall, the market is getting better.

Placer County – Luxury sales for properties priced above $1,000,000 are down 17 percent from 2016 luxury sales. For 2017, there have been 38 luxury properties sold as compared to 46 sold last year for the same period. The median sales price for luxury properties in 2017 thus far is $1,500,000, which is down 3 percent from the median sales price of $1,550,000 in 2016. The average sale price of luxury homes year to date stands at $1,829,378 as compared to $2,504,941 in 2016 and is down almost 27 percent.

There continues to be considerable interest in the market as many buyers and savvy investors are actively looking for homes. For sellers, there is a demand for properties on the market because of the low inventory. For buyers, even though inventory is down from last year, there are quality properties to choose from throughout the north Lake Tahoe and Truckee areas. As spring approaches, more homes will be coming on the market and with the current home prices and favorable mortgage interest rates, real estate investors will be able to succeed in this market and acquire homes in many of the Lake Tahoe and Truckee resort communities.

Sacramento County – There is increasing inventory, which is causing the market to trend toward a buyers’ market. The bifurcated market under $500,000 is in great demand and has virtually no inventory. The over $750,000 inventory is now a buyers’ market.

San Francisco –There is still a high demand and few listings, but unrealistic price expectations will cause a property to stay on the market longer. There is more inventory and the patterns seem to be holding, but there are fewer home sales from February year over year. There is a lot of traffic, interest and offers up to about $2.5 million but anything higher is where activity appears to drop off. Condos have less traffic and frenzy with about half going at or under asking price. Buyer credits are becoming more common. Because there are still not enough listings for the amount of buyers, many properties continue to receive multiple offers on their offer dates. When something ratifies with only a single offer, it is because a savvy buyer made a pre-emptive cash offer or because it is a new construction condo. As is always true, properties that buyers view as over-priced continue to sit despite the lack of inventory.

SF Peninsula – The market is strong, and there is a lot of activity at open houses. Because of the low inventory and high demand, prices continue to rise due to multiple offers, and the market remains very competitive for buyers.

Santa Cruz County – Homes listed at more than $1 million in Santa Cruz are receiving offers if they are priced appropriately and are appealing. The luxury market is likely going to perform well this year with the affordable pricing for jumbo loans. The number of new listings coming to the market is less than the number of active listings changing to pending status. The overall listing inventory for single-family residences has decreased to below 200, which is lower than usual this time of year. It appears that there may be a surge of inventory pent up, which may hit the market after the tax-filing deadline. 

Silicon Valley – The market is steady but needs more inventory. There were 16 offers on a small condo in Blossom Valley. There are many more listings coming on the market, meaning there finally seems to be more choices for potential buyers, but the number of homes for sale does not yet meet buyer demand. Prices, however, remain high and sellers are realizing that they can still get top dollar for their homes. Higher mortgage interest rates do not seem to have dampened buyer enthusiasm or willingness to pay full price for a home in South County. The luxury market (homes priced over $4.5 million) is steady but days on market and inventory are heading up slightly higher because frenzied bidding and multiple offers are the exception as opposed to the rule. As a result, the number of sales in this market is down. At first glance, inventory would appear to be abundant, however, with so few homes actually on the market, this number is more of a false negative. Overall, inventory is rebounding faster than in years past, albeit slow, but inventory levels are still low compared to buyer demand. Many of the homes that had been lingering on the market have either gone off the market or have been sold. Currently, we have only a little more than one months’ worth of inventory in Los Altos. With such a limited number of homes available for sale, we are seeing most homes receiving multiple offers that typically achieve a sales price that is over asking. The market in Mountain View is even hotter with barely two weeks’ worth of inventory. In short, the number of homes coming on the market for sale each week is on the rise in both the Los Altos and Mountain View markets. Although the number of homes coming on the market has risen and inventory levels have eased, homes are selling very fast, particularly if they are priced well, in some cases spending as little time as one week on the market. The markets of Los Altos and Mountain View are still very strong and robust.

South County – The market seems to be picking up from the last two months. Despite the increase in inventory, homes are selling fast.

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