A new survey by Coldwell Banker Real Estate finds that despite a preponderance of multiple bids and offers above asking price, today’s home sellers are twice as likely to choose an offer based on emotion rather than money alone, compared to pre-recession years.
“There is a notable difference in seller psychology today compared to 10 years ago,” said Budge Huskey, president and chief executive officer for Coldwell Banker. “Home sellers often want to feel emotionally connected to the buyer. These findings should give solace to buyers in highly competitive markets who may present a compelling story as to why they should be the next owners of the home.”
Prior to the recession, roughly 20 percent of sellers accepted an offer based on emotion rather than money alone. From 2006 to now, that number rose steadily to 36 percent: an 89 percent increase in the nearly 10-year span.
Since the recession, Huskey said, “sellers are more aware that their home, which played such a critical role in their lives, will have the same emotional impact on the next occupants. Today, they have more information than ever and want to more actively participate in the sale of their home.”
Other Key Survey Findings:
- Homes going faster than they can say “sold.” More than one in four sellers today (28 percent) sold their home in less than two weeks. This is a notable difference from even pre-recession years, where only 19 percent of homes sold this quickly.
- Multiple offers are back on the table. Compared to the initial recovery years, more sellers are receiving multiple offers (47 percent versus 40 percent).
- Once again getting offers above asking price. During the recession, sellers were half as likely to receive an offer above asking price. But in the past five years, it has bounced back to pre-recession levels (27 percent today and 28 percent during the initial recovery years, compared to 14 percent during the recession).
- No longer feel the need to take the first offer. During the recession and initial recovery years (59 percent and 58 percent respectively), significantly more sellers took first offers than today. Now, only 46 percent take the first offer, a 22 percent decrease.
Below is a market-by-market report from our local San Francisco Bay offices:
North Bay – Still seeing multiple offers on most properties, reports our Greenbrae manager. A big problem agents have been voicing is listing agents posting on MLS a date for hearing offers and then taking pre-emptive offers. Inventory is still down. Our Novato manager says listing inventory has increased slightly but still less than needed. Buyers continue to compete or give up. New sales are fairly steady through “graduation season” and start of summer. There haven’t been too many cancelled sales from buyers having buyer’s remorse after getting offers accepted. She expects to see the rest of the summer be fairly strong numbers with prices leveling off in Northern Marin even with the lack of inventory. Sales at lower price points are still moving quickly with homes over $800k taking a little longer. The San Rafael area market appears to be flattening out or, as it has been said in the past, we are in the End of the School Year/June Gloom. Our local manager believes it will pick-up again soon. Properties are still selling but not at the previous pace and without lots of multiple offers. The year of increasing inventory has not materialized like many of the economists predicted, our Santa Rosa Bicentennial manager reports. May’s supply of inventory was down 22.6% from May of last year and new listings for the month are down 15.5%. The overall number of multiple offers has decreased and there is a corresponding increase in price reductions. This may indicate that the frenzy in the buyer market may have crested which would trend toward a more normalized market of balance between supply and demand. The over $1,000,000 market remains active with May sales up 21% over May of last year. Some of this can be accounted for in the rise in prices pushing more properties over this benchmark price. Our Mission office manager says limited inventory remains but there are some signs of buyer bidding war and price appreciation “fatigue” in the market with some buyers hesitating to enter the fray. Sellers can no longer price their listed property at 5% to 10% over the last comparable. If they do the property will often sit and require a later price reduction. This was graduation week in Sonoma County so weekend activity at open homes was considerable less than we have been seeing, reports our Sebastopol manager. Agents who held opens report lots of out of town guests. The Southern Marin Previews market remains strong as evidenced by CB-Southern Marin’s agents representing 4 sides of $4 million properties in the last week. We also got an accepted offer on our listing for $6,899,000. There is great demand for multi-million dollar properties, which are well-located, turnkey condition and priced accurately. The overall market continues to see less unit sales, due to lack of inventory, and more price appreciation.
San Francisco – Agents talk about frustration of Buyers, but the Buyers keep writing offers in droves, according to our Lakeside office manager. Cash offers continue to speak powerfully but do not command a discount. Inventory remains very low, reports our Lombard office manager. Cash and quick closes still dominating. Hottest properties remain totally turnkey, beautifully remodeled or the opposite – total fixer-uppers and teardowns.
SF Peninsula – Low inventory is still an issue in the Half Moon Bay area. Many homebuyers are priced out of the market. Ocean view properties are still in demand and are selling quickly with multiple offers. Summertime in Palo Alto means lower inventory and a bit quieter than usual. Lack of inventory is still driving the sellers’ market in the Redwood City-San Carlos area. One property in San Carlos that was in need of everything but was on a double lot with views had 23 offers and sold $450,000 over list price. Another home in Redwood City in somewhat original 1930ish condition but in a wonderful neighborhood had 17 offers and the property sold $500,000 over list.
East Bay – As interest rates creep up, the market will start to adjust back to a “normal” market. June and July are typically slower months in Berkeley while students and families go on vacation. Open houses are still well attended, lots of buyers still actively looking. Previews market is slowing down. Houses over $800k are seeing offer dates come and go without any offers. Some sellers are rejecting multiple offers because they are not high enough over asking. In the Oakland-Piedmont area, it was a little hit and miss on attendance for open homes. There is more inventory coming to market and that has slowed down attendance at homes with unique features. Homes that are turnkey with updates are still having strong attendance and a lot of disclosure packets going out and receiving multiple offers. The number of multiple offers in most instances is going down but a hot property will still garner in the double digits. It feels like there is a bit of a slow down with school getting out, graduations, and vacations. The Previews market in the Lamorinda area has been steady.
Silicon Valley – The local market continues to be strong, but spotty, according to our Cupertino manager. There are some wonderful properties not getting nearly the attention they would have a few weeks ago. In general the number of multiple offers per property has decreased, but the prices remain high. Buyers are clamoring for homes in the Los Gatos area as inventory continues to tighten. The Previews luxury market remains solid. Sales in the San Jose-Almaden area are increasing along with listings. This market still has a lot of steam and seems to be getting stronger in units sold. The number of offers on a property is lower but most listings are still receiving multiple offers. Prices are continuing to climb. Average sales price for Almaden was up 11%, Blossom Valley was up 8% and Cambrian was up 10% for May over 2014. Our San Jose Main office manager says the local market remains strong however agents are seeing some price reductions as some sellers put their initial listing price too high. Buyers are well educated and understand the market and those homes priced even a little above market will sit with no activity. When buyers see a well priced home they make offers right away. Interest rates are still great, the economy continues to improve with low unemployment and higher incomes and salary, thus keeping home prices high. The Willow Glen market has continued to show strength in new open sales each week. However, there has been some buyer push back. On multiple offers the winner is not always happy they are the winner. There have been multiple non contingent offers that have fallen out of escrow within days of being accepted, buyers never depositing monies into escrow then backing out. Active listing inventory is staying at a steady pace of low 60 units each week, but buyers continue to consume the number of new units coming on thus no net gain in inventory.
South County – From all appearances, it seems that interest rates are going to go up in the near future. This will add even more pressure on buyers to find and close a home before this occurs. At the present time, the listing inventory is not keeping up with demand and so asking prices are steadily increasing. It is becoming an alarming trend—demand is high, inventory is low, resulting in skyrocketing list prices. In all of South County, homes priced in the six to eight hundred thousand dollar range are being sold with multiple offers and, in most cases, over list price. The “upper end” (homes priced in the $2 million dollar range) has homes lingering on the market.
Santa Cruz County – The number of homes being offered for sale is slowly increasing, however, the total inventory of active homes on the market has not increased due to strong demand. The number of pending properties increased from April to May by almost 30%. The number of closed sales increased more than 20% year over year for the month of May 2014 compared to May 2015. Santa Cruz County is still seeing multiple offers on listings priced well and agents have seen a large number of off market sales as well. Agents are having some luck knocking on doors in search of homes for Buyers. The number of homes being offered for sale in the Previews Market has slowly increased month to month, but the number of sales has caused the inventory to actually decrease just in recent weeks. Each month agents have seen about 10 or so more homes hitting the market, but demand has stayed strong and this has caused the Days on Market for Previews listings to be at an astonishingly low 49 days as of this report.
Monterey Peninsula – Our local offices have had several Previews $2 million plus closings in the last two weeks. The high-end market continues to been strong with a few new listings on the market that are getting some attention. A recent Carmel sale on Scenic closed for $7.6 million after it had been in a long escrow and the back up buyer was ecstatic to close the sale. Summer visitors escaping the heat of the central valley and the southwest are beginning to arrive and look forward to the mild summer weather. Inventory in the “Last Home Town” – Pacific Grove – continues to be tight. Any new property on the market if it is priced right is receiving multiple offers and a lot of attention from buyers and neighbors considering if this is the time to sell. If sellers are looking to trade up or downsize the empty nest, now is a great time to sell 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.