January Market Update

Happy New Year folks! 2019 is upon us and we're excited it's arrived! Last month, I traveled around Asia for a month to enjoy some RnR and to attend to some family matters. Good news is that the trip really revived me and put a lot of things into perspective. I had the opportunity to see both ends of the real estate and life spectrum, with homes in the Deep Water Bay neighborhood of Hong Kong Island being sold for $5,000/sqft while shanties in the provinces of the Philippines could be built for less than $300 in scrap materials.  While prices in the Bay Area are the highest in the nation (currently between $500 - $1500/sqft), in relation to the rest of the world, I'd say we're doing ok. 
 
December was a rally month for us at Hatch Realty Group. We sold all of our listings and opened escrow for 6 properties. (Not bad for the holiday season!) The real estate market in the Bay Area has officially shifted into a balanced market with more opportunities for buyers to get in contract for homes while keeping their loan and inspection contingencies in place. Gone are the days of the super stressful market when if you don’t get the house, it could be months before you get in contract for something else. Now, not only can you negotiate for repairs, the market is ripe for homeowners with equity and not much cash on hand to be able to "upgrade" into another property as sellers are now more wiling to entertain offers “contingent” upon the buyer selling their home. That basically means that the buyer is not obligated to purchase the seller’s home unless they are able to sell their current home for the price they want. A year ago, that was virtually impossible. Now, it is turning into a norm. We are currently in escrow for a property in San Jose on Crother’s Rd where the buyer of this home listed her property on the market contingent on finding a replacement home. My clients accepted her offer and wrote an offer on another property in Redding contingent upon closing the deal on Crothers.  The seller of the Redding property accepted their offer contingent on the sale of the two other homes. In all, there are 4 homes involved in this domino effect with everyone collaborating to make things happen. We are closing escrow on January 14th. The stars are aligned for everyone involved.
 
Rates also seem to be cooperating with the real estate market. Anyone who got into contract last December and is closing on their home this month is extremely lucky because rates recently dropped half a point (.5%) in December. When the stock market took a huge hit, losing about 15% in value, many investors moved their money into bonds, which has caused the 10-year treasury yield to go down. The treasury yield is now at 2.6%, which is the lowest since February of last year when it started climbing to a high of 3.2%. For borrowers, that means rates were hovering around 4.65% a couple months ago, but now, they are seeing 30-year rates averaging approximately 4.125%. In money talk, that translates to a savings of $3,000 a year for someone buying a million dollar home with 20% down. This is a win for homebuyers and refinancers of today.
 
Inventory is still very low too, so the market is favorable to sellers. If the property is not over priced, or if there's nothing wrong with it, homes are getting into contract within a month, with some even garnering slight overbids. I'm actually hoping for more inventory to come on the market in the spring and am curious to see how quickly buyers will make a move. Prices are stabilizing. Offers are for the most part being taken "as they come in" so buyers either have no competition when they write an offer or they are competing against only one or two others. This is a huge relief in comparison to a year and a half ago with upwards of 20 offers per listing. The market tends to see a flood of new listings after Superbowl and after taxes are filed in the spring, so I can't wait to see how the market is then.
 
Pricing is still all over the board. Some agents and sellers are still choosing to strategically list homes with “teaser prices” while others choose to list with “transparent pricing.” Buyers surfing the internet on Zillow or Redfin only see the price, so newbie buyers should take note. San Francisco condos, East Bay properties, and South Bay homes and condos are priced more "transparently" but San Francisco single family homes and Peninsula single family homes are still being priced to attract. My listing in Millbrae which is pending now, was listed with a teaser price, but all agents who called were told what the seller was expecting and told to check the comparables. Same thing for our listing on Fallon in San Mateo. Both homes garnered offers over the asking price. Buyers beware: list prices may not reflect the true market value. 
 
All markets are different, so if you would like more information about a particular area or a free market analysis of your home, please feel free to reach out! We are here to help!  Thank you for reading our market update! Wishing you all health, housing and happiness in 2019!