The Bay Area’s luxury housing market is showing no signs of slowing down as we move through the spring home buying season. From Marin to San Francisco to Silicon Valley and across to the East Bay, Previews level properties are selling in greater numbers and at higher prices than they did a year ago at this time.
We just released Coldwell Banker Residential Brokerage’s luxury market reports this week, and here’s a quick recap:
- Luxury sales over $2 million in San Francisco jumped 27 percent in the first quarter versus first quarter 2013, with 107 such transactions. The median price was up 5.7 percent to $2.9 million.
- The upper end of the luxury market was particularly strong in the most recent quarter with 51 sales of homes over $3 million in The City, up from 34 transactions a year ago, and 23 sales over $4 million versus 17 in first quarter 2013.
- Silicon Valley luxury sales over $1.5 million soared 28 percent last month compared to a year ago. In the upper end of the market, there were 83 sales over $2 million and 20 over $3 million.
- Perhaps the biggest spike in luxury sales were in Marin County where there were 56 sales over $1.5 million in March, more than double the high-end transactions in February and up 47 percent from March 2013.
- Marin’s median sale price of a luxury home surged to $2,654,000, up 26 percent from the previous month and 34 percent from a year ago.
- Finally, the East Bay luxury market also turned in a banner month in March when it recorded 212 sales over $1 million, up 30 percent from a year ago and almost double the number of high-end sales in February.
I think part of the reason for the solid gains is that we have seen a gradual increase in inventory. There continues to be extremely strong demand from well-qualified buyers who want to purchase homes here, and now we are finally starting to see more listings come on the market to meet that demand.
Having said that, we could still use more inventory. We still don’t have enough good listings given the robust demand, but we’re moving in the right direction. Word is finally getting out to homeowners that this is a great market to sell your home. Hopefully we’ll see even more inventory as spring continues.
Below is a market-by-market report from our local offices:
North Bay – Novato is selling more million dollar-plus homes, according to our local manager. There were four on tour this week and several just under the million-dollar mark. Listing inventory overall is increasing steadily the past few weeks. Sales have slowed down a little but this may be due to Spring Breaks and tax day. Open houses are still very busy. Properties are taking longer to go into escrow than previous months unless the home is in a high demand area and priced realistically. Our San Rafael manager says it was a bit slower because of the Easter holiday, spring break etc. Still most of the new sales have had multiple offers. In Southern Marin, the luxury Previews market is steady with most of the activity happening between $2 million and $4 million. In the last week, CB Southern Marin closed four transactions over $3 million. Agents continue to see multiple offers on almost everything up to $2 million. The sweet spot in the market appears to be $1 to $2 million and those properties are averaging 10% over list price and in some cases 25% over list price.
San Francisco – Our Lombard office manager reports that records keep getting broken: Inventory is still dropping, there are multiples on most deals (38 on one), but most significantly the prices over asking – 16, 18, 22% over asking. Our Market Street manager says the story remains one of too many buyers for too few available properties. Multiple offers remain the rule as well (from two to 39 during this period), but we did see several properties sell with a single offer (and not just private or pre-MLS sales). And despite it being Easter and the many activities throughout SF on that weekend, open houses continues to see buyers in great numbers. The shortage of listing inventory continues in the Sunset District, and is affecting the number of transaction. Buyers are becoming more and more aggressive in their offers, not just making non-contingent offers but with the offer price. The prices that are being offer are just shocking, he says, setting a new high that surpassed the mark set in 2007- 2008.
SF Peninsula – Spring Break and Easter Sunday may have had less open homes but those that were open saw attendance upwards of 100 groups, according to our Burlingame manager. Sales are brisk and 10+ offers is not uncommon. Educated buyers are really reaching aggressively to be the winner. So far this year appraisal issues have been rare in the Burlingame/Hillsborough area. Hillsborough currently has 30 active and 29 pending sales. This represents the lowest available inventory in several years $2 million- $2.5 million is the sweet spot right now, but there have been several sales in the $5-10 million range, demonstrating the upward trend in this market. Our Menlo Park manager says it continues to be a “blood bath out there” for any buyer who wants a property in a B or better location. Agents who have a number of buyers are really struggling. Some buyers want to get another agent as they seem to not be able to see that it is their offer preventing them from getting a house, not the agent. The very companies that helped create this frenzy by their high stock valuations are also having trouble recruiting new employees from out of the area, she says. It continues to be a very challenging market for buyers and an amazingly good market for sellers, our Redwood City-San Carlos manager reports. One of the San Carlos listings, a 3/2 single family home, built in the fifties, in good shape but not updated, listed at $1,175,000 had 11 offers and went $400,000+ over list. The secret seems to be in the pricing and the presentation. It is to the seller’s advantage to spend some time and possibly dollars to get the property ready for the market. It seems like buyers are rediscovering Woodside and Emerald Hills West of Highway 280, our local manager notes. “Walkability” may be losing its grip.
East Bay – Berkeley agents are still dealing with multiple offers (5-20 per listing), some closing as much as 150k over asking. Listing inventory is increasing with several coming on the market in May. Last week did not bring the multiple offers as usual in most cases, according to our Oakland-Piedmont office manager. A few properties had over 10 packets out and at the 11th hour a single offer came in. There were, of course, the properties that garnered 10+ offers but they were fewer in the last week. Agents attributed it to the holiday break and many buyers going on vacation that week. There was only one home open on Easter so we’ll need to see the number of buyers that come out this weekend.
Silicon Valley – Houses under $1M in the great school areas are going crazy, according to our Cupertino manager. Some nice properties with average schools are languishing. It’s a bifurcated market. The local Los Gatos area market continues to show signs of strength as pent-up buyer demand and lack of inventory drive the market. A property listed in downtown Los Gatos for $1.399 million, 2 bedroom, 1 bath approx. 1,000 sf on a 9,000 sf lot, is pending under contract for $1.65 million. The San Jose Willow Glen market continues to experience a contraction in listing inventory, with much anticipated inventory coming to the market post the Easter holiday weekend. The market has not recognized any kind of “bump” in new active listings. Our manager will continue to monitor inventory on a weekly basis for guidance. Open house traffic is still heavy, however the number of offers per property has seemed to decrease.
South County – The beginning of the third quarter of 2014 brought forward many more new listings in South County. The increased inventory helped meet the ever-increasing demand for homes in every price category. Even with the increased inventory, however, mid-priced homes (priced at $550,000 to $750,000) continue to sell quickly and often over asking price. South County agents are also reporting an increase in the number of cash sales, especially with the upper-end homes. Though the market continues to favor sellers, there is gradual movement towards supply getting closer to buyer demand.
Santa Cruz County – Listings are coming on at an increasingly faster rate. Buyers are beginning to take a stronger stance when it comes to negotiation of purchase price and credits toward repairs.
That’s it for now. Have a great weekend!