Maybe we just had a late spring. That’s one possible explanation for what we’re seeing in the Bay Area housing market. Normally, the real estate market picks up in March, April and May and then takes a breather over the summer for vacations, graduations, weddings and other activities. But this year it seems like that’s being reversed.
After a modest spring, the local housing market has been heating up this summer with strong sales in June and even into July in many areas. Sales activity has been especially robust in the higher end of our markets – over $1 million in much of the Bay Area and $2 million and up in San Francisco. But even the mid-level market was surprisingly active (more on that below).
As I was combing through last month’s sales figures, I noticed an interesting trend: In most of our Bay Area markets in June we had the highest level of million-dollar home sales since the summer of 2008. You might recall that was just weeks before the collapse of Lehman Brothers sent the financial markets into a tailspin and pushed our economy into the “Great Recession.” Now, three full years later, we’re seeing a much brighter picture for the local housing market.
Coldwell Banker Residential Brokerage will be issuing our luxury market reports next week, but I thought you’d be interested in getting a sneak preview today. Here are a few highlights from various markets:
- East Bay – Sales of million-dollar homes jumped 26 percent in June from the previous month to 159 transactions, the most since last summer. Even more impressive, multi-million-dollar sales quadrupled from a year ago to 16 last month. The median price was also up nearly 13 percent;
- Silicon Valley – There were a whopping 284 million-dollar home sales in June, up from 230 the previous month and the highest level the region has seen since June of 2008. The very high end of the market – those homes over $2 million – saw sales spike to 52 from 36 a year ago;
- Marin County – Million-dollar sales totaled 80 in June, up from 60 in May and the most that county has seen since July of 2008;
- San Francisco – $2 million sales spiked from 50 in the first quarter of the year to 86 in the second quarter, the most since 2008. And sales of $3 million-plus homes more than doubled to 33 in the second quarter (April-June) vs. 16 in the first.
The high-end of the market is not the only segment doing well. The entry level and mid-level markets have shown solid signs of improvement as summer rolls along. Bay Area home sales overall rose sharply last month to the highest level for any month since June 2010, when expiring tax credits gave housing a final boost, according to DataQuick, the La Jolla-based research firm.
The only thing holding back the lower end of the Bay Area market in many cases has been a lack of inventory. “Inventory remains elusive,” Sebastopol manager, Stephen Liebling, said in speaking for many of the managers around the Bay. Because of the shortage of good, well-priced homes, multiple offers are picking up in many communities. In nearly every one of our regional markets, you can almost be assured of multiple offers for a well-priced, well-located, and nicely staged home in the entry price level for that market.
Clearly, the Bay Area’s relatively strong economy – especially the robust tech sector – is playing a key role in our housing market. As Inman News put it in a Friday article, “Tech is back — and tiptoeing along behind it, at least by some measures, is the San Francisco-area real estate market.”
The Inman story recounted what a lot of the local media have discovered in recent weeks: That the tech sector is giving new life to housing in many parts of the Bay Area. “Tech jobs are on the rise, and with the increase in high-paying jobs, we are seeing more and more younger, first-time homebuyers,” one San Francisco agent noted.
“Indeed, technology-based industry — which drove Bay Area home prices to fabled levels during the headiest days of the housing boom — seems to have found its legs,” Inman reported. At the end of 2010, San Francisco had an estimated 30,700 tech jobs, compared with the 32,800 at the peak of its tech boom in 2001, according to an analysis by real estate firm Jones Lang LaSalle.
This all is not to suggest the housing market is completely out of the woods. Real estate is very much a local business. And while many of our markets are on the mend, others are still softer than they were a few years ago. And there still is an overhang of distressed properties that will continue to come on the market as bank owned REO sales in the months ahead.
While we take quite serious the nation’s fragile economy, and most recently the stalled talks to come to terms with our national debt limit, we can be thankful for the Bay Area real estate activity that continues to move forward. We are fortunate to live and work where we do. The limited housing stock, diverse job base, incredible universities, and great weather are all factors that help homebuyers focus on these terrific home values and low mortgage rates.
Below is a market-by-market report from our local offices:
North Bay – We are still seeing multiple offers when the price and property are appealing to buyers, our Greenbrae manager reports. It seems buyers all know a good deal when they see it. One short sale in Greenbrae has been on for the past two months, and then finally a price reduction to the magic number that elicited four offers, ultimately selling at a nice reasonable price. The high-end Previews market has slowed just a bit, but there are still buyers out there looking for the perfect homes. In Southern Marin, it has been surprisingly steady. Sellers seem to be getting a bit more realistic in pricing and accepting offers. Buyers are starting to step up to the plate more readily in this price range. In Northern Marin, both sales and inventory are on the rise. Sales appear to be holding steady in Santa Rosa – and very active in the $400K market. Between $500k and $800 things are fairly quiet, and there’s some activity between $800k and $1.2 million and above. Sales are on the rise in Sebastopol. In fact, this was the most productive two-week period this year, our local manager says. Inventory remains elusive. Most of the sales are on the lower priced properties but there were a few in the move-up territory of $600,000 to $900,000. Developable vineyard land remains a hot commodity.
San Francisco – There seem to be fewer buyers out on the hunt, according to our San Francisco Lakeside office manager. But those that are there are serious and respond quickly to good value. Similarly, our Lombard office says things are slowing down for summer, except the well-located, well-priced homes that are still attracting multiples. But there hasn’t been anything significantly over asking price for a couple of weeks now. Our Market Street manager says the local market feels erratic. In one week, multiple contracts are ratified, the next week it’s oddly quiet. We are seeing offers come in quickly, with plenty of interest… often buyers are coming in with offers full price or above, but then they are waiting out the entire contingency period and backing out, causing many properties to come back on the market. Probably due to the July 4 Holiday, activity has slowed, our Sunset office reports. With that said, open houses are still well attended. One entry-level listing had 30 groups and an upper end listing of $2 million had 10 groups.
SF Peninsula — The multiple offers are happening with ever-greater frequency, our Burlingame office reports. The inventory remains low in the most desirable areas. It remains a mystery why 1 home will get multiple offers and a similarly priced home nearby sits for weeks. The initial pricing is more critical than ever. There are 29 active Hillsborough Listings at this time. The inventory has slowly built up. Open house turn out is very strong in all price ranges. Location is a key factor. In Menlo Park, sales continue to be strong in the $1 million to $2.2 million market. In Palo Alto, week-to-week inventory ranges from low to very low. There continues to be strong demand up to $5-6 million. Meanwhile, things have quieted down a bit in Portola Valley but low and mid-range properties are still selling well. Our Redwood City manager says the local market has been seasonably flat. Good inventory is still very low and open houses are not as busy with summer upon us. However, one San Mateo property listed at $1,350,000 had 13 offers. The buyer paid all cash.
East Bay – The Berkeley office continues to experience a busy market ever since June and still going strong. Still seeing REO’s in our general area, more and more short sales and auctions beginning to creep in. While inventory has been decreasing, sales have been steady in Danville. Our local manager says the market is more active than usual for the summer months. Both sales and listings are picking up in Fremont over the past two weeks. Sales activity has eased a bit in Livermore, but buyers are still out in the market and jump when they see a good value. A unique custom home one nearly an acre with a picturesque country setting generated 11 offers and sold for substantially over the list price of $899,900. The Oakland-Piedmont market has been steady. There are a lot of first time home buyers just beginning their search as well as buyers who have been looking for a while and are taking a wait and see attitude based on economic news and personal uncertainty. There are a few more instances of multiple offers in the marketplace but some of those are on homes that were priced under value in our office’s opinion. The Lamorinda market has slowed a bit due to summer weather. Some buyers have placed their search on hold while they vacation. In Walnut Creek, buyers seem to be coming off the fence. Many selected areas and price ranges are getting multiple offers.
Silicon Valley – The best homes are getting lots of offers. Our Cupertino office says the majority of its sales are multiple offers. Seems like we are having a delayed spring. New single-family home listings in good areas of Los Altos, Mountain View and Sunnyvale are getting multiple offers and selling up to 15% over asking price, according to our Los Altos manager. Activity has increased recently in the Los Gatos area with more properties seeing multiple offers. Well-priced homes are continuing to sell at a quick pace while not so well priced homes continue to languish. Our San Jose Almaden manager says a number of price reductions have led the way toward sales over the last week. Prices overall are not going up, but in fact appear to have dipped a bit. Multiple offers still abound for the “good deal.” In the San Jose Willow Glen area, open houses are pretty busy and sales have been steady. The Saratoga market seems to be steady. One home listed in Saratoga for $1.5 million received 18 offers and was bid up astronomically.
South County – That past two weeks showed an increase in traffic at open houses in the South County. Our Gilroy manager says it may be a sign that buyers are out ready to buy at the right price. Short Sales and REO’s still make up about 40% of the South County real estate market, according to our Morgan Hill manager. Buyers still are making offers on these types of properties and seem willing to wade through the laborious process to obtain a home. Properties listed under $700,000 that are “regular sales” (and that are correctly priced and staged) are garnering offers almost immediately upon hitting the market. June was a very good sales month for the Morgan Hill office and July is also going to be a good one as well. Average sales price, sales volume and the number of units sold all are greater than this time last year. There is a prevailing feeling of cautious optimism by local agents.
Santa Cruz – Summer vacations and great weather always bring out the potential buyers in Santa Cruz, and open house activity this year is no exception. It seems the buyers know a good thing when they see it and despite a lot of mixed indicators, savvy buyers know that this is probably the best real estate market for purchasing that they will ever see. Rates continue to be at an all-time low and some banks are seemingly making an attempt to reduce approval times on short sales. Overall, sales are up over 2010 and we continue to outpace last years’ closed unit sales in our local branches and in the county.
Monterey Peninsula – Carmel has been packed with people for the last two weeks, especially over the past two weekends including 4th of July. Our local sales associates have been busy showing properties, holding open houses and writing offers, many of which seem to end up in multiple-offer situations when they are priced well. As a result, sales activity has remained steady across all price ranges.
That’s it for now. Enjoy the summer weather, and have a great week!