Epicenter of luxury housing market moving north from LA to Bay Area
Posted on December 2, 2012
If you had any doubt that the Bay Area in general – and Silicon Valley in particular – is rapidly becoming the center of the luxury housing universe, a new study out this week should put that to rest. Coldwell Banker's annual Home Listing Report confirmed that the epicenter of luxury housing has moved from Southern California to Northern California, due in large part to the influence and success of the technology industry.
This year's most expensive market in the national survey was Los Altos, where the average listing price for a four-bedroom, two-bath home is $1,706,688. In fact, seven of the top 10 most expensive markets were all in the Bay Area (plus Carmel) and 10 of the top 15 were local as well. This is a big shift from the days not long ago when posh Southern California locals like Newport Beach dominated the top end of the survey.
Besides Los Altos, ranking in the top 20 most expensive markets this year were Saratoga, Menlo Park, Palo Alto, Los Gatos, Carmel, San Carlos, Cupertino, San Francisco, Belmont, and Redwood City. There are actually more high-end Bay Area cities that would show on the report – but to keep consistency as they compare across the US, the report ranks only 4 Bdrm-2 Bath homes. As you know, we have towns such as Woodside, Hillsborough, and Belvedere for instance with higher average prices than those on the report – but it’s hard to find a home with only two baths among these communities
As I mentioned in the news release, the success of many of our native tech companies has shined a spotlight on Silicon Valley and our real estate market in the San Francisco Bay Area. Listing prices in our market are a product of ongoing high demand, projected population growth and the low inventory levels of homes in what is one of the most desirable locations to live.
In contrast to prices here in the Bay Area, the most affordable market in this year's national survey is Redford, Michigan, where a similar home, four-bedrooms, two-bathrooms, is listed at $60,490 – a listing price difference of more than $1.6 million. In fact, 28 homes can be purchased in Redford for the price of a similar home in Los Altos.
Overall, the report found the average listing price of a four-bedroom, two-bathroom home in the U.S. to be $292,152. Affordability remains strong in many markets across the country as 36 percent of the markets analyzed by the report had an average home listing price of less than $200,000 for four-bedroom, two-bathroom homes.
The annual Coldwell Banker HLR provides a snapshot of the average listing price of four-bedroom, two-bathroom homes across the country. This year’s report analyzes more than 72,000 home listings in more than 2,500 U.S. markets, comparing the listing prices of similar homes in markets across the country from January 2012 to June 2012.
One reason we do this survey every year is that it serves as a good apples-to-apples comparison of similar homes in various markets to provide relocating buyers and others with useful information about the many housing markets across the country.
Despite our pricy real estate here in the Bay Area and in the LA area, interestingly enough California was not the most expensive state. The average listing price of a four-bedroom, two-bathroom home in California ($431,625) is less than both Hawaii ($742,551) and Massachusetts ($489,063).
For more information and to see where your various cities ranked in the study, here's a link to the national news release on the HLR survey. And here is an interesting video which tells the Bay Area story: http://tinyurl.com/bwrtdev
Below is a market-by-market report from our local offices:
North Bay – The Marin market continues to thrive well beyond our wildest expectations, according to our Central and Southern Marin manager. Yet, for as much business as we’re doing, inventory is at record lows, and multiple offers rule the day. It’s a wonder agents are able to get as many sales into contract as they are – well above last year’s numbers. The upper end of the market continues to thrive. Properties in escrow last week included $2+ million, $3+ million and $6+ million properties in Belvedere. The Bowman Group (#1 in Ross and #2 in Marin) just closed a home at 8 Upper Road for close to $4 million and the hits just keep on coming! We are now seeing more properties in the $3 and $4 million range. In the past it’s been plentiful in the $2 million range, but jumped up to $5 million with little in between. We seem to be closing the gap there a little. We are bracing for a strong 2013 and already preparing listings for the spring. Our Santa Rosa manager says inventory for single-family homes across Sonoma County has dropped 9 percent within the last week. It has fallen by 30 percent since mid-June. When a property is priced well, it is continuing to sell quickly. However, when priced lower than market, there is an irrational response. One home was put on the market last week at about 16 percent under what one would consider market value and it received 28 offers, disappointing 27 buyers. We are continuing to attempt to get the word out that now is the time to sell and are finding it difficult to meet the demand of homebuyers.
San Francisco – Multiple offers still abound but the market seems to be slowing down for the holidays, our Lombard manager reports. Competitive bids are producing shorter loan and appraisal contingencies and closing dates that the banks can’t match. Lots, if not most, financed deals are not closing on time. Our Van Ness manager is seeing increased year-end activity with many sellers looking for buyers who will close by year-end so the sellers can minimize their tax liability for 2013.
SF Peninsula — Our Burlingame office saw a brisk local market right up to the holiday. New inventory of any kind is sought after. Agents are writing offers the first few hours of a property coming to market. It's all pretty crazy with 20+ offers on some properties and final sales prices $200-300 thousand over asking price as a common occurrence. There have been a few appraisal problems. There has been steady activity on the coast even with the Holiday’s approaching, our Half Moon Bay manager notes. Competition is still fierce for anything under $1.5 million, our Menlo Park manager reports. Menlo Park, Palo Alto, Los Altos and San Carlos all have less than a one-month's supply of inventory and Atherton about two months. Mountain View has 3 weeks! The Palo Alto area is experiencing seasonally high activity –very strong demand for the most desirable location and in all price points. Our Redwood City manager says these are very unpredictable times. With a tremendous lack of inventory there's a fair amount of frustration on both the clients’ and the agents’ part. The San Mateo area is looking at the holiday slow down. Our local office is working with those clients undecided about making a move before or after the New Year.
East Bay – Buckle your seat belts, our Berkeley manager warns. This market is not for sissies. She's hearing hair raising tales from agents of fabulous, all cash, non-contingent, large deposit, as much as 40% over asking, fast close offers coming in fifth against 10 offers. Our Danville manager says inventory remains critically low in San Ramon, Dublin and Danville. While demand up to $800,000 is strong, the high end has slowed. Agents holding homes open report an influx of interested buyers. Sellers are still wary of putting their home on the market out of fear of not being able to find replacement housing. Low inventory continues to drive competition in the Lamorinda area. Multiple offers continue, reflecting the inventory levels. Our Walnut Creek manager says local inventory continues to be low. Agents are increasing new home sales, but even that inventory is beginning to diminish. Short sales are starting to move faster as we approach the year-end.
Silicon Valley – It's been remarkably busy for this time of year, according to our Cupertino manager. Activity remains unseasonably strong in the Los Gatos area as the holiday season begins. Buyer’s agents are beginning to have some success getting their buyers into contract. Prices under $700K are up approximately 20% over this time last year, our San Jose Almaden manager says. Over $700K prices are up approximately 10-15%. One recent condo sale was listed for $265K last sale $245K two months ago, and it sells for $310K with 22 offers. Amazing! Our San Jose Main office manager says the local market seems to be slowing a bit, most likely due to the upcoming holidays. Open house activity was strong over the past two weekends. Meanwhile, our Willow Glen manager reports agents are seeing a significant drop in the number of new listings coming onto the market with the belief that many sellers are waiting until after the New Year to put their homes on the market. Those who are listing are very motivated to sell and close escrow by the end of the year maybe to avoid any and all future capital gains and the new 3.8% investment tax. We are still experiencing agents writing several offers for buyers anxious to get into contract, and buyer demand is still very strong in all price points. The Saratoga area market continues to be crazy. It seems like virtually every property has multiple offers. Buyer’s agents continue to be frustrated over the lack of inventory.
South County – The Gilroy market has had a huge drop off in inventory – only 54 homes for sale – less than one month worth of supply. There are only two short sales and two REO’s active in Gilroy. What an incredible shift over the past few years when this market was well over 60% distressed. Without inventory, open houses are scarce. Properties are not lasting on the market for more than several days – or hours in some cases. Markets to the south – San Benito County and the Salinas Valley markets are faring no better – with multiple offers, overbidding, and appraisal issues rampant. There's been a huge drop off in REO’s. An unusual phenomenon is occurring in Morgan Hill—new home construction. It seems that since the first of the year—many new home communities are opening or just breaking ground. These tracts range in price from $300,000 (senior living complexes) to a new “gated” community with starting prices at $1.3 million. As listings continue to be scarce, the ability to show and sell new construction certainly increases options for buyers and agents alike. As of 11/21/2012 there were only 69 single-family (resale) homes on the market in Morgan Hill. In addition there are only two active condos. It continues to be a sellers’ market in all of South County.
Monterey Peninsula – Our local manager says that agents have been so busy with buyers looking for properties that they a hard time taking a day off for Thanksgiving, and especially because our local offices tend to have more people visiting for the four-day holiday weekend. Most properties that are priced price, in good location and reasonably good condition are selling quite readily and buyers know it and know they have to stay on their toes watching for new properties coming on the market.
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