My how things have changed in just one year! A year ago at this time, many homes were languishing on the market as buyers stayed on the sidelines, worrying about their jobs, the sharp decline in their 401k accounts, and whether housing prices would ever rise again. Today, many of those buyers have swallowed their fears and are out in force once again, spurred by an improving economy, a solid recovery in the financial markets, and federal home buyer tax credits that will expire this spring.
While no one claims the housing market is out of the woods yet, an unusual dynamic is occurring in many communities around the Bay Area: Despite the choppy housing market, there is an army of confident, well-qualified buyers out searching for homes, but many sellers are now sitting on the sidelines! One listing in San Francisco’s Outer Mission neighborhood priced in the mid-$500,000 drew more than 100 groups during a two hour open house during the past holiday weekend.
Inventory shortages continue to be the challenge in many areas. In Santa Clara County and the East Bay, for example, the number of homes for sale is standing at half of what it was a year ago! This has resulted in as many as half of the listings on the market attracting multiple offers as buyers fight it out for the best properties.
This conundrum has resulted in prices rising even as sales are falling. DataQuick, the La Jolla-based research firm, reported that the median sale price of homes and condos in the Bay Area shot up almost 17 percent year over year in January while sales dipped 4 percent. The biggest jump in the median price was 18.3 percent in San Mateo, but all counties (except Napa) saw strong increases. (see chart below) The upper end of the market is particularly sensitive to this trend, as illustrated by Santa Clara County, which saw sales of million-dollar homes half of what they were a year ago even as prices rose 4 percent, according to Coldwell Banker Residential Brokerage’s luxury market report.
Santa Cruz County: There are many multiple offers on homes under $700,000 and REO properties and short sales. REOs and short sales continue to have a very strong influence in sales, pricing, and overall market activity. There seems to be a lot of anxious buyers waiting on the sidelines for the right property to appear. Buyers seem to acknowledge with some positive economic news that it is an optimum time to purchase – maybe the most optimal time ever. Inventory still continues to be an issue, although as we move toward spring and warmer weather we are seeing more homes coming on the market.