For the past few years our local real estate market has been dominated by the financial crisis that caused a melt-down in real estate values across the country. Like everywhere else, the result was a seemingly never-ending string of short sales and bank owned homes for sale (REOs) that had been foreclosed. Historically this has tended to hold prices down so the big question on everybody’s lips was “When will it all end?”
The latest indication based on the chart shown here is that the end is in sight. Inventory is at record lows (less than a 2 month supply in most areas). It is significant that Short Sales and REOs are also way down (as a percentage of the active listings). In fact, with the exception of Walnut Creek and perhaps surprisingly, Alamo and Danville, all of our cities are down to single digit numbers of distressed properties.
And look at the number of Sales Agreed compared to the number of homes available. This gives us the number of months inventory available and it is certainly not a lot. Homes really are selling fast in the San Ramon Valley and Lamorinda.
If you still have doubts as to where the market stands now, ask any real estate agent. They all say that everything is selling like crazy, there is no inventory and multiple offers are becoming the norm. Many have a familiar lament (one that was common back in 2006) … “I’ve written 10 offers for this buyer and we keep getting beat out by offers well over list price”.
So how does this affect you as a potential buyer or a seller? If you are a seller you must realize that now is an opportune time to list your home for sale and realize a price higher than in years. It still needs to be prepared for sale and professionally marketed for sale but the return should be worth the effort.
As a buyer, you should see that we probably have “hit bottom” (in fact we may well be viewing the bottom from the other side on the way back up now). And as has always been the case, you need to be lender approved before you write any offers. One point you really have to bear in mind is that the List Price will probably only be a “starting place” in many cases. Most desirable homes that are being listed for sale now are getting multiple offers within days and sale prices are getting agreed above list price.
I recently listed a pleasant, but unexceptional home for sale in San Ramon. The kitchen was updated and it was well-maintained and I listed it at the price I thought it was worth as was supported by comparable recent sales. We held an Open House the first weekend after listing and had around 50 groups through – more than any Open House I have held in the last 10 years! 3 offers were received virtually immediately and we agreed a sale a little over list price on exactly the terms my sellers wanted. This is not an unusual situation now and it shows exactly where the market is.