Bay Area Home Sales Gradually Easing, Luxury Market Remains Strong
A number of new housing reports out over the past week show that the Bay Area housing market is gradually coming back down to Earth with sales easing slightly from their feverish pace, although prices continue to escalate. But the red-hot luxury market around the Bay is showing little sign of cooling off with sales continue to climb at double-digit rates and prices remaining strong.
DataQuick, the La Jolla-based industry analysts, reported that a total of 7,595 new and resale houses and condos sold in the nine-county Bay Area in October, up from September but down 3.9 percent from October 2012. I suspect part of the reason is simply lack of inventory, which has frustrated buyers who are willing and able to purchase right now.
The median price paid for a home in the Bay Area last month was $539,750, up 1.8 percent from September and up 29.7 percent from $416,000 in October 2012. Part of what’s driving the prices higher is that very same lack of inventory, resulting in multiple offers and bidding over the asking price in many instances.
While prices have risen sharply, the Bay Area median price last month was still 19 percent below its all-time peak of $665,000 in June and July 2007 before the financial crisis hit. But today’s median is also up a whopping 86 percent since its low of $290,000 hit during the depths of the recession in March 2009.
According to DataQuick economists, the Bay Area housing market continues to move in “fits and starts” toward normalcy.
“At different times in recent years we’ve had various peaks or troughs when it comes to sales volume, prices, foreclosure activity, cash sales, absentee-owner sales…you name it,” said John Walsh, DataQuick president. “All of these market components are now trending toward normal. We are still a ways away, but the market is slowly re-establishing equilibrium.”
Meanwhile, the luxury end of the Bay Area housing market continues to be the hottest segment with little sign of a letup.
We’ll be releasing our latest Coldwell Banker Previews Luxury Market Reports in the coming days, and they will show continued double-digit sales gains in the high-end markets from Marin County to Silicon Valley and across to the East Bay.
Here’s a sneak peak: Sales of million-dollar-plus homes in Marin County last month surged 47 percent from the same period a year ago with 106 luxury transactions in October. There were nine sales last month above $3 million, more than double the number last year.
And in Silicon Valley, there were 156 sales over $1.5 million in October, up 19 percent from September and 17.3 percent from October 2012. The number of $2 million sales jumped 28 percent to 82 properties, and there were 25 sales over $3 million, nearly double a year ago.
Be on the lookout for the full reports early next week. In the meantime, here is a market-by-market report from our local offices:
North Bay – New sales are outpacing new listings, so the inventory shortage continues in Marin. There’s less pressure on the upper end where homes above $3 million take longer to sell. Anything below $2 million (priced properly) is going right into escrow and most often with multiple offers. Even those homes sitting on the market are now getting offers, though possibly not where sellers had hoped. If your home does not get an offer within the first week, you can rest assured that price is the issue, as we have no shortage of buyers out there, according to our Central and Southern Marin manager. Sellers thinking outside the box and putting their homes on this holiday season may be the real winners in Marin. Inventory levels in Sonoma County have continued to decrease, according to our Santa Rosa manager. Although this lack of inventory would seem to drive buyer traffic, open houses are being very well attended, and buyers are becoming increasingly selective about which properties they are willing to place an offer on. Many properties that are well priced are receiving multiple offers and those that are not well priced are sitting. Many sellers have to reduce their price to get an offer. Much of this activity seems to have been influenced by the run up in the median sales price in the last year – about 25% year over year. Buyers are concerned with paying too much. While there does not seem to be merit to this concern, it is influencing their decision making process.
San Francisco – Slowing for the holidays? Maybe a little, our Lakeside manager reports. But buyers are still looking hard for that house that they can’t say no to. Sellers are looking more and more to the new year to launch their home and it shows as we are in the 6th week of decline in inventory after it had risen slightly in the fall. Our Lombard office manager says he’s seen a seasonal slowdown in sales after a strong October and early November. There has been a dip in inventory across the board, and agents say it is an excellent time to bring on listings. Well-priced listings under $2m still are going about 10% over with multiple offers. The holidays are on people’s minds, giving a sense that things are winding down, our Market Street manager notes. Even so, well-priced properties continue to benefit from lack of inventory. The majority of sales in recent weeks had multiple offers – anywhere from 2-12. One of our office’s listings received 8 offers, and achieved a near record price for its neighborhood despite needing over $30K in pest repairs and a new furnace. Our Sunset district manager reports a similar holiday slowdown. Open houses are still active and multiple offers are still the norm but activity levels have eased a bit.
SF Peninsula – The luxury market has been slow in terms of new inventory coming to market, but active with regard to sales activity. Buyers are closing out the year with cash offers and limited competition. The right property and price will always have that special buyer waiting to jump right on it. Overall, sales activity has been brisk. Our Burlingame agents are searching out every possible property for their buyers who are ready and waiting. The tour sheet has offered fewer and fewer new listing these last several weeks, which has prompted buyers to give a second look to those homes that have been on the market a few weeks with no activity. The word from open houses is that buyers see the last months of the year as having great potential for scooping up a deal and avoiding some of the competition that they expect will be back in full force with the new year. Our Menlo Park manager reports strong demand for properties up to 1.5M with multiple offers more often than not, but less aggressive demand for Previews properties at the higher price points. Some buyers seem somewhat distracted with holidays coming up, while other buyers seem more desperate with the concept that fewer new listings are coming on with the holidays approaching. Buyers at higher price points seem more price sensitive and in less of a hurry than a few months ago. Our Palo Alto manager says Inventory has gone to sleep with the local market in full holiday mode. Open houses are still attracting a huge amount of buyers, according to our San Carlos-Redwood City manager. There’s very limited inventory, particularly in San Carlos. There still are some multiple offers but more like 3 to 4 as opposed to 8 to 10. As the holidays approach activity seems to be slowing down. There still seems to be a large amount of first time buyers in the market and they are trying to get into a home before the interest rates start to climb.
East Bay – Half the accepted offers in our Berkeley office have been solo buyers with no competition and half have been very competitive with 3-14 offers competing. One of our listings received three pre-emptive offers. Listing agents say a lot of disclosure packets are requested, but that does not always translate into offers or multiple offers. Some agents submit offers at the last minute, perhaps thinking that “laying in the weeds” benefits their buyers. Our Danville manager says the local market is both hot and cold. Not all houses sell right away. When the right house in the right location comes on the market agents still get multiple offers. Last week our office got 11 offers on a house in San Ramon that was small, cute and single level. In the Fremont area, market demand is strong with some multiple offers. Open house activity is very busy with 25 to 30 groups coming through. Price is holding firm and in some cases going over the asking price. Our Oakland-Piedmont manager says there are lots of buyers writing offers and going out to open homes. Unfortunately inventory is shrinking in all price points so the competition is heating up, not to the degree it was earlier in the year, but once again all our ratified offers were in multiple offer situations (2 – 8). Sellers want to hold off for the first of the year and agents are working to show them the merits of putting their properties on the market now. The Lamorinda market has slowed as buyers seem to be taking more time before making offers. Open homes still well attended.
Silicon Valley – Lots of closings but fewer new sales, reports our Cupertino manager. “Holiday light” has begun, she says. Our San Jose Almaden manager advises Inventory is crazy low in the Almaden area with only 17 SFR active as of this week. Meanwhile in the Willow Glen area, there’s been no seasonal slowdown for the local market as we typically see. The only factor keeping agents from more sales is once again lack of inventory. The local inventory continues to shrink each week as we move towards the end of the year, and it is anticipated this trend will continue into the first quarter of 2014. Even in the midst of the holiday season agents are still experiencing high demand and now multiple offers are back for well-priced, well showing homes. Our Saratoga office manager says there has been a small uptick in offers as agents see inventory diminish even further.
South County – Several months ago South County homes that were put on the multiple listing service sold at a very fast pace. In May of this year it took an average of just 16 days to get a Morgan Hill listing into contract. That figure was 23 days for a home in Gilroy. As of October the average days to obtain a contract increased to 43 days in Morgan Hill and 58 for Gilroy. So, agents (and sellers) will agree that the market has slowed considerably. The good news in all of this is that the listing inventory continues to be low and prices seem to be holding steady. Agents continue to report good attendance at open houses and buyer interest remains strong.
Santa Cruz County – The Previews market, which in Santa Cruz County is properties over $1 Million, represent 33-35% of the market currently. However, the upper end only represents approximately 10% of the total closed transactions. As previously reported, 10% represents a very good increase from the downturn a couple of years ago, at which time those properties represented only about 4% of the total sales. 40% of the local sales this year have been all cash sales, and that includes all price segments.
Monterey Peninsula – Monterey Peninsula October property sales were 229, down from 295 in October of 2012 and 7.7% lower than the 248 sales last month. October 2013 sales were at their lowest level compared to October of 2012 and 2011. October YTD sales of 2,669 are running 10% behind last year’s year-to-date sales of 2,965. The median sales price in October was $405,000, up 31.1% from $309,000 in October of 2012 and down 1.3% from $410,500 last month. The average sales price in October was $580,293, up 27.8% from $454,134 in October of 2012 and down 12.7% from $664,880 last month. October 2013 average sales price was at highest level compared to October of 2012 and 2011. Our office has three listings in the $6 million range that have gone into contract in the last four days. The Pebble Beach property was featured on the cover of the fall Previews magazine and has received much attention and showings. One of the other two properties was an ocean front property that has been on the market for over 18 months. The third property is on Carmel point on Scenic road, with spectacular ocean views with from several rooms and terrace. Our local offices currently have 172 listings and approximately 50% are in the Previews category.
That’s it for now. Have a great weekend, and Happy Thanksgiving!