Woodside is home to many Silicon Valley executives, hedge fund managers and other well-healed residents. When the tech bubble inflated in the late 90s, housing prices here soared along with the NASDAQ index. And when tech valuations came back down to Earth, so did home prices, although this remains one of the most-sought-after real estate in the country. It may not be Beverly Hills 90210, but Woodside 94062 is an excellent barometer in how the very high end of the housing market is faring.
So how’s the temperature in the Woodside real estate market? After a long cool spell, things have been heating up a bit in recent weeks. One statistic catches my attention: Over the past year ending Sept. 30, there were just four sales over $6 million in this community. But in the past four weeks alone, there have been a whopping six sales over $6 mill. The buyers, all Silicon Valley execs, all live in Woodside are deciding to move up to larger homes.
What’s happening here? While we can’t draw too many conclusions quite yet, our local manager, Wendy McPherson, says it’s a combination of things. There has been incredible pent-up demand among the moneyed class looking to buy. Prices on luxury homes have come down sharply to levels we haven’t seen in a decade or more. And there’s greater confidence among high-end buyers that we’ve seen the bottom of the market and prices will only rise from here.
Luxury buyers can hardly be blamed for thinking the market is offering more relative bargains than the Nordstrom’s half yearly sale. One Woodside estate that was listed at $22 million just six months ago dropped to $17.5 million and then sold over $15 million. Another priced at $15 million two and a half years ago was relisted recently at $9.9 million and sold in the mid nines.
Woodside isn’t alone when it comes to upper end markets bouncing back. We’ve seen the luxury sector of local markets from Lake Tahoe to San Francisco to Silicon Valley stabilize and rebound off their recessionary lows. Coldwell Banker Residential Brokerage’s latest luxury housing reports show:
- Million-dollar home sales in the Tahoe-Truckee region up 31 percent in the third quarter (July-September) from the same period a year ago. Some 16 homes sold for more than $2 million, up from 10 the previous quarter and a year ago;
- In San Francisco, there was a nearly 6 percent increase in sales over $2 million during the third quarter but a 42 percent increase in $3 million and above home sales. The median price of multi-million-dollar sales also jumped 10 percent;
- While million-dollar sales did slip in Silicon Valley last month and were flat in Marin County, both of those results followed many months of strong year-over-year gains;
- Additionally, the highest end of the Silicon Valley market continued to climb with 24 homes selling for more than $2 million in the county, up from 18 a year ago, and four selling for more than $3 million compared to just one a year ago. Los Gatos reports they have just closed a sale over $4M and are pending on a $8.9 listing.
In the past, luxury homebuyers – the so-called smart money – are often the first to declare a market bottom and jump back in because they have the cash and the means to do so once they are convinced the time is right. These buyers are astute observers of real estate trends and financial markets, and are often the first to see turnarounds in the macro economy. Their confidence in the market often leads overall consumer confidence.
It will be interesting to see if the rest of the market follows suit again this time. While the economy here in the Bay Area and across the country certainly has been sluggish and unemployment levels remain stubbornly high, it’s encouraging to see solid improvement in the upper end of the real estate market. Only time will tell if it catches on to the rest of the market. One thing is for certain. For this high end activity to trickle down to the $1M to $3M buyers who are getting some level of financing, the banks are going to have to provide more options for well-qualified buyers who have a down payment and strong credit scores. There is still practically no secondary market to sell Jumbo loans, so the options don’t yet exists for Jumbo rates to become more competitive – unlike what buyers are seeing in the conforming loan arena.
Below is a market-by-market report from our local offices:
North Bay – While many might think the market has slowed, there is still lots of business happening out there, according to our Greenbrae manager. We are seeing multiple offers, offers on properties that have sat for a while, and sellers still bringing new and exciting properties on at good prices. While the market is not as robust as we would like it to be, it is still healthy. The market in North Marin remains slow, with buyers still sitting on the fence and sellers hoping for a return to glory days. However, Novato has seen steady listing activity all across price ranges in the past two weeks – 28 new on the market from $139,000 to $2,200,000, with the majority clustered around the mid $500Ks-$700Ks. Sold properties show a similar spread, from $153, 000 to $1,055,000, again with the majority in the mid range. San Rafael is holding steady with a fairly large inventory. In the last two weeks, 30 listings have come on the market, with almost a quarter of them over a million dollars. In the same period, 24 units closed escrow, with a similar profile to Novato – ranging from $150,000 to $2.275MM – and the majority again in the mid $500K-$700Ks. The most difficult price point remains above $1MM, with buyers scarce and lending much more problematic. Finally, our Sebastopol office reports that open house activity was exceeding slow this past weekend with five inches of rain on Sunday alone. Only the most well priced homes are garnering offers. Buyers are very slow in making their purchasing decisions even though there are some screaming deals on the market.
San Francisco — Our San Francisco Lakeside office says the local market has been steady of late. There were eight offers on a new listing, two offers on a listing that has been on the market for more than a month – but other properties languish. Buyers are cautious and lack urgency but respond to the right deal for them. There were 23 ratified offers, three of which were multiples. Meanwhile, the Lombard offices says it has been a slow October. The manager says there’s more buyer caution and lack of urgency. Some knowledgeable sellers are listing at attractive prices. However, there is more action in the $1 million to $3 million range. Our Market Street office reports that the number of ratified offers picked up last week from the previous week. On the rainy Sunday, the open house activity was all over the map from a steady stream of buyers to one or two people showing up. Finally, the market has been steady, according to our Noriega office, which reports four ratified offers, one of which was a multiple offer.
SF Peninsula — Our Burlingame office says that sales activity is steady while inventory has decreased. The terrible rain and wind put a damper on some open homes while others had groups of 20 or more. There are continued re-negotiations on properties already in contract due to needed repairs and lender requirements. In the Previews market, buyers are becoming active and bringing cash. There is a lot of money coming from overseas. This would indicate that investors are sensing the bottom of the market. Across the hills in Half Moon Bay, sellers are frustrated with the few showings across all price ranges. Buyers are looking but aren’t writing offers unless the home is perfect in all aspects. In Menlo Park, open houses were excellent this weekend despite the rain. A good omen, our local manager says. The Previews market is getting stronger – more confidence by buyers. They had a $7.5 mil sale on basically raw land in Atherton. The Palo Alto market has been steady to improving. Turnover is brisk on homes priced up to $2M, including multiple offers. However, volume of sales is low. Seems as though the holiday season is affecting the market sooner rather than later. Our Redwood City office reports the local market has been very slow. Our San Mateo manager says the hottest local markets are in that city with 42% of the total sales, Burlingame with 21% and Belmont with 16%. Open houses were well attended last week even with the rain.
East Bay – The Berkley market has been steady of late with 11 ratified offers in recent weeks, six of which were multiple offers. That’s echoed by our Castro Valley manager, who reports 13 ratified offers, many of which are multiples. In Oakland, open house traffic is mixed. Some areas are really hot and of course, new listings get a lot of attention. The number of multiple offers has dropped. In Orinda, there are still a lot of sales, however, most are under $1 million. Transactions are occurring but are taking longer and with a much lower sales price. Our Danville office reports that after a slow beginning, the end of October has been much more active. One of our listings in Alamo got seven offers and sold in one week (not a short sale or REO). Our Walnut Creek manager says buyers and sellers are now challenged with lender issues. Both the appraisal and underwriting process has become slow and cumbersome. Short sale lenders are approving sales in shorter time frames. REO’s are trickling in. In Fremont, the local market, appears to be focused on the upcoming holidays. Slower activity is typical for this time of year. Area REO market is also slow due to recent restrictions, while short sales are showing a slight increase. Similarly, the Tri-Valley market is easing back, according to our Livermore office. Buyers are being very cautious when evaluating the value of a home. Active listings in Livermore are increasing, while total pending sales have declined. In Pleasanton, active listings and total pending sales have declined. And in Dublin, listings have declined while pending sales have remained stable.
Silicon Valley – The Los Gatos market appears to be steady or even improving. We just went into contract on an $8.9 million dollar home, just closed a $4.3 million dollar home and had a $2.5 million dollar buyer walk in to an open house looking for an agent. Open houses are where the action is, according to our Cupertino manager. Lots of lookers, but fewer buyers. The manager reported 16 ratified offers, including several multiple offers, and 132 open homes. The Los Altos office, meanwhile, says the market is slowing due to the holidays approaching. There have been 26 ratified offers, about 20% of them multiple offers. Some of the deals have fallen through due to financing problems for the buyers. The local market is slow above $1.6 million and very slow above $2.5 million. In the San Jose Almaden area, inventory is decreasing but sales activity is steady with 18 ratified offers, six of which are multiple offers. Our San Jose Main office, meanwhile, says the market has picked up a little. Open houses are slow, perhaps due to Giants in the playoffs and now the World Series. Some of our listings are getting reduced in list price as well. Finally, Saratoga seems to be quieting down with our local office saying it seems as though we’re entertaining the holiday slowdown a bit early.
South County – The Gilroy market is mirroring most statistics slowing a 20% decline in sales over last year. Our local manager says agents are working hard and are finding every transaction a new adventure with additional hurdles to overcome in order to close. There have been eight ratified offers and five multiple offers. Both inventory and sales activity appear to be slowing down, according to our Morgan Hill office. There were 17 ratified offers and 28 open houses. Our local manager says low consumer confidence is translating into slower sales. Continued high unemployment rates are playing a role. Even if a potential buyer has a job, many are concerned about their job security. This is reported by agents who are meeting the public at open houses. Consumer confidence is the only weak link in what is a perfect buyers’ scenario—low interest rates and very attractive prices.
Monterey Peninsula – Sales activity on the Monterey Peninsula has been steady while listing inventory has decreased in recent weeks. Our local manager reports a total of 37 ratified offers, two of which were multiple offers. Additionally, there were 98 open houses. However, the high-end market has been much slower on the Peninsula.
That’s it for now. I normally stay neutral in my writings with regards to sports team preference. But I can’t help myself today. GO GIANTS!!
Have a great week!