Luxury Market Rebounds in Northern California and Nationwide
Nationwide, prices of luxury homes have outpaced the rest of the market for the first time since 2014, according to industry reports. In recent headlines, stock market growth, increasing home prices in all ranges, low unemployment and new jobs created across the country are encouraging homebuyers to jump into the real estate market. This upswing has finally reached the luxury market and here’s what’s currently happening in our Northern California offices:
Monterey Peninsula offices show a slight increase in year-over-year sales. Values have shifted back to pre-recession prices with low supply, high demand and a market favoring sellers. Many properties are getting offers within three days of being on the market. Carmel and Pacific Grove are in high demand even with entry level prices at $1 million. There were 14 closings in the $2-5 million range. The area also witnessed a unique $25 million listing that served as a filming location for the movie Basic Instinct.
In Greenbrae, fewer homes are available prompting multiple offers above list price. While the luxury market rebounds, properties need to be priced well or risk sitting on the market for an extended period.
Although Santa Rosa Bicentennial’s market experienced 18 percent fewer sales in year-over-year comparisons, median prices are 9 percent higher than in 2016. With fewer properties available, sellers have a prime opportunity to list their homes. This means that buyers coming in with cash offers came out ahead. The luxury market is strong with an increase in buyer interest in the $7-plus million range.
Southern Marin also saw a seller’s market with most properties under $2 million receiving multiple offers with many closing above asking price. This trend continued in the luxury market with 27 percent of listings over $3 million under contract as opposed to the typical 10-15 percent.
Tahoe’s market is in full swing with summer visitors and many interested buyers. An influx of new inventory and a possibility of more in the coming weeks intrigued both buyers and investors. Sales of luxury homes priced over $1 million have decreased 15% from 2016 due to inventory, while the average sales price of luxury homes are higher than 2016 in year-over-year statistics.
In Folsom, inventory increased steadily. The increase in inventory coupled with lower interest rates made it a good time for buyers to make their move. Sacramento Fair Oaks saw more inventory, especially at $400,000 and under. Luxury market inventory is still robust allowing well-heeled buyers to remain selective.
Sierra Oaks saw an increase in listing inventory and sales year-over-year in the lower price range. The luxury market had higher inventory and slower buyer activity, making it a good time for prospective buyers.
San Francisco Lombard reported continued limited inventory. The market is especially hot for entry-level homes at lower price points. Buyers are encouraged to take the asking price for homes priced under $1.5 million and bid against other prospective buyers. SF Market also saw low inventory, prompting buyers to make multiple, over-asking offers.
San Francisco Peninsula:
Half Moon Bay saw a decrease in coastal inventory levels with only two months of supply. Luxury properties are in especially high demand with buyers searching for a great view or ample acreage. The high demand means that buyers must be committed with their best offer upfront or opportunities may be lost. Simple gestures such as a letter to the seller, a family picture and of course pre-approval letters can help seal the deal.
San Mateo Downtown reported slightly lower inventory. Unlike Menlo Park and Half Moon Bay, there was a decrease in activity in the luxury market.
Santa Cruz County:
Santa Cruz saw an influx of properties going into contract last month and is experiencing historically low inventory. The luxury market has increased with more buyer demand and closings in the multi-million range.
Cupertino saw continued low inventory with a strong seller’s market. The luxury market was strong and steady under $4 million. Los Gatos also saw this trend with inventory 20 percent less than 2016, spurring competitive offers for homes under $2.5 million. Saratoga’s market was similar with tight inventory and competition among buyers. The luxury market has been relatively steady.
Los Altos’ market was again run by sellers with low inventory and the potential for multiple offers and sales over asking price. Because of the low inventory and highly-competitive market, buyers are encouraged to have all financing ready and make strong offers to show seriousness.
San Jose Willow Glen market conditions were dictated by the low inventory. Only 40 properties were on the market – a nearly 50% decrease from last year. The market is especially popular with buyers looking for tear-down or fixer properties. For example, a 5,800 square-foot empty lot listed at $775,000 sold at $920,000.
El Dorado County:
In El Dorado Hills, many properties under $500,000 receive multiple offers. This means it’s important for buyers to scale back on requesting non-essential repairs as cancellations (from both sides) have experienced a recent spike.