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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How to Get Your Home “Sale Ready!”

How-To: Get Your Home Ready for Spring Buying Season in a Hot Market

The first day of spring was earlier this week—and you know what that means.  It’s the official start of the home-buying season! (Technically the season came early this year — California had 12 out of 20 of the hottest markets during the month of February, according to the Realtor.com Hotness Index).

If you’re thinking of putting your home on the market, now is the time. But before you do, you might want to start a mental checklist of pre-listing to-dos. De-clutter your office. Check. Clean out your garage. Check. Repaint your hot pink bedroom a tasteful neutral. Eh….check. Hire a listing agent. No question. (You better get on that, stat!)

To help you get your house in tip-top shape for open houses and showings, here are 12 simple and relatively inexpensive tips from stagers that will make your house stand out to buyers (and may ultimately help you sell it quicker and for more money in a hot, highly competitive market).

1. Pump Up Your Curb Appeal

The old saying is true: you only get once chance to make a good first impression. Make sure that the outside of your home looks as appealing as possible. Water and mow the lawn, trim the trees, cut back overgrowth and plant colorful flowers in the front and back. Even paint your front door an unexpected color—to give buyers a hint at what awaits them inside.

2. Clear the Clutter 

When it comes to staging, any stager will tell you: less is more. Having fewer things filling the rooms makes your home look both neater and roomier. It allows buyers to more easily visualize their own furnishings there. Be sure to store bicycles, gardening equipment, and children’s and pet’s toys. Also move any cars from the driveway and along the curb in front of your home.

3. Focus on the Living Areas First

A living room is an area in which potential buyers should be able to envision themselves entertaining friends or gathering with their family. With that in mind, consider making the area appear as large and functional as possible by removing any unnecessary furniture and decorations.

4. Go Light and Airy in the Bedrooms 

To make bedrooms appear bigger, try painting walls a light color and bringing in a neutral rug. Since beds will be the largest piece in the room, consider linens that don’t stand out too much.

5. Give Your Bath a Makeover 

Another area buyers will typically look is the bathroom. Some stagers suggest replacing standard bathroom tub or doing tile surface refinishing at a cost of about $1,900. You can add a new vanity, a medicine cabinet and hardware for an additional charge. New floor tiles can be laid on top of existing tile. A little goes a long way.

6. Make Your Home Anonymous

Of course you’re proud of your family, but now is not the time to show their pictures and mementos. Stow away family photos, trophies, collectibles and any other personal items. You want buyers to imagine their families in the house, and that’s hard to do with constant reminders of your family. This process can also help you declutter.

7. Make Necessary Repairs

Look at your house with a critical eye. The last thing you want potential buyers to see are chipped tiles in the bathroom, a faucet that doesn’t work, or burned out bulbs in light fixtures. All systems and appliances should be in good working condition.

8. Consider Cosmetic Improvements 

Simple, cosmetic touch-ups like painting, wallpapering, adding new light fixtures, and minor landscaping, can really help a home show better. If you paint, make sure it’s in a neutral color. You don’t need to spend a lot of money on these projects to help make your home look its best but remember that if there are any problems these must be disclosed to potential buyers whether or not the problems have been remediated.

9. Give Your Home a Good Spring Cleaning

This can be the most cost-effective thing you do in prepping your home for sale. Potential buyers will want to inspect every part of your home, from the kitchen to the bathrooms to the garage. After removing any clutter, clean the inside of the house from top to bottom. Clean carpets, spotless kitchens and bathrooms, and tidy bedrooms can help make a positive impression.

10. Go Green 

An easy way to breathe new life into your rooms is by adding plants, whether succulents, ferns or rosemary topiaries. Place a floral arrangement on tabletops for a lush touch.

11. Mix and Match Your Furniture 

Sure, you may be proud of your matching Pottery Barn sofas and loveseats in the living room. But you can give the space a quick refreshed look by separating those pieces. Replace a bulky piece of furniture with a chair that takes up less space and makes the room seem larger.

12. Add the Finishing Touches

When stagers are through decluttering a home they finish by adding a few carefully selected items for beauty—a painting in the living room, fresh flowers in the kitchen, an accent pillow for the sofa, or maybe an area rug for the bedroom.

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Bay Area Real Estate Market Update

California Real Estate Heats Up As Inventory Remains Low

California continues to deal with limited listing inventory, which is resulting in an increase in buyer interest, attendance to open houses and multiple buyer offers. The job growth and a strong stock market have made home buying a more achievable goal for many nationwide.

According to the National Association of Realtors® (NAR) Pending Home Sales Index, there was a 2.8 percent drop in contract activity for the West, causing the lowest pending home sales in the last 12 months.

“Despite a strong sales start for the year, the housing supply shortage in California continues to cast doubt on whether the sales momentum can be carried forward into the spring home buying season,” said Leslie Appleton-Young, senior vice president and chief economist for the CALIFORNIA ASSOCIATION OF REALTORS®. “The number of active listings has been on a downward trend for the past 20 months and has shown no signs of improvement. As we move into the spring home buying season, we should see a marginal increase in listings, which will be offset by a pickup in sales. The inventory level is not likely to get better in the upcoming months.”

What does this mean for sellers? Most homes that are reasonably priced tend to receive multiple offers and stay on the market for as short as one month, according to Lawrence Yun, NAR chief economist.

“Sales got off to a fantastic start in January, but last month’s retreat in contract signings indicates that activity will likely be choppy in coming months as buyers compete for the meager number of listings in their price range,” added Yun.

What does this mean for buyers? As limited listing inventory continues, homes will receive more buyer offers and stay on the market for shorter time periods. Buyers should come prepared with financing and ready to make a quick purchase decision.

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

 

East Bay – The East Bay region continues to display signs of a strong market with limited inventory. There have been a few more new listings coming on the market. Overall listings are still selling briskly and are receiving multiple offers.

Monterey County – The market continues to be a little on the soft side, but several agents are reporting that they are receiving calls for listing appointments that will be on the market very soon. Active properties in most cities are ranging from one- to three- months supply. Reasonably priced homes seem to sell more quickly due to the quantity of buyers and offers, and we expect to see even more buyers this month.

North Bay – Across the North Bay, we are experiencing an increase of activity in the last couple of weeks. Inventory is steady to slightly increasing and multiple offer situations seem to be on the rise again. Open houses have been very active and there are many buyers waiting for new inventory to come on the market. As of March 13th there were 74 single-family detached homes for sale in San Rafael, and of those, 32 are pending. The San Rafael market continues to be very strong and should remain strong well into late this year. Countywide, we are seeing a trend similar to the middle of summer 2016 with sold units above $1 million and the percentage of available listings above $1 million. Available listing inventory compared to the same period last year is up only 3.6 percent. Pending and sold units are up 42 percent and 28 percent, respectively for the same period. In Southern Marin, the luxury market is doing well. The manager of the Southern Marin office said the office closed a Tiburon property for $8,250,000 and put several multimillion dollars into escrow during the past two weeks. About 20 percent of the active market is listed over $3 million. However, only 5 percent of the sold properties are over $3 million. Only the most competitively priced and desirable luxury properties receive offers. The general market continues to have a limited supply to meet demand. However, the month supply of inventory has risen from 1.1 months in Dec. 2016 supply to 2.5 months as of March 16, 2017. This is definitely a seller’s market.

Placer County – Open houses continue to attract many buyers. Luxury sales for properties priced above $1 million are down slightly from 2016 luxury sales. For 2017, there have been 33 luxury properties sold as compared to 34 sold last year for the same period. The median sales price for luxury properties in 2017 thus far is $1,540,000, which is down 9 percent from the median sales price of $1,700,000 in 2016. The average sale price of luxury homes in year to date stands at $1,862,768 as compared to $2,609,244 in 2016 and is down almost 29 percent. Even with one of the largest snow level years in history, the 2017 real estate market in North Lake Tahoe and Truckee has begun the same as it did for the same period in 2016, which was a very solid year. There continues to be considerable activity in the market as many buyers and savvy investors are actively looking for homes.

Sacramento County – There is an abundance of inventory over $1 million, which makes this one of the few buyer’s markets in the state.

San Francisco – There is more inventory over $4 million showing a big increase in closings over the last few weeks. More than 75 percent of houses are selling over asking and surprisingly over 65 percent of condos are closing over asking, despite the condominium inventory being considerably higher year over year. Entry-level and fixer properties are still yielding the most traffic and offers. The luxury properties are seeing more price reductions, competition and lengthening days on market. As per usual, the number of homes available continues to increase as we enter the spring home selling season. We are still seeing multiple offers (as many as 13 during this period), and offers for well over the listing price. Open houses and broker tours continue to be well trafficked. However, we are also seeing buyer fatigue. Pricing is critical because even if a property is slightly over priced, the property will sit without offers.

SF Peninsula – In some areas, we are beginning to see multiple offers on properties that we have listed. Oceanfront homes are selling quickly if priced right. There are many cash purchases and quick closes. Despite the low inventory and high demand, there is extreme price sensitivity. Homes below $900,000 are selling quickly. Palo Alto and surrounding areas north and south tend to receive offers exceeding 20 percent of the listing price.

Santa Cruz County – Approximately half of the active inventory of single-family homes on the market have an asking price of over $1 million. There are 115 active single-family homes asking over $1 million and 17 are pending. The number of single-family homes active on the market in Santa Cruz County is currently 227, compared to 317 last year in March, which has created a competitive buying environment. There are a noteworthy number of all cash purchases, and we are seeing offers coming in on listings quickly as well as multiple offers on listings in the more affordable price range. In February we saw 97 sales, which is slightly up from February 2016, which had a total of 94 sales.

Silicon Valley – Activity is excellent but inventory levels are still low compared to buyer demand. Everything under $2.5 million sells quickly unless it is severely over-priced. Closing figures for the month of February reflected slow sales in January. Activity has, however, increased in March with more homes being listed to meet extraordinary buyer demand. With buyers facing the prospect of higher mortgage rates, the urgency to secure and close a property has increased significantly. South County agents are informing sellers that, if they are thinking about listing their homes, timing could not be better. The luxury market with homes priced over $4.5 million is steady but lacks offers. Typically we see an increase in inventory in the spring. However, we have already seen our inventory rebound faster than in years past, albeit slow. 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 month’s worth of inventory in Los Altos. With such a limited number of homes available for sale, most homes are receiving multiple with a sales price 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. And although inventory is increasing, homes are still selling very fast. Reasonably priced homes coming on the market tend to sell in less than a week.

South County – There is still a shortage of inventory, especially in the under $500,000 market. We are seeing more interested buyers coming to the area, which means well-attended open houses. Most homes receive offers within a few days. Homes under $400,000 are seeing multiple offers. Over the last week we have seen an increase in listings, but finding homes for first-time buyers in the price point of $350,000 and below is a struggle. Most listings are seeing multiple offers and the majority of listings are going over asking price.

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Bay Area Housing Market Update

Housing Market Starts Off Year on the Upswing

As the housing market approaches the end of the first quarter, there have been some encouraging signs for home sellers and homeowners who may be weighing whether to sell. The year kicked off on a fairly strong note for the housing market both on a national and statewide level.

January sales of existing, single-family detached homes in California totaled 420,100, up 4.4 percent from a year earlier and 2.1 percent from the prior month, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

The median price for single-family homes sold in California in January was $489,580, which is a 4.8 percent increase from the median price recorded during the same month in 2016 but a 3.8 percent decline from December’s $508,870 median price.

Local housing experts attributed the boost in January sales to rising mortgage interest rates which encouraged buyers who had been waiting to make a move to make a purchase before interest rates rise further.

“California’s housing market continues to be defined by the higher-priced, coastal markets and the less expensive, inland areas that still offer access to major employment centers,” said C.A.R. President Geoff McIntosh. “For example, eroding affordability and tight housing inventory are pushing buyers away from the core Bay Area markets of San Francisco, San Mateo, and Santa Clara and into less expensive bedroom communities, such as Contra Costa, Napa, and Solano. In Southern California, an influx of buyers from coastal employment areas into the Inland Empire drove healthy year-over-year sales in Riverside and San Bernardino.”

Several metropolitan areas in California were among the regions nationwide where homes were selling fastest. Data from realtor.com® showed that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in January were San Jose-Sunnyvale-Santa Clara, Calif., 43 days; San Francisco-Oakland-Hayward, Calif., 47 days; San Diego-Carlsbad, Calif., 55 days; Seattle-Tacoma-Bellevue, Wash., 57 days; and Nashville-Davidson-Murfreesboro-Franklin, Tenn., Vallejo-Fairfield, Calif., and Greeley, Colo., all at 58 days.

Other parts of the country also experienced gains in sales and prices during the month of January. In fact, every region except the Midwest saw an increase in unit sales, according to the National Association of REALTORS® (NAR).

Nationally, sales of existing homes, including single-family homes, townhomes, condominiums and co-ops, were 3.8 percent higher in January than a year ago and were up 3.3 percent from December 2016, according to NAR®. The median existing-home price for all housing types increased 7.1 percent year-over-year to $228,900 compared to $213,700.

NAR Chief Economist Lawrence Yun noted that strong hiring and improved consumer confidence at the end of 2016 “appear to have sparked considerable interest in buying a home.”

“Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions,” Yun said.

But in a separate report about pending home sales released in late February, Yun noted that homebuyers faced obstacles in January, including insufficient supply levels, which was a drag on contract activity in some parts of the country. In fact, the Pending Home Sales Index, which is a forward-looking indicator based on contract signings, slid to its lowest level in a year. Pending sales decreased 2.8 percent in January from December 2016 and although January’s index reading was 0.4 percent above the year-ago index reading, it is the lowest since then.

Take a look at what was happening in our Northern California offices during the last two weeks of February:

East Bay – The region is still dealing with a shortage of active inventory, which is leading to multiple offer situations and properties selling well over the asking price in Oakland and other areas. “Oakland is very much still on the receiving end of many buyers coming in from all over the Bay Area and out of state making it more and more difficult for first-time homebuyers to find a home,” explains the Oakland office manager. To provide a better idea of how tight the housing supply is, the Berkeley office manager outlined inventory levels noting that there were virtually no changes from the prior two weeks: In Berkeley there were 27 houses available for sale compared to 33 under contract, which is an inventory supply of .82 months. In Albany, there were six active listings versus seven under contract, a supply of .86 months. El Cerrito showed 16 active properties and 15 under contract, which is a supply of 1.07 months. In Oakland, there were 211 active listings and 249 under contract, a .85 months’ supply. Looking north to Richmond, there were 90 active listings and 93 under contract, a .97 months’ supply.  There is consistent strength in the East Bay market, which is reflected in the continued price increases, intense demand for homes in the region, and low supply.

Monterey County – Weather hampered home sales and listing inventory in the region, which experienced a decline in sales and new listings in February. Many sales associates reported that they couldn’t have properties photographed because of the flooding, explains the manager of the Monterey Peninsula offices. “We hope that February showers will bring March buyers to the market,” he said.

North Bay – As in other areas, one of the main challenges of the market in the North Bay, was lack of inventory. Multiple offers were happening with nearly all of the new listings coming on the market, as demand continued to outpace supply in the last two weeks of the month, notes the Greenbrae office manager. Listings priced under $1 million, in particular, sold quickly. In Marin County, there were 215 properties available for sale in the last two weeks of February, with only 55 priced under $1 million and 18 priced under $750,000. In a similar manner, the Novato office manager explains that homes in the $1 million to $1.5 million price range in “prime locations” were selling quickly. She said inventory is so tight that homes that had lingered on the market for more than three months were selling. Novato had 41 active listings, 25 percent of which were condominiums, and 50 contingent/pending sales in the last two weeks of February. The tight supply is affecting unit sales. Sales were down 9.7 percent year-over-year and inventory declined 20.8 percent, according to the Santa Rosa Bicentennial office manager. The median price for February was $550,000, which is 7.8 percent higher than the same month in 2016. The significant rainfall also affected market conditions, as the Santa Rosa Mission office manager shares that it kept “a lid on the market.” Meanwhile, in West County, listings doubled but inventory remained at an all-time low, said the Sebastopol office manager. Most properties in that region received multiple offers and went under contract within 10 days of hitting the market, she notes, and all cash offers were “usually the winning offer”.

Placer County – The area saw robust open house activity, even as inventory remained tight and homes priced under $500,000 were selling within a few days of being on the market and drawing multiple offers. The Auburn office manager points out that several homes priced under $400,000 went into escrow within a couple of days and for over the list price. Some offers turned into all cash offers, instead of offers with a mortgage contingency, so that buyers could be successful, according to the El Dorado Hills office manager. As for the higher-end market, more listings came on the market but pending sales and closed sales were about the same. Buyers of luxury properties continued to be being very selective.

Sacramento County – The supply of listings picked up in some areas and declined in others, but multiple offer situations were still occurring in some communities. Listing inventory doubled in the last two weeks of February but well-priced homes continued to sell at a quick pace, according to the Folsom office manager. However, the Sacramento Fair Oaks manager reports that inventory was still very light and that multiple offers on lower-priced homes was “leading to appraisal problems.”

San Francisco – Sales activity was on the rise in San Francisco in the last two weeks of February, with both the Lakeside and Pacific Heights office managers noting an increase in sales. Multiple offers were common, as the San Francisco Lakeside office manager points out that most properties that were “well priced, well prepared and well publicized” were getting more than 10 offers. Still, the manager cautioned that some sellers were unrealistic with price expectations.

SF Peninsula – The overall theme in the region continues to be a shortage of supply met with strong buyer demand, although some offices serving the area reported an uptick in listing inventory. Open houses in Menlo Park, San Carlos, and other communities in the region attracted large turnouts. The Woodside & Portola Valley office manager points out multiple offers were consistently seen for properties across most price ranges. Buyer demand has been healthy as the Menlo Park office manager notes that they’ve seen a return of homebuyers who were previously unsuccessful in their efforts to purchase properties.

Santa Cruz County – A key challenge in the county was the low number of listings. The number of active property listings on the market has decreased each month since June 2016, said the manager of the Santa Cruz offices. There were approximately 184 active listings, which is almost half the number of listings a year ago. There were almost an equal number of sales this year compared to last year, at 87 active single-family homes. The average sales price for single-family homes is $904,743, which is up approximately $10,000 from the total for 2016. The luxury market has been fairly consistent over the last five to six months, and demand has remained strong through the winter, leading to the lowest inventory level in more than three years, according to the manager of Santa Cruz offices. There were approximately 60 sales of properties priced more than $1 million. The number of active listings over $1 million declined from the prior month.

Silicon Valley – Increased sales activity, busy open houses, and multiple offers were the general theme for the region. The Cupertino office manager notes that open houses were getting “hundreds of visitors” and listings were typically drawing 10 or more offers. In the San Jose market, office managers said inventory was lower than a year ago. “We just can’t bring enough homes onto the market to satisfy demand,” said the San Jose Almaden office manager. The number of active listings dropped to 39 units in the last two weeks of the month. “Buyer demand is strong, open house traffic is jammed every weekend . . . with prospective buyers,” said the San Jose Willow Glen office manager. Average sales prices in February were up year-over-year in Almaden (+1.5 percent), Blossom Valley (+2 percent), Cambrian (+5.5 percent) and Santa Teresa (+5 percent). Meanwhile, the Los Gatos office manager notes that buyers were encouraged to see some more inventory coming to the market because inventory had been off 35 percent from the same time last year. He said the luxury market is showing signs of strength, with a recent $13 million sale occurring.

South County –  The South County region is experiencing a seller’s market. The listing shortage is having a significant impact on the market, as there is insufficient supply to meet demand. There were only 40 homes listed for sale in all of Morgan Hill as of March 1, while Gilroy had 76 active listings.  “Anxious buyers are looking to secure a property before rising interest rates prevent them from qualifying for loans,” explains the manager of the Gilroy & Morgan Hill offices. Many sales associates have started to walk through neighborhoods and make cold calls to secure listings.

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Bay Area Real Estate Market

 

Housing Affordability in California Steadies but Remains Low

There is no doubt that prices in California continue to be among the highest in the nation, buoyed by steady demand and a healthy economy. A recent report delivered a dose of good news, however, showing that rising wages and seasonal price declines have helped to stabilize California’s housing affordability.

According to the CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index, 31 percent of homebuyers could afford to purchase a median-priced, existing single-family home in California during the last three months of 2016, which is the same percentage as in the third quarter of 2016 and up slightly from 30 percent in the fourth quarter of 2015.

The fourth quarter of 2016 was the 15th consecutive quarter that California’s housing affordability index has been below 40 percent. The index peak of 56 percent was registered in the third quarter of 2012.

What does this translate to in terms of dollars? Homebuyers in California needed to earn a minimum annual income of $100,800 to qualify for the purchase of a $511,360 statewide median-priced, existing single-family home during the last three-month period in 2016. The homebuyer’s monthly mortgage payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,520, if a 20 percent down payment was made and with an effective composite interest rate of 3.91 percent.

Eight out of 29 counties tracked by the index experienced an improvement in housing affordability in the fourth quarter compared to third quarter 2016. Those counties that saw improved housing affordability are Contra Costa, Marin, Napa, Los Angeles, Ventura, Monterey, Santa Barbara and Madera.

The following 10 counties, however, experienced a decline in affordability quarter-over-quarter: San Francisco, Sonoma, Orange County, Riverside, San Bernardino, Santa Cruz, Kern, Kings, Merced, and San Joaquin. The remaining 11 counties – Alameda, San Mateo, Santa Clara, Solano, San Diego, San Luis Obispo, Fresno, Placer, Sacramento, Stanislaus, and Tulare – were unchanged.

The least affordable areas in the state in the fourth quarter included San Francisco County, where 13 percent of homebuyers could afford to purchase a median-priced existing single-family home, followed by San Mateo County at 15 percent and Santa Cruz County at 17 percent.

Affordability remains a concern not just in Northern California but in other parts of the country as well. In a recent survey by the National Association of Realtors®, Aspiring Home Buyers Profile, affordability was identified as the main hurdle for consumers who wanted to be a homeowner.

Here’s what was happening in our local Northern California offices in early February:

East Bay – Even though it is still early in the year, the East Bay region continues to display signs of a strong market with limited inventory. In Berkeley, there were only 27 homes available for sale in mid-February compared to 25 under contract, and there was about a month’s worth of inventory, shares the Berkeley office manager. In Albany, six homes were active listings while five were under contract and the community had 1.2 month’s supply, he said.  El Cerrito, Richmond and Oakland had less than a month’s worth of inventory. El Cerrito had 11 active listings and 14 properties under contact, while Richmond had 75 active listings and 97 homes under contract. Oakland had 201 active listings and 244 under contract.

Monterey County – The month of January saw a healthy level of sales activity. One sales associate had nine sale sides, and several other sales associates had two to four sales each, leading to a 43 percent increase in unit sales. Sales volume was up 39 percent year-over-year. February pending sales “look promising,” according to the manager of the Monterey Peninsula offices.

North Bay – The supply of available listings is still relatively low in most communities but there appeared to be some pick up in new listings in parts of the region in early February. The managers of the Greenbrae, San Rafael and Santa Rosa Bicentennial offices noted that inventory is on the rise.  In Marin County, there were 210 available properties up from 190, while listings priced under $1 million climbed to 55 from 45 and there were 16 properties priced under $750,000, up from eight, said the Greenbrae office manager. However, she also shared that multiple offer situations are occurring, with many offers eliminating inspection and financing contingencies. The Southern Marin office manager also reports that “multiple offers are becoming the norm again” for properties priced under $1 million and often for homes priced between $1 million and $2 million. Meanwhile, sales activity has been flat in northern Marin County, with sellers waiting for the weather to improve, according to the Novato office manager. With so few homes to sell in the local area, sales associates have been traveling to other counties to assist buyer clients in their searches for new homes. The San Rafael manager noted there were many new listings in the office over the last week. This is the first jump in office inventory since the first of the year, he said.  There were 72 active properties for sale in San Rafael, however only 38 of those are single-family homes, with the rest being condos or townhomes with some properties under contract. The San Rafael office had seven ratified offers. The median price for active single-family listings in San Rafael is $1,212,500 with an average price per square foot of $588.  With the anticipation of the arrival of spring, buyers are swarming open houses and sellers are getting their homes ready for sale, he added. However, the Santa Rosa Bicentennial office manager shared that there are a good number of homeowners who are holding off on putting their homes on the market until they find another home to move into, which means that some move-up buyers aren’t able to find a property to purchase. Meanwhile, the condominium market is very competitive, with sellers enjoying a big advantage in some parts of the region. The Santa Rosa Mission office manager, for example, said condo sales are up by 60 percent and pending sales are up 25 percent. The number of single-family home sales and listings is about the same as a year earlier, he added. As for the luxury market, the Santa Rosa Bicentennial office manager said the lower end of that sector is seeing “good buyer activity with multiple offers on correctly priced homes,” while the properties priced over $2 million are experiencing slower activity and more selectivity among buyers. The Previews market is gaining momentum, according to the Southern Marin office manager, with four new luxury sales in the price range of $3 million to $5 million in the office during the past two weeks. The Santa Rosa Mission office also reported gains in Previews, pointing to a 30 percent increase in pending sales activity but also about 30 percent more available listings in this market segment.

Placer County – Sales associates are busy but there is a need for additional inventory. Almost all properties attract at least two offers and as many as 12 offers, according to the Auburn sales office manager. If the home is priced under $500,000, even if it is not in the best condition, it will get multiple offers, she said.

Sacramento County – The market is displaying signs of health, with slight increases in inventory and sales holding steady. In the Sacramento Fair Oaks office, several listings priced over $750,000 have been taken, but the manager notes that they are experiencing a buyer’s market in that price range. Still, he described the lower end of the market as “hot.” The office’s sales in January were 29 percent higher than the same month last year. There were 21 properties under contract in that office, while the Sacramento Sierra Oaks office had 23 ratified offers.

San Francisco – Open houses and broker tours in the region are drawing large crowds, particularly for properties that are priced well and in good condition. Inventory, overall is restricted. Entry-level homes, fixer-uppers and well-priced homes are selling briskly, with multiple offers and properties selling for over the asking price, said the San Francisco Lombard office manager. An Outer Sunset home listed at $749,000 generated 16 offers with at least three offers over $1 million, he said. On the other hand, condos are seeing more price reductions with the majority selling at or below asking price, and the luxury market is seeing slow activity, he shared. “Multiple offers remain the order of the day even though we’ve seen a good number of properties need (price) reductions to generate interest — mainly in the higher price ranges,” said the San Francisco Market office manager.

SF Peninsula – There appeared to be some slight improvement in inventory but overall the region is still dealing with a very tight supply of available for-sale properties. Open house activity seems to be very brisk, drawing a lot of buyer traffic. Properties located in desirable areas and “priced right” are receiving multiple offers, shared the San Carlos office manager. Homes priced under $2 million are selling quickly, said the manager of the Menlo Park and Woodside/Portola Valley offices.

Santa Cruz County – Buyer demand in Santa Cruz County appears to be strong. There were 118 sales in January compared to 96 sales during the same month in 2016. Also, the active listing inventory grew, with 115 homes hitting the market last month, compared to 106 a year earlier. Additionally, the number of Previews homes coming on the market is starting to pick up. In January, 36 Previews listings hit the market and 32 were sold. It will likely take a few months to build the inventory with the demand being as high as it has been, explained the manager of the Santa Cruz offices. 

Silicon Valley – Some communities in Silicon Valley are seeing an uptick in listings and sales. Countywide, there was a jump in inventory compared to the previous two-week period, but overall there is not sufficient supply. Prices in some communities are also on the rise month-over-month and year-over-year. The San Jose Almaden office manager reported that Cambrian had the biggest price jump with the average sales price increasing 10.5 percent from January 2017 and 9 percent from February 2016.  The average sales price in that community thus far into February is $1,002,000. The average sales price for Santa Teresa is $757,000, which is up 1 percent from February 2016. Almaden and Blossom Valley average sales prices are on the rise compared to a year earlier. Almaden’s average sales price is $1,427,000 (5 percent gain) and Blossom Valley’s average sales price is $728,000 (6.5 percent increase). The San Jose Main office manager explained that there are more multiple offer situations and the sale price to list price ratio is starting to increase. Open house traffic is heavy, with most homes going under contract after just one weekend of open houses, and the area is experiencing “pre-emptive offer” listings or “coming soon” listings which are generating aggressive offers that are well over list price, according to the San Jose Willow Glen office manager.

South County – Listing inventory remains low, but more homes in all price ranges were being listed in South County during the last two weeks, providing more options for potential buyers. Sales associates were also reporting an increase in open house attendance. It has not been uncommon for 30 to 40 individuals to attend an open house, especially for listings priced correctly and located in desirable neighborhoods, according to the Gilroy and Morgan Hill office manager. There are still signs that the region is in a seller’s market.

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How to Write the Perfect Dear Seller Letter

In a seller’s market, buyers frequently find themselves competing for a limited number of available properties for sale. When competing for a home, one thing that can give buyers a distinctive edge is writing a dear seller letter to the homeowners.

A dear seller letter is one thing that can give the buyer a distinctive edge in a seller’s market. In the Bay Area, like many other parts of the country, listing inventory is low and buyers find themselves competing for a limited number of available properties for sale. When competing for a home, there are many ways to make your offer attractive to the seller. When a seller is reviewing multiple offers on their home that may be very close in price and terms, you want them to feel an emotional connection to you. A well-written dear seller letter can create that connection.

Here are some tips on how to write the perfect dear seller letter:

You want the seller to know who you are: Start out your letter by introducing yourself and let the seller know who will be living in the house. They might be thrilled to know that you are, for example, recently married, first-time buyers who work in a field like theirs. It’s all about making that personal connection.

Tell the seller why you are moving: Helping the seller understand your motivation for buying their house can make a difference too. Sellers might be more motivated to sell the house to a family who is weeks away from the birth of a third child and desperately needs the fourth bedroom their house offers.

Explain to the seller why you love the house: Chances are the seller originally purchased the property because, like you, they felt an emotional attachment to the home. Let them know the distinct characteristics that drew you to the house; whether it’s the beautifully remodeled kitchen or the hardwood oak floors they may have painstakingly just refinished. Sellers will appreciate knowing the details that make their home special to you.

Use social media to learn a little bit about the sellers: Checkout the seller’s Facebook and LinkedIn profiles to make some connections. If the seller has frequent posts about races they’ve run and you’re a runner too, include that in your letter. For example, you can’t wait to establish a new running route through the beautiful tree-lined streets of the neighborhood. Perhaps you discover on LinkedIn that you and the seller attended the same university; be sure to mention that you’re an alum.

You should also remember and mention things about the house that show your common interests like evidence of pets, kids, or hobbies. If you know the seller has a dog and you have one too, be sure to let them know how much you appreciate, for example, the fenced-in back yard that will be perfect for your beloved pet.

Compliment, Compliment, Compliment: Lastly, every good dear seller letter should include lots of compliments and seller love letters are no exception. Make sure your letter is full of sincere praise. Did the sellers custom-build the home? Let them know how much you appreciate their design aesthetic. Is the lower level recently finished? Let them know how much your family will enjoy the space. Did you notice a copy of a classic novel on their kid’s nightstand? Mention how, as an English teacher, that impressed you!

Everyone needs a little love and home sellers are no different. If you find yourself competing for your dream house, using these tips to write the perfect dear seller letter may give you a edge. It’s also always a good idea to get the help of an experienced real estate professional to help you navigate through the home buying process.

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