Bay Area Real Estate Market


Housing Affordability in California Steadies but Remains Low

There is no doubt that prices in California continue to be among the highest in the nation, buoyed by steady demand and a healthy economy. A recent report delivered a dose of good news, however, showing that rising wages and seasonal price declines have helped to stabilize California’s housing affordability.

According to the CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index, 31 percent of homebuyers could afford to purchase a median-priced, existing single-family home in California during the last three months of 2016, which is the same percentage as in the third quarter of 2016 and up slightly from 30 percent in the fourth quarter of 2015.

The fourth quarter of 2016 was the 15th consecutive quarter that California’s housing affordability index has been below 40 percent. The index peak of 56 percent was registered in the third quarter of 2012.

What does this translate to in terms of dollars? Homebuyers in California needed to earn a minimum annual income of $100,800 to qualify for the purchase of a $511,360 statewide median-priced, existing single-family home during the last three-month period in 2016. The homebuyer’s monthly mortgage payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,520, if a 20 percent down payment was made and with an effective composite interest rate of 3.91 percent.

Eight out of 29 counties tracked by the index experienced an improvement in housing affordability in the fourth quarter compared to third quarter 2016. Those counties that saw improved housing affordability are Contra Costa, Marin, Napa, Los Angeles, Ventura, Monterey, Santa Barbara and Madera.

The following 10 counties, however, experienced a decline in affordability quarter-over-quarter: San Francisco, Sonoma, Orange County, Riverside, San Bernardino, Santa Cruz, Kern, Kings, Merced, and San Joaquin. The remaining 11 counties – Alameda, San Mateo, Santa Clara, Solano, San Diego, San Luis Obispo, Fresno, Placer, Sacramento, Stanislaus, and Tulare – were unchanged.

The least affordable areas in the state in the fourth quarter included San Francisco County, where 13 percent of homebuyers could afford to purchase a median-priced existing single-family home, followed by San Mateo County at 15 percent and Santa Cruz County at 17 percent.

Affordability remains a concern not just in Northern California but in other parts of the country as well. In a recent survey by the National Association of Realtors®, Aspiring Home Buyers Profile, affordability was identified as the main hurdle for consumers who wanted to be a homeowner.

Here’s what was happening in our local Northern California offices in early February:

East Bay – Even though it is still early in the year, the East Bay region continues to display signs of a strong market with limited inventory. In Berkeley, there were only 27 homes available for sale in mid-February compared to 25 under contract, and there was about a month’s worth of inventory, shares the Berkeley office manager. In Albany, six homes were active listings while five were under contract and the community had 1.2 month’s supply, he said.  El Cerrito, Richmond and Oakland had less than a month’s worth of inventory. El Cerrito had 11 active listings and 14 properties under contact, while Richmond had 75 active listings and 97 homes under contract. Oakland had 201 active listings and 244 under contract.

Monterey County – The month of January saw a healthy level of sales activity. One sales associate had nine sale sides, and several other sales associates had two to four sales each, leading to a 43 percent increase in unit sales. Sales volume was up 39 percent year-over-year. February pending sales “look promising,” according to the manager of the Monterey Peninsula offices.

North Bay – The supply of available listings is still relatively low in most communities but there appeared to be some pick up in new listings in parts of the region in early February. The managers of the Greenbrae, San Rafael and Santa Rosa Bicentennial offices noted that inventory is on the rise.  In Marin County, there were 210 available properties up from 190, while listings priced under $1 million climbed to 55 from 45 and there were 16 properties priced under $750,000, up from eight, said the Greenbrae office manager. However, she also shared that multiple offer situations are occurring, with many offers eliminating inspection and financing contingencies. The Southern Marin office manager also reports that “multiple offers are becoming the norm again” for properties priced under $1 million and often for homes priced between $1 million and $2 million. Meanwhile, sales activity has been flat in northern Marin County, with sellers waiting for the weather to improve, according to the Novato office manager. With so few homes to sell in the local area, sales associates have been traveling to other counties to assist buyer clients in their searches for new homes. The San Rafael manager noted there were many new listings in the office over the last week. This is the first jump in office inventory since the first of the year, he said.  There were 72 active properties for sale in San Rafael, however only 38 of those are single-family homes, with the rest being condos or townhomes with some properties under contract. The San Rafael office had seven ratified offers. The median price for active single-family listings in San Rafael is $1,212,500 with an average price per square foot of $588.  With the anticipation of the arrival of spring, buyers are swarming open houses and sellers are getting their homes ready for sale, he added. However, the Santa Rosa Bicentennial office manager shared that there are a good number of homeowners who are holding off on putting their homes on the market until they find another home to move into, which means that some move-up buyers aren’t able to find a property to purchase. Meanwhile, the condominium market is very competitive, with sellers enjoying a big advantage in some parts of the region. The Santa Rosa Mission office manager, for example, said condo sales are up by 60 percent and pending sales are up 25 percent. The number of single-family home sales and listings is about the same as a year earlier, he added. As for the luxury market, the Santa Rosa Bicentennial office manager said the lower end of that sector is seeing “good buyer activity with multiple offers on correctly priced homes,” while the properties priced over $2 million are experiencing slower activity and more selectivity among buyers. The Previews market is gaining momentum, according to the Southern Marin office manager, with four new luxury sales in the price range of $3 million to $5 million in the office during the past two weeks. The Santa Rosa Mission office also reported gains in Previews, pointing to a 30 percent increase in pending sales activity but also about 30 percent more available listings in this market segment.

Placer County – Sales associates are busy but there is a need for additional inventory. Almost all properties attract at least two offers and as many as 12 offers, according to the Auburn sales office manager. If the home is priced under $500,000, even if it is not in the best condition, it will get multiple offers, she said.

Sacramento County – The market is displaying signs of health, with slight increases in inventory and sales holding steady. In the Sacramento Fair Oaks office, several listings priced over $750,000 have been taken, but the manager notes that they are experiencing a buyer’s market in that price range. Still, he described the lower end of the market as “hot.” The office’s sales in January were 29 percent higher than the same month last year. There were 21 properties under contract in that office, while the Sacramento Sierra Oaks office had 23 ratified offers.

San Francisco – Open houses and broker tours in the region are drawing large crowds, particularly for properties that are priced well and in good condition. Inventory, overall is restricted. Entry-level homes, fixer-uppers and well-priced homes are selling briskly, with multiple offers and properties selling for over the asking price, said the San Francisco Lombard office manager. An Outer Sunset home listed at $749,000 generated 16 offers with at least three offers over $1 million, he said. On the other hand, condos are seeing more price reductions with the majority selling at or below asking price, and the luxury market is seeing slow activity, he shared. “Multiple offers remain the order of the day even though we’ve seen a good number of properties need (price) reductions to generate interest — mainly in the higher price ranges,” said the San Francisco Market office manager.

SF Peninsula – There appeared to be some slight improvement in inventory but overall the region is still dealing with a very tight supply of available for-sale properties. Open house activity seems to be very brisk, drawing a lot of buyer traffic. Properties located in desirable areas and “priced right” are receiving multiple offers, shared the San Carlos office manager. Homes priced under $2 million are selling quickly, said the manager of the Menlo Park and Woodside/Portola Valley offices.

Santa Cruz County – Buyer demand in Santa Cruz County appears to be strong. There were 118 sales in January compared to 96 sales during the same month in 2016. Also, the active listing inventory grew, with 115 homes hitting the market last month, compared to 106 a year earlier. Additionally, the number of Previews homes coming on the market is starting to pick up. In January, 36 Previews listings hit the market and 32 were sold. It will likely take a few months to build the inventory with the demand being as high as it has been, explained the manager of the Santa Cruz offices. 

Silicon Valley – Some communities in Silicon Valley are seeing an uptick in listings and sales. Countywide, there was a jump in inventory compared to the previous two-week period, but overall there is not sufficient supply. Prices in some communities are also on the rise month-over-month and year-over-year. The San Jose Almaden office manager reported that Cambrian had the biggest price jump with the average sales price increasing 10.5 percent from January 2017 and 9 percent from February 2016.  The average sales price in that community thus far into February is $1,002,000. The average sales price for Santa Teresa is $757,000, which is up 1 percent from February 2016. Almaden and Blossom Valley average sales prices are on the rise compared to a year earlier. Almaden’s average sales price is $1,427,000 (5 percent gain) and Blossom Valley’s average sales price is $728,000 (6.5 percent increase). The San Jose Main office manager explained that there are more multiple offer situations and the sale price to list price ratio is starting to increase. Open house traffic is heavy, with most homes going under contract after just one weekend of open houses, and the area is experiencing “pre-emptive offer” listings or “coming soon” listings which are generating aggressive offers that are well over list price, according to the San Jose Willow Glen office manager.

South County – Listing inventory remains low, but more homes in all price ranges were being listed in South County during the last two weeks, providing more options for potential buyers. Sales associates were also reporting an increase in open house attendance. It has not been uncommon for 30 to 40 individuals to attend an open house, especially for listings priced correctly and located in desirable neighborhoods, according to the Gilroy and Morgan Hill office manager. There are still signs that the region is in a seller’s market.

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How to Write the Perfect Dear Seller Letter

In a seller’s market, buyers frequently find themselves competing for a limited number of available properties for sale. When competing for a home, one thing that can give buyers a distinctive edge is writing a dear seller letter to the homeowners.

A dear seller letter is one thing that can give the buyer a distinctive edge in a seller’s market. In the Bay Area, like many other parts of the country, listing inventory is low and buyers find themselves competing for a limited number of available properties for sale. When competing for a home, there are many ways to make your offer attractive to the seller. When a seller is reviewing multiple offers on their home that may be very close in price and terms, you want them to feel an emotional connection to you. A well-written dear seller letter can create that connection.

Here are some tips on how to write the perfect dear seller letter:

You want the seller to know who you are: Start out your letter by introducing yourself and let the seller know who will be living in the house. They might be thrilled to know that you are, for example, recently married, first-time buyers who work in a field like theirs. It’s all about making that personal connection.

Tell the seller why you are moving: Helping the seller understand your motivation for buying their house can make a difference too. Sellers might be more motivated to sell the house to a family who is weeks away from the birth of a third child and desperately needs the fourth bedroom their house offers.

Explain to the seller why you love the house: Chances are the seller originally purchased the property because, like you, they felt an emotional attachment to the home. Let them know the distinct characteristics that drew you to the house; whether it’s the beautifully remodeled kitchen or the hardwood oak floors they may have painstakingly just refinished. Sellers will appreciate knowing the details that make their home special to you.

Use social media to learn a little bit about the sellers: Checkout the seller’s Facebook and LinkedIn profiles to make some connections. If the seller has frequent posts about races they’ve run and you’re a runner too, include that in your letter. For example, you can’t wait to establish a new running route through the beautiful tree-lined streets of the neighborhood. Perhaps you discover on LinkedIn that you and the seller attended the same university; be sure to mention that you’re an alum.

You should also remember and mention things about the house that show your common interests like evidence of pets, kids, or hobbies. If you know the seller has a dog and you have one too, be sure to let them know how much you appreciate, for example, the fenced-in back yard that will be perfect for your beloved pet.

Compliment, Compliment, Compliment: Lastly, every good dear seller letter should include lots of compliments and seller love letters are no exception. Make sure your letter is full of sincere praise. Did the sellers custom-build the home? Let them know how much you appreciate their design aesthetic. Is the lower level recently finished? Let them know how much your family will enjoy the space. Did you notice a copy of a classic novel on their kid’s nightstand? Mention how, as an English teacher, that impressed you!

Everyone needs a little love and home sellers are no different. If you find yourself competing for your dream house, using these tips to write the perfect dear seller letter may give you a edge. It’s also always a good idea to get the help of an experienced real estate professional to help you navigate through the home buying process.

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Bay Area Housing Market Update

California Dominates Top-Performing Housing Markets List

San Francisco, San Jose, and Sacramento were among the nation’s top-performing housing markets in January, according to an analysis by®.

The same analysis by® revealed that homes were selling 4 percent faster nationwide than they did a year earlier, but housing supply hit new lows. Prices, meanwhile, remained at record highs. While nearly 360,000 new listings entered the market in January, inventory was down by 11 percent from a year ago, reports®.

“We saw evidence of a stronger-than-normal off-season starting last September and October due to pent-up demand and surging interest from first-time buyers,” says Chief Economist Jonathan Smoke of®. “The downside to this strong off-season is that we have started 2017 with a new low volume of available homes for sale and a new high for prices.”

Low inventory has been a challenging factor in parts of Northern California, particularly the San Francisco Bay Area. In fact, even though® highlighted several markets in the region as top-performing in January, the California Association of REALTORS® cited the scarce housing supply as a key reason for the decline in the Bay Area’s pending home sales in December.

While pending home sales were on the rise throughout most of California in December, pending home sales in the San Francisco Bay Area as a whole fell 14.2 percent compared to December 2015 and 32.5 percent from November 2015.

San Mateo County posted the steepest decline in December at 35.3 percent, followed by San Francisco County at 23.3 percent. Meanwhile, Santa Clara County experienced an 18.6 percent decline in pending home sales.

Projections of mortgage rate increases in upcoming months are creating a sense of urgency among buyers, according to housing experts, which means that buyers will be scrambling to see new listings.

Despite the fact that fewer homes were available for sale,® identified the following 20 top-performing markets in January, based on where buyers were checking out the most listings and homes were selling briskly:

1. San Francisco, Calif.
2. San Jose, Calif.
3. Vallejo, Calif.
4. Dallas, Texas
5. San Diego, Calif.
6. Sacramento, Calif.
7. Yuba City, Calif.
8. Denver, Colo.
9. Stockton, Calif.
10. Fresno, Calif.
11. Oxnard, Calif.
12. Columbus, Ohio
13. Colorado Springs, Colo.
14. Nashville, Tenn.
15. Detroit, Mich.
16. Modesto, Calif.
17. Los Angeles, Calif.
18. Tampa, Fla.
19. Santa Rosa, Calif.
20. Fort Wayne, Ind.


Here’s what was happening in our local Northern California offices during the last two weeks of January:

East Bay – There has not been a significant spike in listing inventory in the East Bay. The lack of inventory has led to multiple offer situations in some parts of the region.  A property in Oakland attracted 36 offers, while another listing received 26 offers, reports the Oakland office manager. Buyers are still flooding open houses, added the Oakland manager, and the Danville manager shared that it seems like buyers “are at the starting line waiting for the shot of inventory.” Meanwhile, there was strong and consistent growth in the area’s housing market in 2016 in comparison to 2015, according to the Berkeley manager. Median selling prices for properties increased year-over-year by double-digit percentages in several communities. Alameda’s single-family median home price jumped from $865,000 to $950,000, representing a nearly 10 percent increase, while the median condo price increased 11 percent from $600,000 to $667,500. Oakland’s single-family median home price jumped approximately 10 percent from $615,000 to $675,000, and the median condo price increased 15 percent from $482,000 to $555,000. Emeryville also saw a significant year-over-year increase in its median home price, going from $455,000 to $500,000, which represents an almost 10 percent increase. The median sales price for single-family homes in Berkeley grew approximately 8 percent from $1,025,000 to $1,105,000, while the median condo price leaped 14.5 percent from $585,000 to $670,000.  Albany’s single-family median home price increased from $875,000 to $925,000 and the condo median selling price inched up from $447,500 to $455,000. El Cerrito saw a smaller increase overall from $745,000 to $788,000. The condo sample size was only 23 sales in all of 2016, with a slight reduction in value from $518,000 to $500,000. Finally, Richmond’s single-family median home price rose from $400,000 to $440,000 and the median condo price increased from $355,000 to $397,000.

Monterey County – January started out a little slow in the region with the weather affecting listing activity. Rain delayed outdoor photo shoots for listings, and when the rain finally subsided the new listings started emerging. In January, the Monterey Peninsula offices saw several days with five to eight new listings coming online. Buyers are at a standstill if the property seems to be overpriced; they are not submitting any offers until there is a price adjustment, explained the manager of the Monterey Peninsula offices. The region is looking forward to the AT&T Pebble Beach Pro Am, which kicks off February 6, and the exposure that it brings to the Monterey Peninsula.

North Bay – Overall, the North Bay region is dealing with a lack of listing inventory, which is leading to multiple offer situations. Marin County had 40 properties under $1 million listed for sale and 140 listings priced above $1 million. The Greenbrae office manager reports that most of the new listings in the office in the last two weeks received multiple offers included one property listed at $699,000 that drew 16 offers, and a fixer-upper priced at $1,195,000 that received seven offers. Buyers are having to pay substantially over the list price in the low inventory market, the Greenbrae office manager shared. In a similar fashion, the Novato office manager said a property in Bel Marin Keys garnered 16 offers, and he said some listings are expected to hit the market this month and in March. The supply of inventory averaged about two months in 2016, according to the Santa Rosa Bicentennial office manager. “We anticipate more new homes coming on the market this year, but not enough to make a sizable change in inventory,” he said. The Sebastopol market currently has 25 properties for sale, and the heavy rainfall delayed work to get properties ready for sale, according to the Sebastopol manager.  The Santa Rosa Mission office manager said inventory was down about 16 percent for the time period October 2016 – December 2016 compared to 2015, and closed units are down 11 percent for the same period. The Southern Marin office has three listings priced over $5 million that have not been posted on the MLS, but all three properties are already getting qualified showings, and two of the three homes have attracted offers.

Placer County – As in other regions, Placer County is in need of listings as sales activity is on the rise. Homes priced in the low $400,00s or less are receiving multiple offers within a couple of days of being on the market, explained the Auburn office manager. Appraisals are taking time, and there are still properties that are being appraised for less than that contract price, she said. “We are still having a higher number than usual of cancellations,” noted the Auburn manager.

Sacramento County – The region is dealing with a low number of listings and is facing strong buyer demand for properties priced under $350,000. The Elk Grove/South County market had 1.2 months of inventory, down 27 percent for the same period a year ago, according to the Elk Grove/West Sacramento office manager. The average sales price in that area climbed to more than $400,000, due in part to two $2 million-plus property sales. The average listing price is growing, making it more challenging for buyers to find properties priced under $300,000 and thus creating strong competition for homes priced in the $275,000 to $350,000 price range. Many properties in that price range are generating multiple offers. Sales prices have increased more than 7 percent over the last 12 months. The region is also seeing new home developments. West Sacramento is experiencing similar market trends, with a decline in inventory and few homes available under the $300,000 price range. Prices have increased more than 8 percent year-over-year and price per square foot has increased to its highest level in a decade, the Elk Grove/West Sacramento office manager pointed out.

San Francisco – Demand for homes in the San Francisco market remained strong but inventory is not keeping up, leading to buyer competition and multiple offers. The San Francisco Lakeside office manager notes, “There is virtually nothing available to buy,” while the Lombard office manager said inventory is growing but not at the rate expected.  Entry-level and fixer uppers are drawing a lot of buyer traffic, multiple offers, and offers above asking price, according to the Lombard office manager, but the condo market is cooling as evidenced by the price reductions, the growing supply and days on market.

SF Peninsula – Some areas in the region are seeing an uptick in sales activity. The Burlingame, Burlingame North and Half Moon Bay offices reported an increase in sales activity during the last two weeks, with the Burlingame offices noting an increase in listing inventory as well. There were 10 properties under contract in the Burlingame office, seven in Burlingame North, and eight in Half Moon Bay. The Palo Alto Downtown office reported a drop in sales activity and inventory, and had three properties under contract.

Santa Cruz County – Sales activity is picking up in the Santa Cruz market. There have been approximately three new single-family homes listed per day, but brisk sales activity is absorbing the inventory. There are fewer than 200 active listings, according to the manager of the Santa Cruz offices. A number of high-end properties received offers over the last two weeks, and pending sales in the luxury market are on the rise.

Silicon Valley – More listings are emerging in the region, but Santa Clara County is still facing a shortage of available homes and strong buyer demand, which in some cases is leading to bidding wars. Open houses drew “hundreds of visitors” in the last two weeks, reports the Cupertino office manager. All offers ratified over the past two weeks have been multiple offers and all deals have contingencies in place, according to the San Jose Almaden office manager. Prices were up in several communities in January compared to the same month in 2016, he noted. Almaden’s average sales price was $1,329,000 in January, which was up 12 percent from January 2016 and down 3 percent from December.  Blossom Valley’s average sales price followed a similar trend. The average sales price in that community was $708,000 in January, which is up 10.5 percent from January 2016 and down 9 percent from the prior month.  In contrast, Cambrian’s average sales price declined 10.5 percent from a year ago to $916,000 and was down 6 percent from December.  Santa Teresa’s average sales price rose 11 percent year-over-year to $759,000 in January and was also 2 percent higher than the average sales price recorded in December. Most homes are going into contract after just one weekend on the market and in some areas homes are selling well over 10 percent of asking list price, says the San Jose Willow Glen office manager. Despite the strong demand and brisk activity, “Sellers still need to be careful not to overprice as we see homes that are priced above market sit idle as more competitively priced homes are seeing all the action,” explained the San Jose Main office manager.

South County — The real estate market in Santa Clara’s South County continues to be very slow, challenged by low inventory. Presently in the entire city of Morgan Hill, there are only 35 active listings.  The city of Gilroy has about 60 homes available. Both buyers and sales associates are finding this to be “frustrating and somewhat alarming,” shares the Gilroy and Morgan Hill office manager. Sellers are in an advantageous position to list their homes in coming weeks.  

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Home Sellers, Buyers: Start Planning Now

For homeowners who are considering selling their homes, it is not too early to start preparing for the spring selling season, which is traditionally the real estate industry’s busiest season.

Whether you’re thinking of putting your home on the market or planning to buy a home, right now may be the ideal time to meet with a real estate professional who understands the market to discuss your options.

For home sellers in particular, there is much to prepare for, and a real estate professional can help you prioritize and establish a plan of action. A strategic sales and marketing plan is essential to engage active buyers. That plan should include an effective pricing strategy, home presentation suggestions and a comprehensive approach to online marketing.

A competitive market analysis that includes a review of current inventory, recent comparable sales prices and other data is critical information that a real estate licensee can provide. In addition to providing valuable marketing data, a knowledgeable sales associate can also make recommendations on how to prepare your home for maximum appeal and to better position your property on leading real estate websites and portals in the industry. Below are a few practical tips:

As a seller, focus on curb appeal: The outside of a house is the first thing potential buyers see and it is important to make a good first impression. If the “curb appeal” is strong, people will want to see what is inside. To improve a home’s appearance, consider mowing the lawn, trimming the trees, cutting back overgrowth and possibly adding some pots or containers of colorful plants and flowers. Also, properly store away gardening equipment, bicycles and other toys.  The front door should have a “welcome home” feeling so consider adding a fresh coat of paint on the front door — it can work wonders on making that good first impression.

Remove the clutter: Homebuyers tend to show less interest in an untidy home. The two most important rooms in a buyer’s mind are the kitchen and bathrooms. Make certain these rooms are sparkling clean and show well.  If necessary, re-caulk tubs, showers and sinks. It is also helpful to clear out overflowing closets and avoid displaying too many family collectibles and photos.  Consider renting a storage unit to store some furniture to free up space in other living areas of the home. Buyers need to imagine themselves living in the home.  By neatly displaying and making all available space accessible, the seller affords the buyer a suitable opportunity to look towards the future.

Make repairs: Homebuyers generally expect all features in a home to operate safely and efficiently.   It may be beneficial to repair any faulty or outdated electrical outlets and wiring, furnaces and water heaters, along with leaking roofs and other plumbing concerns, prior to putting a house on the market.   Potential buyers may also react negatively to holes in window screens, broken windows and burned-out light bulbs.

Minimize odors: Make sure to take out the trash, change the cat’s litter box frequently, and open the windows to eliminate cooking odors. Another helpful tip is to clean drapes and bathe pets. It is important that the home smells nicely and you should consider adding fresh flowers, scented candles, or freshly baked cookies which can help create a pleasant environment.

Work with your Sales Associate:  Being objective about your environment is not always easy and you should utilize your real estate sales professional to gain an independent determination of what actions you should consider to make your home more appealing. Sales associates have the experience and knowledge to help identify potential problem areas and/or suggest some modifications that can help attract more potential buyers.

Preparation for Buyers Homebuyers have to do their homework as well and obtaining financing is generally a major priority. With limited inventory on the market in most areas, those buyers who come to the negotiating table pre-approved and ready to make an offer are likely to have stronger bargaining power.

A real estate professional can walk you through the home-buying process and help you identify homes for sale that are in your price range. Real estate licensees can help you research the markets you are interested in, prepare and present offers, negotiate price and other terms and then close the transaction.

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Bay Area Real Estate Market Update

The Cost of a Down Payment

Saving for a down payment can often be challenging for first-time homebuyers, particularly in high-cost areas like Northern California, and it is likely an issue that most consumers carefully weigh before the housing hunt begins.

A recent report outlined just how much homebuyers would need to save for a 20 percent down payment in major metropolitan markets across the country. Not surprisingly, some of the largest down payments are required in markets throughout California.

A median-priced home in the U.S. is $192,500, which means buyers need $38,500 for a 20 percent down payment, according to the report by Zillow. But in most market areas in California, the down payment cost is much higher and the income burden is greater. In fact, metro areas in California were among the cities where homebuyers needed to save the highest percentage of income to cover a 20 percent down payment.

For homebuyers in areas like San Jose, San Francisco and Los Angeles, saving a year’s worth of income wouldn’t even cover a 20 percent down payment, according to the report. Buyers in those markets need to save at least 180 percent of the average income in those cities.

In San Jose, for example, the median 20 percent down payment translates to $192,320. That represents 182 percent of the average income and is roughly the same as the median price for a home in the U.S.

San Francisco-area buyers are faced with a median 20 percent down payment of $164,920, which is 180 percent of the average income.

Buyers in Sacramento need $70,040 for a 20 percent down payment, which is about 108 percent of the average income.

The down payments are particularly steep when compared to the nation as a whole: the average American homebuyer sets aside two-thirds of his or her annual income to make that 20 percent down payment.

“It’s a big number,” Zillow Senior Economist Aaron Terrazas told CNN Money. “Very few are saving for a down payment in one year, it’s something they do over multiple years. And for renters who have been faced with rising rent and health care costs, it’s very difficult to put away any money at all.”

There are programs to assist first-time homebuyers, particularly those that offer smaller down payment requirements. While it is possible to put down less than 20 percent, that often translates to a higher interest rate and the extra cost of private mortgage insurance for homebuyers.

“Saving enough cash for a down payment is a major barrier to homeownership, especially in expensive markets, where a 20 percent down payment can cost nearly $200,000,” said Zillow Chief Marketing Officer Jeremy Wacksman. “While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates. As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table.”

Here’s what our local Northern California offices had to say about market conditions as we started the new year:

East Bay – The East Bay market has had limited inventory and steady buyer demand and sales activity. Almost every property is receiving multiple offers because of the low number of homes available for sale, our Oakland manager reports, and buyers are eagerly waiting for more homes to come on the market. In fact, the office had 5 multiple offers. Sales associates have multiple buyers and many of them are looking for the same home, she added. The Oakland office has observed that many properties are being repaired and staged to be listed in the future, possibly by March.

Monterey County – Rain was a big factor in the area in the first weeks of January, but that hasn’t deterred sales associates and consumers. Buyers are looking in all price points and “sellers that have been waiting for the new year seem to be ready to get serious about selling,” says the manager of our Monterey Peninsula offices. A $10 million-plus property went into escrow this past week. There is limited inventory in the mid-level million-dollar price point.

North Bay – Pent-up buyer demand and low inventory continue to affect the North Bay area. However, a “surge” of new listings is expected in the Greenbrae and Southern Marin offices in coming weeks after the Super Bowl, our office managers report. The market is so short on supply that it has created an “off market” supply that is equal to almost 25 percent of all transactions in January, our Southern Marin manager reports. The office had 18 open houses and 10 properties under contract. Many buyers missed out on the opportunity to buy last year in Marin County, our Greenbrae manager said, so there could be a bump up in sales as new inventory comes on the market. The Greenbrae office had 7 open houses and 8 properties under contract. The high-end sector has also seen some activity, with new multi-million dollar listings coming on the market in January and February, and 2 $5 million homes going into escrow during the last week, said our Southern Marin office manager.

Placer County – Open house activity was slow in the first two weeks of the year because of the heavy rains and flooding, our Auburn manager explained, but listing inventory is steady and there were 3 multiple offers and 7 homes under contract. A majority of buyers are coming from the Bay Area, especially San Jose and Marin, because Auburn and the surrounding communities offer more affordable housing options, she said. Conditions in the Previews® luxury market are basically unchanged since December. High-end properties are being shown although the majority are overpriced, according to the Auburn manager, and several luxury listings will be hitting the MLS in upcoming weeks and months.

Sacramento County – Listing inventory is on the rise and sales are declining, according to both our Folsom and Sacramento Fair Oaks managers. However, the Fair Oaks office reported 6 multiple offers and 7 properties under contract. The office also had 19 open houses. The offices in the region are gearing up for the spring selling season.

San Francisco – The start of the new year was marked by a bump-up in listings. Total inventory was 30 percent higher compared to a year earlier, shares our Lombard office manager, but sales and buyer traffic have lagged. Entry-level priced homes and fixer uppers are seeing the biggest demand, while the mid- to upper-priced condos have seen the largest number of price reductions, he said, with two-thirds of closed condo transactions selling at or under asking price.  The Lombard office had 2 multiple offers and 3 properties under contract. With mortgage interest rates expected to climb this year, open houses and broker tours have been well attended, and sellers are noticing increased demand and not waiting until the Super Bowl to sell in hopes of “catching a more-than-ready and able buyer,” according to our Market office manager.

San Francisco Peninsula – There was a significant slowdown in activity, due in part to the holidays and inclement weather, with our Burlingame, Burlingame North, Half Moon Bay, Palo Alto Downtown, and Redwood City managers reporting that sales activity decreased. Several offices in region held open houses during the last two weeks – 6 in the Burlingame office, 4 each in the Burlingame and Half Moon Bay offices, and 2 in the Palo Alto Downtown office. Demand seems to be healthy. Our Redwood City manager says there are still a lot of buyers, with very limited inventory, and both the Half Moon Bay and Burlingame offices dealt with multiple offers (2 each).

Santa Cruz County – The Santa Cruz area has seen a decline in overall sales but an increase in sales activity in the high-end market. Inventory is steady when compared to the level of listings a year earlier, however sales are off by about 25 percent. Previews® luxury property sales, on the other hand, have climbed, with 15 more unit sales recorded compared to the same period last year. Open house activity is on the rise in the region.

Silicon Valley – The new year has started off on a strong note, with sales activity and prices picking up in some parts of Silicon Valley. Gains in inventory are starting to emerge, but inventory is still not sufficient to meet the robust buyer demand in most areas. There are currently only 32 active listings in all of Willow Glen with only 3 of those listings priced under $1 million. Sales associates are reporting heavy traffic at open houses and strong buyer demand, says the San Jose Willow Glen manager. Many of the homes that had been lingering on the market have either gone off the market or have been absorbed, said our Los Altos office manager, and there is a little more than a month’s worth of inventory. With such a limited number of homes available for sale, properties are still receiving multiple offers and some are going for over the asking price. Average sales prices climbed in multiple communities, according to our San Jose Almaden office manager. The average sales price so far for January in Almaden is $1,216,000, which is 4 percent higher than January 2016 ($1,169,000).  Blossom Valley’s average sales price is up 9 percent to $695,000 in January 2017 compared to $633,000 in January 2016.  Santa Teresa had the largest increase of average sales price in January.  It is currently $829,000, which is 23 percent higher than the $674,000 average sales price recorded a year earlier.  Cambrian was down with an average sales price of $883,000 from $1,024,000 in January 2016 ( -14 percent).  The luxury market — homes priced over $3.5 million — is steady but somewhat flat with days on market and inventory creeping up; frenzy bidding and/or multiple offers is the exception as opposed to the rule, shared our Los Gatos manager.

South County – Listings are down and sales have been slow and flat since the beginning of December in South County. The holiday season, coupled with the election and economic uncertainty that goes along with it, and the perception that mortgage interest rates are on the rise, has caused sellers and buyers to postpone or delay their real estate decisions. “The old saying that the real estate market doesn’t hit its stride until after the Super Bowl seems to ring true this year,” says our Gilroy & Morgan Hill manager. The office had 7 open houses and 10 properties under contract.

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The Smartest Home Improvements for 2017

Why not add home improvements to your 2017 resolutions?

The New Year is a great time to begin thinking about home improvement projects. Here are a few tasks to kick off in 2017.

Replace Your Garage Door
Your garage door is one of the first things visitors and potential buyers will notice about your home. That’s why it’s important to ensure that yours is in great shape. Consider installing a new garage door if yours is damaged or showing its age.

Insulated garage doors will boost the energy savings of your home. Your garage is an open pocket of air attached to your home. As it gets colder outside, an uninsulated garage will trap cold air against your home, forcing you to spend more on energy bills. Insulated models will keep cold air out and help you eliminate extra spending on utilities.

Install Smart Locks
Smart locks allow you to control and monitor the security of your home through your smart phone. The price of smart locks will vary depending on the features. Most models come with Bluetooth connectivity and remote access.

Get a Nest Thermostat
Learning thermostats will improve the environment in your home and save you money. Smart thermostats learn your heating and cooling habits and automatically adjust your HVAC to meet your needs. You can install a smart thermostat yourself or with the help of a pro.

Complete a Minor Kitchen Remodel
Your kitchen is a busy place. Everyone loves to gather around food and enjoy good conversation while keeping the host or hostess company. If you’re dealing with a cramped kitchen, consider a minor kitchen remodel to help open up your space.

Worried about the cost of a remodel? A kitchen remodel will return 83 percent of its cost at the time of resale, making it one of the better ways to spend your money in 2017.

Update Your Bathroom
Your bathrooms are another great location for home improvements. You don’t have to overhaul the entire room to recoup the cost of your upgrades. Head to your local home improvement store and pick up any of the following items to boost the appearance of your bathrooms:

● New faucet and handles
● Modern mirrors
● New towel racks
● Floating shelves

Channel Your Inner Handyman
You can also tackle some home improvements yourself. It’s as simple as focusing on what’s already in your home rather than what it lacks. Go through your home and check for the following:

● Leaks in the shower
● Leaks in the sink
● Knicks in the drywall

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Signs You Could Have a Plumbing Problem

A plumbing problem can be extremely disruptive. We expect fresh, clean water that’s available at a tap’s notice. Plumbing problems destroy those expectations. The following watchouts can help you decide if you need a plunger or a plumber.

A plumbing problem can sneak up out of the blue, causing disruption in a life where you’ve come to expect that everything should always run as it should. Like losing electricity in a blackout, losing access to fresh, clean water can turn your life upside down as you rush to handle the issue, usually at substantial inconvenience and major cost to you. The best thing to do is to attack plumbing issues before they become plumbing disasters. Check out below for some plumbing problem watchouts.

Leaky Pipes

If you’ve ever opened up the cabinet beneath your kitchen or bathroom sink and noticed drips coming from one of the pipes, you’re most likely dealing with a plumbing issue that can get progressively worse if it’s not dealt with right away. A leaky pipe often means that the pipe is rusting, creating holes for water to seep through. You will need to replace the rotted section of the pipe at the very least and possibly the entire pipe. A great plumber can let you know for sure.

Frequent Toilet Back Ups

There is quite possibly nothing more “ew!”-inducing than a backed up toilet. A toilet that can’t flush is not only gross, but it can also quickly turn into a major sanitary issue. Plunging the bowl may take care of the problem temporarily, but if the issue keeps happening, the problem is probably deeper in the tank. You may have a septic tank that needs to be emptied. If you own a single-family home, call your plumber stat. If you own an apartment in a co-op or condo, alert the board ASAP as the issue could very quickly end up affecting other apartments in the building.

Sink Draining Slow

If you’ve noticed that it’s taking a long time for your sink to empty of water, you’re most likely dealing with a blocked pipe. Some people try clearing the drain with gentle solutions like (blue) Dawn dishwashing soap and hot water. Dawn cuts grease really well, and the hot water helps melt and push through the blockage. If that doesn’t work, you’ll want to call a plumber. Commercial drain cleaners can be effective, but they’re also corrosive and can cause damage to fragile, rotting pipes.

Sputtering Faucet

You’ve most likely experienced a sputtering faucet at one point and simply attributed it to a moody faucet. That’s only true if it doesn’t happen that often. If it happens all the time or in more than one faucet in your house, it could mean there’s a cracked water pipe somewhere in the building’s plumbing system or the main water line. You’ll need a plumber to take a look and see if it is a local issue or if it’s centered on your home’s system alone. Waiting to handle it could deal with more costly and disruptive repairs down the road.

Dripping Faucet

A constantly dripping faucet is annoying at best, while costly and evidence of a deeper hidden problem at worst. Your water bill can be driven up by hundreds of dollars a year by a seemingly light drip. The washers that prevent leaks from happening can become torn or loosen over time, causing a leak. Replacements can be found at your local hardware store.

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