The Bay Area’s housing market is finishing 2013 where it began the year – with home sales enjoying sharp gains over last year and prices continuing to appreciate. It is particularly showing impressive strength in the luxury market. This comes as the stock market nears record highs, raising the net worth of many luxury homebuyers, and the economy finally seems to be gaining some traction. In this edition you’ll find some impressive numbers from our Previews International Luxury division.
After months of speculation, the Federal Reserve announced this week that it plans to slow down its bond-buying program, which has kept interest rates near historic low levels. But the Fed also committed to keeping short-term interest rates near zero until well past the time that the unemployment rate declines below 6.5%.
Although a majority of our luxury home sales are all cash; or a very high percent down payment if a loan is involved, the activity of the Fed such as bond purchasing which affects interest rates also affects the luxury market. Typically Wall Street reacts positively or negatively when the Fed changes monetary policy. And the luxury homebuyer is either more inclined or less excited about a luxury purchase after seeing a trend change upward or downward in stock prices.
Wall Street greeted this past week’s the news enthusiastically, perhaps because the decision was a modest tapering and driven by the fact that the economy appears to be getting measurably stronger. As of Friday afternoon, the S&P 500 Index was up 2.6% for the week and the Dow appeared poised to set a new record above the 16,200-level.
The strong gains in the stock market certainly are playing a role in the Bay Area’s red-hot luxury housing market. Three new reports out this week by our Coldwell Banker Previews International luxury brand show high-end sales rising sharply as the year draws to a close.
- Sales over $1.5 million in Silicon Valley were up nearly 24% in November compared to a year ago. A total of 151 luxury homes sold last month, up 23.8% from the 122 sales in November 2012. The median sale price was $1.92 million, up 1.7% from the same month a year ago. And the upper end of the luxury market was especially strong with 67 sales over $2 million, up from 50 a year ago, and 22 sales over $3 million, up sharply from the 15 last year.
- Marin County recorded an 18.6% spike in million-dollar sales last month with 83 high-end transactions. The median sale price in Marin hit $1.6 million, up 1.6% from last year and 14% from October’s median price. Sales over $2 million were up 20% from a year ago.
- But the strongest performance came from the East Bay’s luxury market, which saw sales of million-dollar homes soar 43% in November to 199 transactions. The median sale price of $1.25 million was up 1.6% from the previous month. Most telling was the fact that sales over $2 million nearly doubled last month in Contra Costa and Alameda counties.
- Coldwell Banker Previews International will have a quarterly report on the San Francisco market early next month and it will be interesting to see if it follows suit. I strongly suspect it will.
So as we head toward 2014, all signs point to a healthy market overall, but especially in the Previews luxury segment of the market. That’s not to say we don’t have our issues. Inventory remains way too low, which continues to restrict sales. But my hope is that more sellers realize that the housing market has indeed turned around, values are up once again, and buyers are out there ready to purchase, we’ll see a wave of new listings come on the market in the new year.
Below is a market-by-market report from our local offices:
North Bay – The Southern Marin market has slowed down for the holidays, but agents do have properties to bring on the market in January. Despite the slowdown, our Mill Valley office did close two $4 million sales last week. Our San Rafael office reports that although they are seeing a normal holiday slowdown, the buyers who are out there seem intent on making a purchase. The Sebastopol area has virtually no inventory to speak of. As of today, there are only 705 single-family homes available on the local multiple listing service. This number includes condominiums and mobile homes. This is the tightest inventory local agents have seen. Open houses continue to attract large numbers. Many of the attendees are starting to look now but anticipate not buying until spring.
San Francisco – The constant refrain of low inventory is now louder than even last year, our Lakeside office manager reports. Sales are fewer because available inventory has been absorbed. Less than one-month supply and the holidays will bring no relief; only sellers can do that. Our Lombard manager notes that there’s been a larger drop in inventory compared to other holiday markets. The second week of January should see a good crop of listings. Well-priced fixers continue to draw the biggest action. One listing this week went 30% over list price with 11 offers. Open and broker traffic slowing down for the holiday. Our Market Street manager says sellers have begun their holiday hibernation, and are waiting for January to introduce their properties to the public. Even so, buyers remain active, as evidenced by the number of multiple offer situations during this period. In fact, one savvy buyer noticed a “Coming Soon” sign, and immediately ratified an attractive offer from just that small bit of exposure (prior to any open house, to any staging, or even being uploaded in MLS). Our Sunset manager agrees that buyers are still out there, but says they are starting to take a break since there is no new inventory to look at.
SF Peninsula – In Burlingame area, everything is in the traditional “holding until after the holidays” mode. A few listings are coming to the market for waiting buyers who are still there and looking in that $750k to $1.5m price point. Open homes are thoughtfully scheduled for this weekend. Homes are decorated and ready for the truly smart buyer who isn’t afraid or too busy to make a home purchase in December. Our Menlo Park manager says the dedicated buyers are still out there. There were 95 people though a new $1.6 listing on Sat and Sun. It’s still an out-of-balance market with few listings and not a lot of letup in sight. Our Palo Alto manager also reports exceptionally low inventory. The Redwood City–San Carlos market also remains holiday quiet, but a home in San Carlos listed at $1,125,000 had 6 offers and went considerably over asking price. Another in Los Altos listed at $1,585,000 had 18 offers and also went way over asking. This past Monday there were only six single-family homes for sale in San Carlos. The Woodside-Portola Valley market is still pretty brisk with regard to Open Houses and showings. Every agent has buyers and many have sellers too. The market is still out of balance, however.
East Bay – Buyers are still visiting Berkeley open houses with 35-45 groups at each of last weekend’s opens. Buyers are still making offers and being accepted. Those who hung in as back up offers are getting the good news that their offer is now in first position. Our manager is hearing almost daily of listings lined up for early 2014. Listings are still the main engine for this market. The Danville area market has slowed to a crawl as we get close to Christmas and New Years. Some buyers are still looking, but inventory has dwindled to very little. Although the Lamorinda market has quieted due to the holidays, new listings that are competitively priced are moving quickly. Buyers are still ready to make offers. Sellers seem to be holding off listing until the new year. That assessment is echoed by our Walnut Creek office.
Silicon Valley – The Preview luxury market is improving, according to our Cupertino manager. She says she’s never seen the most popular homes get bid up to the degree that they have. One of the Palo Alto listings got 21 offers and was bid up about $1M. Lots of all cash offers. Lack of inventory continues to drive prices up in the Los Gatos area as buyer demand remains fierce. The average sale price is up 10% in Los Gatos over the past year from $1,233,000 to $1,351,000. The holiday slowdown has hit the San Jose market with our Almaden manager reporting only 15 single-family homes on the market in that area and 20 pending sales. The Willow Glen market is also starving for listing inventory. Agents continue to see contraction in inventory week after week as we move through the holiday season and year end. Buyers are still in the holiday buying mode. Any new listing that comes to the market is getting a lot of attention. Open house traffic is still brisk and agents are experiencing quick sales with multiple offers on most new listings that come “active” to the market. The expectation is that listing inventory will continue to be tight as we move into the new year.
South County – South County Realtors are definitely feeling the effects of the very low listing inventory. Morgan Hill hit a record low this month of just 57 homes available for sale. Gilroy inventory is equally challenging. The low inventory, coupled with a seasonal slowdown, has impacted the market in that very few sales transactions have been completed. Agents are reporting good attendance at open houses, but the consensus is that most potential buyers are waiting for the first of the year, hoping for more inventory to hit the market and thus having a wider selection from which to choose.
Santa Cruz County – 2013 winds down with very similar stats for Santa Cruz County as 2012. Due to the shortage of inventory, which is currently at about a four-month supply, sales were definitely held back. Prices are up, the median price from $512K a year ago and currently $659K. Currently there are 533 properties listed for sale, with 185 under contract, 353 active listings, and it appears the number of total sales for the year will be flat or slightly less overall than for 2012. The Previews Market for those homes listed for sale over $1 million in Santa Cruz represents 35% of the active listing inventory and 10% of the actual closed sales for the year. Cash Buyers continue to represent about 40% in that market segment.
Monterey Peninsula – The local market continues to amaze our manager. Ratified offers keep coming in and our escrow department is busier than ever keeping up with files scheduled to close by the end of the year. The fires in Big Sur this week threatened two of our current listings but fortunately they were spared. Month to date unit sales are down but our average unit price is up to $942,000 from $674,000 a nice 40% increase over the average sales price last year.
That’s it for now. Happy Holidays everyone and best wishes for a healthy, happy and prosperous New Year!