A number of new housing reports out over the past week show that the Bay Area housing market is gradually coming back down to Earth with sales easing slightly from their feverish pace, although prices continue to escalate. But the red-hot luxury market around the Bay is showing little sign of cooling off with sales continue to climb at double-digit rates and prices remaining strong.
DataQuick, the La Jolla-based industry analysts, reported that a total of 7,595 new and resale houses and condos sold in the nine-county Bay Area in October, up from September but down 3.9 percent from October 2012. I suspect part of the reason is simply lack of inventory, which has frustrated buyers who are willing and able to purchase right now.
The median price paid for a home in the Bay Area last month was $539,750, up 1.8 percent from September and up 29.7 percent from $416,000 in October 2012. Part of what’s driving the prices higher is that very same lack of inventory, resulting in multiple offers and bidding over the asking price in many instances.
While prices have risen sharply, the Bay Area median price last month was still 19 percent below its all-time peak of $665,000 in June and July 2007 before the financial crisis hit. But today’s median is also up a whopping 86 percent since its low of $290,000 hit during the depths of the recession in March 2009.
According to DataQuick economists, the Bay Area housing market continues to move in “fits and starts” toward normalcy.
“At different times in recent years we’ve had various peaks or troughs when it comes to sales volume, prices, foreclosure activity, cash sales, absentee-owner sales…you name it,” said John Walsh, DataQuick president. “All of these market components are now trending toward normal. We are still a ways away, but the market is slowly re-establishing equilibrium.”
Meanwhile, the luxury end of the Bay Area housing market continues to be the hottest segment with little sign of a letup.
We’ll be releasing our latest Coldwell Banker Previews Luxury Market Reports in the coming days, and they will show continued double-digit sales gains in the high-end markets from Marin County to Silicon Valley and across to the East Bay.
Here’s a sneak peak: Sales of million-dollar-plus homes in Marin County last month surged 47 percent from the same period a year ago with 106 luxury transactions in October. There were nine sales last month above $3 million, more than double the number last year.
And in Silicon Valley, there were 156 sales over $1.5 million in October, up 19 percent from September and 17.3 percent from October 2012. The number of $2 million sales jumped 28 percent to 82 properties, and there were 25 sales over $3 million, nearly double a year ago.
Be on the lookout for the full reports early next week. In the meantime, here is a market-by-market report from our local offices:
North Bay – New sales are outpacing new listings, so the inventory shortage continues in Marin. There’s less pressure on the upper end where homes above $3 million take longer to sell. Anything below $2 million (priced properly) is going right into escrow and most often with multiple offers. Even those homes sitting on the market are now getting offers, though possibly not where sellers had hoped. If your home does not get an offer within the first week, you can rest assured that price is the issue, as we have no shortage of buyers out there, according to our Central and Southern Marin manager. Sellers thinking outside the box and putting their homes on this holiday season may be the real winners in Marin. Inventory levels in Sonoma County have continued to decrease, according to our Santa Rosa manager. Although this lack of inventory would seem to drive buyer traffic, open houses are being very well attended, and buyers are becoming increasingly selective about which properties they are willing to place an offer on. Many properties that are well priced are receiving multiple offers and those that are not well priced are sitting. Many sellers have to reduce their price to get an offer. Much of this activity seems to have been influenced by the run up in the median sales price in the last year – about 25% year over year. Buyers are concerned with paying too much. While there does not seem to be merit to this concern, it is influencing their decision making process.