January / February Market Update
/Despite the instability in the stock market and all the buzz about Crypto Currencies, the real estate market in the Bay Area is still very strong and even with the rates slightly going up and the reduction in mortgage interest rate deductions, I don't see a drop in prices in the immediate future. The lack of inventory and the influx of high earning, out of state imports into the tech industry buying property in the Bay Area has been driving the prices up and it's still going very strong.
Reporting from the battlegrounds, I still see multiple offers and overbidding in all price ranges from $3M and below in the Peninsula and *San Francisco. Listing agents, in many cases, are still slightly underpricing properties in hopes to generate a demand and ultimately receive multiple offers surpassing their target sales prices. Buyers need to know the market before writing offers. Rule of thumb is if the price is too good to be true, it probably isn't true. It's more likely that it's a teaser price the listing agent set to drive as many people through the door as possible.
Tip: Make sure you check average price per square foot in the areas before getting too excited about a home.
The school districts are the foremost factor that is driving the desirability of neighborhoods. So if you have a property in a good school district, you can bet you will be getting top dollar and multiple offers for your property. If you're looking to buy in one of these API10 neighborhoods, be prepared to compete! Homes in the areas with API scores of 10 have the stiffest competition due to lack of inventory. Small developments in bedroom communities with room to build are popping up in cities like San Ramon get sold out quick to techies with small families willing to commute to silicon valley. More established areas like Fremont (Mission San Jose School District) have little to no inventory. Other cities in the Peninsula with 10 API scores like Millbrae, Burlingame, Cupertino have a price tag of over $1200/sqft.
Non-contingent offers are the industry standard in most of San Mateo, Santa Clara, Alameda, Contra Costa and San Francisco counties. Agents tell me that most offers are written non-contingent and the winning bid is always non-contingent. This is good news for sellers as once they accept an offer, they can almost be certain that escrow within contractual timelines. If you are a buyer, make sure that your loan is completely underwritten and you are able to write a non-contingent offer if you want to win. The competition is stiff and you need to do your prep work before entering this market if you want to save yourself heartache.
On the lower price spectrum, the market in the East Bay for entry level homes is also going bananas. Most recently I was shocked to hear 42 offers on a fixer-upper property in San Leandro that went well above what I considered to be market value. Hayward, Fremont, and Union City are now beginning to be out of reach for many local families who are into the central valley (Lathrop) where many new planned communities are popping up (http://www.riverislands.com). It will take you as much as $550k to buy a decent condo or townhouse in Hayward. In lower median income cities like Richmond and San Pablo, you can still buy a single-family home for about $450k, but you may have to dodge a few bullets occasionally—just kidding.
Silicon Valley is HOT!!! There are many micro markets in Silicon Valley so if you have questions about that, feel free to message me directly and I can send you the data. The new frontier in the South Bay has been areas like Gilroy and Hollister. Buyers are opting to commute to San Jose from further south in order to buy an affordable home.
See attached San Francisco and San Mateo County Market reports and let me know if you have any questions or concerns. If you would like more data about a specific area, let me know. I can pinpoint your area of interest if you want specific data. I will add Alameda and Contra Costa Data at a later date, but email me if you want it right away.
*$3M and below refers to single-family homes n San Francisco. I am finding that condos are being sold close to the asking price and oftentimes, it is not a multiple offer situation so buyers tend to try and bid under or at the asking price.
*What is affecting the market slightly is the ability of H1B buyers. Previously, they were purchasing homes but now with Trump and his keeping jobs in America campaign, the future of the H1B worker in the US is uncertain and those buyers are now waiting on the sidelines before making a move.
*I have a feeling that cash buyers / foreign investors are back in the market paying top dollar for investment properties to rent to those who can't afford to buy. (540sqft condo in San Bruno recently closed escrow for $520k)
San Mateo County Single Family Home Annual Report
San Mateo County Condo Annual Report
