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East Bay: Q4 Results |
Buyers in our East Bay region benefited from a modest increase in the number of homes for sale in the second and third quarters of 2013. However, by the fourth quarter, that extra inventory
had disappeared, frustrating home shoppers and helping to slow overall sales activity in the region even before the typical holiday-season decline. The tight supply ensured that virtually
all homes that were attractive and competitively priced received multiple offers.
Despite the headwinds, plenty of new buyers entered the market during the fourth quarter, and properties
in most neighborhoods sold at or above their asking prices. Competition was strongest for homes priced from $750,000 to $1 million, and the median sales price for East Bay homes continued
to rise.
Looking Forward: The pace of sales activity in the first quarter of 2014 will depend on the number of homes that hit the market, but we expect that the inventory shortage of the
fourth quarter will ease with the coming of spring. Rising prices will encourage more sellers to list their homes, and buyers will be ready. Tightened lending
regulations and rising mortgage rates could have an impact, offset by forecasts for strong economic growth in the Bay Area.
Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Albany; Berkeley; El Cerrito; Kensington; and
Piedmont. Sales data in the charts below includes single-family homes in these communities. |
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Median Sales Price |
The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price. |
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Months’ Supply of Inventory |
The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a
seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market. |
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Average Days on the Market |
Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches “pending” status, meaning all contingencies have been removed and both parties are just waiting to close. |
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Percentage of Properties Under Contract |
Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes. |
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Sales Price as a Percentage of Original Price |
Measuring the sales price as a percentage of the final list price, which may include price reductions from the original list price, determines the success of a seller in receiving the hoped-for sales amount. It also indicates the level of sales activity in a region. |
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A Closer Look at the East Bay |
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Bay Area Real Estate Markets to Enjoy Continued Vibrancy and Velocity in 2014 |
Fasten your seat belts, because 2014 will outpace 2013 in the San Francisco Bay Area residential housing market. The calm of the past 60 days, when we saw multiple-offer situations dissipate, will ramp up
toward the end of the first quarter to robustly outperform Q1 2013 in units sold.
In 2013, units sold experienced double-digit-percent increases in all Bay Area markets. References to “lack of inventory”
need to be shaped in the context of exceptionally high buyer demand. While inventory seems scarce, vibrant demand and limited days on the market are creating these intense conditions.
Our regionally unique housing demand is driven by a robust job market: California generated over 300,000 new jobs in 2013 and saw unemployment rates settle in at 8.5 percent by the end of November.
The strength of the Northern California job market has consistently been driven by technology, social-media, and professional-service firms and is now joined by the retail sector. This job growth was fueled in 2012 and
2013 by three western Bay Area counties (San Mateo, San Francisco, and Marin), all of which currently enjoy unemployment rates of about 5 percent. Job growth is now taking hold in the northern and eastern counties
of Sonoma, Napa, Alameda, and Contra Costa, where unemployment rates range from 6.0 to 6.8 percent, also well below the state average.
Interest rates remain near historical lows, and multiple new lenders are
returning to the jumbo-mortgage market. One dynamic we anticipated in 2013 that did not materialize in force was the mobilization of the “move-up buyer.”
If this segment of buyers engages the market this spring, we expect to see additional inventory in the form of their sales and significant movement in the high-end and second-home markets.
As we noted back in October,
we have a robust outlook for 2014 and 2015. We expect to see records set for units sold and near double-digit-percent price appreciation throughout
the Bay Area. Municipal building departments are seeing enormous activity in new-housing and major remodeling permits, an exceptional leading indicator of consumer confidence, buyer demand, and a vibrant real estate
market.
Please remember that real estate is hyperlocal. While information is widely available and opinions on real estate markets are plentiful, there is generally only one set of facts. In a market that is
experiencing record-setting velocity, it is particularly important to find the best real estate professional to provide you with the keenest insight, knowledge, advice, and decision support.
Thanks for your
confidence in Pacific Union.
Sincerely, |
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Mark A. McLaughlin, CEO, Pacific Union |
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Barbara Hardacre
Realtor
510-338-1307
[email protected]
1900 Mountain Boulevard
Oakland, CA 94611
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� Pacific Union, Inc. 2013. License # 01866771 |
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