With the economy anticipated to continue growing, demand for housing is expected to remain strong and incrementally boost home prices, according to the California Association of REALTORS®. C.A.R.’s Senior Vice President and Chief Economist Leslie Appleton-Young states, “This year’s housing market can be told as a tale of two markets – the inventory constrained lower end and the upper end that’s non-inventory constrained. This trend is likely to continue into 2018…”
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Monterey County – The real estate market in Monterey experienced a slight year-end plateau in home prices, which is great for home seekers because the frenzy has subsided. The exception is Pacific Grove that continues to be in high demand with only 28 properties currently available for sale. There was a general slowing in the luxury market, but it is too soon to tell if this is due to the recent tax reform. The new year is a great time for sellers to get their properties primed for sale and Monterey has experienced great weather for exterior photography and yard maintenance.
North Bay – Greenbae saw a continued seller’s market due to low inventory. The luxury market has slowed in Marin County, but multiple offers are still expected on well-priced homes. Santa Rosa Bicentennial also saw reduced inventory, but a decrease in offers has offset the seller’s market.
Economists predict higher mortgage rates in 2018 and affordability may be in question later in the year. For those on the fence about selling, it may be an opportune time while the pool of qualified buyers is still relatively high. Buyers are also encouraged to begin their house hunt as offers have slowed and there can be less competition early in the year. The luxury market is property and area dependent, and the rush to purchase after the local fires has waned for the time being.
Southern Marin saw a slowdown in the market leading up to the holidays with properties either being sold or just taken off the market. Demand typically picks up in early February until late summer, which is good for both buyers and sellers as there will be more properties on the market to choose from. Inventory is projected to increase in the spring, giving buyers more opportunities to find their dream home. The luxury market also cooled during the holiday season, although the area experienced a stronger demand for high-quality new construction.
Sacramento County – Sacramento Fair Oaks endured a 15 percent decrease in inventory since October and sellers saw a hot housing market with little seasonal slow-down. High buyer demand and a rapid rate of sales means sellers should get their property camera-ready. The upper-end markets remained active over the past quarter. The $400,000 to $750,000 price range saw an 18 percent increase in closed sales and a 29 percent increase in pending sales versus last year at this same time. Buyers need to get themselves pre-approved to compete in this fast-moving market. Homes priced over $750,000 saw a 42 percent increase in closed sales and a 35 percent increase in open sales over the past month. Anticipated mortgage rate increases and proposed tax changes may have contributed to a sizzling fourth quarter, but the high demand and low supply is expected to sustain the trend.
San Francisco – SF Lombard saw the typical holiday slowdown and this may have encouraged sellers to price their homes right. With less competition in the new year, sellers may be able to find a buyer more quickly.
SF Peninsula – Redwood City saw little activity in all price points. With little inventory, sellers are encouraged to list their properties now if seriously considering a move.
San Mateo experienced an active market during the holiday season. Listings and sales did not stop, as there were serious, committed buyers and sellers. Buyers are encouraged to keep searching for their dream home. As many buyers wait for the spring season to start their search, there is currently less competition in the market.
Silicon Valley – Los Altos saw a sustained seller’s market with low inventory and multiple offers on many properties. Instead of the usual holiday slowdown, activity remained brisk with properties selling above asking price in many instances. Knowledgeable sellers and buyers act and react quickly to home values in the current market, which led to lower days on market averages. Average DOM year-to-date is 18 for Los Altos, 37 for Los Altos Hills, 14 for Mountain View and 13 for Sunnyvale. Although the quick-selling moments lead to less homes on the market for buyers to compete for, there have been more homes sold in 2017 than 2016. Sellers must be methodical in pricing their homes as buyers are now very knowledgeable and aware of values. Buyers should also be ready with financing and be aggressive with their offers. Homes priced over $4.5 million are selling steadily with little growth.
Los Gatos saw multiple offers as the norm, especially because inventory is half of what it was a year ago. This makes it a great time for sellers to list their homes and capitalize on the record-breaking appreciation in the area. Buyers are encouraged to work with local experts to find their dream property.
Market Watch is a monthly column exploring the Northern California housing market. Click here to view past issues.