A molten-hot Bay Area residential market has simmered down—albeit to a boil—with the rapid price appreciation and brisk sales of homes leveling off since the summer.
At this juncture, the market “has stabilized,” said Jeff Stricker, a broker in the Los Altos office of Alain Pinel Realtors. “It’s not as intense as the summertime.”
Stricker and other real estate agents say a key reason for the market’s current relative cooling is buyer pullback in the face of steep prices. “What happened in the fall is buyer fatigue set in,” Stricker said. “That’s common after a hot market. People get tired of putting in offers and losing.”
Michael Faulkner, a San Jose-based Realtor with Keller Williams Realty, had a similar take, saying, “The prices were rising pretty fast, so buyers took a step back because things were getting out of hand.”
The peak median price in the Bay Area so far this year was $562,000 in July—the highest for any month since the $587,500 in December 2007, according to the San Diego-based real-estate information service DataQuick.
That summertime peak was the culmination of a double-digit percentage appreciation spanning just several months. Dean Wehrli, a Sacramento-based vice president for the independent research provider John Burns Real Estate Consulting in Irvine, said such an appreciation normally would happen over a period of three to four years—even for a hot market.
In the South Bay, for instance, Wehrli noticed that the price for new home projects jumped more than 30 percent within a nine-month span. “That’s simply not sustainable,” he said. “Then right after that, prices stabilized.”
A rise in mortgage rates, consumer worries in the wake of the political battle over the federal budget and the typical seasonal slowdown also all figured into the cooling trend, real-estate agents said.
“The mortgage rate has gone up over 100 basis points” since the spring, Wehrli said. “That has spooked some people.”
According to DataQuick, the volume of October home sales in the Bay Area was 11.2 percent below the month’s average going back to 1988. The total of 7,595 new and resale houses and condominiums sold in October was also down 3.9 percent compared to the same time a year ago though up 6.4 percent from September.
In the communities that he does business, Stricker reports a severely low inventory of homes for sale. Los Altos, for instance, had just 10 homes on the market as of the end of November. “I haven’t seen it that low,” he said. “In comparison, there were 33 homes for sale in Los Altos at the end of November last year.”
To be sure, homes continue to draw multiple bids and sell at high prices. “There’s still demand out there,” Stricker said. “The market hasn’t completely changed.”
The market for luxury homes, in particular, is doing well right now. “We just sold a property in Atherton—about an acre—that had an asking price of about $3 million, but the bidding pushed it up,” Stricker said. “It closed at about $4 million. That’s a sign to us that people are focusing on high-end properties.”
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