The National Association of Realtors, the Mortgage Bankers Association, Fannie Mae and Freddie Mac all predict that home sales are going to heat up in 2017, and a new report from realtor.com shows much of that heat will be coming from the western portion of the U.S.
Which cities and regions will be leading the way? In its report, realtor.com said Sacramento will be among the top 10 markets in the country, coming in at number four on its ranking of hot markets.
The research estimates the Sacramento market median home price to be $420,000, to show a price growth a 7.18 percent, and a sales growth of 4.92 percent.
What’s driving the surging Sacramento market? Our own Coldwell Banker Residential Brokerage sales associate Cara Ryan told a local TV station that she is seeing two major groups of people looking to buy in the Sacramento market – those from the San Francisco Bay Area in search of more affordable homes, and those who were negatively affected by the recession and are now looking to get back into the market.
“We’re getting clients from San Jose and Santa Cruz saying that now’s the time that we want to come over here to get a little bit bigger house,” Ryan said. However, demand for homes remains high because inventory is low. “I do have buyers that are cautious,” she said. “But at the same time it’s been several years so it’s not something that happened last year and they’re still feeling it.”
The top 10 hottest metros for 2017 are found by averaging realtor.com’s forecasted price and home sales growth for the year.
Phoenix comes in at number 1 on the national ranking with a projected price growth of nearly 6 percent and a sales growth of 7.24 percent. The Los Angeles metro area is number 2, Boston is number 3, Sacramento fourth, and Riverside fifth. Jacksonville, Florida; Orlando, Florida; Raleigh, North Carolina; Tucson, Arizona; and Portland, Oregon round out the top 10 list.
Below is a market-by-market report from our local Northern offices (listed by alpha):
East Bay – In Berkeley as of 12/8 there are 22 houses available for sale with 35 under contract, which translates to a .63 month inventory supply versus .55 months two weeks ago. In Albany, there are five houses for sale and eight under contract, a .63 month inventory supply, a slight increase over two weeks prior when we saw a .45 month supply. El Cerrito currently has 15 homes listed for sale with 17 under contract, a .88 month supply and a decrease from two weeks ago. Richmond has a 1.12 month supply versus the 1.04 months two weeks ago. Oakland has an .86 month supply, almost the same as two weeks ago. In summary, the market is almost unchanged from two weeks ago. In Danville, the holiday season is upon us and sales and listings reflect that, notes our local manager. Our Oakland-Piedmont manager says buyers are still coming out in big numbers. Open houses are getting 60+ groups and most are ready to write an offer and get their home for the holidays. The tour is a little over a page long with approx. 15 homes to visit and it doesn’t look like many more will be coming on in the short term. Agents are seeing buyers presenting offers after the first open house hoping to get in to contract without waiting for the second open house and, for the most part, it’s working. Listings are being lined up for the new year tentatively coming on in late January or early February.
El Dorado County – The market has definitely slowed down, our Placerville manager says. The focus of buyers and sellers now seems to be on holiday activities.
Monterey County – Our local manager says the Monterey Peninsula has definitely felt the slow down and the Bay Area trickle-down effect of buyers purchasing a vacation home. Our office average sales price dropped considerably to $1,070,000 from previous month of almost $1,300,000. We have several new sales in the under $1 million price point, which represents several new to the area and first time buyers. Price pressure is on the listings that have been sitting for some time and sellers are realizing that it is time to reduce their price if they want to sell. It seems that buyers are more in the driver’s seat rather than just six months ago it was the other way around. Our manager would call this a “normal market” at the moment with prices leveling off and potential buyers coming back to the table.
North Bay – Our Greenbrae manager says the local area is seeing a seasonal slowdown with very little new inventory coming on the market. Many deals that are in contract have been challenging with unrealistic buyers and sellers, but most are closing with concessions having to be made. The current market in the San Rafael area appears to be normal with the typical holiday slowdown, according to our local manager. The office’s agents are working on many closings for the remainder of 2016 with many preparing new inventory to come on after the 1st of the year. As of today 12/6 there are 31 single-family homes available and 14 condo/townhomes (per MLS not counting the retirement communities) in San Rafael. Since 11/1 there have been 55 closings for San Rafael. The market should be very strong in 2017, our manager believes. Buyers are concerned about rising interest rates and low inventory. This should provide for a very busy spring season. Our Santa Rosa manager said there were three properties in the last week where interest was high and 3, 7, and 11 offers were received on these properties. Sonoma County is still supply restricted and initial pricing of a listing is extremely important in determining the final sales price. The correct initial price often yields a higher sales price than starting high and dropping to find a buyer. The Previews market remains steady with activity being more erratic than at lower levels. High end homes are selling and being replaced so there is not an inventory crunch as there is at the more modest priced homes. The overall Southern Marin market continues to show strength with 42% of all properties under contract, which qualifies as a “weak seller’s market.” About 40% is the threshold for “seller’s market.” Some 17% of properties listed over $2 million are under contract, which translates to a “buyer’s market.”
Placer County – With rising interest rates our Auburn manager believe some of the buyers are having to reconsider purchase price, and for those in the $400K or less market, there is not a lot to choose from at this time. There’s still a shortage of inventory, but in the past couple of weeks some of the buyers have decided to opt out instead of being in multiple offer situations in hopes that there will be more inventory after the first of the year. There have been a couple of new buyers that need a 2016 close due to their tax situations. There have been fewer open houses during the last couple of weeks, and those homes held open did not have the turnout that agents had been experiencing in the last quarter. In the Previews luxury market, there a couple of years of inventory in Placer County. Many of the Previews homes are put on the market substantially over market value and then go through several price reductions, our local manager reports.
Sacramento County – Our Sacramento Fair Oaks manager reports that it’s a bifurcated local market. It’s a seller’s market under $450,000 but a buyer’s market over that price point. Our Sacramento Metro and Sierra Oaks managers report a steady market.
San Francisco – Our Lombard office manager says sales volume has dropped beyond typical seasonality according to a Bay Area report. SFH’s continue to sell largely over asking, especially at the entry price level. Over half of condo sales however traded at or under asking, with price reductions on the increase. Also, fixers continue to bring a lot of traffic and multiple aggressive offers. Our Market Street office manager notes that the holidays are in full swing, which means that listing inventory and sales activity have declined. Agents listing properties now are holding off introducing them to the market until the new year. However, there are still buyers actively looking who are ready to pounce if the right place comes along. Even an “unusual” home recently found its buyer after a long time on the market.
San Francisco Peninsula – The Menlo Park area market has picked up some steam over the past few weeks as buyers are jumping back in, reports our local manager. Buyers seemed to have realized that that market was not slowing as much as they may have thought. Sellers have not been as confident in terms of simply going on the MLS at a “higher” price than the comps suggest. “A+” properties are selling quickly, while other properties may sit a while and then still get multiple offers. Inventory that has been taken off the MLS should provide a better supply in the new year when they go back on the MLS. Open house activity has definitely picked up with new buyers coming into the market. Many of these buyers are saying “now is a good time to get in.” Our Redwood City manager reports that it’s a very slow time with very little inventory right now.
Santa Cruz County – The market in Santa Cruz County has been very active with strong competition between buyers due to a very low inventory, according to our local manager. The discrepancy between the number of active single-family residences for November this year compared to last year is shocking, with actives totaling 393 in 2015 and only 295 in 2016. Sales have been up despite fewer homes being available with sales totaling 129 in 2015 and 145 in 2016 for the month of November. The number of homes active on the market listed at over $1 million represents approximately half of the inventory of homes for sale in Santa Cruz County. The number of active listings is almost exactly the same as 2015 this time of year, however the number of sales is up approximately 30% in this price range.
Silicon Valley – The most popular homes in the Cupertino area (great schools and close to Apple) are getting tons of offers, and the rest are languishing on the market at times, our local manager reports. The market needs more quality inventory, but most folks seem to be waiting until after the holidays. The Los Altos area luxury market (homes priced over $3.5M) is steady but, flat – with days on market and inventory going higher – and frenzy bidding or multiple offers being the exception as opposed to the rule. The number of sales in this market is down. And at first glance, inventory would appear to be abundant however, with so few homes actually on the market this number is more of a “false” negative, according to our local manager. Our San Jose Almaden manager says the listing market is coming into the holidays. There’s been an uptick in sales probably due to the interest rate increase panic. It’s really more of the same with median sales price and units sold. Almaden Valley had a median sales price of $1,343,000, up 5% from last year and just down 1% from last month. Units sold were 26 for the month, just two less than last month but eight more than last year. Blossom Valley’s median home price was $740,000, which is the same breakdown as Almaden for last month and last year, up 5% from last year and down just 2% from last month. Our San Jose Main office manager says that similar to the last couple years, inventory continues to decrease to very low numbers during the November-December months. This year smart buyers are still out there taking advantage of some buyers who are waiting for the new year to resume shopping. Fewer buyers would normally mean a buyer’s market, however sellers too are waiting – thus creating a frenzy for homes ready to move into and priced right. Multiple offers are seen again and sales in 7-10 days are not uncommon. Smart sellers are getting their homes on the market now so they have less competition. Local economic predictions see continued growth and great employment, which shows signs of a strong housing market through most of next year. Any increase in interest rates will have limited effect on market activity as buyer demand will remain strong and the inventory shortage will continue. Willow Glen’s active listing inventory continues to contract. Our local manager says the market hit the low 40”s count from a mid-70’s count just a few weeks ago at Thanksgiving. Agents are reporting very busy traffic at open houses with buyers ready to pull the trigger. Two properties sold with over 15 offers and $100K over list price and zero contingencies. It appears the interest rate hike has thrown many buyers off the fence as rates continue to tick up, their buying power shrinks.
South County – The real estate market in South County has definitely slowed, our local manager notes. Presently there are fewer listings coming on to the market and sales are down from several months ago. There are several contributing factors for this phenomenon, the most obvious being the arrival of the holiday season. Other, more direct reasons, however, center around increased mortgage interest rates. During the past several months consumers have had to factor in higher rates coupled with higher list prices resulting in fewer sales and closings. The housing market, at least in South County, has shifted from one that favored sellers to one where buyers have more choices. It would seem that the significant shift in market conditions is just one more example of the market becoming more balanced, our manager believes.
Tahoe & Truckee – The 2016 real estate market in North Lake Tahoe and Truckee has been a remarkable year for both sellers and buyers, according to our local manager. There continues to be considerable activity in the market as many Buyers and savvy investors are actively looking for homes. For Seller’s there is demand for properties in the market with inventory down. For Buyer’s, even though inventory is down from last year, there are quality properties to choose from throughout the north Lake Tahoe and Truckee areas. With current home prices and favorable mortgage interest rates, real estate investors are taking advantage of this market and acquiring homes in many of the Lake Tahoe and Truckee resort communities. Luxury sales are up 59% year over year.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area and Sacramento-Tahoe president Mike James exploring the local Northern California housing markets. Click here to view past issues.