Bay Area home sales in March up from February, down from a year earlier

Posted on April 20, 2016

by By Richard Scheinin, Mercury News, Santa Cruz Sentinel

4/19/16, Santa Cruz, CA –  The Bay Area’s red-hot housing market may be leveling off — a little — after years of skyrocketing home appreciation, based on data released Tuesday. March home sales were up sharply from February across the Bay Area, heralding the busy spring selling season, though they were down from the levels set a year earlier. 

In Santa Clara, San Mateo and Alameda counties, it was the second consecutive month in which sales declined on a year-over-year basis, according to a report from the CoreLogic real estate information service. In addition, the median price for the nine-county region dipped slightly — by 1.5 percent — from the year before, suggesting that the market may be cooling just a tad, even if that is little consolation for most buyers seeking a home they can afford.

It was the first time the regional median price has gone negative since March 2012, when it also dipped 1.5 percent. “The year-over-year gains have ratcheted down some,” said Andrew LePage, a research analyst with CoreLogic. He pointed to the continued shift of buyers toward less costly inland areas, including Contra Costa County, where the volume of year-over-year sales ticked upward — by just slightly over a percentage point. But compared with sales drops of 12.8 percent in Alameda County, 8.4 percent in Santa Clara County, 15.1 percent in San Mateo County and 6 percent for the region as a whole, Contra Costa’s modest gains look like a major success story.

“In our market, there are a lot of buyers still in the sweet spot, say, between $600,000 and $800,000,” said Kevin Kieffer, a Keller Williams agent in Danville. “That’s everybody’s home. People want to get out of the rat race and into that home.” Even so, Kieffer urges clients to “pick out their biggest Louisville Slugger” bat. “Give it all you got,” he said, because while most bidding is less fierce than a year ago, pitched battles occasionally break out. One Pleasant Hill home — underpriced at $575,000, he said — recently attracted 29 bids and sold for more than $675,000.

In other counties where sales activity is down, there’s still not much relief for buyers, despite the recent tapering off of appreciation. Saying the latest shifts in the market may turn out to be “a trend or a blip,” LePage pointed out that one thing hasn’t changed: Tight inventory combined with high demand continues to put pressure on the cost of housing.

The pace of the market is “brutal, really brutal,” said Travis Grant, who moved from Massachusetts to the Peninsula 18 months ago to work in tech. During the process of selling their house back East, he and his wife Sharie watched prices shoot out of sight in some of the school districts that interested them here: “We stuck to our guns in terms of being conservative and only going after what we could qualify for and watched these neighborhoods slip away.” They recently sold their Massachusetts home — lakeside, on 5 acres — for $1.2 million, which doesn’t cover the cost of the Menlo Park townhouse they closed on earlier this month after making an off-market bid. It is “an awesome townhouse, but it took a lot of weekends sleuthing and feeling out neighborhoods, a lot of patience” to find it, he said, acknowledging that he is a victim of real estate culture shock. “My dad has been in real estate for a long time,” he said, “and I had done my homework and thought that I knew what I was in for.”

In three counties — San Francisco, San Mateo and Marin — the median sale price remains over $1 million. In Santa Clara County, the median price rose year-over-year by 7.5 percent — a gentle bump by Silicon Valley standards — to $942,000. In Alameda County, the median rose by 0.7 percent to $675,000. Even with that 1.5 percent regional dip in price, the median for the nine counties now stands at $660,000. “We’ve had such massive appreciation over the last few years,” said Nick Granoski, a Pacific Union agent on the Peninsula who handled Grant’s townhouse deal. “At some point, it levels out, even though we still have the demand.”

The shift in the market is part of “a natural cycle for real estate,” he said. “It’s normal. It’s not good for anyone to have massive 10 or 20 or 30 percent appreciation year after year. Things get a little out of whack.” A house in Menlo Park listed this month for $2,995,000: “It’s 2,900 square feet, a nice enough house, and it had like eight offers, and it sold” for well over asking, Granoski said. “Which means you still have seven other people running around out there who can spend $3 million and didn’t get a house this week.” They won’t find much to bid on, however, because inventory remains “super-tight. There will be more listings coming up” over the next month or two, he said. “But in talking to people on the street and just networking — it’s not like the floodgates are about to open.”

Despite low mortgage rates, the lack of inventory continues to plague the market. Suzanne Yost, an Alain Pinel broker in Los Gatos, said, “There just isn’t the move-up market we used to see. Years ago, you would buy your starter home and stay about seven years. Now it’s about 20.” She sees a shift in the market: a “moderate reduction” in listing prices “and fewer multiple offers. I’m making an offer on something today, and I hear there will be three offers, whereas last year it probably would have been at least 10.”

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http://www.santacruzsentinel.com/general-news/20160419/bay-area-home-sales-in-march-up-from-february-down-from-a-year-earlier/5