No Fall Slowdown in Bay Area as Buyers Snatch up Luxury Homes
The housing market is supposed to slow down as we get deeper into the fall season and inch closer to the holidays, but something very unusual is happening here in the Bay Area. Not only is the market remaining active overall, there’s been a remarkable surge in luxury home buying – in particular, the mega-home sales.
A quick look at closed sales at the end of October caught my attention. Our company alone closed an amazing 13 sales over more than $5 million in the Bay Area just in the last two weeks of October! The vast majority of these deals were in San Francisco, the Peninsula and Silicon Valley, although one was in Healdsburg. The homes went for as much as $11.1 million, the price paid for a Los Altos Hills property.
In all, we saw the strongest October in sales volume since 2004 for the San Francisco Peninsula Region. And although I can’t share with you Coldwell Banker’s proprietary sales figures, I can tell you that this added up to a 56 percent gain from just last October.
For a market that still faces a number of economic and political headwinds, this is quite a remarkable spike in activity for the upper end of the market.
So, what do we make of all this? It’s a strong signal that the so-called “smart money” is placing some very big bets that the housing recovery is well on its way. Well-heeled investors believe that real estate today offers a tremendous value and the long-term potential is quite attractive.
Below is a market-by-market report from our local offices:
South County – The South County market continues to be battered by low inventory. Gilroy’s inventory is down to 55 actives, our local manager says – which is 1/3 of what a healthy, balanced market looks like. Of those, 33% are the luxury market for the area. As a result of the low inventory, most properties are going with multiple offers in a matter of days or hours. There are few open houses and those that get held open are well attended. San Benito County is similarly bleak with a lack of inventory. There are just 72 homes listed in Morgan Hill and only 14 homes for sale in San Martin. The “Sellers’ Market Phenomenon” continues. The average home in South County is selling at or above 101% of list price. The average “days on market” has dropped from 137 days (one year ago) to just 40 days (Nov. 2012). A true indicator of the market is “months of available inventory.” That statistic is at its lowest level in years (just under three months supply). Sellers are smiling, buyers are frustrated and agents are working very hard writing offers that are acceptable to sellers– over list price with no appraisal contingency. There also seems to be no seasonal adjustment, as demand remains very high for the few available listings.
Santa Cruz County – Inventory continues to drop. The total inventory of properties available for sale in October was 580, down 15.5% from 686 last month, and down 42.8% from 1,014 in October of last year. October 2012 inventory was at its lowest level compared with October of 2011 and 2010. There is currently about a 2.6 mo supply of inventory and market times continue to shorten also. The average DOM is 60 days, down about 19% from this time last year. The market with the inventory we have vs. the number of buyers is moving very quickly and most properties have multiple offers.
Monterey Peninsula – It’s hard to believe that it’s already November and sales activity on the Peninsula continues on as it has been for some months now. In most years new escrows would have decreased by now. However, our steady pace continues, though our listing inventory is falling. We are now seeing persistent agents with buyers but no suitable home to sell them. Agents are going out and finding possible homes and contacting the owners to see if they would be interested in an offer, and in a number of cases it has resulted in a sale. The Previews luxury market has seen increasing sales the last few months as well.
Silicon Valley – People have to stand in line to get into some open houses, our Cupertino manager says. We’ve got too many buyers chasing too few homes and too many agents chasing too few deals. In the Los Gatos area, properties are continuing to go under contract in spite of low inventory. There has been a recent uptick in pendings across the board, especially in the Los Gatos Mountains. This is a great time of year to educate sellers about the opportunity of selling their home now versus later. Our San Jose Almaden manager says multiple offers continue to be the norm. Inventory has reached 52-week lows in six of our 19 areas. Percentage under contract is 66% for SFD’s and 77% for PUD’s for the county. Inventory is still dropping in Santa Clara County with approximately 1,076 single-family homes available at present. Multiple offers on most properties, especially in the lower priced properties, is the norm. Low interest rates are keeping buyers in the market. Open house traffic is still extremely active in all price ranges. Our Willow Glen manager says agents are still seeing multiple offers in the low end of the market. Anything under the $600k mark is extremely competitive at this price point. The mid-level market is still seeing strong demand for anything in the $650 to $850 range. It’s not as competitive, however still multiple offers on most properties in this range. We have seen a bit of as slowdown in demand for anything over the $1 million price point. Some properties are sitting on the market, but it might be seasonal; we will see how the market responds in the next few weeks post-election. Saratoga sales activity for the month of October was incredible, our local manager says. With listing inventory at an extremely low point the agents are complaining daily that they can’t find properties for their buyers.
San Francisco – Our San Francisco Lakeside manager said his experience is that buyers are ready to buy if only they can find a house that suits their needs in an increasingly picked over inventory. Sellers are seeing that the best way to get the highest price is not to price high. An agent reported that his client’s offer of several hundred thousand dollars over the asking price in St. Francis Wood was scoffed at and the property sold for a million dollars over the list price! Our Lombard manager reports that listings are starting to slow down a little. The percentage of deals this week that drew multiple offers is down, but most sales prices are still going over asking. Mortgage offers often have to go into back-up position behind all cash deals. Low inventory continues to be the headline as sellers shifted their focus to the election and the upcoming holidays. Buyers are still out in force, our Market Street manager reports, but not all properties receive multiple offers. One agent described his $769K listing as a “feeding frenzy” and gave out 45 disclosures, while other listing agents are doing multiple counter-offers to ratify with a single party. Our Sunset manager notes that it continues to be an active market. Inventory has decreased slightly in the last couple of weeks. There are still a lot of multiple offers but the number of offers has decreased. Agents are reporting large turnout at their open houses. And our Van Ness office reports that activity for past 10 days closing out October, which was the biggest closing month of the year.
SF Peninsula — Multiple offers and lots of them are the rule of the day, according to our Burlingame manager. With so few properties and so many buyers trying to complete purchases by years’ end, the Peninsula is “Red Hot” – 20 plus offers on well-presented listings have become the new normal. Sale prices are trending at 200k to 300k or more over asking in these situations. As always cash is king and offers with no contingencies are winning the day. We are finally seeing some movement in the $10 mill.+ price range with two pending sales over $12 mill. and increased activity in general in Hillsborough and San Mateo Park. According to our Menlo Park manager, open houses on lower end homes (outside of MP but still local) have been amazing – lots and lots of people. The public has been trained – most are armed with lender letters already. Higher end has slowed. Additional cautiousness has crept into the market. Some of that cautiousness may be election related. Inventory is starting to slow down in the Palo Alto area from what it was a month ago. Nonetheless, demand for inventory is still extremely high. Homes that would list for $1.3 have sold for $1.8 – all cash. Lack of inventory leads to fewer open houses, which in turn gives less opportunity to meet new clients, our Redwood City manager says. Any property – single family home or condo or townhouse – that comes on the market priced right and showing well is immediately in a multiple offer situation. Still a lot of anxious buyers looking for a home. San Mateo area inventory is down sharply and our local manager is unsure if it is the season or sign of things to come. Upper end Woodside continues to be a struggle. Sales are slowing again across the board in all of Woodside and surrounding ‘rural’ properties.
Tuesday, November 27, 2012
Friday, November 16, 2012
OCTOBER MARKET STATISTICS
Home inventory continues to be abysmal. It was off 41.6% from last October.
The median price for homes jumped 27.5% year-over-year. The median price has been higher than the year before for the past nine months. The sales price to list price ratio has been over 100% for the past eight months.
The average price for homes was up 27.3% year-over-year.
Pending home sales were down 3.1% year-over-year.
Friday, November 2, 2012
The Bi-Weekly Market-By-Market Report
By Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Below is a market-by-market report from our local offices:
South County – Inventory is at such dire levels that only 54 homes are active in all of Gilroy. REO’s have all but dried up. Five REO’s are for sale in Gilroy, six in all of San Benito County, and five in Morgan Hill and San Martin. San Benito County has only 90 homes for sale in the entire county. Overbidding homes is constant, with offers going 5%+ over asking price. And there seems to be no slowing down. It has been a nice change of pace for a seller, but brutal on buyers. Houses don’t make it hours or days on the market – they sell that fast. It seems that this has been the year for South County and San Benito County to cycle through most of the backlog short sales and to make way for the new move-up buyer coming back into the market. As the inventory “crisis” worsens the average price of a home sold in Morgan Hill has increased by over 20% (over the last three months). Multiple offers are driving prices skyward with anxious buyers willing to pay substantially over asking price for property. In addition, many buyers are willing to waive appraisal contingencies in order to be competitive in this marketplace. It is not uncommon for moderately priced homes (that show well) to garner seven to 10 offers—all at above the list price.
Santa Cruz County – The market overall has experienced improvement over the last year. Sales continue to come steadily in and like other markets our challenge is the demand is way exceeding the supply for Buyers. Agents must be creative to find properties off market, and honing their skills in putting forth their best effort as many homes are in a multiple offer situation. About 65% of our closed sales are under $600,000 although as prices inch upwards we are noting that that stat has dropped from a high of 70% last year. The Previews market is fairly steady and there are sales occurring, although it still represents only a small percentage of local sales. Properties from $1 million to $2 million represent about 6% of the total closed sales and sales over $2 million represents 1%. Agents are looking for properties that are off market, which tend to be cash transactions and short closes.
Monterey Peninsula – We’re continuing to have excellent sales activity with very few REOs anymore – now short sales and many more regular sales. And most of the lenders seem to be getting more efficient at handling the short sales, and with that lessening of the time spent between offer and lender approval, we are not having as many short sale fall-outs from buyers getting tired of waiting for approval as we did some months ago. Our open houses continue to be well attended, particularly in the second home areas of Carmel and Pacific Grove. The Preview luxury market is improving but still has a lot of inventory.
North Bay – At our Marin sales meeting on Wednesday, our local manager asked, “How many of you have a listing you’ll be putting on before the end of the year?” Only one hand went up, along with a few tentative half raised hands. When he asked how many had buyers, nearly everyone raised their hands– about 50 agents. And, so goes the Marin market. Agents were counseled to search high and low to uncover potential homes for sale, look up expired listings, send out inquiries to neighborhoods where they have buyers, network and encourage those on the fence to sell. We need the inventory. Otherwise, we are experiencing fairly robust sales for this time of year, so it’s good to see that deals are actually happening, despite the low inventory. In Santa Rosa, we are finding that appropriately priced homes are still receiving multiple offers, as the pent up demand at the lower end is still evident. Many homes are coming on to the market at prices that seem to be low for the market. This may be due to agents determining price with their sellers and then by the time they actually come to market, other buyers on comparable homes have already bid the comparable sales higher. This lag in timing is proving to be a challenge for appraisals, but is often taken care of by the buyer bringing more cash to the table. Inventory across all price categories for Single Family dwellings in Sonoma County is down approximately 20 percent from early June of this year.
San Francisco – While some agents report a slight drop in traffic and activity, most offers remain multiple, our Lombard office manager reports. A number of pre-emptive offers were made this week, as buyers will pay a premium to avoid open competition. Market Street agents are looking for inventory as most listings continue to receive multiple over-asking offers. Buyers are out in force (one modest house near Glen Park BART had over 100 groups during its first open house), and savvy agents continue to get their buyers in to properties pre-MLS when possible. In the Sunset district, open houses continued to be very active. Multiple offers are still the norm as majority of the ratified deals are in multiple offer situation. Listing prices continued to edge upward as sellers are starting to get aggressive in their pricing. In the preceding week our Van Ness office ratified 30 sales vs. 22 sales the week before. There is heavy competition for the finer north side of the City homes at record prices. Multiple offers on most sales.
SF Peninsula — We’re seeing busy open homes at every price point. One listing in South San Francisco listed at $449,000 had over 150 groups attending open houses both Saturday and Sunday. One San Carlos listing had six offers and will close well above asking. One Burlingame property listed at $1,449,000 just closed at $1,651,000 with cash purchasers. The scarce inventory is being snapped up and bid up in the price range under $1,500,000, our Burlingame manager says. Too few properties to meet the demand. There are currently 61 active and 16 pending listings in Hillsborough. Our local manager is starting to see interest in some of the most expensive properties that have been on the market for some months. Buyers are looking at end of year, low interest rates and the perception of softness in the 5+ million range and certainly in the 10 + million range. Our Half Moon Bay office said they need more inventory under the $1m mark. Sales are brisk in the $550k-850k range. In Menlo Park area, all price ranges are still moving. Good properties come on, they sell right away albeit with only one or two offers now. Our Palo Alto buyer’s agents have been winning in multiple offer situations, fortunately. Sales are up. Multiple offers are nearly 100%. Move up buyers are reluctant to market a home without inventory to move up to, our San Mateo manager says. They cannot use a contingency offer in this market where certainty is demanded in contracts. Low inventory continues to plague our market. Nearly 56% of all September closed escrows in our market place sold for the list price or more. Friday, we had 19 offers on a single family home in San Mateo listed at $799,000. Several of our agents are working with buyers who are writing offers with all cash or substantial down payments, short periods to close escrow, and despite our advice against a contingency free offer, still choosing to do so.
East Bay – Our Oakland-Piedmont manager said last weekend’s open house traffic was slower and it seemed as if there might not be as much competition for the listings. But that all changed in a flash as the week went agents found clients in competition with 11 offers, 8 offers, 15 offers and so it goes. Several clients who have continued to lose out in multiple offer situations are ready to do whatever it takes in their offers to get accepted. There is still a lot of cash winning the multiple offer battle at all price points. Even though inventory is decreasing, buyers continue to make offers, our Orinda manager says. Multiple offers continue resulting in many homes going into contract over asking price. Many cash offers and open homes heavily attended. In Walnut Creek, local inventory is still low. New construction has really become an alternative and even those projects are starting to sell out quickly.
Silicon Valley – The market’s been steady, our Cupertino manager reports. There were 180 groups at a fixer upper on a busy street in Sunnyvale listed for $728K with 47 disclosure packages handed out. Need we say more about the lack of inventory? There has been a recent uptick in agents getting their buyers into contract, our Los Gatos manager says. Buyers are continuing to struggle with meeting short time frames on multiple offers and whether or not they should waive their appraisal contingency. Our San Jose Almaden manager notes that multiple offers prevail. One listing came out at $610K and, after 2 weeks and no offers, they lowered the price to $589K. They got multiple offers in four days and sold for $625K, proving you cannot under price a home in today’s market but you certainly can over price one. And buyers only want it if other buyers want it as well. The psychology of today’s market. Willow Glen overall inventory is down slightly. Our manager says agents are seeing a slight decrease in the number of multiple offers and the bidding up and over list prices has leveled off. Demand for lower end to midlevel priced homes in the $400k to $600k range is still very strong. We continue to have sellers listing homes through the holiday season, and many may be trying to get on the market and in contract prior to the election and by the end of the year.
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Below is a market-by-market report from our local offices:
South County – Inventory is at such dire levels that only 54 homes are active in all of Gilroy. REO’s have all but dried up. Five REO’s are for sale in Gilroy, six in all of San Benito County, and five in Morgan Hill and San Martin. San Benito County has only 90 homes for sale in the entire county. Overbidding homes is constant, with offers going 5%+ over asking price. And there seems to be no slowing down. It has been a nice change of pace for a seller, but brutal on buyers. Houses don’t make it hours or days on the market – they sell that fast. It seems that this has been the year for South County and San Benito County to cycle through most of the backlog short sales and to make way for the new move-up buyer coming back into the market. As the inventory “crisis” worsens the average price of a home sold in Morgan Hill has increased by over 20% (over the last three months). Multiple offers are driving prices skyward with anxious buyers willing to pay substantially over asking price for property. In addition, many buyers are willing to waive appraisal contingencies in order to be competitive in this marketplace. It is not uncommon for moderately priced homes (that show well) to garner seven to 10 offers—all at above the list price.
Santa Cruz County – The market overall has experienced improvement over the last year. Sales continue to come steadily in and like other markets our challenge is the demand is way exceeding the supply for Buyers. Agents must be creative to find properties off market, and honing their skills in putting forth their best effort as many homes are in a multiple offer situation. About 65% of our closed sales are under $600,000 although as prices inch upwards we are noting that that stat has dropped from a high of 70% last year. The Previews market is fairly steady and there are sales occurring, although it still represents only a small percentage of local sales. Properties from $1 million to $2 million represent about 6% of the total closed sales and sales over $2 million represents 1%. Agents are looking for properties that are off market, which tend to be cash transactions and short closes.
Monterey Peninsula – We’re continuing to have excellent sales activity with very few REOs anymore – now short sales and many more regular sales. And most of the lenders seem to be getting more efficient at handling the short sales, and with that lessening of the time spent between offer and lender approval, we are not having as many short sale fall-outs from buyers getting tired of waiting for approval as we did some months ago. Our open houses continue to be well attended, particularly in the second home areas of Carmel and Pacific Grove. The Preview luxury market is improving but still has a lot of inventory.
North Bay – At our Marin sales meeting on Wednesday, our local manager asked, “How many of you have a listing you’ll be putting on before the end of the year?” Only one hand went up, along with a few tentative half raised hands. When he asked how many had buyers, nearly everyone raised their hands– about 50 agents. And, so goes the Marin market. Agents were counseled to search high and low to uncover potential homes for sale, look up expired listings, send out inquiries to neighborhoods where they have buyers, network and encourage those on the fence to sell. We need the inventory. Otherwise, we are experiencing fairly robust sales for this time of year, so it’s good to see that deals are actually happening, despite the low inventory. In Santa Rosa, we are finding that appropriately priced homes are still receiving multiple offers, as the pent up demand at the lower end is still evident. Many homes are coming on to the market at prices that seem to be low for the market. This may be due to agents determining price with their sellers and then by the time they actually come to market, other buyers on comparable homes have already bid the comparable sales higher. This lag in timing is proving to be a challenge for appraisals, but is often taken care of by the buyer bringing more cash to the table. Inventory across all price categories for Single Family dwellings in Sonoma County is down approximately 20 percent from early June of this year.
San Francisco – While some agents report a slight drop in traffic and activity, most offers remain multiple, our Lombard office manager reports. A number of pre-emptive offers were made this week, as buyers will pay a premium to avoid open competition. Market Street agents are looking for inventory as most listings continue to receive multiple over-asking offers. Buyers are out in force (one modest house near Glen Park BART had over 100 groups during its first open house), and savvy agents continue to get their buyers in to properties pre-MLS when possible. In the Sunset district, open houses continued to be very active. Multiple offers are still the norm as majority of the ratified deals are in multiple offer situation. Listing prices continued to edge upward as sellers are starting to get aggressive in their pricing. In the preceding week our Van Ness office ratified 30 sales vs. 22 sales the week before. There is heavy competition for the finer north side of the City homes at record prices. Multiple offers on most sales.
SF Peninsula — We’re seeing busy open homes at every price point. One listing in South San Francisco listed at $449,000 had over 150 groups attending open houses both Saturday and Sunday. One San Carlos listing had six offers and will close well above asking. One Burlingame property listed at $1,449,000 just closed at $1,651,000 with cash purchasers. The scarce inventory is being snapped up and bid up in the price range under $1,500,000, our Burlingame manager says. Too few properties to meet the demand. There are currently 61 active and 16 pending listings in Hillsborough. Our local manager is starting to see interest in some of the most expensive properties that have been on the market for some months. Buyers are looking at end of year, low interest rates and the perception of softness in the 5+ million range and certainly in the 10 + million range. Our Half Moon Bay office said they need more inventory under the $1m mark. Sales are brisk in the $550k-850k range. In Menlo Park area, all price ranges are still moving. Good properties come on, they sell right away albeit with only one or two offers now. Our Palo Alto buyer’s agents have been winning in multiple offer situations, fortunately. Sales are up. Multiple offers are nearly 100%. Move up buyers are reluctant to market a home without inventory to move up to, our San Mateo manager says. They cannot use a contingency offer in this market where certainty is demanded in contracts. Low inventory continues to plague our market. Nearly 56% of all September closed escrows in our market place sold for the list price or more. Friday, we had 19 offers on a single family home in San Mateo listed at $799,000. Several of our agents are working with buyers who are writing offers with all cash or substantial down payments, short periods to close escrow, and despite our advice against a contingency free offer, still choosing to do so.
East Bay – Our Oakland-Piedmont manager said last weekend’s open house traffic was slower and it seemed as if there might not be as much competition for the listings. But that all changed in a flash as the week went agents found clients in competition with 11 offers, 8 offers, 15 offers and so it goes. Several clients who have continued to lose out in multiple offer situations are ready to do whatever it takes in their offers to get accepted. There is still a lot of cash winning the multiple offer battle at all price points. Even though inventory is decreasing, buyers continue to make offers, our Orinda manager says. Multiple offers continue resulting in many homes going into contract over asking price. Many cash offers and open homes heavily attended. In Walnut Creek, local inventory is still low. New construction has really become an alternative and even those projects are starting to sell out quickly.
Silicon Valley – The market’s been steady, our Cupertino manager reports. There were 180 groups at a fixer upper on a busy street in Sunnyvale listed for $728K with 47 disclosure packages handed out. Need we say more about the lack of inventory? There has been a recent uptick in agents getting their buyers into contract, our Los Gatos manager says. Buyers are continuing to struggle with meeting short time frames on multiple offers and whether or not they should waive their appraisal contingency. Our San Jose Almaden manager notes that multiple offers prevail. One listing came out at $610K and, after 2 weeks and no offers, they lowered the price to $589K. They got multiple offers in four days and sold for $625K, proving you cannot under price a home in today’s market but you certainly can over price one. And buyers only want it if other buyers want it as well. The psychology of today’s market. Willow Glen overall inventory is down slightly. Our manager says agents are seeing a slight decrease in the number of multiple offers and the bidding up and over list prices has leveled off. Demand for lower end to midlevel priced homes in the $400k to $600k range is still very strong. We continue to have sellers listing homes through the holiday season, and many may be trying to get on the market and in contract prior to the election and by the end of the year.
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