Market Watch | Northern California Continues Pattern of High Prices and Low Inventory
Northern California Continues Pattern of High Prices and Low Inventory
The month of May saw a strong seller’s market and the pattern has continued into the summer months. This issue of Market Watch for Northern California puts the spotlight on climbing listing prices and tight inventory throughout the region, making it a seller’s market. However, today’s sellers need to be mindful that setting unrealistic prices will have their homes sitting on the market longer than anticipated. Savvy sellers who price their homes at or just below closed, comparable sales can see their homes bring in offers above their asking price – particularly in markets like San Francisco and Silicon Valley.
The only slowdown reported by some Northern California offices is house hunters taking holiday or vacation breaks, which reduced open house traffic in some markets. Other than that, buyers are out in full force looking for their next dream, vacation or investment home in our beautiful region. Working with the right sales associate to strategize pricing and marketing is key to a quick and seamless sale in today’s hot market. Equally important is working with the right associate to find the right property and negotiate terms for your home purchase.
Here’s what was happening in our local Northern California offices:
Monterey County – Monterey Peninsula offices had a record month with a 110% increase in sales and a 90% increase in unit sales. Now is the opportune time for both buyers and sellers, as asking prices remain strong and buyers are plentiful with no sign of a slowdown.
Sellers thinking to list their property should act now before the school year starts. Move-in ready homes are pulling in full price and above. Buyers need to stay focused and place their best offers in to secure that dream home. There are also opportunities for new construction with three new developments in the Marina. The luxury market in exclusive coastal Monterey announced a new listing at $25 million.
North Bay – While North Bay experienced a seller’s market with low inventory continuing, there has been some indication that buyers remain influential. In Greenbrae, many properties have stayed on the market for over 30 days prompting some price adjustments. Well-priced luxury homes in top neighborhoods continue to spur multiple offers, so appropriate pricing is key.
Novato saw a slight decrease in sales when comparing year-over-year sales in May. Buyers are looking at factors other than price, such as the property’s overall value and move-in condition. With the average price of homes in Novato around $900,000 and properties typically selling over list price, there has been an increase in sales over $1 million, giving buyers in that price range more options.
Santa Rosa Bicentennial had 1.9 months of inventory for properties under $1 million. However, in the luxury market ($1 million-plus), there were 71 sales, showing a 16% increase compared to 2016. While Santa Rosa Mission has seen a typical seller’s market with low inventory, affiliated sales associates warn that sellers should still price their homes at market value. The local market remains competitive and expectations for both sellers and buyers must be realistic. Southern Marin had a strong month in May, especially for properties under $2 million. The area reported slightly more inventory with less competition for buyers. The luxury market is seeing many options and activity, particularly in the $3-5-million range.
Placer County – Buyers and investors have remained active in the Tahoe and Truckee area as mortgage and interest rates remain favorable and inventory steadily increases. However, the luxury market has slowed in comparison to last year’s market. The average sales price is down 17% from 2016 and a year-over-year analysis shows 111 properties in 2017 as opposed to the 133 sold in 2016.
Sacramento County – Folsom saw a slight increase in listings with higher asking prices per square foot. Despite the higher prices, the average time on the market was only 23 days, reflecting the small supply and seller’s market. As a result, buyers had to act quickly and place their highest offers first. Fair Oaks saw a similar trend of high demand in price ranges under $450,000. Elk Grove saw properties under $400,000 in especially high demand.
The luxury market was not as active and required careful pricing to encourage potential buyers. Sierra Oaks saw a solid market overall, but with slight differences in market trends between neighborhoods. While most saw multiple offers in lower price-points, some were less active. Overall, both buyers and sellers had more success with agents who are knowledgeable about neighborhood nuances.
San Francisco – SF Market had a continued trend of little inventory with multiple offers. SF Lombard reported the most active properties were lower-priced units, whereas more expensive properties had less interest. SF Pacific Heights saw high transaction activity with no signs of slowing down. Multiple offers are still being made, even on properties that have been on the market for longer periods of time.
SF Peninsula – Half Moon Bay reported quick turnover with 21 days as the average time on market. In lower-priced properties, the number of days was as few as seven. Even with this quick-selling average, over-priced homes were more likely to sit on the market, while homes priced right often sold for more than asking. Menlo Park saw the same trend. A few offices saw slower open houses due to summer vacations and holidays, including Palo Alto and Menlo Park. Redwood City showed little inventory and multiple offers. San Mateo also reported multiple offers with a strong seller’s market, but with a steadier inventory.
Santa Cruz County– In Santa Cruz, increased inventory has somewhat leveled the playing field for buyers. Although inventory is 20% less compared to 2016, buyers continue to stay motivated. With property in the “affordable” range ($500,000-$700,000), many buyers have been successful with offers 5% over asking. In the luxury market, Santa Cruz homes are up 10% compared to 2016, with most offers made in cash.
Silicon Valley – Silicon Valley continued to see a seller’s market. Cupertino summed up the region’s best advice, encouraging potential sellers to list their homes and buyers to not be discouraged by the low supply. Gilroy and Morgan Hill had high demand for entry-level homes priced between $700,000 and $900,000. Luxury properties were not as active, typically sitting on the market until sellers reduce the asking price. The decrease in inventory has been prevalent in many offices. Los Gatos saw a 15% decrease in inventory with a 10% increase in sales prices.
San Jose Main had 837 properties for sale compared to 1400 in 2016. San Jose Willow Glen is also at record lows for active listing inventory. Saratoga saw a slight uptick in both sales and inventory, but still reported a competitive buyer’s market due to low inventory. San Jose recommended listing property below recently closed sales in the neighborhood to garner more attention and get multiple offers. The office reported selling a townhouse for $200,000 over the listing price of $1.3 million using this strategy.
El Dorado County –This region saw a similar pattern, a disproportionately small supply in relation to demand. In El Dorado Hills, there has been a shortage of new construction, causing the cost per square foot of these homes to be higher than in past years. The luxury market also had the highest amount of properties since the housing peak in 2006. Although the market in Placerville has slowed and prices have increased as a result of the small supply, properties are still a good value for the price.
As always, feel free to contact me if you have any questions or would like to learn more about your local housing market. Suzanne Volkman, 916.773.1028.