The Bay Area’s housing market has been extremely hot for some time now, but it has taken other parts of the country a while longer to get back on track from the recession. Now it seems that the rest of the nation has finally joined in the “house party.”
The National Association of Realtors® reported this week that existing-home sales steadily increased for the third consecutive month in July, reaching the highest pace since before the recession in February 2007.
Total existing-home sales, including single-family homes, townhomes, condominiums and co-ops, increased 10.3 percent from a year ago and 2 percent from June to a seasonally adjusted annual rate of 5.59 million in July. Sales in July were most since February 2007’s 5.79 million and have now increased year-over-year for ten consecutive months.
Lawrence Yun, NAR chief economist, says the increase in sales in July solidifies what has been an impressive growth in activity during this year’s peak buying season.
“The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now,” he said. “As a result, current homeowners are using their increasing housing equity towards the down payment on their next purchase.”
The pick up in nationwide sales activity bolds well for the overall economy since the housing market is one of the main pillars of the economy. But the latest report isn’t without some cautionary signs.
One segment of the population, first-time homebuyers, have not jumped into the market to the same degree as the rest of the consumers. NAR blamed stubbornly low inventory levels and rising prices for sales to first-time buyers falling to their lowest share since January.
Hopefully as inventory begins to inch up, the housing market nationwide will begin to balance out a little more between buyers and sellers, giving first-time buyers a better chance to get into a home at long last.
Below is a market-by-market report from our local San Francisco Bay Area offices:
North Bay – There seems to be a pre-Labor Day lull in the market, with many sellers waiting until after the Labor Day holiday to introduce new listings. Even with the slow-down of inventory our Greenbrae/Larkspur offices have ratified 33 new sales in the last two weeks. Properties that do come on the market get bought up quickly, usually with multiple offers. There continues to be a large number of off-market sales that never get close to hitting the Multiple Listing Service. The Novato area is experiencing a normal slow down for this time of year, although it began early. Inventory has decreased by 10% since last summer and we currently have less than 1 month of inventory in Novato. The absorption rate is 94% with properties selling at 100% of list price. Multiple offers are declining yet values continue to climb. Our San Rafael manager reports there are still multiple offers on properties, however the market appears to be slower due to vacations. School is back in and the agent and buyer activity is now picking up. Should be a great 4th quarter. Market activity is picking up again after a brief slowdown in July, according to our Santa Rosa Bicentennial office manager. More homes are going into escrow and new listings are increasing slightly, but still down 17.7% from July of 2014. Median price for July was up 11% from July of last year, but is starting to see more price resistance from buyers. Sales of Previews luxury properties are steady and the influx of people looking to buy high-end second homes in the wine country has not dropped off. Our Santa Rosa Mission manager notes that past “August recess” activity remains steady, and he expects things to pick up in September. Buyer fatigue but best listings still sell fast with multiple offers. The Previews market is growing, due to price appreciation (i.e., residences that did not meet the price criteria a few years ago now do). Well-priced, well cared for properties in the Sebastopol area do not last long on the market. Even with the less well cared for properties there is no objection that price will not overcome. One of the Previews listings sold in 5 days, garnered 4 offers and closed at $205k over asking. The Previews market is hot!
San Francisco – In spite of what should be the normal summer doldrums, the tiresome old story of inventory shortage and buyer disappointment in multiple offers continues, according to our San Francisco Lakeside office manager. With July being one of the most quiet month this year, activity in August appears to be picking up, reports our San Francisco Sunset office manager. The market seems to be spotty where some listings are getting multiple offer while others see offer dates come and go without any offers. Demand remains strong but the lack of inventory is affecting the number of transactions.
SF Peninsula – This time of year is often slow on the Peninsula while families are getting their children settled into the new school year. Not so however in 2015, says our Burlingame manager. Open homes are jammed, and the few listings coming to the market have multiple buyers waiting for them. As agents are getting ready for our fall home buying season, they are reporting inquiries from potential sellers who think that now may be the time to put their homes on the market. Hopefully this bodes well for and early and exciting finish to 2015. Our Menlo Park manager reports it’s “August slow” in the local market. Inventory still very low in the Palo Alto area. Activity is low as well, hopefully seasonal with the start of school, says our local manager. Our San Carlos-Redwood City manager also notes it’s a very, very slow time with the end of summer. There are not as many visitors at open houses. Some buyers have said they want to wait to see what happens with the market in the fall. Our Woodside-Portola Valley manager says it’s slow out there. Attendance at open houses is OK but lots of clients and agents are out of town.
East Bay – The Berkeley area market is still attracting very motivated buyers, according to our local manager. Interest rates are still low and most properties attract multiple offers. The few that were sitting are now receiving offers. More properties are coming onto the market but inventory is still very low. Inventory for Previews luxury properties is low, although prices are escalating. Buyer activity remains strong in the Lamorinda area, according to our Orinda manager. Agents are seeing movement from the Peninsula and SF market to the Lamorinda area. Competitively priced listings are moving quickly.
Silicon Valley – Things are quieter in the Cupertino area than they have been, which is typical for August. Open houses continue to be very busy. Our local manager says if she were a buyer, she would shop in August. Inventory is down 26% in the Los Gatos area from the same time one year ago. Listings are increasing and sales are steady in the San Jose Almaden area, with multiple offers on almost every property (2-5). This past weekend was slow at Open Houses probably due to the hot weather and being the last weekend of the summer for kids going back to school this week. Prices certainly continue to rise. The median price in Almaden was $1,340,000, which is up 11% from the same time last year and up 7.2% from last month. Blossom Valley’s median home price was $727,500, which is up 14.6% from the same month last year and up 8.6% from last month. The median home price is Cambrian is $950,000, which is up 25% from the same month last year and up 6.7% from last month. Our San Jose Main office manager says the market has slowed with the end of summer/start of school activities that has buyers and sellers busy doing other things than buying and selling homes. With that said, the buyers and sellers still in the game could be considered more serious as they have not let these distractions deter them from their housing goals. Smart sellers are pricing their homes at market or 5% under, thus attracting the attention of the buyers out there. Greedy sellers who want to be the next highest sale in their neighborhood are being snubbed by buyers who want nothing to do with homes priced over market. Limited inventory and excellent interest rates will keep the sales market strong through the end of the year. The Willow Glen market continues show strong buyer demand. Open house traffic is heavy, and inventory is back down into the low 60’s for active available properties. Even with the new school year starting this past week agents are still seeing strong demand with multiple offers on most properties and the biggest question for buyers is how high over list price do we go. Sellers are out and so are buyers, reports our San Mateo manager. Average attendance at weekend open houses is between 40 and 75 groups. This is a good sign.
South County – Homes in the South County (Morgan Hill and Gilroy) are staying on the market just a little longer these past several months, according to our local manager. Multiple offers (though still somewhat common) are not as prevalent as at the beginning of the year. Sellers are also facing the fact that in order to garner an offer, price reductions may be required. As supply and demand become more balanced, seller expectations are not as easily realized. There simply are more homes currently offered for sale on the MLS, thus giving buyers more homes to select from. However, with the distinct possibility of an increase in interest rates, buyers are showing just a little more urgency in securing a property and locking in their rates.
Santa Cruz County – The inventory of homes for sale in the Santa Cruz area continuous to stay quite low compared to previous years. Currently there are only 458 homes for sale in the entire County. Sales however have been higher than recent years past with July closing out with 232 homes sold. The inventory for homes on the market over $1 million in Santa Cruz County has increased steadily for the past couple months and is currently at 189 active. Sales activity has slowly increased with 46 sales in the month of July.
Monterey County – The Monterey Peninsula survived another “Car Week” with over 80,000 car enthusiasts who descended upon the Peninsula. Over $500 million in auction sales were generated over the week and agents hope that some of that will be spent on local real estate. Our offices reported heavy walk in traffic along with fairly good open house attendance. The weather was spectacular and in the mid 80’s and it left a lasting impression on visitors and future property owners. International billionaires, Silicon Valley multi-millionaires and celebrities were out in force at the events for the week. Kim DiBenedetto hosted an evening at “Casa Ladera” and it was very well attended along with the three celebrity agents from Million Dollar listing San Francisco. A few sales were reported for the week, but we made many contacts that will be looking in the area for a future residence. The back to school lull may have begun in the last two weeks, or maybe it was the anticipation of “Car Week,” but once everybody has recovered we anticipate the momentum of the market to continue.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James. Click here to view past issues.