Mike James is president of the Bay Area and Hawaii regions for Coldwell Banker, the real estate brokerage that was founded in San Francisco in 1906, in the aftermath of the great earthquake. We decided to ask James what’s happening in Bay Area real estate in 2016.
This interview has been edited for length and clarity.
Q How has the market been behaving lately? And give us your predictions for the coming year.
A Inventory is lower than it’s ever been. But there’s an old saying: “Everything picks up after the Super Bowl.” And that looks like it will be the case again this year. Most agents are sitting on at least a listing or two. And CAR (California Association of Realtors) predicts a 6.3 percent increase in units — we’ll sell more units this year, they say — and a price increase of about 3.2 percent.
In the higher-end markets, the inventory is even tighter, so we may see even a little bit more of a run-up (in price) in those areas, as in San Francisco and on the Peninsula.
Q Overall, the Bay Area saw about an 8 percent rise in the median price of single-family homes in 2015. Is the market softening? Some agents say it is.
A In the last quarter we saw a little bit of what would be perceived as softening. Instead of getting 10 offers on a house, you’d get two, which the agents see as softening because they didn’t get their $100,000 over list price. But there’s a pattern: You go into the holidays, and inventory shrinks. Then you come out of the gates early in the year, and you get this huge pent-up demand, and it tends to drive prices again.
I think there will be less of an increase than there was last year — at some point it becomes unaffordable. But there will be an increase.
Q I imagine you’re concerned about world factors, including the Chinese market?
A It kind of goes day by day. A few days ago the Chinese government says, “Well, don’t worry, we’ll formulate some sort of bailout plan,” and the stock market did well that day. A few days later, it was something else, and the market didn’t fare as well.
I try not to pay too much attention to it, because the Bay Area seems to run a bit differently than the national market. But, look, if there was a stock market collapse, of course it would affect everything.
Q Short of that, you’re not seeing any kind of pinprick or puncture in the bubble?
A There’s always talk about the bubble, but, no, we don’t see that at all. We have no reason to believe that the (real estate) market will be anything less than great in 2016. We expect to see good steady increases in both units and prices.
Q Are many new agents coming into the pipeline, taking classes to get their licenses?
A Yes. We saw that slow down in the second half of last year. It almost seemed like people were anticipating, “OK, we’re probably nearing the peak. There’s no reason to get into this.” But now our new agent classes are full, and it seems like there’s a ton of interest. It kind of surprised me.
Q What advice would you give to a couple that wants to buy a house in the Bay Area with a combined income of $100,000?
A Pick your location.
Q What locations do you recommend?
A Certain areas of Santa Clara County: South San Jose, Morgan Hill, Gilroy. And up the East Bay, if you avoid Danville and certain pockets, most of the East Bay is certainly affordable — and the North Bay when you get up to Novato and places like that. But it always comes down to the same question: Everyone has to judge how far they want to commute.
Q The inland counties had the region’s highest sales increase in 2015, especially Solano County.
A That was a huge distress market previously, so there’s a lot of opportunity. Funny how the buyers always find the opportunity, isn’t it? They’re always good at it.
Q What most surprised you in 2015?
A The way inventory had not grown. You would think with the run-up in prices that there’d be a healthy group of people who’d say, “OK, it’s time to cash out” or, “Maybe I should move on this right now before it goes out of reach.” And some of that has happened. But not as much as you’d have expected.
Q Do you expect a shift in 2016? More inventory, finally?
A That’s the magical question. My guess is maybe fourth quarter this year. Who knows?
5 FACTS ABOUT MIKE JAMES
1. He’s a horrible golfer. “I love to do it, I’m just not any good.”
2. He went into real estate in the 1970s after learning that his mother, an agent, had cracked $100,000 in annual income: “Back then, that was a lot of money, and I was in the Air Force earning about two grand a month, so I went, ‘Wow, that’s what I’m going to do.’ “
3. He reads books about business and history, most recently “13 Hours: The Inside Account of What Really Happened in Benghazi” by Mitchell Zuckoff.
4. He is a fair-weather sports fan. “The Warriors, I love ‘em now. The Niners, God, I always have high hopes. But it’s hard to stay focused when they’re not winning.”
5. As a young man, he founded a pool company and ran a linen supply company. There was a time when he worked three jobs at once. “That’s the way you make it in this world: focus and hard work.”
Job: Regional president for Coldwell Banker
Background: Grew up in Southern California
Residence: Walnut Creek
Military service: U.S. Air Force, 1975-79
Family: Married to wife Andrea; has two grown sons from previous marriage