My how things have changed in just one year! A year ago at this time, many homes were languishing on the market as buyers stayed on the sidelines, worrying about their jobs, the sharp decline in their 401k accounts, and whether housing prices would ever rise again. Today, many of those buyers have swallowed their fears and are out in force once again, spurred by an improving economy, a solid recovery in the financial markets, and federal home buyer tax credits that will expire this spring.
While no one claims the housing market is out of the woods yet, an unusual dynamic is occurring in many communities around the Bay Area: Despite the choppy housing market, there is an army of confident, well-qualified buyers out searching for homes, but many sellers are now sitting on the sidelines! One listing in San Francisco’s Outer Mission neighborhood priced in the mid-$500,000 drew more than 100 groups during a two hour open house during the past holiday weekend.
Inventory shortages continue to be the challenge in many areas. In Santa Clara County and the East Bay, for example, the number of homes for sale is standing at half of what it was a year ago! This has resulted in as many as half of the listings on the market attracting multiple offers as buyers fight it out for the best properties.
This conundrum has resulted in prices rising even as sales are falling. DataQuick, the La Jolla-based research firm, reported that the median sale price of homes and condos in the Bay Area shot up almost 17 percent year over year in January while sales dipped 4 percent. The biggest jump in the median price was 18.3 percent in San Mateo, but all counties (except Napa) saw strong increases. (see chart below) The upper end of the market is particularly sensitive to this trend, as illustrated by Santa Clara County, which saw sales of million-dollar homes half of what they were a year ago even as prices rose 4 percent, according to Coldwell Banker Residential Brokerage’s luxury market report.
|Sales Volume||Median Price|
Source: MDA DataQuick Information Systems, http://www.DQNews.com
Inventory levels are slowly rising in some communities, and the balance between buyers and sellers could shift in the weeks and months ahead. But right now it’s a good time to be a seller if you price your home for today’s market.
Here’s a market-by-market breakdown from our local offices:
North Bay – With a shortage of inventory, multiple offers are still the norm in Petaluma. Most agents are working with 4-6 qualified buyers ready to go. A lot of offers are written with fierce competition, and lots of activity in the $500,000 price range. Northern Marin reports lots of multiple offers on short sales, while the Santa Rosa market is seeing a growing number of sales. While there is almost no inventory now, there is a small flurry of new listings coming on the market. Lack of inventory continues to be a problem in Sebastopol with listings under $500,000 instantly getting multiple offers. In Southern Marin, sales have increased greatly so far this year versus same period a year ago with Tiburon and Belvedere experiencing almost three times the number of sales.
East Bay—Inventory still low but slowly building in many cities. Berkeley reports the market is still slow and prices are far below several years ago. A local appraiser told Realtors that the $2 million plus market is so slow that appraisers are going back much further than three or six months to find comps. In Castro Valley listings abound. There are homes for sale in all neighborhoods, which is resulting in fewer multiple offers. The Danville market still needs listings to sell and to hold open. Homes in some price ranges are selling so fast that Realtors are not getting much open house time to meet new buyers! Livermore reports the upper end of the market improved greatly in January with three pending sales above a million. Overall, there’s a healthy market in the Tri-Valley area of Livermore, Pleasanton, and Dublin. All three cities have experienced an increase in listings and pending sales in 2010 with multiple offers common. In Pleasanton, inventory shortages continue, with multiple offers on homes under $500,000 common. Buyers are eager to get into a home due to tax credit.Oakland-Piedmont: Lots of action this month keeping agents busy. Both Orinda and Walnut Creek are seeing listings and activity on the rise.
Monterey County— The market is steady on the Monterey Peninsula, where locals and visitors alike enjoyed a great three-day President’s Day weekend and the AT&T Pro Am golf tournament. Realtors were busy with inquiries and showing properties, though mostly sales from events like this come later. Nevertheless, the Peninsula did see a number of sales, including a multi-million dollar property. Inventory is plentiful in the higher-priced areas of Carmel and Pebble Beach, but scarce in the lower-priced areas of Seaside and Marina, where we are waiting for another wave of REOs to hit the market.
Peninsula— Burlingame reports less inventory than last year and more buyer interest, including those paying all cash. Market seems to change day by day, but overall there are more sales and more multiple offers. In Half Moon Bay, agents say sales are slow although the number of listings are picking up. It’s taking much more time and paperwork just in getting offers accepted, with many counters. Things are holding steady in Menlo Park, with the market showing signs of coming out of the winter hibernation. Inventory is slowly increasing in Palo Alto including higher end properties, in the $2 million to $4 million and some above $5 million. Buyers and sellers are more optimistic that things are turning around. San Mateo is seeing strong activity in the post-Super Bowl market while Woodside and Portola Valley markets are quiet. There are buyers looking for homes, but the number of homes for sale is just too low.
San Francisco— Lakeside reports most of the activity is for properties under $1.2 million. A lot of energy is in the first time home buyer market as we approach the deadline for the federal tax credit. Inventory is still low for the Lombard office. Buyers are often surprised that they’re in multiple offer situations in this market. The Market Street office reports that agents are seeing a lot of well qualified buyers coming to their listings, many with a lot of cash. Multiple offers are still the order of the day, especially in the first time homebuyer’s price points. Properties that are in desirable locations are going into contract after the first open house. The Noriegaoffice has seen a lot more activity in the last two weeks. There seems to be a renewed sense of urgency for buyers as the tax credit deadline gets closer. One listing in the Outer Mission priced in the mid-$500,000 drew more than 100 groups during a two hour open house during the past holiday weekend. The Van Ness office is noticing lighter inventory of available homes, and had a handful of sales ratified over $2 million.
Santa Cruz County: There are many multiple offers on homes under $700,000 and REO properties and short sales. REOs and short sales continue to have a very strong influence in sales, pricing, and overall market activity. There seems to be a lot of anxious buyers waiting on the sidelines for the right property to appear. Buyers seem to acknowledge with some positive economic news that it is an optimum time to purchase – maybe the most optimal time ever. Inventory still continues to be an issue, although as we move toward spring and warmer weather we are seeing more homes coming on the market.
Silicon Valley: Cupertino continues to see a severe shortage of homes for sale, with lots of multiple offers as buyers compete for good listings. In Los Altos, open house attendance is picking up as is overall activity, but the higher end market – above $2 million – is still slow. Similarly, things are slowly improving in the Los Gatos market with inventory and sales increasing. In San Jose’s Almaden and Willow Glen neighborhoods, inventory is gradually increasing although still far too low for buyer interest. Inventory in San Jose is half of what it was a year ago in all local markets, but sales are up between 30 and 70% depending on neighborhood. The Saratoga market started very slowly the first few weeks of January, but Realtors have seen a definite increase in activity.
South County: In the South County it has become the “Tale of Two Cities.” As potential buyers show interest in this area, they can select from either Morgan Hill or Gilroy. In both cities, inventory is down, but Gilroy listings tend to be short sales or REO properties. Morgan Hill has far less inventory, but non-short and REO sales are now the norm. Agents are challenged when showing properties and well priced properties receive multiple offers.
In a quick update on our Previews properties – There continues to be gradual improvement in the luxury end of the market in many areas. For example, in the last couple of weeks the Santa Cruz area offices report multiple offers on listings for $2.4 million, $2.1 million, and $1.2 million. A $7 million dollar property that literally sits on the ocean is now $4.9 million and getting lots of activity and could sell shortly.
Overall, a few dips of the Dow under 10,000 don’t seem to stick, and the result is an improvement in consumer confidence.
Have a great week!
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage