WHERE HAVE ALL THE LISTINGS GONE? | WHY NOW IS THE BEST TIME TO SELL
When Derk Brill and his wife decided it was time to downsize, they experienced the normal emotions associated with “giving up” the family home. The pleasant memories of holiday dinners, birthday celebrations, neighborhood sleepovers, easter egg hunts, and late night storytelling became more real in the light of selling.
Yet, as the #1 Realtor in the Alain Pinel Palo Alto office, Brill knew he had to take his own advice and remove emotion from the selling process.
“Even when you’re in the business you can experience the same emotions as home sellers. But I had to take my own advice, step back and be unemotional. So I prepared my family home of 20 years to be a sellable product and had to get beyond the emotions involved.”
Drawing upon the years of experience and his extensive connections in the luxury real estate market, Brill’s transition into a new home was a smooth and easy one.
Unfortunately, that isn’t the story for many homebuyers within the San Francisco Bay Area. If you talk to any luxury Realtor, they’ll likely mention one thing about today’s real estate market– the lack of inventory!
What’s Happening in the San Francisco Bay Area Real Estate Market?
The Bay Area Real Estate Market is hot, and there is no indication of things slowing down. Job growth has been an important factor and workers are drawn to this region since it boasts the country’s lowest unemployment rate and most satisfied workers. Buyers are coming in from all around the nation to take advantage of the vibrant job opportunities, fantastic schools and exceptional weather.
Unfortunately, the need for more housing hasn’t kept pace with the demand. For example, according to NBC Bay Area San Francisco took on 10,617 new residents in 2013, but added only 2,277 new housing units. Santa Clara added 5,245 new units for over 27,600 newcomers and Alameda added 2,474 new units for 23,135 new arrivals. This trend is replicated throughout much of the Bay Area.
In addition, San Jose and San Francisco have the highest median home prices in the nation, according to Zillow.com.
To add complication, wealthy Chinese investors continue to dump their money into the Bay Area due to an increasing lack of confidence in the Chinese housing market. Their all-cash offers make it even more difficult for local Bay Area residents to purchase.
What does this huge buying pool produce? Multiple offer situations, “sold over asking” price tags, all cash offers and 100+ person open houses and more.
Woodside Realtor and President of the Silicon Valley Real Estate Association (SILVAR) Chris Isaacson from Coldwell Banker discusses how fierce competition to own a home in the Bay Area continues to drive housing prices up:
“If you are thinking about selling, there are people out there right now that will buy your house. The type of frenzy that was happening when people were putting on fixer uppers for $500,000 a year or two ago — that kind of frenzy has moved into the multi-million dollar market. So houses in the 2 and 2.5 million dollar range are getting 10, 15 to 20 offers! The buyers are not quiet right now because they can’t afford to wait — since there hasn’t been enough out there. The idea that you wait until April to put a home on the market doesn’t even make sense right now. Open Houses are having hundreds of visitors!”
With a buyer pool this aggressive, now is obviously the best time to sell! But with all the motivated buyers seeking a place to call home, many sellers still aren’t listing their properties!
Where are the Listings? The Phenomenon of Low Inventory
Top producing Realtor Steve Maurer of Keller Williams Danville explains that a “leap of faith issue” contributes to low inventory. Although sellers are likely to receive the offers they want in today’s market, many question if they’ll be able to find a house to purchase after they’ve sold their own.
In addition, many homeowners don’t want to sell because of educational opportunities for their children. The Bay Area boasts some of the best elementary, middle, high schools and colleges throughout the United States. Many families want their children to benefit from the educational opportunities, and would not consider removing them during the school year.
Brill confirms that homeowners throughout the mid-Peninsula have the same concern. The fear of not finding a new home has discouraged many sellers from putting their houses on the market, despite current opportunities.
The Benefits of Working With an Agent
This is where working with an experienced real estate agent makes all the difference. Brill explains how the concerns of potential sellers can be easily addressed when working with a qualified Realtor who knows how to navigate the hurdles:
“Working with a good agent who has a strong network and maintains a pulse on the market is very important. A good agent will start testing the waters before hand and put the word out to other agents to start pre-qualifying their clients.”
Isaacson reveals that agents who are well connected often receive information about houses that will be available before being publicly broadcasted. Working with an agent who has connections gives homebuyers an “insider advantage” that can be very beneficial. Knowing about homes before they are listed on the MLS gives potential buyers enough time to put together a competitive offer.
Working Past the Hurdles
Tax ramifications also make homeowners hesitant to list their homes. According to Brill, “the market is so strong that people worry about the tax burden on the sale. Many homeowners wonder ‘how do I make this into my new purchase?”‘
Again, this is where working with a strong and knowledgable real estate agent is extremely important. A qualified Realtor will be able to offer invaluable guidance and advise homebuyers and sellers on various ways to bypass hurdles.
As Brill puts it, working with an agent who is a “problem-solver” makes all the difference in getting the best possible outcome in any real estate transaction.
For more information about the San Francisco Bay Area real estate market, check out the latest edition of HomeFolio’s luxury real estate magazine, or contact the Bay Area’s top producing Realtors today.