After years of post-bubble turbulence, the Bay Area housing market appears headed for a period of stability as rapid price increases hit a wall and sales plateau.
October median sale prices for existing houses were up double digits from a year ago, but were down from peaks in June and July, DataQuick reported Wednesday. Sales of existing single family houses were down 6.8 percent across the Bay Area from the same month last year, though up slightly from September.
Without the frenzied competition that characterized the first half of the year, buyers are being more selective and sellers have to be more patient and realistic in their pricing.
“There’s more to choose from, less sense of urgency, and probably fewer people out there shopping,” said Andrew LePage of DataQuick. And the spike in interest rates during the summer also discouraged some buyers, he said.
“We’re clearly cooling off a bit,” said Lanny Baker, chief executive of ZipRealty, who noted that pending sales in the Bay Area ended October down 7 percent from the previous year. Nationally, and in the Bay Area, he said, housing prices in the cities with the strongest gains of early 2013 are moderating, and lagging markets are starting to accelerate.
But there are plenty of hot spots with low inventory and high demand. In Menlo Park, Palo Alto and Atherton, “We don’t have enough houses to sell,” said Wendy McPherson of Coldwell Banker. “Some parts of the market of course are slower by nature of the price range. That’s normal. But under $4 million we do not have enough houses to sell.”
Peter Giovannatto with Dreyfus Sotheby’s International Realty in Palo Alto said the “baseline price” for real estate there is $1,000 a square foot. “We’re getting random emails from investors offering $1.4 million to $1.6 million for lots,” he said.
Santa Clara County‘s median of $713,000 was up 15 percent from a year ago, but down 5 percent since June. San Mateo County‘s median price of $782,000 was up almost 15 percent from a year ago, but down almost 10 percent from a high in August.
Alameda County‘s median sale price was $568,000, up 35 percent from last year but down nearly 4 percent since a summer peak. Contra Costa County’s median sale price of $395,000 was up 31.7 percent from October 2012 but down 12 percent from July.
Alameda County saw a 13.4 percent annual drop in sales. Contra Costa County sales were down 5.5 percent from a year ago; Santa Clara County sales slid 1.9 percent from last year, and San Mateo County sales were down 13 percent annually.
“The multiple-offer hysteria has started to even out,” said Hank Perry of Empire Realty in Danville. “Confidence is back” among buyers moving up to larger homes, he said. “A large part of what’s driving the market is they feel they can go out and get what their family deserves” as a more relaxed market allows them to shop around.
Around the bay, there are more reports of homes sitting on the market for longer periods, and here and there a price reduction from home sellers unaware of the downward trend who set their price too high.
“Until a few months ago, price reductions were almost unheard of,” said Steve Pierce of Keller Williams Benchmark Properties in Fremont. “Now it’s becoming more commonplace, particularly if properties were not priced reasonably to begin with.”
Pierce said some places and price ranges are seeing brisk demand, and others aren’t. “In some areas where inventory is low, the market is just like the hot market we had earlier in the year. In other areas, buyers are being a little more cautious and a little more careful,” he said.
In Pleasanton, that became clear to Allison Cox, whose home drew lots of offers, only to have the first two back out.
“The next offer we’re waiting to see,” Cox said, adding that she’s happy to have so much interest. “Four or five other homes in the neighborhood have been sitting on the market and they either haven’t had offers or they have been getting offers and not accepting them,” she said.
When their sale is final, the Coxes will face another issue that has caused some people to think twice about selling now.
“We need to figure out where we’re going to live,” she said. “We’re going to come out with a good chunk of equity. Now what are we going to do? We’re in a pickle about it.”
Other factors also point to a more normal market. Distressed sales — foreclosures and sales of houses for less than their mortgage — made up 14 percent of the resale market, less than half of last October’s 35 percent.
All-cash buyers — who are often investors — made up almost 23 percent of October sales, down from nearly 30 percent a year ago.
In addition, banks were making more adjustable-rate mortgages. These are a key part of the high-priced Bay Area housing market. They were 20.5 percent of the area’s October home purchase loans, up from 11.8 percent a year earlier.
Source: Inside BayArea News