Bay Area Home Prices Hit Record High as Inventory Shortage Continues
Bay Area single-family home prices hit a record high last month, reaching $750,000 for the nine-county region, according to CoreLogic, the Irvine-based real estate information services firm. That marked a 7.1 percent increase from a year ago and surpassed the Bay Area’s previous record of $738,500, set nearly nine years ago.
“Job growth and low mortgage rates are continuing to fuel a healthy demand” for homes, said Andrew LePage, a research analyst for CoreLogic, in a report in the San Jose Mercury. “But with the tight supply, you get this pressure cooker effect that drives up prices.”
According to the Mercury, the region’s largest percentage gains in prices were in the more affordable inland counties, including Contra Costa, where the median price in May jumped 11.3 percent year-over-year to $545,000 — though that figure was still considerably below the $654,000 peak reached in May 2007, before the recession.
In Alameda County, the May median price rose to a record $778,750, up 7.6 percent from a year earlier. The median price in Santa Clara County matched April’s peak of $1 million. And in San Mateo County, the median was $1.2 million, slightly below April’s record high of $1,211,500.
For the overall market, both new and existing single-family homes and condos included, the median price paid in the Bay Area reached a record for the second straight month in May, hitting $700,000, according to the San Francisco Chronicle. That was up 1.4 percent from April and 6.3 percent from May of last year, according to CoreLogic.
Although inventory of homes for sale remains extremely low by historical standards, there are reports from some of our offices that things may be changing – ever so gradually. Inventory seems to be inching up in several local markets. Buyers are still out there, and hopefully they’ll have a little more to look at in the weeks ahead.
Below is a market-by-market report from our local San Francisco Bay Area offices:
East Bay – After a brief lull, sales activity in the Danville area has picked up again. Inventory had been increasing, but seems to have hit another plateau. It’s hard to predict what the rest of summer will be like. The Lamorinda market overall has been steady, our local manager says.
San Francisco – There are fewer homes in multiple offer situations, our Lakeside office manager says, and some properties are left unsold after the short initial exposure time we’ve come to expect to see offers in. Properties that go exceedingly higher than the asking price are fewer. However, it appears to be a healthy and still Seller centric market. Our Lombard manager reports that the cooling trend has not been consistent. While it is very evident on homes over $2m, we still have a relative shortage of SFH’s, and multiple offers and over-asking remain the norm. Just fewer offers and most closed prices closer to asking. The cooling in the condo and new development market is more apparent with price reductions and closings closer to asking and often below. Most listing agents are not posting offer dates, but waiting for definite indications of offer(s) forthcoming. The Previews luxury market is slower with numerous price reductions. As the July 4th holiday approaches, so do the usual SF summer doldrums, according to our Market Street office manager. Open Houses and Broker Tours are being held, and some are very well attended while others see scant traffic. With both clients’ and agents’ attention focused elsewhere, most (but not all) deals during this period were ratified with a single offer. We anticipate more of the same (fewer listings, fewer ratified deals) through Labor Day. Sellers need to be very thoughtful when deciding on listing prices to avoid being passed over. And fatigued buyers should take advantage of the opportunity to purchase without the frenzy of multiple offers.
North Bay – The talk is the market is in transition, says our Greenbrae manager. There are more homes on the market, and open houses are drawing fewer agents. There aren’t as many multiple offers as we saw earlier in the year, but the A+ properties are still seeing multiple offers. In the absence of multiple offers on a property, buyers are not even coming in at full price. Definitely experiencing a slowdown, but along with that a lack of understanding on sellers’ part that the market is changing. We’ve seen some high end properties receive excellent offers, while unrealistic sellers are being firm on price. Ultimately buyers are moving on. There are also many high end properties receiving no offers. Our Santa Rosa Bicentennial office manager says the degree to which we have a seller’s market has ebbed. Many properties are getting just one offer even if they have delayed looking at offers for 5-7 days. Overall activity has picked up and buyers seem to be responding well to having a bit more room to negotiate. Some homes that have received positive agent and client feedback on condition and price are not getting offers. In the luxury segment, buyers are active but cautious and value conscious. Most buyers are 2nd home buyers so the urgency to buy is not paramount. Our Santa Rosa Mission office manager reports that in the higher end of Previews market the growth in inventory has stayed fairly even with the rate of sales. For example, in January there were 4 closings, 8 pending sales vs. 75 available listings (11% pending). In May there were 10 closings, 15 pending sales vs. 167 available listings (9% pending). In the lower end of the Previews market, the pending sales vs. inventory were 45% in January and 35% in May. School is out and buyers in the Sebastopol area have disappeared for the short term. Open houses are quiet with 10 parties or less attending. River properties have quieted down and are sitting with offer dates coming and going. Aggressively priced homes are still selling quickly and receive multiple offers. Our Southern Marin manager notes that the general market is still hot, particularly under $1 million. However, we are seeing less properties listed under a million. $1 to $3 million depends on desirability and pricing. Again, top agents know how to price and market for success. The recurring theme here is to list your home with a savvy agent. 33% of the homes listed above $3 million are under contract. The norm is this price point is 10-12%. So the luxury market is good. However, only the best priced, well located and turnkey properties are getting offers. Top luxury agents know how to price and prepare these properties for success (offers)! We expect to see more luxury properties hit the market throughout the summer. This will give buyers more options.
SF Peninsula – The Burlingame area market has stabilized and some of the properties that are currently for sale are on the market for a longer period of time and not receiving as many offers if any, according to our local manager. Our Menlo Park manager says the local market is still full of buyers but the pace is slower and buyers are more conscientious. Days on market are beginning to build and buyers are very aware of this. We still have pockets of multiple offers however, but these are becoming far less common. Not much change in the Redwood City-San Carlos market. Gradually there seems to be more inventory but still many more buyers who are not able to purchase, causing a lot of frustration. List prices seem to be leveling off and there still are quite a few multiple offers but numbers are smaller. Our San Mateo manager says there has been a slowdown in the local market. Homes are taking a bit longer. They were taking 1 week and now they are taking 2 to 3 weeks. Our Woodside-Portola Valley manager says it has been a slow week in the country. People are out of town and graduation trips drift into the Fourth of July.
Silicon Valley – Good properties are sitting on the market and getting very little attention, our Cupertino manager reports. Are all the buyers on vacation? Our Los Altos manager sees signs of seasonal adjustments in the inventory. Although there has been a slight slowing of market activity, our manager would still categorize the market as robust. There’s strong activity on properties in move in condition and priced to sell, resulting in multiple offers that typically achieve a sale price over asking sale. That being said, some sellers are testing the market by bringing their homes to the market at higher prices than previous sales and pendings. As a result, there are more price adjustments of late. But these still only make up a smaller percentage of the market. The luxury market (homes priced over $3.5M) is steady but flat with days on market increasing and frenzy bidding or multiple offers being the exception as opposed to the rule. The Los Gatos area market under $2,000,000 is still very competitive while the market over $2,000,000 seems to be softening a bit, our local manager notes. Sales were stronger the last couple of weeks for San Jose Almaden area. Average sale price for Almaden is $1,414,000, up 9% over last month and 5.5% over June 2015. Blossom Valley is the only area that is currently down in average sales price over last month and last year. The average price is $630,000, down 12.5% from last month and 2.5% from June 2015. Cambrian has an average sales price of $1,044,000, up 2.5% over last month and up 12% over June of last year. Santa Teresa has an average sales price of $783,000, up 4.5% from last month and up 12% from June 2015. We’re still seeing some multiple offers although homes aren’t going into contract as quickly and don’t have a crazy amount of multiple offers. Willow Glen’s active listing inventory has been steady at and around the 90-unit mark for the past few weeks. The weekly sales have been at a 3-year average at 16 sales with several high end $ 2 million plus properties going into contract at or over the asking list price. With the upcoming 4th of July holiday weekend upon us this might be a little push before the long holiday weekend. The average sales price in Saratoga is up 13% from the same time last year. The average sales price in Saratoga for June 2016 is $2,432,000 compared to June of 2015, which was $2,153,000. Active inventory in Saratoga is up 16% from the same time last year. There are 85 homes for sale in Saratoga compared to the 73 homes for sale in June of 2015.