The luxury housing market around the Bay remains strong as we head toward spring, with sales and prices climbing in most areas. But inventory shortages are starting to have an impact in some communities where listings are even more scarce than they were last year at this time. And that’s saying something.
Sales over $1.5 million in Silicon Valley jumped 22 percent in January from a year ago, according to our latest Coldwell Banker Previews luxury market report. The upper end of Silicon Valley’s luxury market was particularly robust with 50 sales over $2 million, double the number last year, and 19 sales over $3 million, nearly triple the seven sales at that level a year ago.
Meanwhile, the median sale price of a luxury home in Silicon Valley climbed to $2.1 million in January, up 9.4 percent from a year ago when the median stood at $1,920,000. Prices were also up from December’s $1,915,000 median.
But up in the North Bay, a severe shortage of listings is starting to impact sales. Our Marin County luxury market report announced 24 sales over that $1.5 million level in January, down from 29 in January 2014. And the median sale price dropped to $1,915,000 from $2,385,500 in December and $3,075,000 in January 2014.
One of the reasons for the decline in the median price was the mix of homes that sold changed in January with fewer multi-million-dollar transactions than the previous months. There were just 10 sales over $2 million in January compared to 16 in December and 23 last January – again, one more fallout from the inventory shortage.
The East Bay luxury market, however, continued its torrid pace in January, driven in part by house-hunters from San Francisco and Silicon Valley looking for more affordable high-end properties. There were 140 sales over $1 million, up 52 percent during the month from a year ago. There were also 14 sales over $2 million, up from 11 in January 2014.
There’s talk of more listings coming on the market all around the Bay in time for our spring home buying season. Let’s keep our fingers crossed that these new listings materialize. The buyers are more than ready!
Below is a market-by-market report from our local San Francisco Bay Area offices:
North Bay – A Sausalito listing from our Greenbrae office had 12 offers, was priced at $1.2 million and just closed at $1.5 million. Virtually every property going on the market is getting multiple offers and there is an absolute frenzy in trying to ‘win’ the home – all cash, no contingencies, free seller rent backs, reports our local manager. It’s become very difficult for what used to be the traditional buyer with 20% down to compete. Agents are consistent in their feelings that it’s taking about an average of five or six offers for a buyer before they are successful as the winning bid. Inventory continues to be at an all time low. The Previews luxury market is healthy and robust, our Greenbrae manager adds. One example is a $2.5 million property in Mill Valley that received 12 offers. Offers from our office that were several hundred thousand over asking did not win. Our Ranch listing in Novato closed at $7,750,000 on Friday (one offer.) Our Novato manager says a listing shortage continues. Sellers are waiting, expecting stronger pricing/values in the springtime. Strong listing agents are listing properties that won’t be active for several weeks. Despite low inventory and high demand buyers still being particular in our market. Successful buyers “get it” and do what is necessary to get into contract. The current market is highly frustrating to agents who want to get their year going. February sales are down 20% from 2014 while average sales price is up. The luxury market in Novato has improved. Our Santa Rosa-Bicentennial manager notes that inventory fell again in February, down 12.1% from January’s already low numbers. There are plans in place for new housing, but ground is just being broken and that inventory will not help the problem until late 2015 at the earliest. Rents continue to climb making it less likely that landlords will sell when new vacancies arise. Agents are still seeing robust activity in the luxury market with a strong demand for second homes in the area. Our Santa Rosa-Mission office manager reports the market is still characterized by low inventory, high buyer demand. Lower end buyers are being priced out of the market. There seems to be increased energy in the market – more traditionally like a “normal” springtime market. In Sebastopol, inventory remains very tight, however there is a lot of chatter about new listing coming this month. The Southern Marin market continues to suffer from lack of inventory, thereby creating multiple offers on most properties listed under $2 million. The Previews luxury market remains strong, especially in the $2-4 million range.
San Francisco – This season typically brings an increase in listings, activity and sales, our Lombard manager says. But with little inventory, sales remain limited, pretty much each sale bringing multiple offers and over asking. The market continues to be one of not enough listings and too many buyers, agrees our Market Street manager. This period the only properties that didn’t receive multiple offers were ones that were either new construction or sold off market. Open houses and Broker Tours continue to be well attended by a public hungry for something to buy. Our Sunset office manager says it is still a very tight market where all ratified offers during this period were in multiple offers situation. The number of offers range from 9 to 35 during this period. He also noticed that the number of cash buyers is on the rise. Inventory has risen slightly but not even close to satisfying the demand that is in the market.
SF Peninsula – We are still in a severe shortage of listings in every town on the Peninsula, reports our Burlingame manager. The open house attendance has been huge with buyers waiting in line to get into some of the listings. We had 13 offers on a Redwood City starter home, which sold far in excess of the asking price. Buyers are so anxious to become the winning offer that we have instances where they have contacted the seller by phone and mail to plead their case in advance of the offer date! There are only 26 active listings in the MLS for the Previews luxury segment of the market, reflecting a serious shortage of inventory. Multiple offers are very common up to $5 million. Our Burlingame North manager says if you thought the bidding wars last year were bad, the first two months of this year are hyper-heated. The buyer demand is higher than ever and inventory is still at a very challenging low point. However, agents expect a decent amount of upcoming inventory, but still not enough to satisfy the demand. It is not unusual for properties, particularly those listed under $2,500,000 to sell for 30%-40% over the list price. The Average Days on Market seems to be 7-10 days, but only that long because sellers may want to have open houses on two weekends with a Brokers’ Tour in between the open houses. In Palo Alto it’s the same story: highly intense demand and extremely low inventory. It finally seems that there is more inventory coming on the Redwood City-San Carlos market. In almost all cases there are multiple offers on the properties. It seems that buyers are really beginning to understand the market and are more prepared to make a strong offer. There’s still tension caused by low inventory but it seems to be easing. The Woodside-Portola Valley luxury market continues to a bit slow but our manager is seeing some new listings coming into the office.
East Bay – Things were slow in February until the last week and then things got busy, reports our Danville manager. Lots of multiple offers, lots of sales, and fortunately, lots of listings. Our Fremont manager says there is still very low inventory and a high demand – resulting in multiple offers and driving the sales price up. In many transactions the sale price is in excess of 10% of listed price. Open houses are brisk and busy (50-150 attendees). In Half Moon Bay, inventory is slowly increasing, but they are selling as quickly as they come on the market with multiple offers. Properties near ocean and properties with ocean views are selling within a week and for more than asking. Our Oakland-Piedmont manager says hopefully more inventory will be coming to the market in the next couple of weeks. Agents are getting listings but they are taking a while to get on the market. Open house activity was huge this last weekend. While we had a few open, everyone had over 100 people in attendance. There is no shortage of buyers out there. Prices are still going WELL over list and even the best-written offers are getting beat out. Some buyers are wondering if there is anything they can do to be successful. Some are stretching beyond what they expected just a month ago. Luxury listings and sales are both increasing in the Lamorinda market. In Pleasanton, it’s low inventory, multiple offers at right price point. A single story Dublin home priced in the high $600k had 23 offers. Finally an influx of new listings in the San Mateo area, our manager reports.
Silicon Valley – Most all properties are being bid up between 10 – 20%, notes our Cupertino manager. Buyers are getting desperate, she said. Our Los Altos manager reports that Mountain View inventory still extremely low, and properties are getting multiple offers. A bit more inventory than usual came on in Sunnyvale, but even then the houses are all still getting multiple offers. A Los Altos Hills prime view lot sold 2 years ago for $3M, this year had 8 offers and sold for $5.3M. The median price range of the Los Altos Hills buyer is $4M, and there are many of those buyers. There are a number of houses that have sold for considerable amounts over list price as buyers were bidding up the prices. We have about 2 months of inventory on the market. The correctly or underpriced homes sell with multiple offers within a month, and the rest sit on the market. Los Altos median price range for an original floor plan is easily $2.5m, and if the house has updates, the price can shoot upwards. Even the $4M homes are selling swiftly. Sunnyvale prices have increased yet, again. Little house 1,500 sq ft (3 bed 2 bath) listed at $1.2M had 33 disclosures out, over 10 offers, and sold just around 20% over list price. Inventory in this town is basically sold within one week of the introduction to the market. Our San Jose Almaden manager reports the median home price is higher than last year and close to flat for the prior month. Inventory is up a little bit from last month but down from the prior year. Almaden median home price for February is $1,270,000, which is up 27% from last year and down 2.3% from last month. Inventory is at 30 homes, which is up just 6 from last month but down 3 from last year. Blossom Valley median home price is $655,000, up 9.4% from last year and flat from last month. The inventory in Blossom Valley is at 59, up 4 from last month but DOWN 21 from last year. The median home price in Cambrian is $783,500, up 4.5% from last year and up 1.8% from last month. Inventory in February in Cambrian was at 26, down 3 from last month and down from 24 homes the previous year. Willow Glen active inventory is slowly increasing. YTD we are actually ahead of last year at this time. Open house traffic has been extremely busy with heavy traffic on both Saturday and Sunday. Most homes are selling within one week on the market with just one open house. Agents are having a tough time getting in showings before offers are due. The spring selling season has started early in Willow Glen.
South County – Historically, the South County Real Estate market is traditionally three to five months “behind” the San Jose (North County) market. As the listing inventory (and accompanying sales activity) increase to the North, a similar phenomenon “trickles down” to the South County. In addition, as home prices in San Jose, Los Gatos, Santa Clara and Campbell continue to skyrocket, buyers are finding that South County (Morgan Hill and Gilroy) are an excellent alternative. The old adage that was used in the car business “drive a little and save a lot” certainly now applies to Real Estate. This is especially true for buyers who are looking for acreage or “hobby farms.” San Martin and Morgan Hill certainly offer properties that are priced considerably lower than country properties to the North.
Santa Cruz County – The supply of Single Family Homes on the market in Santa Cruz County has dropped since the beginning of the year from 283 in January to 272 as of the first week of March. February saw a spike in home sales at 110 total sales for the month. The demand for housing is very strong and we are seeing multiple offers driving price up over asking by as much as 10% in the affordable price ranges. It has become increasingly difficult for buyers in need of financing to compete with cash buyers, especially when FHA or VA financing is involved. Currently there are a number of off-MLS transactions as determined buyers’ agents are approaching homeowners with offers for their home with the hope that they’ll consider selling. A majority of sellers whose homes have come on the market in the affordable price range are waiting approximately a week to 10 days prior to reviewing offers and they are getting multiples in many cases. Compared to 2014, the inventory of Single Family Homes is 45% down. Meanwhile the number of sales is almost exactly the same. The current inventory of Previews Single Family Residences is just slightly down from 2014, however the number of sales is almost equal. Just recently a home close to $2 Million received multiple offers and the price was bid up over $100,000. This type of overbidding activity is not real common in the Santa Cruz region.
Monterey Peninsula – February ended with a strong finish in unit sales and dollar sales, up about 12% combined. We have seen a flurry of sales around the $1 million dollar price point and below. The Previews price point in the $2 million range is also strong with several closings slated for mid to the end of March. Foot traffic in our Pacific Grove and Ocean Ave locations has been very good. Layover tourists from the AT&T Pro Am and with the cold weather through out the rest of the nation are looking, and the Monterey Peninsula is a perfect winter get away from the cold. Our agents are looking forward to a strong March, more to follow mid month.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James. Click here to view past issues.