Low Inventory Still Impacting Northern California – Bay Area Real Estate Market Update

Sparse housing inventory continues to affect the Northern California market. The California Association of Realtors’ latest report indicates that the San Francisco Bay Area endured a large drop in pending sales due to the lack of available housing. In fact, it dipped 11.5 percent since last July. The report also indicates that San Francisco and San Mateo counties were both down double-digits, 11.0 percent and 21.4 percent, respectively. For homeowners on the fence about selling, the lack of inventory makes it a great time to list because many patient homebuyers are prepared to come in with solid offers. Read more about what’s happening from our Northern California offices:

 

East Bay – In Fremont, inventory remained low and prices held firm prompting multiple offers on most properties. Even with the current sellers’ market, buyers still have a chance to find their dream home with increased listing activity expected in the fourth quarter. Sales for Fremont’s luxury properties priced between $1.4 to $3 million were not as active due to sparse inventory.

Monterey County – After the excitement of Concours d’Elegance, the Pebble Beach classic car show event, the Monterey Peninsula market has returned to normal. With the end of summer traditionally being one of the strongest sales periods – along with a continued sellers’ market – it was a great time to list properties. The luxury market slowed slightly because of inventory, but still had significant activity. Monterey also has some luxury golf properties listed and available that should garner buyer excitement.

North Bay – Despite the shortage in inventory, many buyers in Greenbrae are still searching for their dream home and want to take advantage of low interest rates. Sellers came out ahead by pricing their homes competitively. This strategy encouraged more buyers to place offers and led to above-asking closings. Historically, September sees the highest amount of inventory in the area so it should be a solid month.

Southern Marin experienced a similar trend, a sellers’ market with multiple offers.  Demand will be strong, so buyers should be prepared to bid against multiple offers and bid over asking price.

Placer County – Tahoe offices had an increase in interest, especially with summer vacationers checking out the area. A slight increase in inventory over the past couple of months coupled with favorable mortgage interest rates encouraged buyers to start house hunting and created a strong market for sellers to list and sell their homes quickly. In the luxury market, sales on properties priced above $1 million is down 20 percent compared to 2016. There has been an increase of just over 1 percent in average sales price of luxury homes at $2,277,113 as opposed to the 2016 average of $2,248,678.

Sacramento County – Folsom’s inventory increased, encouraging buyers to stay in the market. This has created a great opportunity for buyers and more properties to choose from. The luxury market is still strong, but sellers must ensure to price their homes competitively.

Sacramento Fair Oaks experienced the seasonal inventory climb, increasing by 10 percent compared to the previous month. Although in a year-over-year analysis, inventory is still down by 12 percent, the uptick in listings gave prospective buyers some much-needed relief. On average, the region has seen an increase in listings as the summer winds down with steady sales. Properties are still affordable and square footage prices are significantly less than the Bay Area average. The luxury market is experiencing a stronger buyer’s market and a larger amount of inventory.

Sierra Oaks had an increase in both listings and sales, with multiple offers on entry-level homes. The luxury market experienced an increase in activity with both listings and purchases.

SF Peninsula – Half Moon Bay’s market remained competitive. The luxury market continued with strong demand. Average days on the market was just 17, with a median sales price of $2 million.

Menlo Park experienced a fast-paced market with no slowing. Sellers were encouraged to list their homes instead of trying to time the market or wait for a more optimal time.

Redwood City had a lack of inventory. Homes priced under $1 million brought in multiple offers. In the $1 million-plus market, homes sat on the market longer before closing.

Santa Cruz County- Offices in Santa Cruz saw a strong month. Average sales prices have been increasing steadily for the last five years by $30,000 to $90,000. This year is no different, with the average sales price of $950,000 and an average list price of $1,050,000. Buyers have been more aggressive in their offers. The luxury market in Santa Cruz peaked in comparison to the last few months with an average of just 50 days on the market (instead of 54 days), and experienced significantly more sales above the $1 million mark over past months.

Silicon Valley – Cupertino continues to experience a lack of inventory. However, the luxury market is still active up to $4 million. Low inventory was also a key factor in Los Gatos’ market, creating a similar dynamic as in Cupertino.

Gilroy and Morgan Hill also endured a lack of inventory causing multiple offers and high closing prices. Even in those markets favoring the supply-side, sellers should be prepared to choose quickly when presented with multiple offers. To submit a winning offer, buyers must put their highest offers first and make the transaction easier for the sellers.

San Jose remained active even with declining inventory. Because of the decreased supply, prices have slightly increased. Sellers can take advantage of the high demand. Buyers should think long term and be prepared to make a strong offer. Factors such as multiple offers or slightly higher asking prices should not deter them from putting in offers.

Saratoga’s market saw an increase of 21 percent in the average sales price year-over-year. The luxury market remained active with five listings and four sales.

El Dorado County – Although El Dorado Hills continued to see low levels of inventory, there was a slight increase in days-on-market before a close. Inventory priced under $500,000 had fewer multiple offers. With fall and the end of the year upon us, many prospective buyers are looking to close on a new property. The luxury market also saw low inventory prompting buyers to make their strongest offer.

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Bay Area Real Estate Market Update

Luxury Market Rebounds in Northern California and Nationwide

Nationwide, prices of luxury homes have outpaced the rest of the market for the first time since 2014, according to industry reports. In recent headlines, stock market growth, increasing home prices in all ranges, low unemployment and new jobs created across the country are encouraging homebuyers to jump into the real estate market. This upswing has finally reached the luxury market and here’s what’s currently happening in our Northern California offices:

Monterey County:

Monterey Peninsula offices show a slight increase in year-over-year sales. Values have shifted back to pre-recession prices with low supply, high demand and a market favoring sellers. Many properties are getting offers within three days of being on the market. Carmel and Pacific Grove are in high demand even with entry level prices at $1 million. There were 14 closings in the $2-5 million range. The area also witnessed a unique $25 million listing that served as a filming location for the movie Basic Instinct.

 

North Bay:

In Greenbrae, fewer homes are available prompting multiple offers above list price. While the luxury market rebounds, properties need to be priced well or risk sitting on the market for an extended period.

 

Although Santa Rosa Bicentennial’s market experienced 18 percent fewer sales in year-over-year comparisons, median prices are 9 percent higher than in 2016. With fewer properties available, sellers have a prime opportunity to list their homes. This means that buyers coming in with cash offers came out ahead. The luxury market is strong with an increase in buyer interest in the $7-plus million range.

 

Southern Marin also saw a seller’s market with most properties under $2 million receiving multiple offers with many closing above asking price. This trend continued in the luxury market with 27 percent of listings over $3 million under contract as opposed to the typical 10-15 percent.

 

Placer County:

Tahoe’s market is in full swing with summer visitors and many interested buyers. An influx of new inventory and a possibility of more in the coming weeks intrigued both buyers and investors. Sales of luxury homes priced over $1 million have decreased 15% from 2016 due to inventory, while the average sales price of luxury homes are higher than 2016 in year-over-year statistics.

 

Sacramento County:

In Folsom, inventory increased steadily. The increase in inventory coupled with lower interest rates made it a good time for buyers to make their move. Sacramento Fair Oaks saw more inventory, especially at $400,000 and under. Luxury market inventory is still robust allowing well-heeled buyers to remain selective.

 

Sierra Oaks saw an increase in listing inventory and sales year-over-year in the lower price range. The luxury market had higher inventory and slower buyer activity, making it a good time for prospective buyers.

 

San Francisco:

San Francisco Lombard reported continued limited inventory. The market is especially hot for entry-level homes at lower price points. Buyers are encouraged to take the asking price for homes priced under $1.5 million and bid against other prospective buyers. SF Market also saw low inventory, prompting buyers to make multiple, over-asking offers.

 

San Francisco Peninsula:

Half Moon Bay saw a decrease in coastal inventory levels with only two months of supply. Luxury properties are in especially high demand with buyers searching for a great view or ample acreage. The high demand means that buyers must be committed with their best offer upfront or opportunities may be lost. Simple gestures such as a letter to the seller, a family picture and of course pre-approval letters can help seal the deal.

 

San Mateo Downtown reported slightly lower inventory. Unlike Menlo Park and Half Moon Bay, there was a decrease in activity in the luxury market.

 

Santa Cruz County:

Santa Cruz saw an influx of properties going into contract last month and is experiencing historically low inventory. The luxury market has increased with more buyer demand and closings in the multi-million range.

 

Silicon Valley:

Cupertino saw continued low inventory with a strong seller’s market. The luxury market was strong and steady under $4 million. Los Gatos also saw this trend with inventory 20 percent less than 2016, spurring competitive offers for homes under $2.5 million. Saratoga’s market was similar with tight inventory and competition among buyers. The luxury market has been relatively steady.

 

Los Altos’ market was again run by sellers with low inventory and the potential for multiple offers and sales over asking price. Because of the low inventory and highly-competitive market, buyers are encouraged to have all financing ready and make strong offers to show seriousness.

 

San Jose Willow Glen market conditions were dictated by the low inventory. Only 40 properties were on the market – a nearly 50% decrease from last year. The market is especially popular with buyers looking for tear-down or fixer properties. For example, a 5,800 square-foot empty lot listed at $775,000 sold at $920,000.

 

El Dorado County:

In El Dorado Hills, many properties under $500,000 receive multiple offers. This means it’s important for buyers to scale back on requesting non-essential repairs as cancellations (from both sides) have experienced a recent spike.

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Preparing Your Home for Sale is Easy as 1, 2, 3

Home selling season is in full swing and thoughts of putting your home on the market may have breezed through your mind. Industry experts say this is the ideal time to list your home. Those considering listing their homes should consult with a real estate sales professional and have a checklist ready – and that checklist is easy as 1, 2, 3.

First, a real estate sales professional will provide you with a sales marketing plan that includes a pricing strategy that takes into consideration competing homes, current inventory levels and time on market. That plan should also outline the online marketing approach and the initiatives you need to complete as a homeowner to ensure success.

Second, sellers should clean everything! Ensure that your home has optimal curb appeal, particularly during the hot summer months since gardens need a little extra attention. Ensure that lawns are mowed, clutter is removed, trash bins are hidden from view, exterior paint is fresh and no roof tiles are missing. It is also important to make sure your driveway is free of cracks and oil stains. First impressions are important and potential buyers do judge a house by its exterior, so be sure to invest a little time and elbow grease to win over buyers before they even walk through your door.

The inside counts too. Cleanliness is king when it comes to showing your property to prospective buyers. Make sure to clean your windows inside and out, vacuum carpets, mop floors and clear all the dust that accumulates in exhaust fans and lighting fixtures. If deep cleaning is not your forte, you can hire a professional cleaning service to scrub down your home. This may cost a few hundred dollars, but it’s well worth it.

Equally important is to declutter as minimalist interiors tend to show best. Buyers walk in and try to imagine their ideal or actual furniture in various spaces. There is nothing worse for house hunters than walking into a cluttered space and being so overwhelmed with stuff that they decide against it on the spot. Be sure to minimize extra furniture and objects by renting a small storage space while you are in the process of showing your home. The small cost is worth the large return.

Third, comfort is key. Particularly during the warmer months, so be sure to have your AC running at a comfortable temperature. If your home is not equipped with AC, then make sure the windows are open and fans are running in the extra warm spaces. It is also a good idea to ensure that shutters and blinds are drawn until just before the open house to help keep out the heat.

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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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