Northern California had a strong start to the Spring home buying season notwithstanding low inventory. The housing market continues to experience an abundance of buyers, and in most cases, multiple offers on reasonably priced listings. New listings continue to come on the market, but not at a rate that meets buyer demand.
According to the National Association of REALTORS® (NAR), existing-home sales reached their highest pace in 10 years during March largely due to low inventory.
“The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home,” said Lawrence Yun, NAR chief economist. “Sales will go up as long as inventory does.”
Northern California continues to sustain a sellers’ market due to its low inventory. Most reasonably priced listings receive multiple offers because buyers continue to outnumber the listings. However, there are not as many buyers for luxury properties in most regions.
Northern California has continued to maintain its strong Spring start into May. Here’s what was happening in our local Northern California offices earlier this month:
East Bay – The year-over-year first quarter statistics for the East Bay area: Alameda saw its overall median sales price increase 4 percent from $818,500 to $849,500 reflected in a 6 percent leap in short sales and foreclosures from $935,000 to $990,000 and a 10 percent jump in condos and townhomes from $655,500 to $722,250. Oakland’s overall median increased from $550,000 to $625,000, representing a 14 percent increase. Short sales and foreclosures moved from $550,000 to $650,000, representing an 18 percent increase, and condos and townhomes moved from $556,144 to $561,254, representing a 1 percent increase. Berkeley now has an overall median price of $1,055,000, representing a 21 percent leap. Short sales and foreclosures grew from $901,000 to $1,100,000, showing a 22 percent increase. Condos and townhomes went from $565,900 to $762,500, increasing 35 percent. Albany grew from $733,000 to $870,000, showing a 19 percent increase, with single-family houses jumping from $848,888 to $975,750, which is a 15 percent increase, and condos and townhomes moving from $418,000 to $525,000, which is a 26 percent increase. El Cerrito also saw significant gains with the overall median moving from $740,000 to $885,000, representing a 20 percent increase, and short sales and foreclosures moving from $775,000 to $915,000. Buyers continue to outnumber the listings as inventory remains less than a one-month supply.
Monterey County – The top five companies in Monterey County for the month of May saw a 25 percent decrease in units and sales. The average price is hovering around the $1 million mark. The last seven days, 14 properties went into contract in all price points, but the under $1 million price point still continues to be the most competitive. The inventory has tightened and prices seem to have peaked. As a result, buyers appear to be waiting for price adjustments or making low offers to get the negotiations started.
North Bay – For Greenbrae, inventory continues to be outpaced by demand, and multiple offers continue to be prevalent. Buyers are negotiating more once they get into contract, which has led to more escrows falling out than normal. In Novato, the luxury market over $1 million has improved. Currently 50 percent of the inventory is in contract with the majority in the $1 million to $1.5 million range. A new listing in Novato this week priced at $1.2 million sold less than seven years ago for $600,000 with little remodeling done. Prices will continue to trend upwards as inventory remains low. During April, the number of units sold in Novato was slightly higher than last April and prices were up 5 percent to a median price of $915,000. The average days on market went down 10 percent to 26 from 29 last year. There has been an increase in listing inventory, but it only equates to two months of available inventory. Currently Novato has 55 active properties and 80 properties in contract. In Santa Rosa, many properties are receiving multiple offers and many buyers continue to write offers even though their previous offers have not been successful. Total sales for April were 15 percent below sales from April of last year and more than 4 percent below sales from March of this year. April over April median price in Sonoma County is up just under 10 percent. In Sebastopol, listing agents are seeing offer dates come and go on properties in all price ranges, but buyers’ agents are still competing for properties. Interest rates still remain low, and more buyers are heading north from the Bay Area.
Placer County – In Tahoe, the luxury sales for properties priced above $1 million are down 20 percent from 2016. For 2017, there have been 65 luxury properties sold as compared to 82 sold last year for the same period. The median sales price for luxury properties in 2017 thus far is $1,425,000, which is down 3.5 percent from the median sales price of $1,476,405 in 2016. The average sale price of luxury homes in year to date stands at $2,148,121 as compared to $2,371,101 in 2016 and is down almost 10 percent.
There continues to be considerable interest in the market as many buyers and investors are actively looking for homes. With the continued favorable mortgage interest rates and inventory coming, buyers will be able to acquire homes in many of the Lake Tahoe and Truckee resort communities.
Sacramento County – In Fair Oaks, the market is bifurcated. There is more luxury inventory than buyers, but the under $400,000 market is still a sellers’ market with listings receiving multiple offers. In Sierra Oaks, the luxury market is strong with an increase in activity. Overall, there are more listings and buyers moving forward. In El Dorado Hills, there is luxury market inventory for up to a year, but the luxury market has slowed. Four luxury homes were listed and only two luxury homes went into escrow. None of the homes that closed during this period were in the luxury market. There is little inventory of homes under $600,000. Open houses have anywhere from six to 35 groups each week, which produce many leads. There are still numerous buyers from the Bay Area, especially East Bay, but there has also been an increase in buyers from the Elk Grove to El Dorado Hills area. There was a large open house held at Serrano last week with a great turn out with people from the Bay Area. These large open houses happen every second Sunday of the month—weather permitting. Land seems to be selling at a greater pace than seen in recent years. Builders are looking at buying several lots. New subdivision lots are selling as well as previously sold lots. There is some seller financing on some of these lots that is very attractive to many buyers. There is still little affordable workforce housing available in many areas. Programs are being proposed that would streamline some of the processes and fees to aid in the construction of new homes as well as second homes on properties that already have one home. In Elk Grove and West Sacramento, there has been an increase in the number of listings in the past two weeks. However, inventory remains below one month and is down 25 percent from last year at this time. Average sales prices in Elk Grove for the month of April were over $400,000, which is up 11 percent from April 2016. The average days on the market has continued to decline and is 45 percent less than the 2016 average days on the market. There is a huge demand for homes in Elk Grove in the under $350,000 range and a lack of homes available in that price point. In several cases offers on properties have come in well above asking. For example, a listing at $450,000 received offers as high as $45,000 over asking price while a property listed at $390,000 received offers as high as $30,000 over asking price. In many cases, buyers in the under $400,000 price point marker must submit several offers before one gets accepted. Open houses have continued to see huge turnouts with several this past weekend including up to 25 or more attendees. There have been many buyers from outside of the local market, with the majority from the Bay Area.
SF Peninsula – In Burlingame, the demand for all properties is once again high due to low inventory. Inventory is growing, but it is still historically low. Almost all of the properties that sell are receiving multiple offers and are selling for much more than the list price. In Half Moon Bay, there are 45 listings currently for sale. Most experience an average 60 days with a low of four days and high of 365 days. There are currently 17 pending listings. Most experienced an average of 42 days on the market with a low of one day and high of 269 days. There were a total of 32 recently sold listings. They spent an average 31 days on the market with a low of one day and high of 220 days. Half Moon Bay has a little over a two-month supply of inventory. Menlo Park continues to have low inventory. Listings in the lower price ranges of $2 million and below, and listings above $2 million sell very fast. For Palo Alto, inventory in year-to-date is substantially lower in the area as well as in the North and South. In Redwood City, there continues to be low inventory but each mid-peninsula city and town is gradually gaining a little more inventory. Buyers are becoming a little more cautious with their offers, which means there are not as many multiple offers, but most property listings still receive two to five offers. In San Mateo, inventory is picking up. Woodside and Portola Valley still have very low inventory and most homes receive preemptive offers.
Santa Cruz County– The number of homes listed for more than $1 million is approximately the same as 2016. The number of sales for properties over $1 million dollars is slightly lower than those of April 2016. There have been several additional sales this April compared to last year, which appears to be a trend that will sustain through the summer. The real estate market in Santa Cruz County is still showing attributes of a sellers’ market. There are multiple offers on well-priced properties, primarily for properties listed under $1 million dollars. There are approximately nine single-family homes hitting the market per day. However, the total inventory of single-family homes in Santa Cruz County is 317, which is quite low. Inventory is approximately 20 percent below 2016.
Silicon Valley – In Cupertino the luxury market remains steady. Last week saw the most sales pending in Santa Clara County for year-to-date. Inventory has increased but there is still high demand for more inventory to satisfy buyer needs. New home developments are springing up all through Morgan Hill and Gilroy. Many developers are offering upgrade incentives and mortgage assistance to attract more potential buyers to their new homes. As a result, house tours now include new home developments as well as lived in properties. In Los Altos, the luxury market — homes priced over $4.5 million — is steady, but multiple offers continue to be the exception. Overall, inventory levels are still very low compared to buyer demand. Currently, there is less than one month’s worth of inventory in Los Altos. Most homes are receiving multiple offers, which typically leads to a sales price that is over asking. The market in Mountain View is even hotter with barely two weeks’ worth of inventory. The number of homes coming on the market for sale each week is slowly on the rise in both the Los Altos and Mountain View areas. However, these homes are being absorbed quickly and are selling very fast. Most homes coming on market are priced to induce offers and are selling in less than 10 days. The markets of Los Altos and Mountain View are still very strong and extremely robust.
Market Watch is a bi-weekly column exploring the Northern California housing market. Click here to view past issues.