RISMEDIA, May 17, 2010—Redfin has released new data on the San Francisco Bay Area market showing that the median price of a Bay Area single-family home increased 5.5% from March to April. In Marin County, prices for single-family homes jumped 10% in one month, aided by lower interest rates for jumbo loans.
Santa Clara County house prices increased 7% month over month and 33% year over year, driven by a shrinking supply of bank-owned properties. House prices in Alameda, San Francisco and San Mateo counties grew by between 1% and 2% month over month.
Sales Volume Declines, in Part Due to State Credit
Sales volume for single-family homes declined from March to April by 3.7% in the Bay Area. Alameda decreased 19%, San Francisco decreased 18%, San Mateo and Santa Clara decreased 5%; in the core Bay Area counties, only Marin County increased, by 5%.
Based on its own brokerage activity in April, Redfin expects May sales to increase in the Bay Area. June sales volume is still hard to forecast, but early-stage traffic and customer-activity metrics so far suggest that June will not be as strong as May.
According to Redfin agent Gina Pio Roda in San Francisco, this decline in the number of houses sold in April was driven at least in part by California buyers delaying closings to qualify for the state tax credit beginning on May 1.
“Of the eight deals we were working on at the end of April, four pushed to May, just so our clients could save another $10,000,” Ms. Pio Roda said. “The other challenge our buyers face is simply a lack of available inventory; every deal has four or five buyers, and sometimes goes for more than $50,000 over asking. If there were more homes to buy, there are certainly enough buyers to buy them.”
Redfin agents also noticed that tax incentives motivated buyers in the $500,000 – $600,000 range more than those buying homes above $1 million.
Bidding Wars Still Common
In Santa Clara, San Francisco and Alameda counties, the median sale price was higher than the original list price, indicating that bidding wars are still the norm. In Redfin’s own Bay Area business in April, offers on all property types under $500,000 faced competition 88% of the time; the trailing six-month average was 91%. Competition for mid-range and high-priced homes has actually increased.
Offers over $500,000 faced competition 81% of the time in April, while the trailing six-month average was 72%. “We are increasingly see all-cash offers, or offers free of any contingencies, as sellers price their homes to sell,” said Redfin San Jose agent Brad Le.
On the Peninsula, competition is driving buyers from highly sought-after markets like Cupertino to more affordable areas like West San Jose. In San Francisco, the same dynamic is driving house-buyers to consider condos, where developers have become more aggressive deal-makers.
This competitive dynamic is partly driven by listing-agent tactics. “Listing agents are getting more aggressive about listing homes lower than their market value to gain a wave of immediate interest among prospective buyers,” said Redfin Fremont and South Bay agent Miawand Bayan. “Their hope is that the final sales price ends up being much higher than the original listing price. This tactic is most common among listing agents for bank-owned properties. Many bank asset managers are only releasing a few properties a month to keep prices as high as possible.”
Some of these tactics are turning away buyers, especially in the battle-scarred East Bay. “Buyers are getting frustrated losing out on foreclosed homes to all-cash investors,” said Redfin East Bay agent Charmaine Frank. “They’re now looking to traditional sales that are in better shape, even if they’re slightly overpriced.”
Spring-Time Inventory Increases Less Than Expected
In most Bay Area counties, the number of houses for sale rose, a seasonal increase aided by rising prices. But comparing April 2010 to April 2009 shows that inventory is in fact declining year over year.
County Month-over-Month Year-over-Year
Alameda County 3% -13%
Marin County 6% -16%
San Francisco County 8% -4%
San Mateo County 4% -9%
Santa Clara County -2% -25%
Change in the # of Houses for Sale in Major Bay Area Counties in April 2010
Even as the amount of homes for sale has decreased because of limited bank-owned inventory, the quality of the inventory seems to have improved. “The quality of homes being listed is definitely increasing,” said Redfin agent Brad Le.
A complete April 2010 report for the Bay Area is available on Redfin’s blog.
The report includes data on the number of homes for sale, for-sale prices, final prices and the number of homes sold; Redfin segments the data for houses and condos, with data on 12 counties and 100 cities.
More detail on Redfin’s reporting methodology is available here: http://www.redfin.com/about/monthly-report-methodology
