November 2012 California foreclosure inventory—the total of Preforeclosures, properties in foreclosure that are Scheduled for Sale, and Bank Owned properties (REO)—fell 7.6 percent from the prior month and is down 31.8 percent compared to last year. While the November decline in inventory is not an unusual event, the significant decline in foreclosure inventory over the past year has contributed to what some are calling an “inventory crisis” of total homes for sale.
The November foreclosure inventory shortage is partially due to the jump in California Foreclosure Cancellations. Cancellations were up 4.7 percent from the prior month, up 69.9 percent in the past two months and up 34.7 percent compared to last year. In taking a closer look at the reason for cancellations, it did not appear the majority were due to statutory time frames or filing errors, but were more likely due to short sales or successful loan modifications.
Thursday, January 10, 2013
Tuesday, January 8, 2013
Promising Signs for More Improvement in Housing Market in 2013
by Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Happy New Year!
The housing market, both in the Bay Area and across the country, certainly showed impressive gains in 2012 with sales and median sale prices up in most markets and distressed sales and foreclosures down. In fact, the biggest challenge many of our local markets faced last year was not having enough homes to sell in order to satisfy the growing demand from buyers. How far we’ve come in just a few short years!
As we kick off 2013, there are a number of positive signs out there that the momentum we saw last year will only accelerate in the new year. Many widely followed industry analysts believe we will see gains in sales, prices and new home construction this year from coast to coast.
National Association of Realtors Chief Economist Lawrence Yun believes the steady housing market recovery will continue over the next several years, barring further tightening of mortgage credit availability.
Yun reports that, “Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases.”
While mortgage rates have been at historic lows, Yun expects these rates to rise to an average of about 4.0 percent this year and 4.6 percent in 2014.
With rising demand and shrinking inventory, NAR foresees “meaningfully” higher home prices. The organization estimates that the national median existing-home price rose 6 percent last year, and predicts it will increase another 5.1 percent in 2013 with a similar increase in 2014.
NAR isn’t alone in its bullish forecast. According to the UCLA Anderson quarterly forecast released last month, the U.S. housing market should be a major driver for the nation’s economy over the next two years – a change from past years when housing trailed other sectors.
UCLA Anderson economists say that the U.S. housing market may have been late to the economic recovery, but it is now taking the lead. “With the recovery more than three years old…housing is gaining strength,” said UCLA Senior Economist David Shulman in his report, Beyond the Cliff. “In fact, the late arrival of the traditionally early pickup in the housing market has become the leading source of strength.”
So where does all this leave us? While no one can say for certain what the future holds, most signs point to the fact that the housing market will continue to see steady improvement. Interest rates remain near historic lows, and home prices are rising again. The economy is gaining strength, albeit not as predictable and solid as we’d like to see. And the job market continues its gradual acceleration.
Locally, this gives us a very optimistic outlook for 2013′s Bay Area housing market. It should be even more robust than 2012′s. The market has turned in a big way since the recession and there just aren’t enough listings to go around.
Sellers are getting good prices for their homes once again – in some cases, multiple offers over their asking price.
In San Francisco and the Peninsula, most of 2012 was challenged with 40% to 50% of the previous year’s inventory, even less in some communities; coupled with rising sales activity. Similar situation occurred in Silicon Valley, and Marin.
East Bay, Sonoma, Monterey and Santa Cruz counties had drastically low levels of entry level homes for sale all year long. Some areas in these counties had been hit hardest with distressed sales, and the recovery was most notably swift here, as it became very competitive to purchase a short sale or bank-owned property.
South County; Morgan Hill, Gilroy, and Hollister, it was all about the lack of inventory all year. Inventory levels there are lowest they’ve seen since 2005. Mid-year the higher end of the market in these counties saw improvement, with some substantial sales along the Coast, wine country, and in the East Bay. The Previews market was alive and well in San Francisco, the Peninsula, and Marin; which had some incredibly “record-high” sales in 2012.
The two most widely known axioms associated with real estate; Location, Location, Location – and Supply/Demand, have never been more important. If a homeowner is considering selling this year, the best advice may be, to not wait for other homeowners in the area to do the same. Now may be the perfect time list your home while the numbers are in your favor.
Below is a market-by-market report from our local offices. An interesting mix reported; some Holiday slow-down, coupled with a fair amount of last minute Fiscal-Cliff buying frenzy.
South County – Our Morgan Hill manager says the dual holiday season certainly slowed down real estate activity in the South Bay. Most buyers and sellers (and agents) took a well-deserved break from the frenzied pace of the current market. As 2013 begins, optimism remains strong and buyer demand continues to be strong for homes in all price ranges. Morgan Hill agents are working hard to acquire listings—as most are selling for over asking price with multiple offers.
Santa Cruz County – The December numbers reflect continued low inventory, hovering around 600 total homes on the market, down 26% from a year ago. Closed sales were up overall for 2012, over 20% and sales have exceeded the same months, one year earlier for well over a year. The unsold inventory index is the lowest since 2005, with only about 3 months supply of inventory currently available. The year ended with the median price around $500K and those sales under that price representing half the sales. It appears that we are digging ourselves out; there are definitely a lot more buyers than homes available, and we are expecting much of the same going forward this year.
Silicon Valley – In Cupertino, it has been very quiet, our local manager says. Agents are just now starting to show up again and get underway for the new year. The Los Gatos office said sales continued to pour in over the holidays and the upper end of the market gained strength. Our San Jose Willow Glen manager says the last two weeks of the year were fairly quiet with new listings. Many sellers seem to be waiting until the new year to put their homes on the market, many of our agents continue to have listing appointments and meeting with sellers to consult about timing as to when in 2013 to put their homes on the market. We have several new listings going “live’ on the MLS the first two weeks of Jan. The overall consensus is that the winter selling season will start well before the traditional “Super Bowl” weekend. The race was on to get all deals closed by the end of the year for those chasing the New Year deadline. Many agents also have a full pipeline of buyer’s ready, willing and able to buy so the hunt will be on right out of the gate of 2013. The inventory is incredibly low going into 2013 in the Saratoga area.
North Bay – Lack of inventory continues to generate multiple offers, according to our Petaluma manager. More than normal, agents are seeing sales transacted before they hit the market. Our Sebastopol manager notes that the holiday real estate market felt just like it did in the 90’s: buyers, sellers and agents all appear to have taken a winter vacation. Almost like a fiscal cliff, our Southern Marin manager says, agents were rushing around December 31st getting deals closed and handing over keys to happy buyers and checks to happy sellers. They made it! The rush of year-end activity was big and we closed the year in Marin with a bang. Still many unsatisfied buyers out there. With equity coming back, sellers should be looking at 2013 as a great time to re-enter the market.
San Francisco – The Lombard manager reports that the fiscal cliff drama helped create a lot of year-end closing frenzy. More deals closed but more gray hairs for agents. Sellers were “snug in their beds” making the market seem “all quiet on the western front,” our Market Street manager says. However, buyers squeezed house hunting in with their holiday preparations, and those few homes that were accepting offers were inundated (one modest home in the Excelsior district had given out 42 disclosures at the time of this update, and had 3 offers in hand days before the official offer date).
Our Sunset office manager noted that sales are down but it is not due to lack of buyer demand. It is due to lack of inventory. The very few listings that had open houses were extremely busy.
SF Peninsula — Peninsula wide the inventory is extremely low: 10 active in Burlingame, 25 in San Mateo, two in Millbrae and three in Foster City. The buyers are waiting, agents are seeking news of any “off market” listing and everyone is praying for something to show to their waiting buyers. There are 35 active and 12 pending sales currently in Hillsborough. This reflects a lower inventory from a typical market of 65 listings through most of 2012. There were a lot of last minute end of year sales. Many were rushed due to uncertainty about taxes in 2013. There are certainly high-end buyers waiting for the expected new listings to come forth. It seems that the spring market will definitely kick off earlier than in most years. In Menlo Park, the local office was amazingly busy until Christmas day. Lots of closings before year ‘tax hike” end. Everyone has more buyers than sellers. The Redwood City-San Carlos market has been very quiet over the holidays. Woodside and Portola Valley got pretty sleepy at the end of the year. Agents have more buyers than sellers in general – properties available over $6 million are numerous however. Some deals to be made in that over $6 million market.
East Bay – The Berkeley office reports steady showings throughout December and even during the holidays. Agents are still writing offers and securing listings for early 2013. In the Lamorinda area, sales have declined slightly as inventory is extremely low. Sellers seemed to have been waiting until after the holidays to list their homes. According to our Walnut Creek manager, inventory is still low. Some sellers are waiting on the new year to list their homes. Buyers are still doing non-contingent deals and cash is still prevalent in winning offers.
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Happy New Year!
The housing market, both in the Bay Area and across the country, certainly showed impressive gains in 2012 with sales and median sale prices up in most markets and distressed sales and foreclosures down. In fact, the biggest challenge many of our local markets faced last year was not having enough homes to sell in order to satisfy the growing demand from buyers. How far we’ve come in just a few short years!
As we kick off 2013, there are a number of positive signs out there that the momentum we saw last year will only accelerate in the new year. Many widely followed industry analysts believe we will see gains in sales, prices and new home construction this year from coast to coast.
National Association of Realtors Chief Economist Lawrence Yun believes the steady housing market recovery will continue over the next several years, barring further tightening of mortgage credit availability.
Yun reports that, “Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases.”
While mortgage rates have been at historic lows, Yun expects these rates to rise to an average of about 4.0 percent this year and 4.6 percent in 2014.
With rising demand and shrinking inventory, NAR foresees “meaningfully” higher home prices. The organization estimates that the national median existing-home price rose 6 percent last year, and predicts it will increase another 5.1 percent in 2013 with a similar increase in 2014.
NAR isn’t alone in its bullish forecast. According to the UCLA Anderson quarterly forecast released last month, the U.S. housing market should be a major driver for the nation’s economy over the next two years – a change from past years when housing trailed other sectors.
UCLA Anderson economists say that the U.S. housing market may have been late to the economic recovery, but it is now taking the lead. “With the recovery more than three years old…housing is gaining strength,” said UCLA Senior Economist David Shulman in his report, Beyond the Cliff. “In fact, the late arrival of the traditionally early pickup in the housing market has become the leading source of strength.”
So where does all this leave us? While no one can say for certain what the future holds, most signs point to the fact that the housing market will continue to see steady improvement. Interest rates remain near historic lows, and home prices are rising again. The economy is gaining strength, albeit not as predictable and solid as we’d like to see. And the job market continues its gradual acceleration.
Locally, this gives us a very optimistic outlook for 2013′s Bay Area housing market. It should be even more robust than 2012′s. The market has turned in a big way since the recession and there just aren’t enough listings to go around.
Sellers are getting good prices for their homes once again – in some cases, multiple offers over their asking price.
In San Francisco and the Peninsula, most of 2012 was challenged with 40% to 50% of the previous year’s inventory, even less in some communities; coupled with rising sales activity. Similar situation occurred in Silicon Valley, and Marin.
East Bay, Sonoma, Monterey and Santa Cruz counties had drastically low levels of entry level homes for sale all year long. Some areas in these counties had been hit hardest with distressed sales, and the recovery was most notably swift here, as it became very competitive to purchase a short sale or bank-owned property.
South County; Morgan Hill, Gilroy, and Hollister, it was all about the lack of inventory all year. Inventory levels there are lowest they’ve seen since 2005. Mid-year the higher end of the market in these counties saw improvement, with some substantial sales along the Coast, wine country, and in the East Bay. The Previews market was alive and well in San Francisco, the Peninsula, and Marin; which had some incredibly “record-high” sales in 2012.
The two most widely known axioms associated with real estate; Location, Location, Location – and Supply/Demand, have never been more important. If a homeowner is considering selling this year, the best advice may be, to not wait for other homeowners in the area to do the same. Now may be the perfect time list your home while the numbers are in your favor.
Below is a market-by-market report from our local offices. An interesting mix reported; some Holiday slow-down, coupled with a fair amount of last minute Fiscal-Cliff buying frenzy.
South County – Our Morgan Hill manager says the dual holiday season certainly slowed down real estate activity in the South Bay. Most buyers and sellers (and agents) took a well-deserved break from the frenzied pace of the current market. As 2013 begins, optimism remains strong and buyer demand continues to be strong for homes in all price ranges. Morgan Hill agents are working hard to acquire listings—as most are selling for over asking price with multiple offers.
Santa Cruz County – The December numbers reflect continued low inventory, hovering around 600 total homes on the market, down 26% from a year ago. Closed sales were up overall for 2012, over 20% and sales have exceeded the same months, one year earlier for well over a year. The unsold inventory index is the lowest since 2005, with only about 3 months supply of inventory currently available. The year ended with the median price around $500K and those sales under that price representing half the sales. It appears that we are digging ourselves out; there are definitely a lot more buyers than homes available, and we are expecting much of the same going forward this year.
Silicon Valley – In Cupertino, it has been very quiet, our local manager says. Agents are just now starting to show up again and get underway for the new year. The Los Gatos office said sales continued to pour in over the holidays and the upper end of the market gained strength. Our San Jose Willow Glen manager says the last two weeks of the year were fairly quiet with new listings. Many sellers seem to be waiting until the new year to put their homes on the market, many of our agents continue to have listing appointments and meeting with sellers to consult about timing as to when in 2013 to put their homes on the market. We have several new listings going “live’ on the MLS the first two weeks of Jan. The overall consensus is that the winter selling season will start well before the traditional “Super Bowl” weekend. The race was on to get all deals closed by the end of the year for those chasing the New Year deadline. Many agents also have a full pipeline of buyer’s ready, willing and able to buy so the hunt will be on right out of the gate of 2013. The inventory is incredibly low going into 2013 in the Saratoga area.
North Bay – Lack of inventory continues to generate multiple offers, according to our Petaluma manager. More than normal, agents are seeing sales transacted before they hit the market. Our Sebastopol manager notes that the holiday real estate market felt just like it did in the 90’s: buyers, sellers and agents all appear to have taken a winter vacation. Almost like a fiscal cliff, our Southern Marin manager says, agents were rushing around December 31st getting deals closed and handing over keys to happy buyers and checks to happy sellers. They made it! The rush of year-end activity was big and we closed the year in Marin with a bang. Still many unsatisfied buyers out there. With equity coming back, sellers should be looking at 2013 as a great time to re-enter the market.
San Francisco – The Lombard manager reports that the fiscal cliff drama helped create a lot of year-end closing frenzy. More deals closed but more gray hairs for agents. Sellers were “snug in their beds” making the market seem “all quiet on the western front,” our Market Street manager says. However, buyers squeezed house hunting in with their holiday preparations, and those few homes that were accepting offers were inundated (one modest home in the Excelsior district had given out 42 disclosures at the time of this update, and had 3 offers in hand days before the official offer date).
Our Sunset office manager noted that sales are down but it is not due to lack of buyer demand. It is due to lack of inventory. The very few listings that had open houses were extremely busy.
SF Peninsula — Peninsula wide the inventory is extremely low: 10 active in Burlingame, 25 in San Mateo, two in Millbrae and three in Foster City. The buyers are waiting, agents are seeking news of any “off market” listing and everyone is praying for something to show to their waiting buyers. There are 35 active and 12 pending sales currently in Hillsborough. This reflects a lower inventory from a typical market of 65 listings through most of 2012. There were a lot of last minute end of year sales. Many were rushed due to uncertainty about taxes in 2013. There are certainly high-end buyers waiting for the expected new listings to come forth. It seems that the spring market will definitely kick off earlier than in most years. In Menlo Park, the local office was amazingly busy until Christmas day. Lots of closings before year ‘tax hike” end. Everyone has more buyers than sellers. The Redwood City-San Carlos market has been very quiet over the holidays. Woodside and Portola Valley got pretty sleepy at the end of the year. Agents have more buyers than sellers in general – properties available over $6 million are numerous however. Some deals to be made in that over $6 million market.
East Bay – The Berkeley office reports steady showings throughout December and even during the holidays. Agents are still writing offers and securing listings for early 2013. In the Lamorinda area, sales have declined slightly as inventory is extremely low. Sellers seemed to have been waiting until after the holidays to list their homes. According to our Walnut Creek manager, inventory is still low. Some sellers are waiting on the new year to list their homes. Buyers are still doing non-contingent deals and cash is still prevalent in winning offers.
NOVEMBER MARKET STATISTICS
Sales of single-family, re-sale homes were up 5.6% year-over-year in November.
Home inventory continues to be abysmal. It was off 73% from last November.
The median price for homes jumped 23.4% year-over-year. The median price has been higher than the year before for the past ten months. The sales price to list price ratio has been over 100% for the past nine months. The average price for homes was up 19.2% year-over-year.
Pending home sales were down 6.9% year-over-year.
SALES MOMENTUM…
for homes rose 0.8 of a point to +4.
PRICING MOMENTUM…
has been on the up-swing the past nine months. It rose 1.8 points to +9.2.
CONDO STATISTICS… The median price for condos was up 43.6% year-over-year. That’s nine straight months of double-digit gains. Sales were off 4.5%, while pending sales fell 10.5%.
SALES MOMENTUM…
for homes rose 0.8 of a point to +4.
PRICING MOMENTUM…
has been on the up-swing the past nine months. It rose 1.8 points to +9.2.
CONDO STATISTICS… The median price for condos was up 43.6% year-over-year. That’s nine straight months of double-digit gains. Sales were off 4.5%, while pending sales fell 10.5%.
Sunday, December 23, 2012
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Tuesday, December 11, 2012
How Will the New 3.8% Investment Tax Affect Real Estate
First, understand that this tax WILL NOT be imposed on all real estate transactions, a common misconception. Rather, when the legislation becomes effective in 2013, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.
Also, please note that the new tax applies to the LESSER of:
1. Investment income amount
or
2. Excess of AGI over the $200,000 or $250,000 amount
As an example, let’s take the sale of a principal residence.
John and Mary sold their principal residence and realized a gain of $525,000.
They have $325,000 Adjusted Gross Income (before adding taxable gain).
The tax applies as follows:
AGI Before Taxable Gain $325,000
Gain on Sale of Residence $525,000
Taxable Gain (Added to AGI) $25,000 ($525,000 – $500,000 home sale exemption)
New AGI $350,000 ($325,000 + $25,000 taxable gain)
Excess of AGI over $250,000 $100,000
($350,000 – $250,000)
Lesser Amount (Taxable) $25,000 (Taxable gain)
Tax Due $950 ($25,000 x 0.038)
Also, please note that the new tax applies to the LESSER of:
1. Investment income amount
or
2. Excess of AGI over the $200,000 or $250,000 amount
As an example, let’s take the sale of a principal residence.
John and Mary sold their principal residence and realized a gain of $525,000.
They have $325,000 Adjusted Gross Income (before adding taxable gain).
The tax applies as follows:
AGI Before Taxable Gain $325,000
Gain on Sale of Residence $525,000
Taxable Gain (Added to AGI) $25,000 ($525,000 – $500,000 home sale exemption)
New AGI $350,000 ($325,000 + $25,000 taxable gain)
Excess of AGI over $250,000 $100,000
($350,000 – $250,000)
Lesser Amount (Taxable) $25,000 (Taxable gain)
Tax Due $950 ($25,000 x 0.038)
Tuesday, December 4, 2012
Q3 Home Prices Show Strongest Growth Since 2006
By Inman News
Shrinking inventory deterring some first-time buyers.
Home prices and home sales both showed strong annual growth during the third quarter, according to the latest report by the National Association of Realtors.
The national median existing single-family home price jumped 7.6 percent from a year ago, to $186,100 — the strongest year-over-year increase for any quarter since first-quarter 2006, when prices were up 9.4 percent from the previous year.
Sales of existing homes rose 10.3 percent during the third quarter, to a seasonally adjusted annual rate of 4.68 million, up from 4.25 million a year ago.
Median prices posted annual gains in 120 of 149 metros tracked, up from 110 metros showing gains in the second quarter of 2012 and 39 metros with price appreciation during the third quarter of 2011.
Inventory of existing homes for sale was down 20 percent from a year ago, to 2.32 million. The combination of rising prices and tight inventory on a quarterly basis indicate that the housing recovery is settling in, said Lawrence Yun, NAR’s chief economist, in a statement.
“We expect fairly normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to meet the needs of our growing population and household formation,” Yun said.
Fighting tight inventory, the West saw the lowest percentage jump of existing-home sales in the third quarter with a 2.1 percent bump from a year ago. The short inventory also translated into a median home price leap of 20.2 percent to $247,400 from a year ago.
Shrinking inventory deterring some first-time buyers.
Home prices and home sales both showed strong annual growth during the third quarter, according to the latest report by the National Association of Realtors.
The national median existing single-family home price jumped 7.6 percent from a year ago, to $186,100 — the strongest year-over-year increase for any quarter since first-quarter 2006, when prices were up 9.4 percent from the previous year.
Sales of existing homes rose 10.3 percent during the third quarter, to a seasonally adjusted annual rate of 4.68 million, up from 4.25 million a year ago.
Median prices posted annual gains in 120 of 149 metros tracked, up from 110 metros showing gains in the second quarter of 2012 and 39 metros with price appreciation during the third quarter of 2011.
Inventory of existing homes for sale was down 20 percent from a year ago, to 2.32 million. The combination of rising prices and tight inventory on a quarterly basis indicate that the housing recovery is settling in, said Lawrence Yun, NAR’s chief economist, in a statement.
“We expect fairly normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to meet the needs of our growing population and household formation,” Yun said.
Fighting tight inventory, the West saw the lowest percentage jump of existing-home sales in the third quarter with a 2.1 percent bump from a year ago. The short inventory also translated into a median home price leap of 20.2 percent to $247,400 from a year ago.
Tuesday, November 27, 2012
No Fall Slowdown in Bay Area
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.
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.
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