Rising Home Prices Send Large-Scale Investors Packing in Bay Area; Traditional Equity Sales Fuel 30 Percent Year-Over-Year Increase
Pleasanton, CA (PRWEB) August 01, 2013 -- To be sure, many luxury homebuyers – and even some first-timers – continued to pay with cash only to obtain financing once a purchase was complete. But with the region’s large supply of bargain-basement distressed properties depleted, all-cash investors increasingly gave way to traditional homebuyers with a 20 percent down payment.
Median sales prices were sharply higher in all nine Bay Area counties on both a quarter-over-quarter and year-over-year basis. Areas with the largest year-over-year increase in median sales price were Alameda County (+36%), Solano County (+34%), and Contra Costa and Napa counties (+32%). San Francisco recorded the region’s highest median sales price, which reached $1,201,920, followed by San Mateo County ($1,199,925) and Marin County ($1,069,559). At $271,544, Solano County’s median sales price was the lowest in the region.
For the Bay Area as a whole, the median price of an existing, single-family detached home rose to $740,567 in the second quarter, up 11 percent from 667,021 in the first quarter of this year and 30 percent from last year’s second-quarter median sales price of $570,081.
After declining to the lowest level in five years in the first quarter, sales of existing detached homes rebounded in the second quarter, climbing 44 percent from 9,985 homes sold in the first quarter to 14,370 – an increase of 4,385. Despite the improvement, the number of homes sold in the second quarter of 2013 declined by 11 percent, or 1,838 homes, from the same quarter a year ago, when 16,208 homes changed hands. Santa Clara County set the pace with 3,075 homes sold, followed by Contra Costa County, with 2,841 homes sold, and Alameda County with 2,785 homes sold.
With fewer distressed properties on the market and more homeowners with enough equity to test the market as home prices increased, the inventory of new listings on the market improved slightly. As of June 30, 2013, 6,105 existing, single-family detached homes were listed for sale in the entire nine-county Bay Area – an improvement from 4,098 homes on the market on the final day of the first quarter but still 35 percent below the 9,343 homes listed for sale on June 30, 2012.
Once listed, homes continued to sell at a near-record pace in some markets. For the Bay Area as a whole, homes were on the market an average of only 38 days before receiving a final purchase offer, down from 54 days in the first quarter of 2013 and 58 days in the second quarter of last year. Homes in Alameda County sold in an average of 21 days, while Sonoma County recorded the highest average with 75 days on the market.
Looking ahead, there are some indications that the Bay Area existing-home market may be normalizing. That’s good news for both buyers and sellers, since few observers believe the market can sustain either the current volume of home sales or the double-digit year-over-year increases in the median sales price that have become common – even in an environment where demand continues to exceed the supply of available homes.
With investors holding on to recent purchases as rentals, entry-level homes may continue to be in short supply. Though there may be fewer multiple-offer scenarios, when it is possible for them to do so, some homebuyers will pay cash to get into a property and then obtain a mortgage loan once they are in the home. So long as interest rates remain near record lows, buying a home will remain an excellent lifestyle decision for Bay Area residents.
According to Keith Robinson, COO on Better Homes and Gardens Mason-McDuffie, “Current homeowners with the desire to purchase a larger or newer home who have been waiting for home prices to recover will continue to pay close attention to what is selling – and for how much – in their neighborhood.” If median sales prices continue to rise in the next couple of quarters, more and more homeowners will discover they have regained enough equity to sell. Pricing will be critically important. For both homebuyers and home sellers, working with an experienced REALTOR® with local-market expertise is a must.
J. Boyd, (925) 924-4617, [email protected]
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