The Bay Area housing market is closing out summer much the way it started: Continued tight inventory in many communities slowing sales and driving prices higher.
New and existing home sales in the Bay Area fell 12 percent in August from a year ago, according to DataQuick, the La Jolla-based real estate research firm. The biggest drop came in San Francisco where sales were off more than 20 percent year over year. Santa Clara, Alameda, Sonoma and Solano counties all saw double-digit declines.
But the limited supply of homes on the market, coupled with continued demand, drove prices up 12.4 percent in the Bay Area from last August to a median sale price of $607,000. The steepest increase was recorded by Alameda County with a 19.1 percent surge in the median sale price to $610,000. All but Napa and Solano counties had double-digit price increases.
Despite the challenges of constrained inventory and mortgage availability, “the housing market is still slowly moving back toward long-term norms that were thrown out of whack back during the Great Recession,” said John Karevoll, an analyst with DataQuick.
Meanwhile, the Previews luxury market by and large continues to roll on. Million-dollar sales in the East Bay surged 29.5 percent last month. Silicon Valley saw a 7 percent rise in sales over $1.5 million. And while Marin luxury sales edged lower in August, median sale prices moved up 7.4 percent.
As we move into the fall home-buying season, agents are hoping that an increase in listings will meet continued demand from homebuyers, bringing the market ever closer to a healthy balance.
Below is a market-by-market report from our local offices:
North Bay – Our Greenbrae manager reports that the local market continues to be filled with a lack of inventory and multiple offers at every price range. A listing that was somewhat of a fixer that went on the market for a bit over a million had 15 offers. In general agents are seeing multiple offers drive prices up as high as 30% over list price. Most of our listing agents and our agents representing buyers are involved in multiple offers with every deal. If it’s a less desirable property (as in location or condition) it still might receive 3 offers, and the most desirable are receiving as many as 15 to 20! The local Previews high-end market is live and well. A beautiful new Previews listing in Ross went on the market for over $5 million and received multiple offers. There is still quite a demand for high-end properties and a tremendous amount of all cash offers at every price range. There is still good activity as far as open house attendance in the San Rafael area, with sales steady. The luxury market in Southern Marin is as strong as it’s ever been. In the past 10 days CB Southern Marin has closed 4 properties over $3 million including one for $5,550,000 in Mill Valley. In the last week we have received multiple offers on three luxury listings, 2 offers on a $9 million listing, 4 offers on a $4 million listing and 3 offers on a $3.7 million listing. By the end of 2014 we will have more than doubled the number of sales above $3 million compared to 2013. The overall market has slowed for unit sales, although average and median prices continue to rise. Well-priced, well-located and turnkey listings continue to see multiple offers.
San Francisco – There was a wide range of activity in our San Francisco Lombard office this week. There was continued frenzy on entry-level fixers that brought 14 and 22 offers. Yet more transactions are solo offers in and around asking price. A typical story this week: 10 disclosure packages out, 5 offers expected, 2 offers materialize with the one around asking price winning out. There are some signs of increased inventory and more cautious buyers. Maybe sellers should be happy with the list price and not feel automatically entitled to scores of offers and 15%-over premiums, according to our local manager. Our Market Street office manager notes that while most properties saw multiple offers during this period, there is a general sense that things are taking a bit of a breather in The City. So, for each home that received 4 offers, there’s a tale of one that didn’t get any. Is this a new trend or just a slow return of buyers to the market following the Labor Day holiday? Whatever the case may be, it’s definitely an opportunity for buyers to scoop up properties without the frenzy seen earlier this year.
SF Peninsula – Our Burlingame manager says agents are benefiting from an uptick in inventory as the fall markets gathers momentum. Pent up buyers who know what they want have no hesitation in making offers on newly listed properties. Open houses continue to be well attended. With more homes to choose from, buyers are beginning to be more selective with regard to pricing as they expand their search area looking for the best value they can find. There are currently 42 active listings in Hillsborough. It is interesting to note that 21 of these properties are listed above $5 million. We have not seen such a wonderful selection of quality homes in a long time, our Burlingame manager notes. Located between San Francisco and Silicon Valley, Hillsborough continues to offer great value with half-acre minimum lots, award winning schools and proximity to all that makes the Bay Area desirable. In the Menlo Park area, open houses are still very well attended and multiple offers are alive and thriving in the A and A- locations. Our manager took a short survey at her meeting and we still have an imbalance of many more buyers than sellers. Flurries of multiple offers occurring in the Palo Alto area. There also have been multiple offers in Atherton – in the $5M range – with sales price exceeding the list price by 8%. In Woodside and Portola Valley, open houses are still well attended, but listings seem to be getting scarcer.
East Bay – The market seems to have cooled off a bit in the Berkeley area, according to our local manager. The last 2 weeks, 57% of ratified offers were not competitive. There has been an increase in listings, which is normal for the time of year. Sellers wait until summer ends to market their homes. Our Danville manager says the market is still strong for “pretty houses on pretty streets,” especially single story homes. Market inventory is gradually building and buyers are proceeding more cautiously. This should help first timers and move up buyers. In the Fremont area, there are four new Previews luxury listings (up from last market report) and two new Previews pending sales (slight decrease from last market report). Our Oakland-Piedmont office manager says lots of buyers are looking around but with the increase in available properties it appears they are more discerning. A couple of properties that were expected to receive multiple offers did not get any on the offer date. They did receive a couple of offers each the next day or two. Having said that a property was listed for $799,000 and received 15 offers and is rumored to have gone 200k over. Agents are still seeing an influx of buyers that are not able to afford San Francisco. The Lamorinda market has been steady lately.
Silicon Valley – Sale prices are not meeting the expectations of some sellers for anything but the most popular properties, reports our Cupertino manager. In the San Jose-Almaden area, the Previews high-end market is holding strong with 2 homes ($1,800,000 and $2,200,000) getting into contract. Listings were down over the previous 2 weeks but the sales count increased. The local Willow Glen listing inventory continues to contract we are not gaining any new positive listing inventory as we move from week to week. Sales activity in the Willow Glen office was strong once again for the second straight week in September. Agents are not seeing any erosion in list to sell pricing. In other words, listings continue to sell at or above asking.
South County – One of the bright spots in the South County Real Estate market is affordability as compared to other cities in Silicon Valley. For example, buyers in the Willow Glen area of San Jose often spend up to a million dollars for a small, older home situated on a city lot. A short drive south, however, enables the million-dollar buyer to purchase a newer home, with about 3000 square feet with lots of amenities and often on acreage. Realtors are reporting that many prospective buyers attending open houses are coming to South County looking for more and varied housing options. Prices remain attractive in Morgan Hill, Gilroy and San Martin especially for those buyers who are being out-bid for homes to the north. Excellent prices, good interest rates and the ability to have a less crowded life-style are factors that are influencing buyers to give serious consideration to South Valley.
Santa Cruz County – The Previews luxury market is still active with several high sales recorded in the last week. Overall, the supply of homes on the market is increasing slowly right now. Demand is still strong and most sales that go pending do close.
Monterey Peninsula – There has been a slight slow-down as of the Labor Day weekend in the Previews properties showings and sales. The out of area buyers and vacationers are winding down the season, which may have something to do with it. Although it was reported that a new Pebble Beach multi-million dollar listing received a very favorable offer near asking price, it is still to be confirmed if it has been accepted. If so it would be a near record high sale in Pebble Beach year to date. The rest of the Monterey Peninsula sales activity is inconsistent. Agents are reporting that out of area buyers looking in the $1.2-1.8 million price point are keeping them busy with showings and strong interest. Properties that have been languishing on the market are finally seeing a price adjustment more in line with the market. The month so far is trending upward with a nice increase in total sales. Hopefully the local market will finish out the month with strong results.