Compared to 2019's first quarter, 2020 showed reduced inventory and heightened demand, increased overbids, and increased sales prices -- some by almost 30% year over year! Interest rates were dropping, some under 3%, and the stock market bolstered down payments with record rallies. No price range was sheltered from this first quarter boom -- even the high end properties (over $2.5m and into the $4m range) received multiple offers and sold for over asking price. The market was busy!
And then... Do I even need to say it? The virus all but shut sh*t down. With the official Shelter in Place order, us agents could no longer hold open houses, show property, get listings staged, inspected, photographed, or appraised. The virtual life is real y'all. It was official, and now we're essential (which is a whole other issue in itself).
What's happening now? The real estate world is spinning a little slower, but it's still spinning. Sellers still need to sell and buyers still want to buy; properties are still being marketed (differently) and bought (with contingencies). Read on for what I expect to see as life returns.
The first quarter of 2020 saw the greatest increase of value for any first quarter (over past five years, which averaged just under 1%)
The average overbid of 12% is consistent with last year and a hair below the 13% average of the past five first quarters. Averages don't always tell the whole story -- the highest overbid of the first quarter came in 55% over asking
Most buyers only had to compete with two other people, but one hot house received 42 offers
Berkeley saw it's strongest first quarter (by far!) with 18% growth over 2019's first quarter. First quarter appreciation has averaged 4.5%, so this year was strong
Most homes reported receiving 4 offers, but the property with the most suitors received 18 offers
There was a large spread in where final sales prices landed with one home selling for 23% under asking and another selling for 74% over asking
Piedmont may have have the least first quarter transactions of all areas studied, but the city's first quarter trumped other areas, as well as its own record of 10% growth, in first quarter comparisons
Average overbid numbers must be taken in context here. Properties priced in the multi-millions have more room for negotiation due to their smaller buyer pool. The strongest over bid in Piedmont came in at 32% over its asking price. The lowest was 11% under an almost $4,500,000 asking price.
Not to be left out of the strong first quarter numbers, San Leandro's 8.5% growth over 2019's first quarter is second only to 2018 and is more than double the average 4% first quarter growth rate
Most sales this quarter sold at asking price, but due to a couple 28% over asking sales the overbid average was bumped up to 5%
Anecdotally it appears that east CoCo County is catching on to the overbidding that Alameda County has long utilized, though the data shows Lamorinda properties most often received two offers
Many properties didn't receive more than one offer because one was all it took for 17 off-market sales
Though data averages tethered overbids close to asking prices, 5% of all sales were 19% or more over asking topping off at 35%
San Francisco is something of the wild west with single family homes selling anywhere from 32% under asking to 88% over asking price
Median detached properties purchased this quarter provided 3 bedrooms and 2 bathrooms in 1,646 square feet with a cost of $869 per square foot
Condos, townhouses, and TICs demonstrated only slightly tighter bidding practices with the low end at 19% under asking and the top at 55% over
The median condo/townhouse/TIC purchased offered 2 bedrooms and 2 bathrooms in 1,067 square feet with a cost of $1,046 per square foot
BE LEERY OF HEADLINES
(except for this one)
As soon as the SiP was put in place the market constricted. Headlines touting talk of massive reductions in inventory lit up real estate blogs, posts, and news sites.
Duh. Agents weren't allowed to work.
But that didn't stop us from figuring out how to still make business happen. Many listings went behind the scenes to off-market networks to test the waters; they'll show up as sales when they close.
Not to say inventory didn't slow, it definitely did. Many sellers decided to wait this out and hit the market when they'll benefit from an official open house. Others are trickling on the market now thinking, Why not? If things don't work out now, they'll just come back on the market later on.
Buyers are continuing to buy, too. Mortgage rates have mimicked a squirrel crossing the road a bit, but they're starting to stabilize. At the moment, banks are offering the best rates with 30-year fixed jumbo loans still under 4% (per a rate sheet I received from a Wells lender last week) while many local lenders are struggling to compete with similar products touching 5% (which is still near historic lows). In this twilight zone we're living through, bigger banks are having more success getting loans funded with fewer hiccups. Their longer timeframes aren't such a concern currently as almost all escrows require more patience for a myriad of reasons.
A perk of all of this, one I truly hope will persist, is more transparent pricing. We're going old school here, people! Sellers are beginning to ask for what they want and accept offers as written. This still isn't the rule, especially as some agents are diving head first into their newly essential status and showing property to eager buyers, but if one thing changes for the good, please let it be this.
The San Francisco Bay Area has always existed in something of a bubble. Even through the last major market correction, our depreciation was less than most of the country and we bounced back faster and higher. I wouldn't be at all surprised for a very active market once life returns. Fears around the massive unemployment numbers will be assuaged when businesses can reopen and many workers can get back to work.
What should you do now? If you are comfortable buying or selling, business continues and there are deals to be had on both sides. If you're more comfortable waiting, bide your time and do your research. Take this time to learn the market where you want to do business, explore areas you may choose to live, research and interview agents and choose someone to work with. If you need help figuring it all out, I'm only a call, text, or email away. And I'm respecting the SiP order, so I'm home and would love to have a conversation.