Housing Recovery Still on Track- But Economic Headwinds Remain
The housing recovery here in the Bay Area and across the country remains solidly on track, according to a variety of industry reports. But a handful of economic headwinds, from higher interest rates to steadily rising home prices, pose challenges as the fall home selling season kicks off.
A recent article in the New York Times noted that homebuilders are moving forward with construction, sellers are finding plenty of eager buyers and even overly cautious mortgage lenders are finally opening up the purse strings and making more loans these days.
Pent up demand from consumers coupled with a lack of inventory of homes on the market have driven prices up 12.4 percent between July 2012 and July 2013, according to the recent Standard & Poor’s Case/Shiller Home Price Index of the nation’s 20 largest metro areas.
But higher prices and rising rates could cool the red-hot housing market a bit, some economists told The Times.
Mortgage interest rates jumped from 3.4 percent for a 30-year fixed-rate loan earlier this year to about 4.5 percent in recent weeks, as the Federal Reserve signaled its intention to begin tapering the bond-buying program that has kept rates artificially low.
Rising rates could be responsible for pending home sales dipping in July and August, according to the National Association of Realtors, although sale contacts for existing homes last month remained above 2012 levels.
The good news for buyers is that rates dropped back down to 4.32 percent this week, according to Freddie Mac, as the Fed decided not to begin tapering its bond purchases – at least for now.
Here in the Bay Area, we just released our monthly luxury housing market reports and all regions saw strong year-over-year gains while posting seasonal declines from July to August.
Just a few of the highlights:
There were 172 luxury sales over $1.5 million in Silicon Valley in August, a 47 percent surge in sales compared to a year ago. There were also 80 sales over $2 million, up from 46 last August. The median sale price edged up 1 percent to $1,917,500.
Marin luxury sales over $1 million climbed even more, jumping 57 percent last month to 118 units. And the number of multi-million-dollar sales tripled during that period. The median price edged up 3.2 percent.
Finally, East Bay luxury sales over $1 million set the pace for the Bay Area, spiking 74 percent to 273 transactions in August. The median sale price, however, dipped 3.5 percent from a year ago.
Anecdotally, we’ve seen the overall market slow just slightly although it remains very healthy – just not as crazy of a sellers’ market as it was a couple of months ago. Well-priced homes are still selling in a timely fashion and there continues to be cases of multiple offers, just not as many offers and not way over the asking price.
More listings are gradually coming on the market and that’s giving buyers more to choose from. And they have a little more time to make their decisions instead of being forced to fight it out with a dozen other bidders for a handful of properties, as we saw earlier in the year. That’s not necessarily bad; it feels like a healthier, more sustainable market.
We’ll report out in the next few weeks on San Francisco’s third-quarter luxury market and have a better idea of how the rest of the Bay is doing as we begin the fall home selling season. Stay tuned.
Below is a market-by-market report from our local offices:
95 Cloud View Rd
North Bay – Our Northern Marin office says agents are seeing very few short sales and REOs come up for sale, as the market continues to stabilize – and increase. In Novato, we saw a month-over-month increase in the average price of Novato SFDs. The Petaluma area market shifted this week to a more traditional model with FHA and VA buyers dominating the mix of multiple offers. We are starting to see more offers contingent on the sale of another home, but multiple offers continue. As new resale homes come on line the open house attendance seems very robust garnering overflowing groups on well-priced homes. The demand is still for more listings. In Sonoma County inventory is steadily increasing, our Santa Rosa manager says. Open houses in the past week or two have been poorly attended and we are seeing more price reductions as sellers are adjusting to a dramatic change in demand in price points above $400,000. Where the market responded to appropriately priced properties earlier in the spring/early summer time frames with double digit multiple offers, we are seeing four or five offers for the sellers to consider now. In August 63% of the County’s sales were below $500K and currently that price point is 33% of inventory. However, on a positive note we expect to see a commensurate increase in the median price due to this lack of inventory in the lower price point. Sebastopol agents have experienced a little slowdown in sales these past two weeks but plenty of potential buyers are still out looking. One new listing had over 75 individuals come through at the open house and had multiple offers by Monday. Price, location and condition – if you have all three aligned the property is sure to sell.
San Francisco – Our Lombard office manager says there’s change in the air – not just an increase in inventory over the last two weeks, but more solo offers, some offer dates come and go, and there are some price reductions. Nevertheless, still evidence of well (or under) priced attractive properties bringing multiples: one sale this week 14 offers, 23% over. With a bump in inventory from sellers holding out until after Labor Day, Market Street agents saw an increase in the number of ratified deals. However, this increase in inventory is looking to be short-lived, and the market is returning to the way things have been throughout the year (too many buyers and not enough properties for sale). While the majority of listings continue to receive multiple offers (anywhere from two to six during this period), one well-priced and well-located condo had 11 disclosures out but did not receive any offers on its offer date (one arrived a day later). So, while buyers may be experiencing fatigue, if they remain diligent, there are opportunities to be found. Our Sunset manager says open houses are still well attended but just not as busy as three months ago. Some open houses are having 10-20 groups while some have 100 groups. It really depends of the neighborhood and price point.
Read more here.
Do not hesitate to contact me at (415) 832-9151 for any real estate purpose you may have.
Janice Lee
415-832-9151
International President's Elite
Top Producer, Realtor
JaniceFLee@gmail.com
www.JaniceLeeHomes.com
BRE #01720205
A recent article in the New York Times noted that homebuilders are moving forward with construction, sellers are finding plenty of eager buyers and even overly cautious mortgage lenders are finally opening up the purse strings and making more loans these days.
Pent up demand from consumers coupled with a lack of inventory of homes on the market have driven prices up 12.4 percent between July 2012 and July 2013, according to the recent Standard & Poor’s Case/Shiller Home Price Index of the nation’s 20 largest metro areas.
But higher prices and rising rates could cool the red-hot housing market a bit, some economists told The Times.
Mortgage interest rates jumped from 3.4 percent for a 30-year fixed-rate loan earlier this year to about 4.5 percent in recent weeks, as the Federal Reserve signaled its intention to begin tapering the bond-buying program that has kept rates artificially low.
Rising rates could be responsible for pending home sales dipping in July and August, according to the National Association of Realtors, although sale contacts for existing homes last month remained above 2012 levels.
The good news for buyers is that rates dropped back down to 4.32 percent this week, according to Freddie Mac, as the Fed decided not to begin tapering its bond purchases – at least for now.
Here in the Bay Area, we just released our monthly luxury housing market reports and all regions saw strong year-over-year gains while posting seasonal declines from July to August.
Just a few of the highlights:
There were 172 luxury sales over $1.5 million in Silicon Valley in August, a 47 percent surge in sales compared to a year ago. There were also 80 sales over $2 million, up from 46 last August. The median sale price edged up 1 percent to $1,917,500.
Marin luxury sales over $1 million climbed even more, jumping 57 percent last month to 118 units. And the number of multi-million-dollar sales tripled during that period. The median price edged up 3.2 percent.
Finally, East Bay luxury sales over $1 million set the pace for the Bay Area, spiking 74 percent to 273 transactions in August. The median sale price, however, dipped 3.5 percent from a year ago.
Anecdotally, we’ve seen the overall market slow just slightly although it remains very healthy – just not as crazy of a sellers’ market as it was a couple of months ago. Well-priced homes are still selling in a timely fashion and there continues to be cases of multiple offers, just not as many offers and not way over the asking price.
More listings are gradually coming on the market and that’s giving buyers more to choose from. And they have a little more time to make their decisions instead of being forced to fight it out with a dozen other bidders for a handful of properties, as we saw earlier in the year. That’s not necessarily bad; it feels like a healthier, more sustainable market.
We’ll report out in the next few weeks on San Francisco’s third-quarter luxury market and have a better idea of how the rest of the Bay is doing as we begin the fall home selling season. Stay tuned.
Below is a market-by-market report from our local offices:
95 Cloud View Rd
North Bay – Our Northern Marin office says agents are seeing very few short sales and REOs come up for sale, as the market continues to stabilize – and increase. In Novato, we saw a month-over-month increase in the average price of Novato SFDs. The Petaluma area market shifted this week to a more traditional model with FHA and VA buyers dominating the mix of multiple offers. We are starting to see more offers contingent on the sale of another home, but multiple offers continue. As new resale homes come on line the open house attendance seems very robust garnering overflowing groups on well-priced homes. The demand is still for more listings. In Sonoma County inventory is steadily increasing, our Santa Rosa manager says. Open houses in the past week or two have been poorly attended and we are seeing more price reductions as sellers are adjusting to a dramatic change in demand in price points above $400,000. Where the market responded to appropriately priced properties earlier in the spring/early summer time frames with double digit multiple offers, we are seeing four or five offers for the sellers to consider now. In August 63% of the County’s sales were below $500K and currently that price point is 33% of inventory. However, on a positive note we expect to see a commensurate increase in the median price due to this lack of inventory in the lower price point. Sebastopol agents have experienced a little slowdown in sales these past two weeks but plenty of potential buyers are still out looking. One new listing had over 75 individuals come through at the open house and had multiple offers by Monday. Price, location and condition – if you have all three aligned the property is sure to sell.
San Francisco – Our Lombard office manager says there’s change in the air – not just an increase in inventory over the last two weeks, but more solo offers, some offer dates come and go, and there are some price reductions. Nevertheless, still evidence of well (or under) priced attractive properties bringing multiples: one sale this week 14 offers, 23% over. With a bump in inventory from sellers holding out until after Labor Day, Market Street agents saw an increase in the number of ratified deals. However, this increase in inventory is looking to be short-lived, and the market is returning to the way things have been throughout the year (too many buyers and not enough properties for sale). While the majority of listings continue to receive multiple offers (anywhere from two to six during this period), one well-priced and well-located condo had 11 disclosures out but did not receive any offers on its offer date (one arrived a day later). So, while buyers may be experiencing fatigue, if they remain diligent, there are opportunities to be found. Our Sunset manager says open houses are still well attended but just not as busy as three months ago. Some open houses are having 10-20 groups while some have 100 groups. It really depends of the neighborhood and price point.
Read more here.
Do not hesitate to contact me at (415) 832-9151 for any real estate purpose you may have.
Janice Lee
415-832-9151
International President's Elite
Top Producer, Realtor
JaniceFLee@gmail.com
www.JaniceLeeHomes.com
BRE #01720205
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