A lack of homes for sale is the Achilles’ heel of Bay Area housing markets. Industry experts and economists have consistently discussed falling inventory levels since 2012, when most of the region’s distressed inventory was absorbed. Since then, inventory levels, while fluctuating, have been on an almost constant decline. Over the last year, the monthly year-over-year supply decrease averaged 7 percent in the Bay Area. More importantly, affordable homes are disappearing at double that rate.
The first half of the year ended on a strong note for Bay Area housing markets, with 2 percent more sales in the first six months of the year when compared with last year. The East Bay saw the largest increase in sales activity, up 4 percent, while San Francisco followed with a 3 percent increase. San Francisco’s improving housing market conditions are particularly encouraging given the lull that the city faced last year.
Pacific Union’s recent second-quarter real estate reports showed that Bay Area housing markets are sizzling again, and buyers are facing tough competition. Overall in the Bay Area, 6 in 10 homes sold over the asking price in the second quarter, while in Alameda and San Mateo counties, almost 8 in 10 homes sold over the asking price. Naturally, some price ranges were in greater demand than others. For example, in the East Bay, competition increased for homes priced up to $2 million but cooled off for higher-priced homes.
Sellers hoping for a speedy sale should seriously consider staging their homes, a process that most real estate professionals believe helps a buyer better visualize the property as their own. That’s true here in the Bay Area, where staged homes not only sell nearly twice as fast but receive more offers and command higher prices.
Palo Alto has always been fashion-forward when it comes to real estate trends. Having worked in residential real estate in this area for 8 years, I have found that the Palo Alto housing market serves as a compass when it comes to trying to predict the next real estate pattern. Over time the neighboring cities, Menlo Park, Los Altos, Redwood City and San Carlos, will often mirror the market ebbs and flows experienced in Palo Alto.