From North Bay to Silicon Valley/Monterey Bay, to the East Bay, our Bay Area’s luxury housing market is continuing its spring rally. Coldwell Banker Residential Brokerage’s newly released luxury housing market reports show strong double-digit sales increases in April – in some cases 50 percent or more – compared to a year ago.
The luxury market all around the Bay remains red hot, driven by pent-up demand from well-healed and determined home buyers who want to purchase while prices are still quite attractive. In many cases, they have been sitting on cash waiting to invest, have enjoyed strong gains in the stock market, or are leveraging stock options to invest in real estate.
Whatever the reason, their impact on the high-end market is unmistakable.
Silicon Valley, for example, saw sales of luxury properties in April surge 43 percent from the previous month and 38 percent from the a year ago. A total of 176 homes sold for more than $1.5 million in April, up from 123 in March.
Los Altos alone had 46 luxury sales during the month, followed by Palo Alto with 38, Saratoga with 27 and Los Gatos with 22.
The upper end of the luxury market was particularly strong last month. There were 91 sales over $2 million (led by a $10 million Palo Alto sale), up from 57 the previous month and 69 a year ago. And there were 21 sales over $3 million compared to 14 the previous month and 16 a year ago.
Because of the huge demand, homes are selling amazingly fast. On average, properties sold in just 22 days. Some were selling within a few days of hitting the market. And because there were so many multiple offers over the asking price, the average sellers received an astounding 107 percent of their asking price.
In Marin County, sales of million-dollar homes jumped 56 percent from the same period a year ago. A total of 111 high-end homes sold during the month, up from 71 in April 2012. Sales also surged 44 percent from the 77 transactions in March.
In addition, there were 27 sales over $2 million in Marin, up from 18 the previous month and 21 a year ago. And like Silicon Valley, all other key market indicators moved higher with homes selling faster on average and sellers receiving a higher percentage of their asking price.
And not to be left out, the East Bay recorded a 67 percent jump in luxury sales compared to a year ago. A total of 222 homes sold for more than $1 million in April, up from 133 transactions in April 2012 and 162 in March.
Like Silicon Valley and Marin, the upper end of the East Bay market was especially robust last month with 16 sales of more than $2 million, up sharply from the 10 multi-million-dollar transactions at the same time last year.
And as we reported in the last Market Watch, San Francisco home sales over $2 million soared 51 percent in the first quarter of this year compared to the same period a year ago and sales over $3 million nearly doubled.
Based on reports from our offices, I don’t see any reason that the luxury market will slow down anytime soon – other than the fact that there just aren’t enough homes for sale to meet the robust demand. Stay tuned! And of course, as you’ll see below, the entry and mid-priced markets continue to be on fire, with virtually no standing inventory.
Below is a market-by-market report from our local offices:
North Bay – Marin County inventory is starting to pick up with approximately 350 new listings. The frenzied environment is easing up a bit, but activity is still brisk, still multiple offers and buyers are still missing out on properties if they don’t act quickly. The under $1 million market and $2 million dollar ranges are particularly hot, as are the markets in Greenbrae, Corte Madera and Mill Valley. Once in escrow, agents have to work extra hard through further negotiations and in some cases buyer remorse (or buyers wondering if they aren’t paying just a little, or a lot too much) for their property.
San Francisco – San Francisco Lakeside agents are seeing double digits offers on most listings. Buyers with more risky financing (lower down payments, even with down payments of only 20%) are having a hard time competing with all cash or with very high down payments (down payments of 40%, 50% or more). These buyers need really good agents to help find homes that they can buy. Our Market Street office said all the ratified offers during the past couple of weeks were multiples (between 2 and 17), but it feels as if there has been a bit of cooling as most properties received only 2 to 4 offers. Does this portend a change in the market, or is it just the usual SF summer slowdown? Only time will tell.
SF Peninsula — Strong sales but fewer multiple offers in the Menlo Park area, our manager says, but agents who work to the south are still seeing lots of buyers. One agent is making an offer today with 23 OTHERS in Santa Clara! The office’s off-MLS issue is slowing evaporating. Our Palo Alto office is seeing more listings coming on the market, but the demand is still quite high. The market has not shown a slowdown with regards to the numbers, but the feeling is it is a litter slower when it comes to the number of offers. In the Redwood City-San Carlos area, not much change: still a lot of multiple offers and a lack of inventory. The important part is that the buyers continue to make offers. In one recent case, the sellers did not take the highest offer in a multiple offer situation with 12 offers. The list price was $579,000 and the sellers selected an offer that was close to the highest ($8,000 less) but had better terms and conditions. The San Mateo area continues to experience low inventory and many buyers. Homes in the Woodside and Portola Valley area that are priced right sell quickly with multiple offers. Inventory is not building up in lower end Woodside. In the last month there have been three large sales – a good sign for the over 8 million market which has been very sluggish.
East Bay – Some Berkeley agents are feeling that the market is cooling a bit, but it appears that the situation varies from neighborhood to neighborhood. Most properties are still having 5-15 offers, but properties priced above $900,000 are seeing maybe two offers, our local manager notes. Our Danville manager says the local market seems to be evening out a little. Multiple offers still abound but the number of offers tends to be smaller. It could be buyer and agent fatigue or the onset of the graduation/summer season. While Oakland/Piedmont agents are still seeing plenty of multiple offers on every type of property, this week they’ve had three properties move their back up offers into first position, something the have not seen in a while. At the open houses the last two weeks there are still plenty of new buyers attending. Some of the buyers have gone to the sidelines because they’re tired of competing and losing. Only time will tell when they will jump back in. In the Lamorinda area, multiple offers within the first days of listing continue to be the norm. This year a larger number of homes are coming on market in the upper end in addition to the entry level homes that were the largest quantity in the past. This has taken the average value up as well. Inventory remains in low supply with many would-be sellers choosing not to go on market at this time. Lending requirements are about the same. Cash remains the attraction, which also minimizes appraisal difficulties. Appraisals and underwriting still remain the large unknowns in the loan approval procedure. Low supply, low interest rates and rising rents are driving the values upward. In the Tri-Valley area, inventory has gone up, but homes still going fast with multiple offers – just not as many multiple offers. Walnut Creek agents say they’re feeling a bit of a slowdown in the market with both listings and sales. This may just be the typical easing this time of year. Many people are pre-occupied with graduation, weddings and Memorial Day getaways. The entry level priced properties are still selling with multiple offers.
Silicon Valley – The best properties in the hottest areas are still getting a tremendous number of offers, according to our Cupertino manager, but the rest of the market seems to be a bit quieter. In Los Gatos, buyers’ agents have also noticed a slight cooling trend in the last two weeks in the number of multiple offers received on each property. Our San Jose Almaden office said they saw an upturn in inventory in the past two weeks with 22 new listings. The overall Santa Clara County market saw improving inventory the past week, our San Jose Main office manager notes. The market continues to be fast paced with multiple offers on most properties, however agents are starting to see more available inventory coming up and a slight rise in the interest rates, which may calm the market down a bit. Open house activity is still brisk in all price ranges. Listing inventory continues to grow in the Willow Glen area as well. As a result, agents are seeing the number of multiple offers easing – typically 1 -4 offers per property versus 8-12 offers per property in the past with some properties attracting well over 20 offers. Price point is still the driver. Most properties in the lower range, along with condos/townhouses, are still generating multiple offers. However the pace of bidding over list price is subsiding in most properties. Some, however, are bucking the trend with several offers well over asking.
South County – The Morgan Hill Office has a “New Listing” Board in the Realtors’ workroom. As of May 22, that board was filled with new listings and they have had to order and install a second board. This office is taking more and more listings on a daily basis—though these listings are selling very quickly, agents seem encouraged by the new direction that the market is taking. This week the local MLS showed a significant increase in the number of single-family homes offered for sale in Morgan Hill—in fact listings are up almost 30% from the previous month. It seems that the market is making valiant strides in changing from an absolute seller’s market to one that seems a bit more balanced.
Santa Cruz County – The local market continues to move quickly for most properties unless they are burdened by poor location, ambitious pricing or other aspects. The under $800K market is still the “hotter” market in terms of multiple offers and over-list price closings but the furor seems to have died down some. Because prices are increasing, the buyers have backed off some, causing a slight slow-down in number of offers. However there are still a lot of buyers circulating.
Monterey Peninsula – Though not as frenzied as the Silicon Valley and San Francisco Peninsula market, the Monterey Peninsula market continues to be very active, limited only by lack of inventory, as they still have more buyers than suitable properties. Year over year, April 2013 vs. April 2012, inventory in this area is down about 32%. However, closed sales during that period are interestingly about the same, down only 1%, showing that we entered the month with a good supply of properties to sell.