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Shutterstock: Silicon Valley starts feeling “buyer fatigue”

“Buyer fatigue” is setting into Silicon Valley real estate markets, according to Selma Hepp, PhD, chief economist at San Francisco-based Pacific Union International. “In my latest monthly analysis of Bay Area housing markets, the most interesting findings are in Silicon Valley. They include a notable drop in sales year over year, a decline in absorption rates and more inventory. It’s more pronounced in Silicon Valley since that area was very strong last year,” observes Hepp. “I also see budget constraints with buyers under the $3 million price range.”

Here’s a look at Hepp’s numbers: Sales of homes priced at less than $1 million fell at the fastest rate seen in two years, down by 28%, driven by 50% drops in San Mateo and Santa Clara counties. Sales of homes priced above $1 million continued to grow. However, June’s increase was the smallest seen in a year. Inventory dropped by 2%. “I’m basically seeing cracks in that Silicon Valley market,” Hepp said.

Don’t get too excited. The Bay Area remains unaffordable for many home buyers. According to Zillow, the median home value in San Francisco rang in at $1,354,100.  While Silicon Valley’s San Mateo and Santa Clara counties experienced some “buyer fatigue,” as Hepp calls it, only San Francisco had lower inventory levels across all price ranges in June.

Percentage-point changes in absorption rates by Bay Area County: June 2018 versus June 2017Pacific Union International

That key benchmark, absorption rates, (calculated as a ratio of sales to total inventory available that month) in Santa Clara and San Mateo Counties showed the highest decline from June 2017 to June 2018. The take-away: fewer homes were sold there in June 2018 compared to a year ago.

“We discuss these issues a lot in our weekly sales meetings,” confides Katharine Carroll, broker associate at Pacific Union International’s Palo Alto office. “I think it’s too early to say for certain Silicon Valley is hitting a slump. To me, the data shows our annual summer seasonal decline, especially in Palo Alto and Menlo Park. Many of the area’s venture capitalists vacation during the summer. Then sellers wait until September to list their homes. I see buyers taking a break because of that,” Carroll adds.

Absorption rates fell the most for homes priced below $1 million. “I think the slowing absorption rates in some areas may suggest that buyers are becoming fatigued after months of strong competition,” Hepp explains.

How many times can you make a highly competitive offer in a nerve-fraught bidding war only to lose out to another buyer? Nina Hatvany, San Francisco’s top residential agent in 2017 who specializes in luxury properties, sees this scenario often. “I had a property we listed on a Monday at $1,250,000. By Friday we had four offers. It went for $2.3 million. I had buyers who were very disappointed they did not get that property. Some buyers have been through this scenario several times,” Hatvany said.

Hepp’s advice for buyers from her economic perspective: “The reason I talk about buyer fatigue is 90% of homes are selling over asking price, I think buyers who have been unsuccessful in bidding on properties are taking a step back. They should look elsewhere geographically to expand the market for buying opportunities.” Good advice if you live in the land of bidding wars.

Article source: https://www.forbes.com/sites/ellenparis/2018/07/25/buyer-fatigue-setting-into-silicon-valley-real-estate-markets/

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The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: Matthew Millman/© Matthew Millman, 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: Matthew Millman/© Matthew Millman, 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: Matthew Millman/© Matthew Millman, 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: 181 Fremont.com

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

The tallest, most luxurious, and most expensive units in SF. Note the condo photos in this gallery are not of the actual record-breaking penthouse, but of the typical condo in the luxury tower

Photo: 181 Fremont.com

181 Fremont was always meant to be a rarefied luxury tower, but its first penthouse sale may have surprised even the most optimistic projections.

Closing for $15 million dollars, the three bedroom, 3,326 square foot unit fetched a record-setting $4,509 per square foot, according to the Business Journal.

181 Fremont

The complex has been newsworthy from the get-go.

Finished in January of 2018, this mixed-use building announced itself to the world as SF’s first LEED platinum luxury condo tower, stretching over 800 feet into the sky, the tallest mixed-use building in the West.

In May, media tours began, lured by the idea that developers of the Jay Paul Co. “set out to make the establishment the embodiment of state-of-the-art luxury living and world-class engineering.” Galleries of photos hit the web, showcasing model units designed by Orlando Diaz-Azcuy and Charles de Lisle, as well as the Sky Lounge and some unique panoramic views.

The luxury of the building was impossible to miss.

As the Business Insider put it, “The developer targeted a superior level of luxury — and pricing — with 181 Fremont, which is Jay Paul’s first San Francisco development, first high rise, and first residential project.”

The latest news for the complex: its first penthouse sale has set a new record for the highest price-per-square-foot condo sale in San Francisco, according to Business Insider.

For context, Paragon’s report on real estate sales in SF neighborhoods for 2017 shows condo sales in the North Waterfront area (including Financial District) at an average of $1,303 for three bedroom units.

181 Fremont has fetched more than three times that.

Penthouse life

The three upper floors of the 802-foot-tower consist of four penthouses. Each penthouse covers a full half a floor.

According to 181′s website, “Residents will enjoy a top-notch suite of amenities that encompass an entire floor, featuring a wrap-around observation terrace, The Conservatory, Bay Terrace, fitness center with yoga room, two distinctive lounges, library, catering kitchen, and conference room.”

If $15 million for a regular penthouse isn’t extravagant enough for you, you may want to check out the nearly 7,000-square-foot grand penthouse on the top floor that is listed at $42 million.

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert 

Article source: https://www.sfgate.com/realestate/article/181-Fremont-penthouse-sale-sets-new-SF-record-13142975.php

The Bay Area continues to lead the state in shattered home-ownership dreams.

Record home prices and rising interest rates have pushed statewide home affordability rates to a 10-year-low. In the Bay Area, fewer than 1 in 5 residents can afford to buy into one of the nation’s most expensive real estate markets, according to a study released Wednesday by the California Association of Realtors.

“It’s not the worst I’ve ever seen, but it’s pretty darn close,” said Dave Walsh, vice president at Alain Pinel in San Jose. “It’s a challenge for any segment of society.”

A swirl of forces has made the region too pricey for even double-income families: a shortage of new housing, booming job growth bringing more professionals to Silicon Valley, and interest rates ticking up from recent lows.

The run-up in prices has proven a spectacular investment for homeowners, even as many newcomers feel locked out.

Median sale prices for Bay Area homes have increased every month over the previous year for a record six straight years. It’s led to an exodus from the area — only to be replaced by even more newcomers — and calls for housing reform in Sacramento and in city councils across the region.

The CAR affordability index is based on a region’s median household income and the median home sale price. It also assumes a 20 percent down payment and a mortgage rate at the national average.

Nationally, more than half of households can afford an average home priced at $269,000. It takes a household income of $57,000 to pay the mortgage and have enough left over for food, health care and other essentials.

In California, the percentage of residents able to buy a single family home has hit its lowest point — 26 percent — since the first quarter of 2008, when the residential housing industry was beset by inflated prices and the subprime mortgage crisis.

A typical state resident needs an annual income topping $125,000 to afford a median home priced at $596,000. In Los Angeles, about 3 in 10 households could afford to buy, while about 4 in 10 residents in the Inland Empire could make a purchase.

Bay Area residents find a much starker balance sheet. A household needs roughly $220,000 in income to afford a home at the median price of $1.04 million, according to CAR. After a down payment of more than $200,000, a typical new Bay Area homeowner would have a $5,500 monthly mortgage payment.

Five of the nine Bay Area counties became less affordable in the second quarter: Alameda, Contra Costa, Santa Clara, Solano and Sonoma. Higher wages improved the home buying environment in San Francisco and Marin counties, while the index remained steady in Napa and San Mateo counties.

Just 12 percent of Santa Cruz County residents could muster enough money to buy a home, the lowest rate in California. About 14 percent of residents in San Francisco and San Mateo counties could afford homes, while 16 percent of residents in Alameda and Santa Clara counties could.

Matt Rubenstein, a Danville-based agent, said the market remains tight, but his office has stayed busy. Many of his recent sales have come from repeat buyers using their home equity to buy a larger home — either by moving away from an expensive area or trading up from a condominium.

“Our area has gotten really expensive,” said Rubenstein, who sells in Contra Costa County. But, compared to the Peninsula, he said, “there’s still some really good values here.”

A typical buyer in Santa Clara County needs to make about $300,000 to qualify for a mortgage. Walsh said that’s a narrow market: “Two college-educated professionals holding two very successful jobs.”

Unless the region builds more homes, Walsh said, a low affordability index may be common in the future. Blue collar workers, young professionals with student debt and nontech professionals will be squeezed out.

“We’re at crisis levels now,” Walsh said. “We must do something. We no longer have an option of just thinking about it.”

Article source: https://www.mercurynews.com/2018/08/09/fewer-than-1-in-5-residents-can-now-afford-a-home-in-bay-area/

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Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. This Palo Alto 1,200 square foot home asks $1.488M

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Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. This Palo Alto 1,200 square foot home

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Photo: Redfin

Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. This Mountain View 1,128 square foot townhouse asks $1.075M

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Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. This Mountain View 1,128 square foot

… more
Photo: Redfin

Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. In San Mateo, this 1,110 square foot home asks $1.098M

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Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. In San Mateo, this 1,110 square foot

… more
Photo: Redfin

Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. This San Francisco condo is 923 square feet, asking $1.3M

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Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. This San Francisco condo is 923 square

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Photo: Redfin

Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. In San Jose, this 1,534 square foot home asks $1.279M

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Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey. And indeed, these simple homes with huge price tags demonstrate the issue. In San Jose, this 1,534 square foot

… more
Photo: Redfin

Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey.

Bay Area real estate is too expensive even for high paid tech workers, says a Team Blind survey.

Photo: Team Blind

A recent LinkedIn study looked at data on where people move when they leave San Francisco and the Bay Area. Click through to see the most common spots for Bay Area folks to land.

A recent LinkedIn study looked at data on where people move when they leave San Francisco and the Bay Area. Click through to see the most common spots for Bay Area folks to land.

In a survey presented to 13 Bay Area tech companies, nearly 60 percent of respondents said they feel underpaid, despite six figure salaries — primarily because they cannot afford buy a home.

The survey

This survey was completed by Team Blind, an app that allows (mostly tech) workers to communicate anonymously.

In late July, Team Blind asked employees from 13 Bay Area tech companies — Cisco, eBay, Intuit, Airbnb, Apple, Uber, Pinterest, LinkedIn, Intel, Oracle, Salesforce, Facebook, and Google — how they felt about salaries.

With at least 100 employees at each of the 13 companies and a total of 2,326 responses, 61 percent reported they felt underpaid.

Bay Area residents are leaving for these US cities.

Media: Ted Andersen, SFGATE, Getty

MORE: ’They do not like Californians’: How the Pacific Northwest is treating transplants

Team Blind followed up this survey with a second survey, asking specifically if users could afford a home in the Bay Area; 59.33 percent said they can’t.

The lowest and the highest

While over 50 percent of all surveyed employees say they can’t afford to buy a house, employees of Cisco and eBay seem to suffer worst: 72.07 percent of Cisco respondents said they can’t afford to buy a home, while 70.63 percent of eBay respondents said the same.

Even the majority of surveyed Facebook and Google employees said they struggle to own a home: 51.74 and 51.39 percent, respectively. Of the companies surveyed, these are the lowest percentages.

Exodus?

In May of this year, the Bay Area made news with an overall 13 percent jump in home prices. In San Francisco, that median is over $1.6 million. In the Silicon Valley, it’s close to $950,000.

Team Blind reported that:

“According to the California Association of Realtors (CAR), only 12 percent of San Francisco households could afford a median-priced single family home at the end of 2017. In nearby San Mateo County, 14 percent of households were able to afford similarly priced homes in the area. The number was 15 percent in Santa Clara County, home of the Silicon Valley.”

So, even when tech workers pull in salaries that reportedly top $300,000 annually, they still aren’t making enough money to buy homes.

That kind of imbalance leads to exodus. A startling Bay Area Council survey found 46 percent of residents plan to leave the area soon.

And indeed, recent surges of Bay Area transplants in places like Sacramento,  Seattle and Portland suggest they already are.

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert 

Article source: https://www.sfgate.com/realestate/article/Google-facebook-can-t-afford-Silicon-Valley-13132157.php

Former NSync member Lance Bass wanted to buy the iconic “Brady Bunch” house, but the result of a bidding war is tearin’ up his heart.

Bass said on Instagram

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  on Sunday that he was “feeling heartbroken,” after finding out that a corporate buyer outbid him for the property in Studio City, Calif. The agent selling the estate had, according to Bass, previously told him that he had the winning bid. Bass noted it was “way over the asking price” of nearly $1.9 million.

But the next day, he said, the corporate buyer swooped in and topped that bid and, due to unforeseen circumstances, could no longer accept his offer. Bass said his offer had been accepted after the deadline for bids had passed. That winning bidder was the home and garden television network, HGTV. It was a painful reminder that the real-estate agent’s client is the seller, not the buyer.

“Here’s a story, of a lovely lady…” anyone have an extra $1.8 million to spare on the Brady Bunch house? It’s in my neighborhood and is for sale! The interiors were sets but man just driving up to the house makes me feel like popping on an episode…which would you pick? I’m thinking maybe the UFO???? one…???? #bradybunchhouse P.S. The house used to be painted pink – this is the first time I’ve seen it in its 70’s brown hues!

A post shared by Ana from Babble Dabble Do (@babbledabbledo) on Jul 24, 2018 at 3:57pm PDT

“While we appreciate Mr. Bass and his interest in the Dilling Street property, tremendous interest in the house required a sealed, best and final bid,” said a spokesman for Douglas Elliman, the real-estate agency selling “The Brady Bunch” property. “Our fiduciary obligation is to the seller, who decided to go with the highest, most qualified bid. We wish Mr. Bass the best of luck in future real-estate endeavors.”

Despite rumors prior to the sale that a buyer would raze the home and build on the 12,500-square-foot lot, David Zaslav, chief executive of Discovery Inc.

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HGTV’s parent company, said the network plans to “restore the home to its 1970s glory” and that it will release more details regarding its plans in the coming months. HGTV declined to comment further.

Here’s what buyers need to know about bidding wars and how to improve their chances of scoring their dream home:

The chances of making a winning bid are lower when the buyer is competing against someone making an all-cash offer, as was the case for Bass. All-cash deals represented more than 1 in 4 home sales overall during the second quarter of 2018, according to data from real-estate analytics firm Attom Data Solutions. And that figure increases for homes worth $1 million or more, like “The Brady Bunch” house.

Given how likely it is that a buyer will lose out on a home, it’s important that they go in with realistic expectations. “You can’t expect to win,” said Skylar Olsen, senior economist at real-estate website Zillow

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If a buyer’s expectations are too high, they run the risk of letting emotions guide their decision-making when placing future bids, Olsen said. And then they run the risk of making an offer they cannot reasonably afford.

Don’t miss: What Alice from ‘The Brady Bunch’ would earn today

Have a maximum price you’re willing to pay

There aren’t just bidding wars for iconic properties. Prospective buyers in hot real-estate markets, including the San Francisco Bay Area, Denver, Seattle and New York City, will often have to bid on homes that are considered affordable in those areas, said Holden Lewis, a mortgage analyst at the personal-finance company NerdWallet.

Don’t get caught up in the excitement of a bidding war, to your own detriment, Lewis said. Before you bid, you should know the maximum price you’re willing to pay for the property and what mortgage you qualify for, and commit to spending no more than that. There are several online calculators you can use.

And in today’s market, figuring out what a consumer can afford means getting pre-approved for a loan. A staggering 82% of buyers get pre-approved before making an offer, according to Zillow, and 77% do so before they have even chosen a property to bid on.

Escalation clauses can be useful

In many cases, bidding wars won’t actually involve back-and-forth negotiations between the seller and different buyers, Olsen said. “Everyone is sitting separately and building their hand, and then everyone just lays their hand down at once,” Olsen said. “You have no idea what other people’s hands are, and you don’t get a chance at a redo.”

Because buyers often won’t get the chance to negotiate actively, they can include escalation clauses in their offer if it is being made on a popular property. In this case, a buyer will make a starting offer, but then specify that if a competing offer is better in some regard they will automatically up their ante.

Escalation clauses can include anything from a higher price to perks such as a faster move-in date. For example, a buyer can make an initial offer of $250,000 on a home, with an escalation clause that permits the offer to increase in $5,000 increments up to a maximum of $300,000 if better offers are made.

Escalation clauses do have risks though. Namely, it can reveal to a seller the maximum price the buyer is willing to pay, which could cause the buyer to lose out on a potential bargain if the seller had previously been willing to settle for a lesser amount.

Offers are about more than just the sale price

“Money talks,” Lewis of NerdWallet said. “But in some markets like New York City, celebrity and connection talk, too.” In some buildings, particularly co-ops, the members of the housing boards may want a neighbor they find prestigious, he said. That could be a boldfaced name, or a buyer who attended an Ivy League college or, more likely, a buyer with a fat bank account. “Sometimes you’re just not going to win,” Lewis said. “That’s something to accept.”

But there are some things you may be able to do to sweeten the deal: Find out what’s important to the seller, Lewis said. Some sellers may feel an emotional connection to the property, fear a major renovation and want a buyer who doesn’t have any plans to raze the property and build anew.

Others might be looking to close quickly and would be attracted to cash buyer; others might want more flexibility on their move-out date, and would favor a buyer who will let them stay longer, or even keep some of their belongings at the property in storage.

“Indicate your willingness to do that if it’s something that might tip things in your favor,” Lewis said. Your buying agent may be able to find out those details for you, or if you’re touring the house, there may be an opportunity to talk to the seller face-to-face.

Buyers can also consider waiving contingencies, such as the home inspection, Hale said. “Waiving these contingencies will make you a more competitive buyer,” Hale said. “But it could put you in a position where you regret that decision further down the road.”

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Article source: https://www.marketwatch.com/story/lance-bass-lost-a-bidding-war-on-the-brady-bunch-househow-home-buyers-can-avoid-a-similar-fate-2018-08-07