“Home sales catch fire in March.” “Local home sales at 5-year high.” Before the cynics accuse me of being a “homer” for the housing market, I have to tell you that these aren’t my words, but the opinion of our local news media. Specifically they are headlines from the San Jose Mercury News, Oakland Tribune, and the Santa Rosa Press Democrat. I know that’s a twist, considering some of the negative headlines we’ve seen in the press lately.
As reporter Eve Mitchell and other journalists around the region noted, Bay Area home sales had their best March in four years, with 7,051 new and existing single-family homes and condos changing hands. That was up a whopping 41.3 percent from February. It’s normal for sales to rise from February to March, but last month’s surge was far more than usual.
Certainly historically low home prices are having an impact. So are historically low interest rates, spurring buyers to jump off the fence. It appears that we’re finally seeing some of the pent-up demand that has been building for the past few years being released into the market – at least here in the Bay Area. Most of our local offices around the Bay are reporting steady to improving sales activity and overall market conditions. Multiple offers, low inventory; here are just a few examples:
- There is a lot of pent-up demand up and down the mid-Peninsula. Our Palo Alto office says they’re seeing an extremely strong market with “almost everything below $3.5M getting multiple offers;
- In the South Bay, our Cupertino office reports buyers are chasing too few good properties. When was the last time you heard that?
- The Los Gatos market has heated up a lot lately, especially in the lower price ranges where multiple offers are the norm. But even in the upper end, sellers are “feeling more confident putting their homes on the market” and getting a good price;
- The market in Saratoga is hot, according to our manager there. In the last few days they had one property with eight offers and another with 19 offers. Both sold significantly over the asking price;
- In the North Bay, our Greenbrae office had a number $2-$4 million homes go into contract recently with a lot of activity in the high-end markets of Ross, Belvedere, Tiburon, Sausalito, Larkspur and Kentfield;
- And our San Francisco Van Ness office is seeing a strong increase in sales, especially in the higher end properties.
While many parts of the Bay are seeing progress on the housing front, the picture isn’t uniform across the board. Some cities are experiencing stronger markets than others (the Peninsula, Silicon Valley, San Francisco and Southern Marin are particularly strong). In some communities, certain price ranges are hot while others are tepid. And even within a local market, while one property may get a eight or 10 offers, another sits idle waiting for a single buyer.
Nonetheless, the recent uptick in activity in general is providing encouragement to Realtors as well as home sellers.
In its April 14 report on the Bay Area housing market, DataQuick noted that “a variety of indicators – including investor and cash purchase levels and adjustable-rate loan use – pointed toward a more normal market,” but the firm added that we’re not there yet. “The housing market has certainly moved well back from the abyss of two years ago, but there is quite a ways to go,” said John Walsh, DataQuick’s president.
Walsh noted that the Bay Area has much less of a foreclosure problem than the rest of the state, but distressed properties are still an issue in some counties and a drag on prices. He added that mortgage financing is still problematic for many potential borrowers as well.
The monthly market analysis demonstrated that real estate is really a local business. Several of the higher priced counties in the Bay Area saw strong gains in sales last month, including 10.7% for Marin, 8.6% for San Mateo, 3.9% for Santa Clara, others experience declines. Alameda was down 7%, Solano 7.9%, and Napa 5.9 percent.
So we appear to be moving in the right direction. I’m encouraged that the spring rejuvenation in many of our markets will continue in the months ahead, especially if the economy and the local job market continues to improve. Only time will tell.
Below is a market-by-market report from our local offices:
North Bay – The $500K to $1 million market seems to be the hot segment right now, according to our Greenbrae manager. There are fewer properties available in the under $500K range. The market is sorely lacking in inventory, down to a three-month supply overall in Marin. Overall the market is healthy with renewed activity and a buzz that can’t be calculated quite yet. The Northern Marin market continues to be active in the “bargain” price range with a large part being in short sales and REO’s. The middle level market is starting to strengthen and show increased activity. The Santa Rosa market has remained steady, according to the local manager. While open house attendance has been high, many buyers seem hesitant to commit. Our Southern Marin office reports that sales are up, although sellers are having a hard time adjusting to current market valuations. Many offers will get close to asking, but sellers are passing. Overall the number of high-end homes sold in Southern Marin is less than a year ago, especially in Mill Valley and Tiburon. Belvedere and Sausalito are up ever so slightly.
San Francisco – April off to a good start, our San Francisco Lombard office reports. Open houses are well attended, agents are busy, and some listings yielding 10-15 offers. But buyers still need to have a sense of a “deal.” The $2-3 million market in particular is very active, although it’s slow above $3 million. Our Market Street office says that properties that are priced well are moving fast. They had two deals this week where properties had over asking price offers within a day to two of being on the market. There are also offers coming in as back up on short sale listings that are aggressively trying to knock the first position out. The properties that seem to be moving are priced between $1 million and $1.4 million. Open houses are well attended, but inventory is still low, according to our Sunset office. Agents are working much harder on their deals, as transactions are much harder to close. Finally, our Van Ness office reports that the local market continues to increase in volume, especially in the higher end properties.
SF Peninsula — Our Burlingame office said they are seeing many multiple offers in the $900k to $1.5 million-price range. There are 62 active and 22 pending sales. The local market “has definitely heated up,” our North Burlingame manager says. Across the hills in Half Moon Bay, both sales activity and inventory are on the rise. The high end of the Menlo Park market is still showing strength, our local office says. Some homes are coming onto the market and “going right out the door” if priced right. And buyers absolutely know what is priced right, our local manager points out. Palo Alto continues to enjoy an extremely strong market. Almost everything below $3.5M generally has multiple offers. As usual, there is a high demand for inventory. Price points from $5.5 to $6M moving fairly quickly as well. Open houses have been very strong – condos as well as single family. Our Redwood City office says that the local market has been fairly steady with sales of single-family homes in San Carlos still very active. It appears that buyers are more willing to make offers even in multiple offer situations. In San Mateo, our local manager says inventory is slim and that which is priced correctly is getting multiple offers. But even some of the multiple offers on a property still don’t produce a “full price” offer.
East Bay – Sales activity picked up considerably in the past 10 days, according to our Berkeley office. But our Castro Valley office reports the local market has cooled a bit. The local manager said many buyers are afraid due to the uncertainty of the economy and are choosing to rent until the market/economy improves further. A similar story comes from the Fremont, where activity has eased recently. In Livermore, the Previews high-end market has remained very stable in 2011. During the first three months of the year there were six closed Previews property sales. Homes under $350k are moving fast, our Pleasanton manager reports. First time Buyers are eager to make offers. There has been a dramatic increase in inventory, our Orinda manager says, with our local tour doubling in size week over week. This has created a lot of great bargains. Our Oakland manager reports that short sales are still the order of the day, comprising a large percentage of the inventory and ratified offers. There are plenty qualified buyers out on weekends looking at the well-priced inventory in the East Bay. Open house activity was up in most areas with from 12 to 30+ groups going through our listings. Finally, our Walnut Creek office says they are seeing both multiple offers and price reductions. There continues to be a lack of inventory in certain pockets of their marketplace, with an increased number of short sale listings.
Silicon Valley – The only problem in Cupertino is not enough listings. Lots of buyers chasing too few good properties, our local manager laments. Similarly in Los Altos, the market is improving with listings slowly coming on. Due to the increased publicity of high-end sales, high-end sellers are feeling more confident putting their homes on the market, our Los Gatos office says. Buyers are beginning to see some opportunities in the high end that were not available in the past. In the lower ranges, multiple offers are becoming more of the norm rather than the exception. In San Jose, our Almaden manager reports that the market is healthy in the low end to middle range. Above that it is slow, however. In Willow Glen, meanwhile, sales are progressing. But the closing dates seem to be pushed back quite a bit in many cases due to the lenders. The market in Saratoga is hot, according to our manager there. In the last few days they had one property with eight offers and another with 19 offers. Both sold significantly over the asking price.
South County – A recent article in the San Jose Mercury indicated that the rental market is getting stronger as many younger workers, feeling more confident about job stability, are moving into their own apartments. This can also be said for the real estate market as well. The Morgan Hill office is seeing more first-time buyers making and consummating offers. Interestingly enough, the “move up” market seems to have a renewed energy as well with buyers making and sellers accepting contingent offers. Open houses are well attended and consumer confidence is better than it has been for quite some time.
Santa Cruz – Looking at the heart of the market – the $500K to $800K range – there are fewer sales occurring, with closed transactions down 16% from the same time last year. There has also been a drop in inventory from 115 to 80 properties in this price range. But homes are still selling in a relatively short 65-day average. This means that if the home is priced right it will sell and close in two months. There is a four-month supply of inventory for this price range. Agents are picking up buyers/sellers at open houses, and for the most part the agents are optimistic and working in this new normal market.
Monterey Peninsula – The Monterey Peninsula market continues at a good, steady pace, with more buyers than properties in the lower-priced areas. We are seeing cash buyers buying low-priced homes, which they plan to use as rentals for 5-7 years and then sell, with the idea that the prices will be up by that time and they will cash out at a good profit. An out-of-town agent was here representing such a buyer with $5 million in cash to buy such properties in Northern California. Our local manager says about 33% of sales as short sales, which means they will likely take many months to close or may just fall apart before approval.
One final note: I want to congratulate Coldwell Banker Residential Brokerage’s 2010 Top One Percent, and offer a special acknowledgement to those superb Realtors who finished among our top 10 in Northern California – Malin Giddings, Nina Hatvany, Tim Allen, Bill Gorman, Keri Nicholas, Royce Cablayan, Tom LeMieux, Bill Lister, Scott Dancer and Dave Clark.
These incredible All Stars are the best of the best in real estate. Together, they were responsible for nearly $1 billion in home sales! And more than half of these agents ranked among the top 10 in the nation as well, outpacing more than 100,000 Coldwell Banker agents across the country. We’re very proud that the most talented agents in the business work for Coldwell Banker.
That’s it for now. Have a good week!