A closely watched housing report was released last week showing the Bay Area market slowly improving in the first month of the new year. DataQuick, the La Jolla-based information firm, said combined new and existing home sales were up 2.3 percent over January of last year. While that increase is less than many of us would like, there are signs that today’s market may actually be gaining more momentum.
What’s important to remember is that closed sales are really just a snapshot of sales activity that began as much as two to three months before – in this case the fall of last year. But as I said in an interview with the Oakland Tribune and Contra Costa Times, we should balance the DataQuick report with more timely market indicators. And in that case, we have reason for optimism.
As the Tribune and Times articles point out, things are starting to improve. Pending sales for January in the East Bay, for example, are much better than a year ago. Overall, pending sales in Alameda and Contra Costa counties were 34 percent higher last month compared to January 2010 – even though at the same time last year home sales were being stimulated by tax credits that have since expired. January marked the highest number of pending sales since last April – the final month of the credit.
Although this is more anecdotal, it’s interesting to note that many of our offices report that they are busier with new transactions today than they were at this same time last year. They are seeing greater numbers of buyers and not just “lookers” at open houses. They’re getting calls from customers who have been sitting on the sidelines over the past year or so and are now ready to move forward.
Apparently, we’re not alone. Other brokers in the East Bay quoted in the news media said that pending sales last month were up anywhere from 18 percent to 66 percent over last year at this time, depending on the community. While I don’t have figures yet for the rest of the Bay, indications are that sales activity is on the rise.
The bottom line is that there are strong indications that more buyers are seriously looking for a home or even going into escrow. And although we won’t see that activity turn into closed sales for another month or two, I’m encouraged that we are moving in the right direction. It will be interesting to see sales figures as we head into the spring buying season.
Below is a market-by-market report from our local offices:
North Bay – January sales in Marin were up year over year, but prices are down since last January, according to our Greenbrae office. We are seeing increased market activity with lots of buyers ready to go once they find the property they want. Closes in January and February are less than anticipated, but opens for February (March & April closed sales) are up. One of our listings in Larkspur at $2.5 million is receiving significant market interest but no buyers have stepped forward yet – indicative of a market where buyers take their time to make sure they are making the right decision. Activity is increasing in Southern Marin. Buyers are out there, and many are starting to step up to the plate with offers. Deals continue to be fraught with problems, with both buyers and sellers sensitive to every term of the contract. But they are closing more often than not. Our Northern Marin office says there have been great turnouts at Sunday open houses (even Super Bowl Sunday). The spring market feels as if it’s starting already, our Santa Rosa office reports, with sales and listings increasing. Open house attendance has been very strong especially in the high price points. In Sebastopol, the market has been fairly steady. Open houses have been better attended and agents are writing offers and showing properties. List price is crucial; even a little too high and no offers will be tendered. Price it right and there will be multiple offers. . In Petaluma, open houses have been well attended in the double digits. The weekend continues to bring numerous walk-ins into the office.
San Francisco – The local market has been steady, our Lakeside office says. There has been good open house attendance and lots of activity. But agents are having a hard time finding good, well-priced product to sell to buyers who are ready to buy. Our Lombard manager reports lots of open traffic and busy agents without the corresponding number of sales. Open house activity was brisk, our Market Street office says, with a property in the Mission Dolores area where agents stopped counting after 120+ came through on Sunday. The Previews market is also picking up. Our Sunset office reports that more inventory is slowly coming on the market, but still not enough to meet demand. There is a strong demand for solid residential income properties in the City. There was portfolio of 20 multifamily properties that came on the market couple weeks ago with a total asking of over $63 million that received seven offers for the entire portfolio. Finally, our Van Ness office says both inventory and sales activity are on the rise – including in the Previews high-end segment of the market. There were 34 ratified offers in the past couple of weeks – three of which were multiple offers.
SF Peninsula — The spring buyers are out and ready to buy when they can locate the right inventory, our Burlingame managers report. We are routinely seeing multiple offers on well-priced homes under $1 mill. Open house activity has increased with as many as 100 people through one open house. Buyers are more positive and sellers more flexible on price. Across the hills in Half Moon Bay, there seems to be two extremes in the market – the very low end selling quickly or the upper end second home, all cash, selling quickly. Our Menlo Park offices report that they are definitely seeing a stronger high-end market in that community. Buyers are not afraid to spend $2.5 million for a house anymore. The inventory is slowly increasing, our Redwood City office says. Buyers are taking their time before making a decision. Agents are working with both buyers and sellers for longer periods of time. Overall attitude seems to be positive. The Palo Alto market is extremely tight in inventory. The $2.5 million price range is strong and getting multiple offers. One example: a Palo Alto listing at $2,195,000 had 118 groups through open house, 14 packets are out, offers on Wednesday. Our San Mateo offices say open houses are still very well attended, although many buyers still on the fence. Finally in Woodside, our local manager says sales activity and inventory have dipped. Still a lot of interest, but no action.
East Bay – Our Castro Valley office reports that there has been a significant increase in the number of ratified offers and listings taken during the past two weeks. Typical of Berkeley this time of year, there is a low supply of inventory of homes while sales activity has been steady. In particular, there have been no listings in the $1.5 million to $2 million range since October. In Fremont, listing inventory is steady and sales are picking up – most likely to the recent uptick in interest rates. Our Livermore office says that both inventory and sales activity in the Tri-Valley area are on the rise. Total pending sales in all three of the cities are up since the start of 2011. Total pending sales are up 17.2 percent in Livermore, 25.7 percent in Pleasanton, and 22 percent in Dublin. Our Oakland/Piedmont office reports that open houses have lots of new buyers and the agents are busy. Most of the sales for the month are in the mid price range and many are short sales. Lots of new listings are coming on to the market. In Orinda, the market remains steady for sales and new inventory. And finally, in Walnut Creek, our local office says there are more REO’s coming on the market. More listing inventory will be coming in March. Open house traffic is good, but many buyers still sitting on the fence.
Silicon Valley – Our Cupertino office reports that although the local market was off to a slow start, it is definitely picking up steam. Buyers at open houses seem more committed to buying, rather than just looking. The Los Altos market is improving in most price ranges. Our local office was involved with multiple offers on a higher end townhouse in Cupertino that sold for the high $800s and had 22 offers. We also had one of our listings of a high-end condo in Mountain View that was listed in the mid $800s sell with 6 offers in the low $900s. And one of our Palo Alto single-family homes sold with 6 offers over 10% above the $2M list price. Open house activity is also picking up in Los Gatos, where sales are on the upswing. Both sales and inventory are picking up, according to our San Jose Almaden office. Attractively priced homes that are considered a good value by buyers are selling quickly. Our sales are keeping pace with new inventory in markets west of HWY 87. Over all, this appears to be starting off as a healthy market. Similarly, the Willow Glen market has been steady in the new year. Open houses have been very, very busy, and there has been cash offers than usual. Finally in Saratoga, as expected, we are seeing the market improve with listings and sales both on the upswing.
South County – The South County market is showing signs of life—agents are reporting that open houses are well attended and that buyers are interested and engaged. But buyers also seem to be divided into two distinct groups: Those buyers on the fence who just won’t make a buying commitment and those buyers who believe that making lots of very low offers will garner them a bargain. This seems to be a common theme across most price ranges. South County is also seeing an increase in REO listings, and short sale transactions seem to be the norm.
Santa Cruz – January and February are seasonally slow real estate months in the Santa Cruz area, and it’s is no different in 2011. There is a steady “buzz” in the offices, and the agents are definitely working to gear up for the spring market. In general, we’re starting out stronger this year than in 2010. Open houses are hit and miss – depending on location, weather, etc. Some have been very well attended, others rather stale. We have a lot of new inventory coming on the market. Sellers still want to try the higher price of the recommended range. However, those sellers who listen to their agents and price slightly below or at the last sale price are much more likely to attract a buyer. It is extremely important for the agents to understand the importance of managing the client’s expectations especially with sellers, providing definite timeframes for price adjustments at regular intervals. Those agents who are having these purposeful conversations with their sellers, and revisiting the price at specific intervals, are having more success.
One final note on the Previews market: The upper end of the Bay Area market continues to improve in many areas. One of our agents won a multiple offer situation representing a buyer for a property in Kentfield listed at $4,695,000 this past week. Our Southern Marin managers says Previews listings are getting more activity than last year, and high end buyers seem to be out in droves.
One extreme example of the improvement in the luxury market just happened in Silicon Valley where an off-the-MLS listing has sold. The palatial estate sitting on 17 acres boasted two homes – a main house at 25,000 square feet and a “small” home at 5,000 square feet. The price is one of the Valley’s best-kept secrets, but insiders said it was between $50 million and $100 million. The buyer will certainly be helping Santa Clara County coffers. His or her new property tax bill alone could be in the neighborhood of $1 million a year.
That’s it for now. Have a good week!