Bay Area homebuyers continue to scour the landscape for homes on the market, crowding open houses, fighting each other in multiple-offer situations, but often coming away empty handed due to the severe shortage of listings. Lack of inventory continues to have a significant impact on the housing market, slowing sales and driving up prices of what few properties are for sale.
DataQuick, the La Jolla-based information services firm, reported this week that lack of inventory contributed heavily to a six-year low in home sales last month. A total of 4,963 new and resale houses and condos sold in the nine-county Bay Area last month, the lowest for any February since 2008.
But what’s been bad news for buyers has been good news for those savvy homeowners who do decide to list their home right now. Lack of inventory (and competition from other sellers) has been driving up sale prices rapidly. In some cases, prices are near or above their all-time highs once again.
The median price paid for a home in the Bay Area in February climbed to $540,000, up 2.9 percent from $525,000 in January and an amazing 33.3 percent from $405,000 in February last year, according to the DataQuick report. On a year-over-year basis, the median has risen the last 23 months, with gains above 20 percent for the last 16 months.
“At some point rising home prices will trigger a more significant increase in the number of homes on the market,” said John Walsh, president of DataQuick. “It’s just a question of when.”
That’s what agents – and their buyers – are asking as well. Here’s the DataQuick report and the sales and price chart is below:
Source: DataQuick, www.DQNews.com
Below is a market-by-market report from our local offices:
North Bay – Not as many Previews listings or sales this past week, according to our Greenbrae manager. In Novato, overall sales decreased in past few weeks due to low inventory. Several new listings expected in coming weeks. But there has been increased listing activity of $1 million plus properties in Novato with two new listings over $2 million. Listing inventory is increasing slightly in the San Rafael area. There are still many multiple offers with offers way over asking. Open houses are very well attended. The lower end of Previews market (below $2 million) is super-hot, according to our Southern Marin manager. For example, three Mill Valley listings listed by CB-Southern Marin asking just under $2 million received multiple offers and each one received offers for more than 30% over list price. The over $2 million market has leveled off and only the most desirable properties receive multiple offers. Under $1 million is almost all multiple offers. $1 to $2 million are seeing just over 50% multiple offers. Over $2 million the multiple offer % drops way off with only the most desirable properties receiving multiple offers. The upper high end (above $3 million) is selling at 2X the rate of 2013, but there is an abundance of listings available, particularly in Tiburon-Belvedere (94920).
San Francisco – Our Lakeside office manager says new listings are well received and sell right away if priced well. Multiple offers are off the charts in frequency, with a high number of offers and amount of overbid. Networking by active agents has been resulting in successful pre-emptive offers to secure properties for their buyers, and top agent negotiating skills have resulted higher sale prices even when pre-emptive offers seem attractive. This is definitely a time when choice of agent makes a big difference. Our Lombard office notes that there are more off-market and pre-emptive offers raising the frustration level for buyers and agents. The San Francisco Association of Realtors’ latest stats have the one-year change in median SFH price rising 35.7% percent with the sale price averaging 110.4% of list price. February was another record closing month with nearly twice the closed volume of 2013, according to our Van Ness Avenue office. Agents are seeing bidding go as high as 40% over the asking price on large Noe Valley homes.
SF Peninsula – Open Homes were very well attended on the Peninsula with 60-150 groups reported at homes in San Mateo, Burlingame, and Belmont. Pre-emptive offers have been winning the day as buyers strive to reduce the number of competing offers. Agents are reporting the beginning of buyer reticence to continue participating in the scheduled multiple offer presentations where there is great competition. Counter offers made by sellers asking for even more money than the overbid already presented to them, are often being declined by buyers or countered back at the existing offer price. Hillsborough currently has 32 active and 17 pending listings. This is a smaller inventory than we saw all of 2013. The value proposition for Hillsborough (minimum half acre lots) sought after schools, prestige and privacy, has never been greater. This community is truly the best value on the Peninsula, according our Burlingame manager. Our Menlo Park manager reports that multiple offer offers are rampant: 19 offers for a Palo Alto home listed at $1.8 mill and sold for about $2.5; 18 offers for a $1.8 million listing in San Carlos that sold for $1.72, 46% OVER the list price); four offers for a $3.2 million Menlo Park home that sold for about $3.5) Half acre tears downs in Menlo Park going for $3.5 to $4 mill. Why? When WHATAPPS was bought by Facebook for $19 billion dollars – after VCs were paid, 55 employees split the rest. Do the math. In Palo Alto the beat goes on: Healthy market, high demand, no supply. Our Redwood City-San Carlos manager says the sale price of homes, particularly in San Carlos, continues to rise. Two ”fixers” – both 3/1 – listed at $839,000 and $849,000, sold with multiple offers. The $839,000 had 10 offers and the $849,000 had four offers. Both sold over $1 million. Our San Mateo office reports very little change over the past couple of weeks. Lack of inventory is driving prices to new heights and appraisers are having a problem with fast-moving prices. Our Woodside-Portola Valley manager says this is the busiest the country offices have been in quite a while; almost no foreign money buying there but lots of locals moving within the area to bigger properties.
East Bay – Pre-emptive offers are surfacing again in the Berkeley area, and some “relative” offers. Still expecting more inventory this month, which is encouraging but buyer competition remains very high. Inventory continues to be the challenge in the Danville area market, with lack of inventory holding down sales. Our Oakland-Piedmont manager notes that the only two transactions recently that were not multiple offer situations were pre-emptive offers. An agent held an open house in Berkeley, printed up 250 flyers, ran out and that was after the neighbors bypassed taking one. To say that he was overrun with buyers is an understatement. All the open houses have been heavily attended with the largest group of buyers coming over from San Francisco. Inventory has picked up but still not enough to meet the pent up demand. It’s very challenging time for buyers and their agent especially when some of them have lost out by a hair many times. The Lamorinda inventory continues to grow at a slow but steady pace. Open homes are heavily attended with many large groups touring at once. Over asking price continues to be the norm when homes go into contract. Walnut Creek agents are seeing lots of visitors at open homes. They seem to be serious buyers and not just looking. What little inventory is coming on is selling with multiple offers, driving prices upward.
Silicon Valley – The number of multiple offers per property seems to be decreasing, according to our Cupertino manager, but the most desirable homes are still going crazy. Most buyers have a better chance today than they did a month ago. Multiple offers continue to drive the Los Gatos area market. A property listed in town for $1.3 million recently sold with multiple offers for $1.57 million. Inventory is increasing in the San Jose Almaden area. They’re up to 34 SFR’s available in Almaden, up from 25 available two weeks ago. The local Willow Glen market is starting to see some relief with a much-needed increase in listing inventory. However open house traffic has been extremely busy with active buyers ready to pull the trigger. Agents continue to see price gains in all segments, and some neighborhoods have reached new high water marks. Buyers continue to write zero contingent offers well over list price on well-appointed homes.
South County – In the South County, as soon as homes are listed offers just come pouring in. This is happening in all price ranges. A Morgan Hill agent recently listed a home in San Martin, listed at $2.8 million. There were three offers, and it ultimately sold with a quick close and for all cash. Another Morgan Hill home was listed at $1.1 million and had several offers immediately after it hit the MLS. A Gilroy agent listed a home in Soledad—priced around $350,000 that garnered four offers. Homes on acreage seem to be especially popular with South County buyers. The inventory in both Gilroy and Morgan Hill remains very low and it continues to be a “sellers’ market.”
Santa Cruz County – The upper end of the market is still a little sluggish, but there have been a few sales recently. Beach homes have taken a little hit due to the increased flood insurance costs. Buyers are actively previewing homes and if a property is priced well and desirable there will likely be multiple offers. The number of homes on the market is creeping up and there are a lot of listing appointments as of the last few weeks. It appears that values continue to slowly creep up, but it does appear that the inventory is going to start to increase, which may level things off a bit.
Monterey Peninsula – The Pebble Beach market has experienced a nice increase year to date with 81 listings in MLS and 19 under contract. The Carmel market has 141 listings and 39 under contract, which combined is about 25% of the listings are in escrow. Comments from our top agents have said that the high-end market will continue to heat up especially as we get closer to car week in August. Tuesday it was 83 degrees at the lodge in Pebble Beach – a picture perfect day to showcase the natural beauty of this area and the reason so many people purchase a vacation or full time residence on the Monterey Peninsula. There currently are 171 listings in the system and 39 are currently under contract, which is just over 20% of the listings. Total inventory in the county as of March 1 is 819 single family and townhomes currently available, which is a 3% increase over January 2014 and a 5% decrease over 2013. Buyers are cautious to write an offer in the over $1 million price, but we are seeing multiple offers in the entry-level price point.
That’s it for now.