The March Madness in the Bay Area’s housing market continued right into April. I know this is sounding like a broken record, but the story’s the same: there continues to be far too many buyers are out there chasing far too few listings. The result of all this is more multiple offers and bids typically coming in as much as 10 percent over asking price on many homes – and a lot of frustrated buyers.
There are a few hopeful signs that listings may gradually be increasing in some areas, although most of our offices report that the increase is still not enough to meet the insatiable demand of buyers. Historically, we’ve seen sellers come out of their winter hibernation around this time of year – especially if they continue to read news stories of a strong sellers market. But only time will tell if that happens again this year.
All segments of the market remain extremely strong, but perhaps none more than the luxury market in many areas. Coldwell Banker Residential Brokerage’s most recent luxury market reports confirm that the high-end market – after a bit of a pause in January – picked right back up in February. And all signs point to strong March numbers as well (we’ll be reporting those figures in the next two weeks).
Luxury home sales in Silicon Valley surged in February from the previous month and year ago period. A total of 86 homes sold for more than $1.5 million during the month, up from 55 in January and 58 during the same period last year.
The upper end of the luxury market showed particular strength. There were 41 sales over $2 million, up from 31 the previous month and 35 a year ago. And there were nine sales over $3 million versus two the previous month and eight a year ago.
Silicon Valley wasn’t alone.
In Marin County, 42 homes sold for more than $1 million in February, up from 28 in January. Clearly, the inventory shortage is having an impact on prices in Marin. On the year-over-year basis, luxury home prices jumped 12.2 percent. And in the East Bay, 83 homes sold for more than $1 million during the month, up 69 percent from the same period a year ago. There were 10 sales over $2 million, double the number last year.
As strong as luxury sales have been in recent months, you can’t help but wonder how much better they would be if we saw a real increase in listings in order to balance out the market and provide more choices for buyers.
Our hope is that as word continues to spread about this strong sellers market, more and more of those people on the sidelines will finally jump into the market. Until they do, they’re missing a heck of a housing market rally!
Below is a market-by-market report from our local offices:
North Bay – Inventory in Marin is down a whopping 70% from this same time last year, our Central Marin manager notes. A crazy tight market has multiple offers and over-asking bids on most properties. Those that sit are being sent a clear message. While Sellers are taking advantage of this market, they best not get too greedy or buyers will boycott their listings and send them to a lower price point than they might have gotten had they listed their property at a reasonable price. Value, as always, remains a key determining factor in purchases. We are seeing much more movement in all segments of the market, from entry-level to luxury properties. The trend for off-market sales continues, despite our warnings to sellers that they may not be getting the true value for their home by not having it exposed on the MLS, and worse for buyers who may be over-paying for a property, just to have the luxury of not competing in a multiple offer situation – an odd conundrum for today’s market. The MLS is the market backbone, helping us to understand changing statistics and market dynamics. We need to support it, and support our clients in fair market dealings.
San Francisco – Buyers seem to feel frantic to nab their house, our Lakeside manager says. Newspaper articles have chronicled some buyers making offers made sight unseen. We recently had a preemptive offer with a high premium made in order to secure the property only to be rescinded less than 24 hours later after the buyer had seen the surrounding neighborhood after dark. Hiring a good agent is the best way to help vet properties quickly but covering the aspects of the purchase that are most important in order to minimize spinning of wheels. The number of offers and the price over asking on transactions has dropped in the last two weeks, along with a slight uptick in listings, our Lombard manager reports. It’s too early to see a trend but any movement toward a more supply/demand balance would be welcome. And our Market Street manager says the story remains one of too many buyers and not enough houses. Each deal that was put together in recent weeks experienced multiple offers (anywhere from four to 30). Some buyers have gotten discouraged and are putting their home searches on the back burner waiting for a more balanced market. Finally, our Sunset office manager notes that open houses continue to be very active in all price point. Although the number of offers on each sale has decreased, 100% of the ratified offers during this period were in multiple offer situations.
SF Peninsula — There are currently 15 active listings in Burlingame, 22 in Belmont, 12 in Foster City, 14 in Millbrae and 48 in San Mateo. This reflects a very slight increase over the last 2 weeks. There are still so many buyers interested in the prime locations who are truly putting their best into crafting a winning bid in multiple offers. One Millbrae open home listed at $1,239,000 had over 300 attendees at open house. Hillsborough currently has 55 active and 13 pending listings. This is a small increase in inventory over the last 2 weeks, reflecting the spring market and better weather. Cash buyers in the upper end price points are looking very seriously at the great inventory and fantastic opportunity to won in this exclusive community. Hillsborough currently has 55 active and 13 pending listings. This is a small increase in inventory over the last 2 weeks, reflecting the spring market and better weather. Cash buyers in the upper end price points are looking very seriously at the great inventory and fantastic opportunity to won in this exclusive community. Our North Burlingame manager reports that nearly 77% of the transactions that closed escrow in March sold for the list price or more. Multiple offer bidding is extremely competitive with lots of cash offers and no contingencies. There have been appraisal issues because the market is moving faster the comparable sales. Overbids in many cases are extremes. The Menlo Park area is still crazy after all these months, our local manager says. The tour sheet this week were the biggest they have had all year – 17 new listings in Menlo Park, 12 in areas of high desirability. Absorption rate will be interesting. Buyers are still out in big bunches and still buying in multiples in the most desirable areas with a great deal of cash. Palo Alto saw a “spring break” slowdown in sales due to low, low inventory. But listings are picking up again. In the San Carlos-Redwood City area properties are still selling quickly with multiple offers, which typically are driving the sale price about 10% above the list price. Several buyers are strongly considering getting out of the market because they feel they are being priced out of the market, particularly in San Carlos. There has been an increase in inventory, our San Mateo office says, but only time will indicate if this is a true trend. As usual, action is slow but pretty steady these days, our Woodside manager reports. The office is reaching into the Emerald Hills/Redwood City area more and are seeing sales there.
East Bay – Inventory is down 50-70% from 2011 and 2012, according to our Berkeley manager. Congratulations to the lucky listing agents who bring a listing to market and to the selling agent who manages to get an accepted offer. For the rest, back to the search. The Previews market is increasing weekly. Sellers now dare to price their homes in the $1-2 million range, whereas last year many hovered just below one million in order to attract buyers. Fewer multiple offers on the higher priced home but still 2-3 on each property. Competition continues to be fierce, our Danville manager says, with buyers going far over asking and waiving most or all contingencies. There is still a plethora of buyers out looking to buy immediately, our Oakland-Piedmont manager notes. They had a condo in Emeryville ($359k list price) that received 17 offers to a single-family home in Montclair ($1.09m list price) receiving five offers and several SFR in between that received between seven and 13 offers. Not sure when or if this frenzy is going to die down but there has been a whisper of buyers starting to sit out because they are tired of competing and are unwilling to shoot the moon to get into contract. Open homes in the Lamorinda area continue to be heavily attended as inventory increases at a slow yet steady rate. Competition continues to remain fierce, as many sales are multiple offer situations. Most buyers remain confident and keep making offers. Our Walnut Creek office is seeing a steady increase in listings, however agents are still seeing almost everything with multiple offers. Buyers are making non-contingent offers to make their offers as competitive as possible against cash offers.
Silicon Valley – We haven’t seen a Cupertino listing only get one offer in a very long time. Open houses are wild, our local manager reports. Multiple offers continue to be the norm in the Los Gatos market up to the $3 million dollar range. The properties above $3 million dollars receiving multiple offers present well and are estate-type homes. Recently a $2.8 million listing in Los Gatos went $300K+ over list, proving once again, that attractively priced homes attract offers in almost any range. Our San Jose Main office manager says inventory increased slightly the past couple of weeks in Santa Clara County. Multiple offers are being made in almost all price ranges due to low available inventory. Open houses are busy with activity driven by low interest rates, low inventory and an increasing consumer confidence of the Real Estate market in general. That story is echoed by our Willow Glen manager, who says the spring market is not cooling down. Agents are experiencing listing inventory growth in all segments in our surrounding markets, Condos / Townhomes are a hot commodity and are typically selling way over list price with 20 plus offers the norm. Cash is king and agents continue to see several all cash offers n all price points along with no contingencies. Buyers and their agents are willing to put everything on the line to win a property – no inspection, no loan and no appraisal contingencies are becoming commonplace for buyers to win the deal. Local inventory levels have remained essentially the same from a year ago. In the Saratoga area, the market is picking up in the $3 million+ range. Under $3 million is very healthy.
South County – The South County market is still red hot with multiple offers commonplace, our Gilroy manager reports. Even raw land is being snatched up with multiple offers. Wells Fargo put 20 vacant buildable lots on the market and they all went pending in one week with multiple offers and the prices going 30% over the asking price. The REO and Short Sale markets are severely dried up in South County, as well as San Benito County. Gilroy only has one short sale in the entire active inventory. We have seen a dramatic jump in prices – over 25% appreciation in some price points in the last six months. Open houses are rare – but are a feeding frenzy of activity. It is a great time to be a listing agent, but a tough time to represent a buyer. Creativity is key with many agents door knocking and sending letters to find a listing for their buyers. Our Morgan Hill manager says during the past several weeks there are now some signs that could the market may becoming more balanced—as agents are seeing more listings coming on the market in South County. Though supply still can’t meet all of the demand it does seem that there are more houses (albeit still not enough) for a buyer to select from. Multiple offers are still common and most homes are selling for more than the list price, but the buying frenzy (at least in South County) seems to be somewhat subsiding.
Santa Cruz County – Agents are seeing a slight bump in inventory, but this is not having much of an impact on the buyers searching. Sellers are reacting to the buyer frenzy by listing at a bit higher price than what we might have seen even just a month ago. We are seeing a listing (and selling) price uptick in nearly all market areas. This is showing the strength of the market, particularly in the areas harder hit by the recession.
Monterey Peninsula – The market continues to move in an active mode across all price ranges. Of course, well-priced and well-cared for homes in lower price ranges are the ones receiving multiple offers as soon as they come on the market, but even high-priced homes are receiving two or three offers many times. Fortunately, the Peninsula has not had the extreme shortage of inventory like many areas in the Bay Area. Even though agents are somewhat limited in inventory, they are experiencing a steady inflow of new listings each week presently.