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Executive Summary
It's getting hot out there in the real estate market! Like 2021 hot. Single family homes sold almost 108% over asking in 17 days here in the SF Bay Area. Condos sold in 33 days and over asking by 102%.
This trend has been increasing since early February, resulting in peak pricing again (similar to 2021), despite mortgage rates around 7.5%.
Rates climbed 50 basis points in April, resulting in 3-8 competitive offers on almost every house compared to 5-18 offers in March. Offer dates are still being set for well priced homes with a few taking preemptive offers, unless if you ask the right questions. Inventory levels continued to rise (active, pending, and sold) yet not fast enough to alleviate demand.
There has been a recent uptick in layoffs, which has tapered demand a bit. Since Elon Musk took over Twitter (i.e. X) in late 2022, we've seen technology companies becoming leaner and reducing headcount. However, with high performing tech stocks and bonuses still being plentiful, there are many cash rich buyers. This extra liquidity is enabling buyers to go ABOVE appraised prices comfortably without fear of losing their financing from their lenders.
Similar to last month, buyers are still anticipating rate cuts so want to get in now before a) rates go lower and b) competition increases (more). We advise our clients who are buying now and have RSUs to consider doing a recast on their mortgage at the next vesting cycle that has the most attractive interest rates. DM me for more information on this strategy.
Elections are coming up and we anticipate mortgage rates to lower slightly to help the current administration prove their economic prowess.
KEY TAKE AWAYS....
What is happening to sales prices? All categories and areas are trending up. Over the last 10 years, appreciation of SF Bay Area single family homes averaged 14% appreciation while condos averaged 7%.
SALES VOLUME - Up as we head into summer.
30 year mortgage rates - Climbed all April from 6.91% to 7.42%.
What sold over asking?
76% of single family homes. 37% of single family homes sold over 110%, double the volume over 110% in March.
79% of townhouses
49% of condos
Homes between $800K - $1.3M and $1.8M - $2.3M sold 110% over asking
What is taking the longest to sell? San Francisco condos are averaging 56 days on market.
Is now a good time to sell or buy?
For well marketed and well priced homes, expect multiple offers.
Buyers are flush with cash and are searching for homes in earnest.
Investors are gobbling up fixer uppers at aggressive sales prices. This will mean the After Repair Values (ARV) will need to be strong in the near term if planning to sell.
Check out two of my latest blogs for how to sell your home in a high interest rate environment and 6 key questions to ask when selling your home in 2024.
Off Market Properties:
San Mateo (Beresford) (2300 sqft) - 3 bedrooms, 1.5 bath, 2-car garage
San Mateo (Aragon) (2870 sqft) - 3 bedrooms, 2.5 bath, 2-car garage
San Mateo (Aragon) (2630 sqft) - 3 bedrooms, 2.5 bath, 1-car garage
San Mateo (4 PLEX) - Two 1 bedrooms, two studios
Santa Cruz (1622 sqft) - 4 bedrooms, 5 bath, 1-car garage on oversized lot
Belmont / Redwood Shores (1770 sqft) 3 bedroom, 2 bath townhouse
....
Want the full list? Feel free to reach out directly to me (650.451.8763).
Table of Contents:
How Are The San Francisco Bay Area Real Estate Markets?
Overall, the latest SF Bay Area real estate trends show the sales prices increasing. Inventory levels are still low due to seller's "Golden Handcuffs", aka cheaper mortgages they purchased with or refinanced. This is causing a limited amount of inventory, especially at the lower price points where many investors are also competing with first time home buyers. The below graphic shows all pending home types and the price levels that sold the most per county highlighted in yellow.
SF Bay Area Real Estate Trends - Month over Month (MoM)
The charts below are month-by-month heat maps of pricing in the SF Bay Area. They are grouped by county and property type (Condo, Single Family Home, Townhouse). The metrics are Price Per Square Foot, Days On Market, how many sold, and the List To Sales Price Ratio. Green highlighted cells indicate items keeping prices up in comparison to previous month's metrics. Red highlighted cells indicate the opposite, i.e downward pressure on sales price towards a Buyer's Market.
(Click on each county's data to make larger). Make county / location bigger than MoM.
SF Bay Area Real Estate Trends - Year over Year (YoY)
Here's the data to support the year over year price growth (supply versus demand) we are currently experiencing.
Inventory - 20 Years vs. 10 Years
Every year we see active and sold inventory go up then down, a predictable cadence. How high or low is dependent on the next metric, Months of Inventory or the rate of change in inventory being sold.
We are still hovering on the verge of historically low inventory, yet Condos active are starting to build up in supply. Could affect the rate of price increases as we head into summer.
The graphs below show 20 year and 10 year time horizons from today.
Months of Inventory - 20 Years vs. 10 Years
This metric tells us how long it would take to sell all the homes on the market if no new listings were added. Five to six months is considered a balanced market, anything less is a seller's market.
As active inventory goes up and the rate of sales goes down, this key performance indicator (KPI) will continue to tick upward. This metric is telling us that there are less buyers for condos right now.
% Over Asking vs. DOM -
Related to Months of Inventory and the rate of change are these next two KPIs - how much over asking a home sold for and how fast it was sold, i.e. Days On Market.
The strength of the tech industry is impacting the demand, as we anticipated earlier this year.
Sales Price - 20 Years vs. 10 Years
In general, single family home prices have doubled every 10 years in the SF Bay Area since the 1980s. Condos in general have tripled in value since 2012. Due to the local economy of the SF Bay Area, we anticipate these values to remain high, especially as inventory levels are still near historic lows.
Please reach out to schedule your free consultation to discuss your home price or home search.
What's Selling The Most RIGHT Now?
Here are the pending details.
FED, Mortgage Rates & The Stock Market
Inflation and jobs are still not where the FED wants, resulting in the delay of rate cuts. The CME Group now predicts the FED to LOWER interest rates possibly starting in July or September 2024, revised from their initial March expectations in December 2023.
Mortgage rates went up by 50 basis points and now sit around 7.42% for a 30 year fixed mortgage.
Despite some recent dips in the stock market, the S&P500 and tech stocks are up year over year, enabling tech buyers to withstand interest rate fluctuations.
Layoffs spiked briefly in January but has since tapered. Note that much of tech had been overstaffed so companies have been "right sizing". Almost 19 of 20 different sectors reported new jobs. Unemployment ticked up from 4.0% to 4.5% in January data which aligns with our January and February sales.
When will the next Recession occur? Check out my infographics in this blog post for a brief primer. Then we can discuss the rest over our next coffee.
At KPeterson.realty, we know not every lender is created equal and we work with lenders who's rates today are around 6.5% for 10/1 ARMS. Our lenders also may value your RSUs better than others. Reach out and tap into our network.
How We Help Our Buyers
We work with the best lenders who are able to beat the current interest rates (some as low as 6.5% on a 10/1 ARM).
Search For Homes by customizing your financial situation before contacting a lender to determine what you can afford.
Investing or not sure which areas to look in? Explore Markets to generate reports that analyze a city by days on market, average home price, price per square foot, average number of bedrooms / bathrooms / square feet in YOUR price point.
How We Help Our Sellers
We have a $0 down / 0% renovation program in which you don't need to pay back for one year, giving you flexibility on when to sell. The goal is for every $1 spent on renovations to net (on average) a $2 to $4 return on investment. Every family has a unique real estate scenario based on their needs and circumstances. Feel free to schedule a consultation with me today.
Click "What's My Home Worth" to find out the rough value of your home and automatically monitor it monthly. It also shows you various options for your equity (refi, home equity line or loan, etc).
If you'd like a more specific valuation of your home, give me a call.
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