One segment of the market that often gets a lot of attention is that of “Luxury Homes’. Clearly, the term ‘luxury’ has different meaning to different people, but, for purposes of the conversation, we’re referring here to those priced at or above $3 million. As the headline above proclaims, the market for these homes is still hot. In fact, as the following clearly indicates, it is more than that. It is incendiary!!. Buyer or seller you may be, but this information shows you the benefits of being a Seller or why you should increase the pace of your search if you’re a buyer.
Executive Summary:
• Sales of Bay Area homes priced above $3 million doubled in February, with most local regions posting large gains.
• Sales of homes priced higher than $1 million also continued to grow.
• Regionally, East Bay sales slowed, while Silicon Valley and the Wine Country saw more sales this February.
• The Bay Area median price jumped another 16 percent year over year, though high-end sales drove a large part of the increase.
• Buyer demand is not abating amid market challenges. Seven in 10 Bay Area homes sold for more than asking price, with the average premium increasing to 12 percent, up from 8 percent premiums observed in the last two Februarys.
• Thirty-year, fixed-rate mortgages reached 4.46 percent as of March 8, 2018 according to a Freddie Mac survey, the highest since the spring of 2014.
Bay Area homebuyer demand remained strong in February despite concerns over tax changes, rising mortgage rates, and stock market volatility. While overall activity remained flat year over year in February, sales of homes priced above $3 million doubled to about 126 for the eight-county Bay Area (excluding Solano County). The largest relative jump in luxury sales occurred in Sonoma County, which had nine high-priced sales. During the last two Februarys, only one and three such sales were recorded in Sonoma County. Notable jumps in high-priced sales were seen in all Bay Area regions except Napa County, were fewer sales were recorded when compared with last
February. Figure 1 summarizes sales of homes priced at $3 million-plus by Bay Area county. Also note that the data presented in Figure 1 relies on MLS data, and since not all sales are recorded in the MLS, the number of transactions could be higher.
Along with the large increase in higher-priced sales, most Bay Area regions also saw solid upticks in homes priced between $1 million and $3 million, with the largest relative increase in Silicon Valley. Sales of homes priced between $1 million and $2 million increased by 30 percent year over year, while sales of homes priced between $2 million and $3 million grew by 33 percent from last February.
Homes sales below $1 million continued shrinking, consistent with rapidly declining inventory at that price point, dropping by 15 percent. Interestingly, despite fewer homes for sale below $1 million in San Francisco and Napa counties, sales at that price point picked up slightly from the year before, up 4 percent and 11 percent, respectively.
Year over year, sales activity grew in some regions and declined in others. Alameda and Marin counties saw sales fall by about 8 percent. In contrast, San Mateo, San Francisco, and Napa counties all posted solid increases, with San Mateo leading with a 21 percent uptick. Most of the increase in San Mateo County was for homes priced above $2 million. Santa Clara and Sonoma counties maintained their overall annual levels of activity, though higher-priced sales again compensated for losses at lower price points.
The bulk of this information applies to Marin as much as it does to the Bay Area overall. As noted in the paragraph above, total sales in these price levels declined a bit from the prior year, although that wasn’t due to any market softening. Rather, it was a lack of available inventory. Prices still rose. All of this was in spite of rising interest rates and forecasts of more of the same.
The word here is that if you’re buying, don’t get shy. Rather, pick up the pace of your search so you can take advantage of what inventory there is, and get your loan before rates experience their next increase.
On the other hand, if you’re selling, the continued upward direction of values bodes well for you. This is all in the face of the projected rate rises. Clearly though, if you get on the market before rates climb much further, potential buyers will be more likely to be willing and/or able to afford the increased values.
In either case, give us a call! We have a combined 64 years of experience in the Marin market, and would be happy to help you, whichever side of the equation you are on. Remember: the numbers are: Peter: (415) 279-6466; Jane: (415) 531-4091. We’re here for you!