Area's spring housing market is in full bloom
Area inventory seems to be growing nicely
By Jean Newton
No one can exactly explain the current real estate market, but no one is complaining about it either. Multiple offers are still a big part of the deal and consensus says the word "healthy" is the best descriptor. As spring approaches, inventory may become tight, giving a focus to price, positioning and perseverance.
There's no doubt something is happening in today's real estate market in spite of a sluggish economy and a puzzling stock market. Sales of existing homes in California in March increased by 13.1 percent and the median home price rose 18.8 percent compared to the same period a year ago, reports the California Association of Realtors and Real Estate Solutions, a real estate information service.
"The residential real estate market is the 'sweet spot' in California's economy, and is a manifestation of consumer confidence," said California Association of Realtors President Robert Bailey. "The median price of a home in California topped $300,000 for the first time last month."
The median price of an existing, single-family detached home in California during March 2002 was $305,940, an 18.8 percent increase over the $257,550 median for March 2001. The March 2002 median price increased 2.6 percent compared to February 2002.
"The window of opportunity created by low mortgage interest rates is definitely a factor driving the market, said the association's vice president and chief economist, Leslie Appleton-Young. "But we expect upward pressure on rates to materialize by late summer, which will impact the entry-level market."
Realtor Kim Richman of Coldwell Banker in Los Gatos said, "There's no explainable reason for what we have going on now. Last week I was in multiple offers for two different buyers, one in the $600,000 price range with eight offers and one in the $2,000,000 price range with four offers."
Perseverance paid off for both of Richman's buyers. Her take on the market is reflected in what's happening with the inventory, the number of homes for sale.
"The inventory seems to be staying steady with only a slight increase from one week to the next, but the buyers keep buying. We have 57 percent more sales for the same time last year. The week of April 19th saw the most purchases over $1,000,000 since January of 2001, with 56 sales. We have only 48 percent of the inventory for the same time last year, but we have 51 percent more inventory than we did in 2000 and 24 percent more than in 1999," Richman said.
Questioning whether the favorable interest rates might still be playing a part in the fervor, Richman also wonders whether the spring market will be tight. According to Jimmy Kang, mortgage broker with Wells Fargo Home Mortgage in Burlingame, the market has definitely picked up.
"Quite a few of my preapproved borrowers are having to make as many as 10 offers on various properties as they are being overbid. In fact, at the end of March, when interest had increased slightly, there was an increase in applications as potential buyers rushed to get preapproved, fearing they were going to miss the low rates," Kang said.
Of course, it's all relevant to individual buyer and seller experiences. Realtor Kathy Stakey of Coldwell Banker in Saratoga calls the market "fickle at best."
"We are getting multiple offers on some properties and others are waiting for the right buyer. I have a client who is selling property in Silicon Valley and moving the proceeds to Southern California. The client is disappointed that our market is not as 'hot' as the market they wish to buy in," Stakey said.
Homes that are well-priced and positioned are the ones that are doing well, said Steve Bellumori of Coldwell Banker in Menlo Park. He sees an increased inventory as being typical for this time of year. The number of homes will probably increase as it gets closer to the end of the school term, then should level off once again. June through August are typically slower real estate months, due to family vacations.
Bellumori, who recently attended an international conference in San Antonio, said the trend is occurring across the United States. "All markets--the northeast, southwest, etc.--were busy, as housing seemed to lead the economy. Now housing gains are expected to level off--not decline--as other sectors of the economy pick up momentum," he said.
The market remains sensitive as to both price point and positioning of the home. Bellumori said there is a good supply of buyers for accurately priced homes. He believes that homes that are "fully priced out" or listed at the upper end of the projected range do not seem to do as well on the market as those priced in the lower or middle of the projected range. Sometimes the fully priced homes need to be adjusted sharply to regain momentum.
"Offers over the asking on such homes are very much typical. Our last seven homes have all gone over asking with multiple offers and reached the higher end of their projected range. It is doubtful they would have done so if they had not been positioned as well," said Bellumori.
Price point sensitivity continues in all communities and within micro markets within each community. In general, Bellumori views the market as very good for both buyers and sellers alike, in spite of multiple offers on properties.
"The buyers are usually there in multiple because of the downward price adjustments that took place last year and have resulted in homes that are now more affordable than they were in the prior two years. Sellers are in good positions because they are able to sell with strong interest at prices higher than they were at the end of last year," Bellumori said.
Saratoga, California Since 1955
