If you look up "seller's market" in the dictionary, you'll find a picture of the Bay Area. Homes all across the region are staying on the market for shorter periods of time than ever before due to a flurry of buyer activity. In March 2015, Silicon Valley homes selling for over $1.5 million spent an average of 17.3 days on the market, compared with 23.1 days on the market in March of 2014. To put things into more of a micro-local context, over the past 6 months homes in the Central Park and Woodside Plaza neighborhoods of Redwood City spent an average of just 10 days on the market, down from 14 days during the same period a year prior.
While these numbers are good indicators of a seller's market, they don't come close to painting the whole picture. In the context of this blog, the phrase "days on the market" is defined as the number of days in between the date the property is listed and the date the purchase goes into contract (it is sometimes defined differently elsewhere). But those numbers are inflated because listing agents don't usually accept offers the day they put a property on the market. To maximize exposure and encourage competition, agents usually keep their listings on the market long enough for at least one round of open houses and broker's tour (unless someone presents them with an offer so compelling they can't refuse). Here at RealSmart, we'll often list a property on a Friday, hold open houses on Saturday and Sunday, broker's tour on Tuesday, accept offers on Thursday morning, then enter into contract later that day. On paper that property was on the market for 7 days, but in reality we were receiving calls from buyer's agents day 1 asking when they could submit their offers. In fact, buyer activity has been so high lately that we usually start receiving offer inquiries before the home even officially hits the market.
The reasons for seller's market conditions in the Bay Area are well documented: massive job growth, tons of tech money, foreign investment, low interest rates, looser lending requirements, and (most importantly) extremely low inventory - the perfect storm. And while the Fed is expected to raise interest rates at some point this year, with all of the other aforementioned factors likely to persist, the Bay Area should remain a seller's market for the foreseeable future.
BUYERS! Don't let the competition scare you away. Persistence will prevail, and if you have a good agent there are many ways that he can position your offer to get it noticed before others. Home values are projected to continue their upward trend, so buying a home now is still a sound investment.
As always, if you are thinking about buying or selling, feel free to call for a consultation. (650) 222-2327
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