Bay Area’s high-end housing market gaining momentum
March 21, 2010 | Leave a comment
Along with the beautiful early spring weather, the Bay Area’s housing market is gradually starting to warm up, too. We’re off to a much more robust and healthy start this year, and it’s not just in the lower price ranges. The mid-to-upper level market is picking up from Silicon Valley through the Peninsula and up through Marin and across to parts of the East Bay.
As I mentioned in an interview with the San Jose Mercury yesterday, after the financial market meltdown a year ago, high-end home sales dried up during the first half of 2009. Compared to those days, homes sales in higher price ranges are much more active now, pushing up median prices around the Bay. And with relatively few homes on the market in Silicon Valley and on the Peninsula, prices have stabilized and buyers are now competing for good listings.
Half of the sales reported by our Los Altos office drew multiple offers, for example. One Sunnyvale home listed at $950,000 drew 12 offers and sold for more than $1 million. In Palo Alto, we’re seeing eight to 10 multiple offers for properties that are well-priced. The San Francisco Van Ness office says some well-priced high-end listings are selling in 10-15 days. The same story is being told in Menlo Park, Southern Marin, Orinda – in fact, most of the Bay Area’s higher-end markets.
We just released our Coldwell Banker Residential Brokerage Luxury Report this week, and it shows million-dollar home sales in Marin nearly tripled last month from a year ago, while the median sale price jumped 25 percent. The same was true in Silicon Valley, where luxury sales nearly doubled as the median price edge higher.
Now don’t get me wrong. While we’re seeing a promising recovery in many of our markets, we’re still fighting our way back to normalcy. The nation’s economy recovery is still very fragile. And the housing market’s gradual improvement must be sustained over time in the face of a challenged job market. But the signs are encouraging that all sectors of our local housing market are slowly coming to life again.
Here’s a market-by-market report from our local offices:
San Francisco— The San Francisco market has the buyers – it just needs more sellers! The Van Ness office says that sales activity is very strong in $800k to $1.5M range – frequent multiple offers and selling after just 10 to 15 days for listings priced right. They’ve seen a few very high-end Previews property sales in the past two weeks, plus a fair amount in the $2M to $4M range. Some older listings still sitting while newer to market are going pending –price and condition is critical. Buyers are definitely out there looking at open houses, the Noriega office reports. One open house in the Outer Sunset, price in the mid $600,000 drew over 200 people during a three-hour Sunday open house. They expect to have over 10 offers. Value properties are definitely flying off the shelf. The Lombard and the Market Street offices say that business has definitely picked up, the majority of offers in some neighborhoods now multiple. But as with elsewhere in the City by the Bay, agents are frustrated by the lack of inventory.
SF Peninsula— Sales are better than last year and the spring market looks promising in Burlingame, although buyers are taking their time to make a decision or the right inventory is not available now.
The entry-level price for Hillsborough is now very competitive with Burlingame and higher end San Mateo. There are some excellent buys right now. Menlo Park offices report steady or increasing activity. One property listed for $1,749,000 had six offers and went substantially over the list price. Well-priced properties are getting a lot of buyer attention with open houses very busy in all price ranges. In Palo Alto, Inventory is low compared to years past. If well priced, we see eight to 10 multiple offers above list price. It appears that buyers in Redwood City and San Carlos are thinking we are beginning to see a turn around and now is the time to buy. Properties that show well and are priced right are starting to sell quickly. Things are also heating up in San Mateo, where six out of 10 listings are attracting multiple offers.
Silicon Valley– Both sales and inventory are picking up steam in Los Altos, as half the sales are multiple offers. One new listing in Mountain View priced at $799K had over 165 groups through the first open houses last weekend. Los Gatos also reports a “dramatic” increase in activity. In San Jose’s Almaden area, entry-level to moderately priced homes are in high demand with nearly all selling with multiple offers. Prices are rebounding in Blossom Valley. The San Jose Willow Glen office is seeing more listings and buyers. Meanwhile, the San Jose Main office says activity over the past two weeks seems to have slowed a bit, but open houses remain active. Saratoga is still reporting very low inventory, down 28% from last year.
North Bay— There is a renewed sense of optimism among agents, reports the Greenbrae office – more properties are coming on the market, more multiple offers and more buyers stepping up to the table. Buyers now know a good deal when they see one and realize the time to strike is now. Activity is also increasing in Northern Marin, with the majority of the new inventory not distressed. Properties are still seeing multiple offers when priced well. Buyers are pouring into open houses in large numbers. One listing held open last weekend in Novato had over 70 people. It’s still a buyers market in Southern Marin as high end listings have been increasing rapidly (97 listings over $2 million). Santa Rosa reports inventory is still tight with multiple offers the norm in the lower price points – home above $500k are finally starting to be shown and sales are trickling in. Petaluma also is seeing a pickup in activity above $500k. Most sales remain multiple offers in Sebastopol, with cash and large down payments continuing to beat FHA offers.
East Bay – There are a sea of buyers in Berkeley, but only a trickle of listings for them to choose. Listings are slowly coming in, but most sellers are not listing unless they have compelling reason to do so. It’s a different story in Castro Valley, where they’ve gone from a listing famine to more than they can handle, in all price points. But well-priced homes are still flying off the shelves, many with multiple offers and all-cash. Danville is seeing both inventory and sales activity gradually increasing over the past several weeks. Open house attendance has been very good and some buyers seem more optimistic. Ditto for Oakland-Piedmont, as well as Orinda and Walnut Creek, where the best properties are still getting multiple offers and agents are reporting more mid-week property showings. As anticipated, Fremont reports a steady increase of listings as we approach the spring selling season. Livermore reports a very healthy market in the Tri-Valley area with listings increasing 26% in Livermore, 35.5% in Pleasanton, and 32% in Dublin this year. Pending sales have also jumped 16-24% in local cities.
Santa Cruz – We’re seeing multiple offers on many properties, both lower and mid-range. Our local offices closed two sales over $2 million. Beach properties well priced continue to draw buyers especially under $1 million. Inventory levels remain very low and prices are slowly inching upward. The median price inched up to $500K from $380K a year ago with unsold inventory dropping to 844 single-family homes vs. 1,049 a year ago. But we’re not out of the woods. Distressed properties including short sales and bank owned units represent about 48% of new inventory, so we definitely are still experiencing a stressed market.
Monterey Peninsula — The beautiful early spring weather is bringing lots of visitors down to enjoy the climate and scenery on the weekends, so our many open houses have increasing activity, especially in Carmel. Many more consumers telling us this is a good time to buy with prices and interest rates down and still good inventory, except in the REO properties. Still, buyers are careful in their offers and negotiating, not willing to pay more than their perceived value of the property, so many offers going by the wayside. We have lots of short sales, still taking many months to get approved and closed – too long for some, generally the first buyer, so the homes are mostly going to the second or third buyer.
South County– The Morgan Hill office has had an interesting first quarter. January saw sales and listings at an all time low. The office rebounded in February and March with a large number of sales. First time homebuyers dominated the market as did cash investors. Good new for some sellers is that there are very few listings and demand remains very strong. The consensus among South County Realtors is that prices remain attractive, interest rates are favorable and that there are not many new homes being built in this area – hence demand remains high for re-sale houses.
Keep in mind that the Fed seems to have made it clear this week that they will end their purchase of Mortgage Backed Securities as scheduled. This will likely result in an interest rate increase as investors for these mortgages will need to be enticed.
That’s it for now. Have a great week!