Recently, The Mercury News shared an article describing some interesting shifts affecting the Bay Area real estate market; lately, demand for Bay Area homes just isn’t as high as expected.
Homeowner Sean Cook witnessed this firsthand when, over the summer, he listed his family’s San Jose home for over $3 million, only to find himself lowering the price two months later. The home, located in the desirable Willow Glen neighborhood, still had yet to receive an offer, even after reducing the price by a shocking $200,000. Cook commented in the article, saying, “Given the way the market has been, you feel a wee bit disappointed.”
As it turns out, Cook isn’t alone.
With an increasing number of homes lingering on the market, more sellers are finding themselves desperately reducing their asking prices in order to pique buyers’ interest. Local real estate agents believe buyer fatigue and rises in inventory and mortgage interest rates are some of the top contributing factors that have led to the market’s current condition. To make matters worse, many sellers are simply setting their listing prices too high, effectively deterring buyers.
Interestingly, despite the apparent “cooling down” of the Bay Area market, demand here is still dramatically higher than most other regions in the country. Nevertheless, sellers are concerned about what’s to come in the near future, while buyers are feeling optimistic.
Yet Oakland-based agent Kerry Naslund-Monday doesn’t seem too phased by the market changes, and was quoted saying, “This is a market shift of sorts. For the Bay Area it won’t be dramatic; it will just be a pause.”
Conversely, San Jose-based agent Sean Manning believes frustrated buyers are giving up on the area. Manning explained, “They kind of got fed up and threw their hands up in the air and said, ‘OK, we’ve got to take a break here.’” Manning then went on to explain how increased inventory has also worked against sellers, allowing buyers to truly take their pick. Sellers unaware of the market’s cooling down continue to lit their own properties at prices that simply aren’t realistic at this point in time.
Last month in Oakland, for example, the number of single-family homes for sale increased by 18 percent, while the actual number of homes sold decreased by 11 percent, as compared to the same time last year, according to MLS data from the Bay East Association of Realtors. Additionally, in Santa Clara County, 25 percent of homes sold for less than their asking price, up from 19 percent in August 2017, based on MLSListings data. And while 68 percent of Santa Clara County homes sold above their asking price last month, this figure is down from 70 percent in August 2017.
In order to increase interest from buyers, more sellers are beginning to lower their prices; a recent report from Zillow showed 9.5 percent of San Jose area listings that lowered their prices in June, up from 7.2 percent in June 2017.
Prospective buyer Janet Negrete noticed price reductions herself while browsing listings online, but still isn’t convinced she can find a property within her price range. Negrete says, “It gives you some hope that maybe there will be a point where you can afford something, but at the same time, you’re like ‘ahh I don’t think they’ll go down far enough.’”
Currently, Negrete rents an apartment in Santa Clara with her husband and children and, since 2011, has made seven offers on homes for sale, only to be outbid every time. Eventually, Negrete admits, she started to give up.
Alternatively, Jasmine Porter, a prospective buyer interested in the Richmond area, believes the price cuts are a positive sign; Porter feels she can take her time hunting down her dream home, rather than feeling rushed into a decision. Porter said, “it’s exciting because I was getting a little discouraged.”
As Manning put it, the housing market is still incredibly strong, but it isn’t as strong as it once was. Just this month, Manning sold a house in San Jose for $1.36 million after receiving three offers. This sale happened four months after Manning sold the house next door, a home the same size, for $1.5 million with eight competing offers.
It’s worth mentioning that the season itself is partly to blame for the ongoing shift in the Bay Area; August is typically a slow month for real estate transactions, as families often avoid moving in the beginning of the school year. That said, Naslund-Monday believes this slowdown particularly seems more dramatic than usual.
According to MLSListings, median sale prices for single-family homes in Santa Clara County have been falling since March, though last year, prices didn’t drop until May. Additionally, homes for sale spent a median 13 days on the market last month, making it the slowest sale time since January 2017.
Real estate agent, Joel Garcia, recently lowered the price of a house in Oakland for the second time, noting that these price cuts are the first he’s made since 2009. When discussing the five-bedroom home, now priced at just under $1 million, Garcia said, “It’s been sitting on the market for two months now. Normally it only takes a week, two weeks, and it’s gone.” In an effort to attract more interested buyers, the seller even offered to cover closing costs, but to no avail, Garcia explained.
As MLSListings CEO Jim Harrison says, “We’re still quite a healthy market. It’s just instead of bringing 50 offers to the seller, it might be five now. It’s not quite the bidding war it was before.”
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