The air is starting to cool just a bit, leaves have begun to change color ever so gradually, and there’s a distinct feeling that the seasons are changing. Could the housing market be changing as well as we enter autumn?
Reports from our offices all around the Bay Area suggest that we may at long last be moving towards a more balanced market. Inventories have gradually increased in many areas. Prices seem to have stabilized for the most part. Although some homes are still getting multiple offers, the number has dropped significantly from eight or 10 to maybe two or three. And buyers are taking their time making an offer, making sure they bid on just the right home – and at the right price. The sense of urgency is gone.
Apparently we’re not along here in the Bay Area. According to Realtor.com, this trend towards a more balanced market is being felt coast to coast. When their economic research team analyzed data for the first three weeks of August, it found that the nation’s housing market—which has been seriously tilted in favor of sellers for some time now—is just starting to tip slightly back toward buyers.
“Now, don’t get us wrong: Sellers still have the advantage. It’s just that their advantage is being reduced,” the publication noted.
“We are now entering the time of the year when both inventory and demand typically reach their peak as the start of the school year takes away a substantial chunk of near-term demand,” said Jonathan Smoke, chief economist of realtor.com.
“This year we’re seeing inventory continue to grow in August,” he continued. “And while overall demand is strong, the trend on median days on market is suggesting that the market is finding more of a balance—and that bodes well for would-be buyers who have been frustrated by the inability to find a home to buy this spring and summer.”
Realtor.com reports that in the first three weeks of August, listings inventory grew 3% over July. The median list price increased to $233,000, up 8% year over year and virtually flat against July. The median number of days on market has increased to 75 days, reflecting the shift in favor of buyers. The metric is down 6% year over year, meaning that the market is still hotter than last year, but the 6% month-over-month gain means that inventory is now moving slower than it has all spring and summer.
So maybe – just maybe – the housing market is gradually changing along with the seasons. One month doesn’t make a trend, and only time will tell whether this movement continues. But if we in fact are moving back into a greater equilibrium between buyers and sellers, that could actually bode well for the long-term health of the market.
Below is a market-by-market report from our local San Francisco Bay Area offices:
North Bay – Public open house traffic is dropping and agents are seeing fewer multiple offers, reports our Greenbrae manager. There has been an influx of price reductions from those who have overpriced their properties. ‘A’ list properties, both Previews and regular, are seeing multiple offers, but not the number of multiple offers on individual properties that we were seeing earlier this year. A $399,000 listing received 12 offers this past week but four well-priced homes at $1.3m that went on the market last week did not receive offers this week. That is a departure from earlier this year when they would have generally received multiples. There has been a noticeable slow down in the Previews high-end market. There are more offers that are contingent on a property selling than we’ve seen in some time. And this periodically is causing deals to fall out of escrow if that property doesn’t sell. Some homes in the right locations are still receiving multiple offers at or over their list price, according to our San Rafael manager. He expects market activity will be steady for the remainder of the year. Overall activity in Santa Rosa feels slow, our local manager says. September countywide sales were down 25% from August. The market is sending mixed messages with some homes going for top dollar and others suffering a series of price drops in order to attract an offer. The Previews market is stable. Since many of these home purchases are discretionary (2nd or 3rd homes) buyers are still not in a rush to buy. The general market in Southern Marin had a flurry of activity since Labor Day, as expected. Most homes listed under $2 million have received offers, pre-emptive and multiple offers on several properties. The demand is strong and the competition is fierce. Above $2 million, there is some hesitation from buyers and the days on market are increasing. Price is still the critical factor. Competitive list price, desirable location and move in condition is the formula for multiple offers. The Previews market remains steady, but less than 20% of properties over $3 million are under contract and less than 10% of properties over $5 million are under contract. Given these percentages, our agents had a good week, closing a Belvedere property for $6.5 M and a Mill Valley property for $4.5 M. We also listed a Sausalito property for $5.75 M on 9/16 and by 9/18 agents had multiple offers and an accepted offer for significantly over the list price. Luxury buyers are very discriminating and only the best-priced and most desirable listings receive offers.
San Francisco – Our Lombard office manager says higher inventory has been sustained over the past two weeks. There has been a bit of a cooling in the market, especially in the upper end. It’s still largely a sellers’ market but some buyers are seeing a little more leverage and choice. One transaction went to many multiple COUNTER offers on a single offer, rather than multiple OFFERS. Some price reductions also showing up. Our Market Street office manager reports a general sense that the market is taking a bit of a pause right now. With an increase in inventory over the past month, agents still see multiple offer situations, but the number of multiples received has dropped from 20+ a few months ago to a more reasonable 3 to 4. Alongside that, agents also are seeing homes that are happy to get one offer, and others get none at all. Regardless of the number of offers, the prices seem to be holding steady.
SF Peninsula – The number of new listings that came on in September was practically identical to the number last year with the city of San Mateo experiencing slightly more, according to our Burlingame North manage. There seemed to be a short pause in the offer activity for new listings early September but those properties seem to be receiving offers now and, in most cases above the asking price. There have been maybe two to four offers on properties that are in extreme move-in condition. Those properties not in prime condition, in most cases, are experiencing longer DOM and fewer offers. There have been a few sales between $5,000,000-$10,000,000. One property listed at $3,995,000 had three offers. Our office represented the buyers at $2M over the asking price. Homes priced below $1 million are still strong in the coastal area. Average days on the market for homes priced below $1 million are 23 days. In the Coastal area (Half Moon Bay to Montara) average days on the market for homes over $2 million are 91 days. Average days on the market for price range $1mil-$2mil is 55 days. The Menlo Park area housing market is definitely slower, reports our local manager. Sellers are reaching for prices and some buyers are exhibiting price jitters.Our San Mateo manager also reports a slowdown in activity. Open houses in the Woodside-Portola Valley area are slower and buyers are clinging to their pocketbooks more. Our local manager even had an agent trying to get someone for an open house – amazing since getting an open house has been impossible for a long time.
East Bay – Berkeley had a flood of new inventory in September. This caused a slowdown in multiple offers for the first time this year. Not as many buyers attending open houses and offer dates are coming and going without any offers. Agents are feeling as if the Oakland-Piedmont market is slowing down due to the increase in inventory after Labor Day. While some open homes are still being well attended, numbers are down from the past few months. Having said that there were 35 offers received on a first time home in the Allendale neighborhood of Oakland. Multiple offers are still happening but more common now is 2 – 3. Agents have seen a few properties lately whose list prices have been raised when the sellers did not receive “their price” with the first group of offers. In Lamorinda, new listings and sales continue at a steady rate with no signs of slow down.
Silicon Valley – Activity seems to be picking up a bit, according to our Cupertino manager. Agents have managed to get homes into contract after being on the market for a month or two. The Los Altos Hills market has steady inventory, reports our Los Altos manager. Under $4M as the new listings come on, within 2 weeks the property sells, if it’s a flat lot and livable house. Some high-end (over $4M) homes are selling, but not for the listed price. Some sellers are reducing price to sell. There’s been a slight increase in inventory in Los Altos as the median price has increased since January about $500K. Now the sellers want to list at recent sale prices, and buyers do not want to pay more than last sale. So prices are not increasing. Inventory over $3M has increased slightly also. New homes still seem to sell with only 1 week of exposure to the market. Prices are not increasing. In Sunnyvale, agents are saying the prices are settling and inventory is either staying on through the first week, or only getting a few or just one offer. Prices are not increasing. In Mountain View there still is not enough inventory of single-family houses under $2M. Inventory of $2.5M is staying on more than one week. Condo prices and house prices do not seem to be increasing any more. The Los Gatos area market appears to have lost a bit of steam while the stock market has been going through a correction, says our local manager. The upper end of the market has been slowing a bit since the stock market has been slumping. Listings in the San Jose Almaden area were down over the past 2 weeks but local sales activity has increased. The available inventory for Santa Clara County is only up 13 units for SFR and C/T over the past 2 weeks. Agents aren’t seeing as many multiple offers but the sales prices are remaining strong. The Almaden sales price was up 10% from last month, Blossom Valley was up 4%, and Cambrian was just barely down 1.1%. Willow Glen is seeing growth in new listing inventory. There are 69 active units – third highest number all year. However, even though buyer traffic continues to be strong at open houses, agents are feeling a bit of pushback from buyers on pricing. Buyers aren’t showing any urgency to write offers. Many properties are now sitting up to 3-4 weeks on the market prior to receiving any offers. Agents are seeing a slight drop in activity in the Saratoga area, both for listings and sales. Open house traffic is moderate to slow – most likely a seasonal pre-curser.
South County – There are a myriad of reasons why this is a good time to buy, notes our local manager. Interest rates remain low and, at least in the South County, inventory has increased over the last several months. Buyers, however, remain skeptical and sales (units and dollar volume) are down for the months of August and September. Agents are reporting lighter attendance at open houses and listings seem to be staying on the market for longer periods of time. In some cases, sellers (who really want to sell) are lowering their prices in order to garner an offer. This is all in marked contrast to the real estate market of just several months ago, where inventory was scarce and buyers were plentiful. Of course, this market adjustment is seasonal as well—with summer’s end and back to school activities. The only thing constant about real estate is change and at this point, the market is making a definite correction.
Santa Cruz County – Inventory of homes on the market in Santa Cruz County has decreased slightly for several weeks, and is currently about 25% lower than September 2014. Sales were down by about 25% in August compared to July, but September saw sales increase a bit. The number of Previews Properties on the market peaked in August at 197, and has decreased to 175 at the time of this report. August was a slow month for sales but September picked back up for a total of 42 units sold, which is 10 more than September 2014.
Monterey County – It seems that fall is in the air. The temperatures have cooled off and the flurry of summer has seemed to follow. It has probably slowed to more of a normal market, according to our local manager. New properties coming on the market with much excitement but buyers are not jumping in as fast. Unit sales for September 2015 over same time last year are down 18% but the average price is up 43% over last year, the result was a couple of significant sales that pushed average sale price up. Agents are hoping that will continue into the 4th quarter. Out of area buyers are continuing to look in the area for future retirement and or relocation from the hot Bay Area market. Just recently a buyer sold in the Woodside area for over $4 million and bought in Carmel Valley for just over $1 million and is continuing to shop for investment opportunities with the balance of funds. Agents are looking forward to a strong 4th quarter finish for 2015.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James. Click here to view past issues.