Bay Area Housing Market Remains Steady, New Report Shows
Summer vacation season is upon us and with it, the usual slowdown in activity. Vacations, graduations, weddings and other events divert buyers’ and sellers’ attention from real estate. Nonetheless, the Bay Area’s housing market continues to move ahead with sales edging higher and prices climbing steadily compared to this time last year.
A report released this week by DataQuick, the La Jolla-based real estate information firm, found that the median price for new and existing home sales last month in the Bay Area rose 11.4 percent to $618,000 compared to June 2013. The biggest increase was 14.9 percent in San Mateo County, and the highest median price was once again in San Francisco, which hit the $1 million mark.
Sales edged 0.2 percent higher from last June to 7,915 units with the biggest gains in San Francisco, which recorded a 6.4 percent increase in transactions. The biggest decline was reported in Alameda County with a 3.6 percent year-over-year drop.
What’s driving the higher prices and steady sales? A strong local economy, including the high-tech sector, and well-qualified buyers competing for a limited number of homes on the market. “Trends in the Bay Area lead the rest of the state by at least half a year,” said John Karevoll, DataQuick analyst. “The reason is straight out of Econ 101: Jobs.”
While the numbers represent good news overall for the health of our housing market, DataQuick says there are still headwinds we need to deal with.
Although sales have rebounded from their recessionary lows, they remain below long-term norms, analysts say. Additionally, potential buyers are still struggling with a limited supply of homes for sale, prices near or at new peaks, and a still-constricted mortgage environment, DataQuick noted.
Many of those issues can be solved with an increase in inventory to meet the robust buyer demand in our area. We’re gradually seeing more listings come on the market in some of our communities, and that could provide much-needed relief for frustrated buyers. Here’s hoping that trend continues as summer rolls along.
Below is a market-by-market report from our local offices:
North Bay – Listing inventory still remains tight, according to our Novato manager. Sales activity is increasing during the busiest time of the summer season, but with fewer multiple offers. Buyers don’t appear to be jumping on new listings quite as quickly if at all. Open houses continue to be brisk with plenty of buyers looking. The Fourth of July holiday interrupted the open house traffic for that weekend, our San Rafael manager reports. Still, activity has been steady with multiple offers on well-located properties. For example, there were 10 offers on a property in Kentfield with 6 of the offers all cash (asking $2.2 million). The Santa Rosa area market remains very active, with fewer multiple offers in the middle of the market and good activity at the upper end, including cash buyers. Our Sebastopol manager says buyers are out kicking tires and occasionally making offers in the luxury end of the market. Many Previews priced property owners have had to budge in their price to make the sale come together. Overall, the market feels very consistent for the time of year. Many agents, buyers and sellers are out for summer vacation, which makes it feel slower than it really is. In Southern Marin, the Previews market is steady above $2 million. But the high-end market is very discriminating, with the best location, turnkey and well-priced properties seeing offers. Overall, the local market has leveled off this summer, however there still is a shortage of inventory below $2 million.
San Francisco – The Fourth of July holiday made a dent in activity, our Lakeside manager notes, and now there are more buyers and sellers returning to the market. However, the temperature seems to be lukewarm, although some properties are drawing double digit numbers of offers. Our Lombard manager says the market has been inconsistent and hard to pick up a trend – an apparent cooling often “interrupted” by 25 offers on one home, 140% of asking on another. Then there’s a winning offer at 98% of asking in a hot area, then a preemptive solo offer at 25% over. Home inventory is steady, while condo supply is growing. With the Fourth of July holiday past, our Market street office is starting to see a small uptick in sales, but still not enough listings to fully meet the demand. Half of all ratified deals were multiple offer situations (3 to 5 during this period). The other half, where buyers didn’t compete, was mainly new construction and preemptive offers. One agent even got creative and got his buyer into contract using a Lease-Option-To-Buy offer on a property that had been on the market for a while. Our Sunset manager reports a general sense of cooling in the marketplace. The number of ratified deals has decreased during this period. Multiple offers are still happening but the number of offers has dropped significantly in the past several weeks. Open houses are still active but not as busy as two month ago. This general slowdown may be due to summer vacations.
SF Peninsula – This week found 13 beautiful new listings on the market in Burlingame, the most in recent memory, our local manager reports. As the inventory of single-family homes increases, the condo/townhome properties have less interest as buyers perceive more choices. This may be a short aberration in the market as generally inventory across the Peninsula is still at historic lows. Open houses have been very busy and it seems that a whole new crop of buyers are out in the marketplace right now. Across the hills in Half Moon Bay, the market has been steady. Multiple offers are still common if priced right. Our Menlo Park manager reports a seasonal lull but still busier than normal. Stagers have lots of properties on their list for the next 2 weeks. We are expecting some real action again in September. The Palo Alto area market is seasonally slow. Inventory is lower, and activity is slower. Multiple offers still occur but not with the same intensity. Our Redwood City-San Carlos manager says the local market has slowed with summer. There still are multiple offers but fewer, and many clients and agents are on vacation. Inventory remains low in many areas. Although there continues to be multiple offers in the local San Mateo area, the number of offers on a property seems to be dropping as much as 50-75%, our manager says. Our Woodside-Portola Valley manager says 1st Q 2013 VS. 1st Q 2014 shows a 26% drop in the number of sales but a 20% increase in sales price. This is due to some higher priced properties selling – not necessarily higher ”average” prices. When it comes to Atherton, Woodside and Portola Valley, a couple of big sales can really skew the stats.
East Bay – The summer slow down happened for two weeks and now is very busy again, according to our Berkeley manager. Open houses have over 100 buyers through on the second and third open house. The Previews luxury end of the market is very strong with multiple offers and all-cash bids. The Castro Valley manager reports the local market has slowed down. Some homes are having appraisal issues and are falling out of escrow, particularly in San Lorenzo. Buyers can’t come up with the extra cash to make up the difference. Considering that so many people are on vacation this time of year, July so far has been unusually active, according to our Danville manager. New pending sales are brisk. In Pleasanton, agents are seeing price reductions starting, although there are multiple offers up to $700K. Our Walnut Creek manager reports a definite slow down but not a complete stop. Buyers and sellers are in summer vacation mode. Not as many multiple offers as in past months but still some. Cash is not as prevalent either.
Silicon Valley – Last week was definitely post-holiday light for new pendings, according to our Cupertino manager. The number of offers per property is decreasing in most cases. If a transaction falls through, the resale is typically for a bit less than the original transaction. The Los Gatos area market continues to be dominated by low inventory, high buyer demand and historically low interest rates. Inventory in the San Jose Almaden area is down from the past two weeks but up in Blossom Valley and Santa Teresa. Local sales have been steady all across the board. Our San Jose Main office manager says the market overall are seeing a slow down. Inventory is climbing and premium properties are getting multiple offers. Agents are seeing a leveling off of the market, allowing buyers more time to make decisions, contingency periods being included in contracts, and overall a more balanced market. Open houses are well attended. The local Willow Glen market definitely felt the Fourth of July holiday slowdown, our manager reports. Listing inventory continued to contract along with very few new active listings coming on the market. It felt like both buyers and sellers took a summer holiday break. Open house traffic was down considerably as well.
South County – The South County market continues to offer buyers more and more choices. The listing inventory is increasing at a healthy rate, with more and more sellers offering their homes for sale. Most sellers, however, who wanted to take advantage of the recent “seller’s market” may be too late, our local manager says. In addition, new construction is booming in both Gilroy and Morgan Hill. New home developments are springing up all over the valley, with builders offering incentives for upgrades and closing costs. It is obvious that consumer demand still remains high, but there are just more choices for buyers. Prices continue to climb. The Morgan Hill Office sold 20 fewer homes in 2014 than in 2013, but the dollar volume was way beyond that of 2013 figure.
Santa Cruz County – The single-family residence market is still hot in the greater Santa Cruz area. The number of homes sold is equal or greater to the number of homes coming on the market. The condo market is a little slow. There is a growing inventory and the number of condos coming on the market exceeds the number selling. The Previews market has picked up and there have been sales in the multi million dollar range in the past couple months.
Monterey Peninsula – The Fourth of July holiday weekend resulted in 11 ratified contracts in all price points, $300,000 to over $5 million properties. The summer season is starting out strong with out of area buyers attending last weekend’s open houses looking for a second home or a future retirement property. Inventory is stronger than the past with just over 700 current listings with about a 25% sales ratio. This six-month supply is the highest agents have seen in this market for several months and since the turn around. Sales are ahead of July 2013 so far, and agents hope to keep up the momentum with new listings coming to market soon. Everyone is gearing up for “Car Week” mid August with increased advertising and a special marketing piece for the weeklong events.