The housing market is like temperatures!!

Bay Area Housing Market Heating up Along with Summer Temperatures

Maybe we just had a late spring. That’s one possible explanation for what we’re seeing in the Bay Area housing market. Normally, the real estate market picks up in March, April and May and then takes a breather over the summer for vacations, graduations, weddings and other activities. But this year it seems like that’s being reversed.
After a modest spring, the local housing market has been heating up this summer with strong sales in June and even into July in many areas. Sales activity has been especially robust in the higher end of our markets – over $1 million in much of the Bay Area and $2 million and up in San Francisco. But even the mid-level market was surprisingly active (more on that below).
As I was combing through last month’s sales figures, I noticed an interesting trend: In most of our Bay Area markets in June we had the highest level of million-dollar home sales since the summer of 2008. You might recall that was just weeks before the collapse of Lehman Brothers sent the financial markets into a tailspin and pushed our economy into the “Great Recession.” Now, three full years later, we’re seeing a much brighter picture for the local housing market.
Silicon Valley – There were a whopping 284 million-dollar home sales in June, up from 230 the previous month and the highest level the region has seen since June of 2008. The very high end of the market – those homes over $2 million – saw sales spike to 52 from 36 a year ago;
Clearly, the Bay Area’s relatively strong economy – especially the robust tech sector ­– is playing a key role in our housing market. As Inman News put it in a Friday article, “Tech is back -- and tiptoeing along behind it, at least by some measures, is the San Francisco-area real estate market.”
“Indeed, technology-based industry -- which drove Bay Area home prices to fabled levels during the headiest days of the housing boom -- seems to have found its legs,” Inman reported. At the end of 2010, San Francisco had an estimated 30,700 tech jobs, compared with the 32,800 at the peak of its tech boom in 2001, according to an analysis by real estate firm Jones Lang LaSalle.
This all is not to suggest the housing market is completely out of the woods. Real estate is very much a local business. And while many of our markets are on the mend, others are still softer than they were a few years ago. And there still is an overhang of distressed properties that will continue to come on the market as bank owned REO sales in the months ahead.
While we take quite serious the nation’s fragile economy, and most recently the stalled talks to come to terms with our national debt limit, we can be thankful for the Bay Area real estate activity that continues to move forward. We are fortunate to live and work where we do. The limited housing stock, diverse job base, incredible universities, and great weather are all factors that help homebuyers focus on these terrific home values and low mortgage rates.
Silicon Valley – The best homes are getting lots of offers. Our Cupertino office says the majority of its sales are multiple offers. Seems like we are having a delayed spring. New single-family home listings in good areas of Los Altos, Mountain View and Sunnyvale are getting multiple offers and selling up to 15% over asking price, according to our Los Altos manager. Activity has increased recently in the Los Gatos area with more properties seeing multiple offers. Well-priced homes are continuing to sell at a quick pace while not so well priced homes continue to languish. Our San Jose Almaden office says a number of price reductions have led the way toward sales over the last week. Prices overall are not going up, but in fact appear to have dipped a bit. Multiple offers still abound for the “good deal.” In the San Jose Willow Glen area, open houses are pretty busy and sales have been steady. The Saratoga market seems to be steady. One home listed in Saratoga for $1.5 million received 18 offers and was bid up astronomically.
That’s it for now. Enjoy the summer weather, and have a great week!