Reporter- San Francisco Business Times
The high-end real estate market in the Bay Area is as hot as ever. The volume of sales and prices for luxury homes are soaring throughout the Bay Area.
Homes priced above $1 million shot up 30 percent in the East Bay during the month of March compared with the previous year, according to the MLS, a residential real estate data service. In Marin County, prices for luxury homes above $1.5 million jumped by 34 percent to a median of $2.654 million.
The number of sales for homes of $1.5 million and up in Silicon Valley increased by 28 percent in March while sales prices were up 6 percent to a median of $2.04 million. In San Francisco, during the first quarter of 2014, the number of homes over $2 million ballooned by 27 percent with a median sale price of $2.9 million, up 5.7 percent from a year ago.
“We still don’t have enough good listings given the robust demand, but we’re moving in the right direction,” said Mike James, president of Coldwell Banker Residential Brokerage. “Word is finally getting out to homeowners that this is a great market to sell your home.”
The trends point to a greater inventory of luxury homes popping up on the market. Meanwhile, home sales overall in the Bay Area dropped by 13 percent in March, compared with the prior year while prices increased by 23.2 percent, according to Dataquick, another data service.
“The upper strata of the market has been strong for a while,” said Dean Wehrli, a residential real estate expert with John Burns Consulting. “In our economy, the strongest portion is the highly, highly affluent.”
With housing prices surging in the past few years, many more homes qualify as “luxury” based on price, he said. A million dollars doesn’t buy much in certain parts of the Bay Area, such as a two-bedroom condo in San Mateo.
While sales volume is up for luxury homes, the market still suffers from a major supply to demand imbalance.
“There is incredibly low inventory and that’s been a huge prop to the housing market,” he said.
In San Francisco, the highest priced home during the first quarter went for $10 million for a five-bedroom, 5,900-square-footer in the Marina.
Even at the high end, the East Bay offers an affordable alternative to the rest of the Bay Area. The median sale price of a luxury home in March was $1.283 million, a 1.6 percent decrease compared with a year ago, which is about 40 percent less than Marin, San Francisco and Silicon Valley.
One buyer handed over $4.675 million for a four-bedroom, six-bath approximately 9,000-square-foot home in Diablo —the highest priced home to sell in the East Bay in March.
“We’ve seen some really good appreciation rates over the last few years, because of that many homeowners have regained their equity positions and are looking at other options,” said Don Cruz Datanagan, a broker with ZipRealty who oversees the North and East Bay areas.
Most of high-end buyers, especially over the $2 million mark, are all-cash or bring a significant down payment, Dataganan said, since the biggest mortgage banks will offer is up to $2 million — and that’s for someone making a very high salary. With interest rates at a relatively low level, some buyers who could pay cash prefer to finance a home and invest the money instead.
One seller said she is trying to unload a five-bedroom home in Alamo that she’s lived in mostly by herself for the past four years after her son went away to college. Her home is priced above $2 million. In March, 25 homes in that segment sold in the East Bay.
She plans to downsize her living situation, so she’s in a good position, but entry level or move-up buyers: Good luck.
Blanca Torres covers East Bay real estate for the San Francisco Business Times.