The San Francisco Bay Area is still home to arguably the hottest housing market in the country, but there may be a little relief in sight for frustrated homebuyers.
Inventory of homes for sale are gradually creeping up in many communities, according to recent news reports confirmed by some of our local managers. And although prices are still climbing, the increases aren’t as high as they have been in the past couple of years in many areas. Moreover, the fevered bidding wars finally seem to be slowing down – except for the top homes at the most competitive prices.
Make no mistake, this is a still a seller’s market. Homes are still getting multiple offers – just not as many on average than they did a year ago. And the San Jose metro area is still the fastest-selling market in the nation, according to a recent Trulia report, with 63 percent of homes selling within a month. Following San Jose is Oakland at No. 2 with 60.2 percent of homes sold in 30 days, and San Francisco coming in at 58 percent.
But in its new report, Trulia notes that the nation’s “fastest markets,” including the Bay Area, are slowing down – just a bit. San Francisco had a 5.8 percent decline in the number of homes selling in a month compared to last year at this time, while Oakland had a 4 percent dip. Put another way, the Bay Area is seeing homes stay on the market just a little longer, although much less than the rest of the country.
Some of our local offices are noticing a slight change in the market, too. Although this remains a seller’s market, there are signs that buyers may finally be getting a little relief. There are a few more listings to pick from in many communities. Homes that are priced higher than they should be are sitting as buyers move to the next listing. Spiraling prices are slowing down in most communities. And most importantly, buyers won’t find themselves in aggressive bidding wars at every turn.
But as media outlet Curbed San Francisco put it, buyer relief is relative. Homes are still selling in 20 days on average in the San Jose metro area and 24 days in San Francisco and Oakland compared to 75 days nationwide.
“As usual with all of the recent news about a cooling housing market, there’s still a pretty wide margin for cooling to happen, after years of thermonuclear-grade activity,” Curbed mused.
Below is a market-by-market report from our local San Francisco Bay Area offices:
North Bay – There is a bit of a softness in the market of higher end luxury properties of $4 million and up, according to our Greenbrae manager. There are currently 350 single family dwellings available in Marin County. Only 67 are listed under $1 million and only five are under $500,000. Properties listed under $1 million continue to receive multiple offers at well over listing prices. Certain properties still receive multiple offers, but a number of homes in the $1.5 million range are lagging with some good houses having very few showings and no offers immediately. There seems to be a slight evidence of a move toward normalization in Marin. There seems to have been a recent flurry in activity in the Santa Rosa area. It’s still a very challenging environment for first timers. The market is very competitive at all price points except ultra-luxury. The luxury market is tracking nearly the same as this time last year. Our Southern Marin manager reports that the Previews market is active, however luxury buyers are very discerning and only offer on the best location, best condition and best price. As evidenced by three high-end pending sales the CB Southern Marin office put in escrow during the past week: $4 million (listing), $5 million (listing) and $6,200,000, where we represented the buyer. Prices appear to have flattened out in the $3 million-plus price range, and only 10% of inventory above $3 million is pending. The general market is very robust, however with more inventory and more choices for buyers. The buyers are focused on best location, best condition or potential, and best pricing.
San Francisco – How the market is changing is the talk of the town, our Lakeside office manager says. Yet the current reality is that well-prepared homes that are well-priced in popular spots are receiving multiple offers. Those that don’t reach star status on all three counts are most susceptible to price. Agents are agonizing over what to tell their sellers about pricing and sellers are not always heeding advice. As a consequence, the inventory is steadily inching up but still far short of a “normal market” here. Single-family homes, especially entry-level and under $1.5m, remain very popular usually bringing multiple offers and very short DOM, reports our Lombard office manager. Higher priced properties and the condo market have cooled somewhat; over half of last week’s condo closings were at or under asking. The market for homes over $3 million is slower. Our Market Street office manager says there’s a general sense that the market has shifted. For every property that gets multiple over-asking offers, there’s another that goes unnoticed or requires a price reduction to generate buyer interest. In such an environment, the list price becomes critical when introducing a property to the market. Open houses continue to be well attended, but buyers are more cautious, and looking to avoid the feeding frenzies of the recent past. Agents are advising sellers to put their homes on the market soon before the typical SF summer doldrums take hold.
SF Peninsula – The Burlingame area housing market seems to be picking up with an increase in listing inventory, reports our local manager. Half Moon Bay area homes are staying on the market a little longer. Right pricing is critical. Lots of listings coming on in the Menlo Park area, and the cream of the crop is still moving with multiple offers. Buyers are out there but less inclined to get into a bidding war, so the lid on prices is stabilizing somewhat. Low inventory and high demand continues in the Palo Alto area. Gradually there is an increase in the inventory in Belmont, San Carlos, Redwood City and Redwood Shores. List prices are still on the high side, our local manager notes, and if they are too high the properties are staying on the market. Correct pricing and good marketing are extremely important. There are still a large number of buyers in the market but they are becoming more selective. The San Mateo market is increasing with listings and sales. Homes are going over asking, most with multiple offers. Some good sales this week from Los Altos Hills to Woodside – five buyers for a $5 million home in LAH, which was about 10% over. That is becoming rarer as substantial over bids are becoming less common.
East Bay – Berkeley real estate is still suffering from low inventory, our local manager says. Open houses are heavily attended with 100 groups of buyers or more. Saturday and Sunday open houses are becoming the new normal. Previews properties in the hills are not attracting the same attention as Previews properties in central Berkeley, according to our Berkeley manager. Buyers want to be close to BART and walking distance to shops and downtown. San Francisco views used to be coveted, not so much anymore, she says. Inventory has increased significantly in San Ramon and Danville. For example, there are currently 101 detached homes for sale in Danville, up from 45 detached homes in March, and only four are under a million dollars. The Previews luxury market is healthy but not as fast as the market for lower priced homes, our Danville manager says. Great traffic at open homes is still the order of the day in the Oakland-Piedmont area. Multiple offers still abound as well. Although the 2 – 5 range of offers seems to be what is coming in the most often, there are still homes that are getting 20 offers. Inventory is up not tremendously but it’s up and agents are starting to see a few more of the move-up buyers then we’ve seen in the past few years. They are more willing to inconvenience themselves by moving in with family or friends to sell their house and then buy their new home.
Silicon Valley – Our Cupertino manager says local activity is still decent, but not as brisk as the prior few weeks. This is typical for this time of year, she notes. Open houses were also not as crazy. Inventory in the Los Altos area has increased recently however, so have the amount of the recent pending sales. And although he has seen a slowing of the market recently, our local manager would still categorize the market as robust. Agents are still seeing strong activity on properties in move-in condition and priced to sell, resulting in multiple offers that typically achieve a sale price that is over asking sale. That being said some sellers are trying to test the market by bringing their homes onto the market too high. As a result, there are more price adjustments of late; however, these still only make up a smaller percentage of the market. In short the market is still solid and and just experiencing normal supply and demand fluctuations. Los Gatos buyers are getting a break as more inventory hits the market. We’re still seeing multiple offers in the San Jose Almaden area but not as many as a month ago. Sale prices are not going too much over list price, especially on higher price listings. Inventory for Santa Clara County has gone up over the 2 weeks but only by 5 properties. Condos and townhouses were up by seven homes while single-family listings were down two. SFR pending’s were up by 99 and C/T were down 7. Our San Jose Main office manager reports as we move into spring agents are seeing inventory increasing. Buyers are still anxious and the properties that are priced at current market price are getting all the attention. Sellers that have priced at a 3-5% premium are finding that buyers are not interested. Buyers tend not to offer under list and wait for sellers to reduce prices. Sales are still strong but not as brisk as 3-5 months ago. Willow Glen active listing inventory hit a three year high breaking 80 active units. This is leveling the playing field for buyers with all this new inventory. There are more days on market for properties, some price reductions and open house traffic has subsided a little bit. However, the local market is still posting double digit sales each week. It is still a very healthy active market in and around the Willow Glen area.
South County – It seems that South County is again experiencing a severe inventory shortage. During February and March, the inventory for both Morgan Hill and Gilroy showed a significant increase in the number of single family homes offered for sale. As the first quarter came to an end—so did sellers’ willingness to list their properties on the MLS. Again, this is most likely attributed to sellers’ inability to find and secure a replacement property, our local manager believes. Sellers with entry-level homes (those priced around $650,000) find that they can sell their homes very quickly and with multiple offers. Their reluctance to list, however, is attributed to the fact that “move-up” homes ($800,000 to $900,000) are just not available, he says.
Santa Cruz County – The inventory of homes active on the market in Santa Cruz County is currently 320 compared to 447 in May 2015. The supply and demand imbalance is driving home values upward to an average price of $896,047 compared to an average price of $797,644 in 2015. The number of Previews homes on the market has increased each month this year and is currently at 161 active homes, which represents approximately 50% of the entire single-family-residence inventory. The number of sales has increased each month as well, and has been steadily higher than each month in 2015.
Monterey Peninsula – Year-to-date results show sales up just 2% and dollar volume up 30%. The average sale price is up to $1,348,950 in the area. Our local offices have had an active last two weeks with new listings coming to market. They are getting much attention and showings with multiple offers on the million-dollar price point. Agents are gearing up for the summer rally of out of area visitors and buyers that escape the southwest and central valley heat and flock to the central coast’s cool climate. The Monterey Peninsula is still one of the most desired destinations for visitors and vacation home ownership, which results in a solid real estate investment market.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James. Click here to view past issues.