Author: Rainy Hake, Executive Vice President, Alain Pinel Realtors
How is the market? Is it a good time to buy? Sell? These are the questions every real estate professional hears at the start of the year. While people asking often want a quick answer, the reality is almost all markets have opportunities for both buyers and sellers – and in 2013, the San Francisco Bay Area is no different.
First, let’s reflect on what we saw here at Alain Pinel Realtors (APR) in 2012. We saw high sales volume and closed units, resulting in our best year on record – and we’ve been around since 1990. Almost every one of our 32 offices around the Bay Area increased their year-over-year sales.
While our skilled real estate professionals absolutely played a huge role in this tremendous accomplishment, the market also was at work. According to the California Association of Realtors, prices are up as much as 25% year-over-year in some Bay Area neighborhoods. Looking specifically at San Mateo County, year-over-year transactions increased 10% and the average price rose 7%. This trend was reflected in the high-end market as well. According to DataQuick, in the nine counties that make up the Bay Area, the number of sales that were above $1 million rose 29% year-over-year to 11,041 – and 162 of them were above $5 million!
A lot of these statistics are reflected in what our agents were seeing day-to-day on the ground with their clients. With many of our local markets having less than 1 month of inventory, homes that were on the market were selling quickly. In San Mateo, the average days on market dropped 28% in San Mateo County, according to TrendGraphix. It also seems like every REALTOR® has a story of helping their clients through an intense multiple-offer situation. With interest rates incredibly low, the buyers in the market were taking advantage of their increased buying power.
2013 has started off with many of the same characteristics as 2012. Let’s look at what that means for buyers and sellers.
Sellers – The market in the Bay Area is extremely strong and prices are the highest we have seen in years. While not everyone has regained the equity lost in their homes, well positioned sellers are taking advantage of their selling power now. While there is no guarantee to how long your house will be on the market, on average, we are seeing homes move quicker than the previous year. With restricted supply and high demand, we are seeing an increase in the number of motivated buyers in the marketplace, with well-priced homes receiving multiple offers – the most in the last 12 years.
Buyers – While it sounds like it is a great time to be a seller, there are plenty of opportunities that exist for patient buyers. We are experiencing some of the lowest interest rates in history, increasing buying power and making home ownership more affordable for many. Rental rates, especially in the Bay Area, also continue to climb making it very attractive for those who can qualify for financing to purchase rather than rent. And as we look ahead, these conditions might not last forever. The Mortgage Bankers Association expects the 30-year fixed mortgage rate to rise almost a full point over the next two years. Also, nearly 30% of all Bay Area home sales in 2012 were cash buyers illustrating that investors are recognizing the buying opportunities that currently exist. With prices rising and investors trying to capitalize on low interest rates, the time to jump into the market is right now.
Casual observers of the market and the media at-large often try to simplify the market as a buyers’ or sellers’ market. However, in almost any market, there are opportunities on both sides of a transaction. As outlined, 2013 has potential benefits for buyers and sellers – consulting a REALTOR® and looking at your specific situation is the first step to capitalizing on them. Happy New Year.
This article recently ran in the February 8th, 2013 Palo Alto Daily News publication Premier Homes.
About Author:Rainy Hake currently serves as the Executive Vice President of Alain Pinel Realtors where she plays a role in managing the strategic direction of the company, and also oversees the Marketing, Technology, Training and Strategy departments. She has over 15 years of experience in the real estate industry and holds and MBA from the University of Oxford.