Bay Area’s Soaring Home Prices Finally Leveling Off
After two straight years of soaring home prices, Bay Area homebuyers may finally be getting a little relief. While prices are still rising in most areas, the rate of increase has begun to level off into single digits on an annual basis, according to a new report released this month.
DataQuick, the La Jolla-based real estate information services firm, said the median sale price for new and existing homes in the region last month stayed at a three-month plateau at $617,000. That was down 0.2 percent from June’s median price but up 9.8 percent from the $562,000 median in July 2013.
Make no mistake about it: home prices are still rising. And in some markets, including San Francisco, Silicon Valley and parts of the East Bay, they’re still climbing by double digits. But sale prices are no longer routinely going up by 15-20 percent or more as we saw through much of 2013 and early 2014.
The leveling off of prices comes as Bay Area home sales also slowed last month from year-ago levels, the result of very tight supply, a tight mortgage market, and a decline in affordability, according to DataQuick analysts.
“The Bay Area housing market is still in transition, still dealing with the remnants of the Great Recession,” said John Karevoll, an analyst with the firm, in a statement. “That said, it’s also a market that is in the process of re-balancing itself with the region’s on-the-ground economic realities, mainly decent economic growth and job creation.”
While the steep price increases of the past two years certainly delighted homeowners, those year-over-year double-digit price gains simply couldn’t be sustained forever. The slowdown in appreciation may actually be a much healthier trend for the market, creating a better balance between buyers and sellers, and moving the market toward more normalcy. This trend should bode well as we continue through the fall selling season and into 2015.
Below is a market-by-market report from our local offices:
North Bay – Our Greenbrae manager says activity is far better than it normally is at this time of the year when we usually see a seasonal slowdown. Our local office has seen 12 new open sales this week alone and 31 closings in the last two weeks! New inventory has slowed but a number of new listings are coming on after the Labor Day weekend, both in our CB offices, and in the county at large. There is still pent up demand, multiple offers and motivated buyers, which would predict a strong September after we see new inventory open up. Even with the upcoming holiday activity is buzzing. The Previews luxury market is strong with well-priced properties but a definite lack of inventory. Many agents have clients in the $4 million plus range, with nothing to show them. Sales activity in the Novato area has been steady through the end of August. Agents are seeing multiple offers on well-priced homes. Inventory is still very tight and there has been a decrease in listings during August, which is typically a slower month. The San Rafael area market is picking up again as anticipated with the opening of schools and the end of the vacation period. Things are looking up. First time open houses in the Sebastopol area were exceedingly busy this past weekend with one agent reporting well over 140 attendees at a newly listed property. Even after that many buyers came to the open house only two wrote offers. Older listings did not see much activity however with one having no attendance at all. Southern Marin is experiencing the usual slow down approaching Labor Day. Listings are down and sales are slightly off. However, agents anticipate a surge of activity immediately after the holiday. Activity should remain strong until we approach Thanksgiving, and then hit the usual holiday slowdown, our local manager says. There is continued strong demand for “new” luxury homes as evidenced by a “new” Mill Valley home listed for $5.7 million (by CB-Southern Marin), which received an all cash within one week of being on the market.
San Francisco – Inventory continues to restrain buyers’ ability to find homes, our Lakeside office manager notes, and there does not seem to be a wealth of new listings anticipated after Labor Day. At the same time, buyers seem to be resisting the price increases that have been seen and there are typically fewer offers although there are notable exceptions that have offers in double digits. Our Lombard manager reports an end of summer dip in inventory and activity with lots of agents away. Mixed reports on whether we will see a post-Labor Day surge in listings. One winning contract was one of 33 offers, going 135% of a seriously underpriced entry-level listing – so lots of buyers still out there. Our Market Street office manager says that as per the usual SF summer market, things slow down as we head toward Labor Day. At this point, sellers are holding off marketing their homes until after the holiday weekend, and hoping for a big response knowing that everyone is back from their vacations. Of those deals that ratified during this period, nearly half of them did so with a single offer (some of these were buyers offering on new construction condos), and a few properties failed to generate any offers on their offer dates. Finally, our Sunset office manager notes that sales activity is on the rise as more buyers and agents are returning from their summer vacations. Open houses are very well attended. Pricing is such a critical factor in today market; well priced listings are drawing multiple offers but some overly priced listing are not getting any offers.
SF Peninsula – Our Burlingame North manager says the market seems to be picking up as school is starting and people are returning from vacations. Still receiving multiple offers but only in rare cases are there a large number of competing offers. Pricing, as always, is critical. Even in this market there are properties that are sitting on the market because they are not price-positioned correctly for this type of market. Then those listings are stigmatized by Days on the Market. They buyers will ask “What’s wrong with the property?” In the Half Moon Bay area, inventory is still low – in fact it’s continuously falling. Prices are steadily increasing. There are more multiple offers and homes are selling for more than asking (if priced right). It’s a very active Previews market in the coastal areas. Our Menlo Park manager says agents are still having a good number of offers on ‘trophy’ properties. One Atherton listing for $3.9 million had seven offers and sold for $5 million. Well-located properties are still in big demand. Our Redwood City-San Carlos manager says there has been a slight change in the market. Her office actually had a listing that received 3 offers all below the list price of $1,298,000. Sent out a multiple counter offer. Although most properties are getting multiple offers there are fewer offers. One Belmont home, however, did receive 7 offers and sold for well over asking price. Our Woodside-Portola Valley manager reports that sales are staying healthy, and seller’s agents are still in the driver’s seat while buyer’s agents are still looking for a road map.
East Bay – Listing inventory is down, reports our Berkeley manager. August is typically a slower month because most buyers and sellers go on vacation. Buyers are still attending open houses with attendance at 20-100+ groups. Previews inventory is down, which means multiple offers are up. 20-25% over asking is still normal. Our Fremont manager said agents are seeing slightly lower inventory. Sales are steady with multiple offers decreasing from 7-10 to 2-3. Our Oakland-Piedmont manager says that while the number of listings has dropped in the month of August the amount of offers have not. Agents were competing with 19 offers on a Berkeley property and 16 and 17 offers for properties in Oakland. The buyers looking at properties this month are writing offers and if they don’t get the property they are back in our office the next day to write again. Talk is that there should be an uptick in inventory after Labor Day. We’ll just have to wait and see. The buyers priced out of San Francisco are still pouring over, driving prices up, up, up. Open house activity has been steady but not a lot to see. The Lamorinda market has been steady, our local manager reports. The Walnut Creek area market activity is slowing down from the summer rush. Agents are still seeing activity but not at the same pace. Multiple offers are very rare and over asking bids have pretty much stopped. Buyers are actually offering at price or below.
Silicon Valley – The market is a bit spotty, according to our Cupertino manager. The demand for great houses with Cupertino schools is as high as ever, but certain segments seem to have cooled off. It’s August, after all! Our Los Altos manager reports that there is lower inventory currently in most of the local cities, which is basically seasonal. But the stagers are booked out the whole month of September, so that means some new inventory hopefully. Downtown Mountain View houses often sell within one week. The condos are still getting strong activity with multiples either the next week or following. Palo Alto still has low inventory, but if the house is priced too high, it doesn’t sell. The best sections of town still lack inventory and there are buyers lined up for each one. Last week a house in old Palo Alto sold for more than 1M over list ($6,700,000) with multiple offers. Los Altos Hills with Palo Alto schools attract many buyers and multiple offers. North Los Altos is still in huge demand as is most of the city and Mountain View west of El Camino. Sunnyvale is still occasionally seeing a new all-time high. In Los Gatos, inventory is tightening up even more as school heads back into session. San Jose-Almaden agents are not seeing as many multiple offers in Blossom Valley and Santa Teresa but they are in Almaden and Cambrian. One listing in Cambrian had 20 offers. Our San Jose Main office manager said the local market is seeing another drop in inventory, while buyer demand has pulled back as well. Open houses are well attending with some open houses having 40 groups each day on the opening weekends. Multiple offers are still prevalent, but the sheer number of offers has seemed to decrease. All signs indicate that we will have a strong fall. The local Willow Glen listing inventory remains consistent where it has been the last month. Agents are waiting to see if the post Labor Day weekend will bring a surge of new listings for the fall selling season. With tight inventory and strong buyer demand agents there has been heavy open house traffic. With this increased demand agents starting to see the pre-emptive offers, multiple offers and aggressive offers way over asking price. The market is getting hot again in Willow Glen.
South County – Statistics concerning the current South Bay Real Estate market are interesting and reflect the fact that the market is rapidly changing in favor of buyers. In March and April of 2014, homes in Gilroy and Morgan Hill took an average of 25 days to garner an offer. In July and August the average time to sell a home increased to 45 days. Another interesting fact concerns “months of inventory”—the supply of active listings. That figure was only two months of inventory at the beginning of the year, but it is now up to four months. All of this is predicated on the fact that many sellers have recently listed their homes, believing that they could “cash in” on extraordinary buyer demand. At this point, supply has now, in some case, met or exceeded demand resulting in lower prices and slower sales.
Santa Cruz County – Sales volume is easily the highest it has been in the past five years, according to our local manager. Agents are very busy and the number of new listings coming onto the market is increasing. Meanwhile sales are increasing as well so the inventory continues to stay relatively low. The Previews market is more active than we have experienced in many months and maybe even years. The number of showings is way up and the number of luxury homes going to pending status has largely increased.
Monterey Peninsula – Our local manager said agents survived the busiest week of the year, August 11-17th, “Car Week” with several thousand car enthusiast descending upon the Monterey Peninsula. With the launch of our “Mini Book” featuring 40 of our premiere properties for sale, this book was handed out at all of our offices and a special event at our booth at the Carmel Mission. The week is about making contact with potential buyers that are taking in the beauty and lifestyle that the Monterey Peninsula has to offer. Last week we were excited to receive news that we were awarded the listing of an incredible Pebble Beach property in the $20 plus million-dollar price point. The 4 top local companies were interviewed and we were awarded the listing for our market share and global exposure that Coldwell Banker offers to market such an incredible property. More to come on this with a Previews’ launch announcement.
That’s it for now. Have a great Labor Day weekend!