A new report by CoreLogic, the Irvine-based real estate information service company, shows that the Bay Area and national housing markets turned in a strong performance as last year drew to a close and the firm predicts a solid increase in home valuations in 2016.
According to CoreLogic, home prices rose 6.1 percent nationwide between November 2014 and November 2015. It forecasts that prices for all homes – single-family, townhouses and condos – will rise another 5.2 percent by November 2016. However, the data does not include distressed sales.
Meanwhile, CoreLogic told the San Jose Mercury that the San Francisco-Redwood City-South San Francisco area had a 15.7 percent year-over-year increase between November 2014 and November 2015. It put the year-over-year increase at 8.6 percent in the San Jose-Sunnyvale-Santa Clara area, and at 9.7 percent in Oakland-Hayward-Berkeley.
A detailed report covering more parts of the Bay Area region will be released later this month, the paper said.
“Many factors, including strong demand and tight supply in many markets, are contributing to the long-sustained boom in prices and home equity, which is a very good thing for those owning homes,” said Anand Nallathambi, president and CEO of CoreLogic. “On the flip side, prices have outstripped incomes for several years in a number of regions so, as we enter 2016, affordability is becoming more of a constraint on sales in some markets.”
Early indications from our local Bay Area offices are that we should start seeing inventory gradually pick up as January continues, and see a more significant rise after – you guessed it – the Super Bowl. For the same of frustrated buyers, let’s hope that happens!
Below is a market-by-market report from our local San Francisco Bay Area offices:
North Bay – Sales in Sonoma County continue to be robust even over the holidays and into the new year. Petaluma is becoming a Bay Area magnet and alternative to the higher median price areas, according to our local manager. Our Santa Rosa Bicentennial office manager reports that the Sonoma County market ended the year with 10% median price appreciation on roughly $7.3 Billion in volume. Activity was strong in December with a surge of end of year closings. Month’s supply of inventory sits at 1.2 months, which is very tight. The county very much needs new listings as potential interest rate increases often spur an increase in buyer activity as they try to get in before rates go too far. Meanwhile, our Santa Rosa Mission office manager notes there’s not a lot of activity in the office over the holidays but a very active week for the week after Christmas for open sides. Listing inventory is tighter at this time of the year compared to last year. Multiple offers increasing for limited inventory. Agents predicting good new inventory coming soon. The luxury market is up 25% YTD 14 vs. 15. Our Sebastopol manager says although listings and sales were slow during the holidays attendance at the few open house held was brisk. Agents are slowly coming back to the office with reports of upcoming listings. The Southern Marin market is in slowdown mode after the holiday season, which our local manager believes will carry through January with an increase in activity expected to begin in February. The luxury market slowed down over the holidays along with the rest of the market. Many luxury listings were taken off market and will come back on in February. He expects that the luxury market will thrive in 2016 based on the demand for luxury homes that agents have experienced in 2014 and 2015.
San Francisco – Our Market Street office manager reports even though most buyers and sellers took a break for the holidays, he did see a few deals ratify with multiple offers during this time. With the holidays over, there is an expectation that inventory will slowly increase until the Super Bowl. At that point, there’s a sense we’ll see many more listings hit the market. Has the market shifted or is this just the normal seasonal cycle? As the Magic 8 Ball might say: “More will be revealed.”
SF Peninsula – Burlingame agents experienced the typical holiday slowdown, but many agents were out there working hard to ratify sales and get listings signed nonetheless. Across the hills in Half Moon Bay, inventory in the coastal area is extremely low. Agent reported that the open house activity has been very active with many serious buyers. The Menlo Park area market was very quiet over the holidays with lots of agents and clients out of town. The same was true for the Woodside-Portola Valley office. Our Redwood City-San Carlos manager says there hasn’t been much activity in the past couple of weeks due to the holidays. There’s still a significant shortage of inventory, but she expects activity to start picking up next week.
East Bay – Only 16 available properties in Berkeley at this time but the Agents were busy selling during the holidays. The rain is here but has not slowed down the market activity. Buyers are still bombarding open houses even as interest rates creep up. The Orinda market was pretty quiet due to the holidays with many agents on vacation.
Silicon Valley – Our Cupertino manager has never seen lower inventory or less activity, even considering the holidays. On a positive note, a number of the agents have listings already signed and coming up within the month. It can’t be a moment too soon. Sellers have never had a better opportunity for top dollar than under current market conditions. Currently there are 27 homes for sale in Los Gatos (area 16). This is the lowest level of inventory in Los Gatos since we have been tracking it in 1999. Our San Jose Almaden manager says the market has lower inventory this year compared to last. Santa Clara County only had 463 SFR active and 113 C/T available as of Jan. 3 this year. Sales were stronger this December compared to last year in December. Almaden had 25 sales in December, four more than last month and last year. The median home price is $1,275,000, up 6.4% compared to last year and flat from November. Blossom Valley had 78 sales, down six sales compared to last year but 10 more than November. The median home price of $640,000 is down 2.3% from December of 2014 and 8.6% from the previous month. Cambrian had 71 sales, 12 more than last year and 22 more sales than the previous month. The median home price of $927,000 was up 15% from last year and up 5.6% from the previous month. Willow Glen agents all have a pocket full of buyers but need active listing inventory. The local Willow Glen area dropped to only 19 active listings during the last week of Dec. Our Saratoga manager says that with inventory being close to 400 homes and only 100 class two properties for the entire valley, it’s a strong Sellers’ market. Lesser-priced homes are experiencing a lot of traffic at open houses and multiple offers. Buyers are still out there, looking and ready to buy. Interest rates remain good. He expects inventory to double in the next two months (still less than 850 homes) and it will continue to be a Sellers’ market through the spring.
South County – As of Tuesday, there were only 30 active listings in all of Morgan Hill (single family homes, condos and townhomes). That number is just a little better in Gilroy where there were 70 active listings. At this point, there just aren’t enough homes on the market to even try and meet buyer demand. Agents are seeing that sellers are very reluctant to actually list their present homes as finding a replacement property is next to impossible. Those sellers living in a moderately priced ($600,000) home who aspire to purchase a larger home in the $900,000 range are presently shut out of the market. It is a very strong sellers’ market where multiple offers are common—often made with no appraisal contingency. South County is also experiencing an increase in cash offers with quick closing times. Agents remain hopeful that as the new year unfolds, more homes will come on the market to meet buyer demand.
Santa Cruz County – The inventory of single-family homes for sale in Santa Cruz County is under 200, which is the lowest count on record with the MLS data dating back to 2003. Despite the low inventory the number of sales has been on par with previous years. Through the month of December almost 50% of listed homes were in contract, which is the highest ratio on according to MLS records going back to 2003. Attractive interest rates have fueled strong demand and low inventory has created a competitive buying environment. In December and January there have been some transactions that have been canceled and the number of sales has decreased. The number of Previews Properties on the market has been on the decline since August with just approximately 94 currently active. The number of days on market was quite low, hovering in the 50’s until December when it spiked to approximately 100 days. In December there were 26 sales, which was the lowest number for the year.
Monterey Peninsula – Our Monterey area offices ended the year up two percent in unit sales with an increase in their average sale price in our office to almost $1.2 million. Average prices in most cities are back to pre-recession prices with the “smart money” that has bought within the last few years realizing appreciation in their properties. We started the year with a sale of the highest priced property in Monterey County at $35 million, and, if all goes well, it should close in March. The Previews luxury properties in Pebble Beach and Carmel are seeing some activity with the excitement of the AT&T Pro Am the beginning of February.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James. Click here to view past issues.