The Bay Area housing market finished 2014 much the way it began, with a solid increase in sale prices and a strong boost in the number of home sales, according to a new report by CoreLogic DataQuick, the La Jolla-based real estate research firm.
Sales of new and existing homes climbed to 7,456 in December, up 24.2 percent from November and 14.1 percent from December 2013. It’s not unusual to see an increase from November to December as buyers and sellers rush to close before yearend. But the sharp spike at the end of last year was far more than a normal seasonal rise.
The median price paid for a home in the Bay Area last month reached $603,000 up just 0.3 percent from November but nearly 10 percent higher than the year before. Marin County led the way with a whopping 22 percent jump in the median sale price to $915,000.
DataQuick noted that December 2014 was the 33rd consecutive month with a year-over-year gain in the median sale price in the Bay Area. However, those annual increases slipped from double-digit to single-digits in the last two months of 2014, although December did reach 9.9%.
To put prices in perspective, DataQuick said the Bay Area median sale price peaked at $665,000 in June and July 2007 and dropped to a post-boom low of $290,000 in March 2009. However, as we know, home prices in many of our communities around the Bay have already surpassed their pre-recession peak.
“The Bay Area’s residential real estate market ended 2014 on a cautiously optimistic note, with moderate year-over-year increases in both median price and sales counts,” said John Karevoll, CoreLogic DataQuick analyst.
“Supply continues to be constrained, and the mortgage market remains difficult,” he added. “As long-term trends, cash sales and investor purchases are declining slowly, but they are still significant market factors. We know that there is a significant amount of pent-up demand lying in wait, and there is a good chance the market could see a surge this spring and summer as more homes are put up for sale.”
The report is one more reminder that we’re still very much in a seller’s market, but that could change as more inventory comes on the market in the weeks and months ahead. Astute homeowners who have been kicking around the idea of selling may be wise to move sooner rather than later.
Below is a market-by-market report from our local San Francisco Bay Area offices:
North Bay – Our Greenbrae manager reports that agents and buyers alike are frustrated by the lack of inventory and slow start to the year as far as anything for buyers to purchase. The properties listed are selling with multiple offers for the most part. Listing inventory in the Novato area has been trickling in over past 2 weeks. Sales activity is very slow. Homes that are well priced and look good are quick to go into escrow. Agents are predicting new listing inventory in the next few months will be good. Our Santa Rosa-Bicentennial office manager says inventory continues to fall. Multiple offer situations are becoming more frequent and the number of offers on each listing is increasing. It is becoming more common for buyers to have to write 4 or more offers before getting one accepted. Our Santa Rosa-Mission office reports things are just starting to pick up but the supply of homes is still very low. Buyers come out and are aggressive when new inventory hits the market. There are not a lot of multiple offers at the moment but agents expect that activity to pick up as we move into February. Activity is gradually returning to normal. Our Sebastopol manager reports lots of activity at open houses. One new entry-level listing received 29 offers on the presentation date. The same listing had 68 groups at the open house. There has been steady activity on the sparse Previews Inventory. Both of our office’s new Previews listings this year are in contract. The overall market in Marin is currently showing record low inventory, 275 available homes for all of Marin. Agents expect to see a surge of new listings after Super Bowl weekend. The question is: how big a surge? We agents likely negotiate through another year of low supply unable to meet the demand for homes in Marin County? This will create multiple offers and upward pressure on prices.
San Francisco – Our Lombard office manager says the new year has been a very slow start with practically no new inventory. Two properties went with 8 and 9 offers well over. Our Market Street office manager notes that lack of inventory continues to be the headline of the current market. The number of available homes is down significantly from this time last year, which was already too low. Those sellers putting their homes on the market now are rewarded with large crowds at open houses and broker tours. Will inventory numbers go up after the Super Bowl (the perceived beginning of the SF selling season)? Only time will tell.
SF Peninsula – Our Burlingame manager says everyone is waiting for those new listings to materialize and so far there are very few. This has created a large “underground” off market group of listings. Agents are firmly holding these listings close with much networking required to unearth needed inventory. There are many Previews luxury listings in the prep stage coming to the market in the next 3 weeks. The sweet spot right now is anything under $3 million. There are many buyers looking in the price range. Inventory continues to stay low in San Mateo County and the Coastal areas, our Half Moon Bay manager notes. Agents are hustling to find more listings by going back to the basics such as door knocking, cold calling, and sending mailers. Many of agents are enrolled in Peak Performance classes to sharpen their skills and to motivate themselves to reach the goal they set for this year. Our Menlo Park manager said there were some well-priced listings on tour – one at $1,395,000 and getting 28 offers. Between the builders and all the new jobs at Facebook, there is literally no more housing on the mid Peninsula. Extraordinarily low inventory and equally high demand continues in Palo Alto. Our Redwood City-San Carlos office manager says she has never seen the inventory this low. Every listing is getting multiple offers. There always seems to be a cluster of offers and then there is one that is way over. It’s a very challenging market. The San Mateo market is slow at this time. Our Woodside-Portola Valley manager says the market still a bit sleepy but there are 3 new listings over $5 million.
East Bay – Inventory has dropped significantly since October in the Danville area. New pending sales have slowed in January due to lack of inventory – not due to any lack of Buyer demand. Our Fremont manager says inventory is picking up. Interest rates are still low. A lot of activity is coming from agents going on listing appointments and taking listings. Expectations are that inventory will pick up and surpass last year’s level at this time. Our Oakland-Piedmont manager says there is so little inventory that the number of sales has diminished dramatically in her office with not many new ones on the horizon. Looks like the inventory will be building back up the end of February, fingers crossed. Buyers are still out in droves and are expected to increase due to the low interest rates. Only time will tell. The Lamorinda market has been steady. The Walnut Creek area market has no inventory, our manager reports. Buyers are frustrated with not being able to find homes and sellers are still thinking about waiting to put their homes on the market.
Silicon Valley – The good news reported by our Cupertino manager is that her agents have taken three times as many listings as there have been sales in the last two weeks. The bad news is agents still need more of each. Inventory is slowly coming on in Los Altos, Los Altos hills, and Mountain View, our Los Altos manager reports. Entry-level inventory in areas close to downtown Mountain View is almost zero. Houses are scarcer than condos. A 3-bedroom home on 5000+ sq ft lot had over 60 disclosures packets reviewed and over 15 offers, with a new high in actual sales price. For every listing there are at least 100 possible buyers under $1.5M in Mountain View. Each new listing in Los Altos under $2M has easily 100 buyers reviewing during open houses. Buyers are from every city in Santa Clara County and also overseas and East Bay. In the entry level in Los Altos Hills of $2.5 million there are multiple, multiple buyers vying for the little product. The $3-6M segment is still brisk in the hills, and although it may take more than 1 month to sell, prices are holding strong. Sales have picked up but the inventory hasn’t in the Almaden area. Almaden is down 30% from January 14 with 19 active listings. Cambrian is down 23% with only 36 active listings. Blossom Valley is down 49% with only 36 active listings. After a brisk start the local Willow Glen market has had a bit of a slowdown in this second half of Jan. Our active listing inventory had a slight uptick the first half of the month coming out of the New Year with historic low inventory count. But the market has regressed back to those historic low active inventory counts. The bottom line is agents have strong buyer demand and busy open house traffic but need active listing inventory to sell.
South County – Real Estate professionals are constantly dealing with market variables—interest rates, supply and demand, etc. Nothing, however, in recent memory, has so directly impacted the market as has the lack of inventory. Though some believe that the recent holiday season had some influence on the slow market, most agree that the low inventory is having a profound impact on buyers. There just isn’t the selection of homes from which a buyer can choose. For those who attempt to make a purchase, multiple offers often times drive the price beyond affordability. The current lack of inventory also is having an impact on “move-up” buyers. These individuals know that they could command “top dollar” for their homes, but are hesitant to list because there are virtually no homes for them to ultimately purchase. The state of the market certainly encourages Real Estate professionals to seek out homes to list. Both the Morgan Hill and Gilroy offices are working on “listing campaigns” to get the word out that “now is the time to sell.”
Santa Cruz County – The number of homes on the market in the Santa Cruz area is too low to support the strong demand, and as a result sellers are experiencing multiple offers on many homes. It is a great time to be a Seller as there is pent up demand and a large group of Buyers working with Realtors looking at homes. The number of days on market is quite low for appropriately priced homes and it appears that this trend may continue for the coming months. There are currently 86 Previews Homes on the market and 9 pending. From December 2014 to January 2015 the inventory of Previews Homes on the market has remained steady with a slight drop in the number that have gone pending.
Monterey Peninsula – The year is starting fairly well for our Monterey Peninsula offices with a $2,500,000+ deal in escrow in Carmel Highlands. Our Pebble Beach office is preparing for the AT&T Golf tournament with thousands of golf enthusiast and celebrity attendees. We have a “Spring Mini-Book” that will be out in time for the AT&T with several new listings. The television coverage that Pebble Beach receives during the event is priceless; the blimp is overhead shooting the tournament and local homes. Our local offices’ 2015 Kick off meeting focused on listings for 2015 and how sellers may not realize that the equity in their property has rebounded and in some cases ahead of what they paid for it during the peak. Agents are looking forward to a fantastic 2015 on the Monterey Peninsula.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James. Click here to view past issues.