While many housing markets nationwide have recently shown signs of a recovery from the housing bust, the local real estate market here in the San Ramon Valley remains hot, and has been on the rise since early spring. Factors that are driving the market and increasing home prices here are: relatively low local unemployment, low interest rates, a low inventory of homes and a high demand for housing.
California has always been the leader of the nation’s real estate market. We have outstanding weather and an abundance of natural attractions, a diverse population, world-class education, and a strong employment market– especially in high tech and the healthcare industry. It’s no wonder that our local market is the strongest we have seen in over 5 years!
For example, in communities from Orinda to San Ramon, the normal housing supply (homes actively being offered for sale) typically averages in the 100’s; currently however, we are experiencing levels at half that. Where the number of days a home is on the market before the sellers receive an acceptable offer is usually 30-45 days, the current median days on market is 16. While it’s not the overheated sellers’ market of 2004 and 2005, with an average days on market time of only 8, it’s a significant sign of improvement to the local market, which has been stabilizing and building since 2009. It’s now to the point where it’s certainly a strong, dynamic market; we’re seeing multiple bids at all price points.
We’ve cleared out most of the inventory from sellers who had delayed their moving decisions because of the economic downturn, and as a result we are now facing an extremely low inventory. That doesn’t mean sellers can just put a yard sign up and expect to hit the lottery. In the San Ramon Valley area of the Bay area in particular, buyers are highly educated and sophisticated. Homes that are move-in ready and are priced right get snapped up very quickly, hence the low number of days on market.
This is true for all points in the market; there is strong activity in all segments, from entry level to the high end. One of the hottest market segments is in the entry market. There is an abundance of first-time buyers looking to get into the market, and there are just as many investors looking for opportunities. This has caused a “feeding frenzy” in this segment, and with many investors paying all cash, many first-time buyers are being pushed out of this highly competitive sector. It’s not uncommon to see 15-25 offers, sometimes more, in the entry-level price range.
Although the fundamental factors affecting home sales are improving—job growth, job stability and the health of the economy—the question for many is, will this strong market continue? The entire U.S. is facing several issues that could have a dramatic impact on the housing market as a whole: possible changes to the capital gains tax rates, elimination of the mortgage interest rate deductions and the pending expiration of the Debt Release Act Of 2007. How these issues play out in the coming months, years, or even decades, will certainly have an impact on our housing markets. The extent of the impact depends upon the pervasiveness of these potential changes, if passed by Congress.
As soon as I have the facts, I will share my thoughts. Until then, if you have questions about the housing market, please contact your local real estate agent or any one of the professionals featured in HomeFolio Magazine.
- Greg Boudreau: Make Your Clients Remember You - August 6, 2013
- The Definitive Responsibility of Your Agent Is to Create the Market for Your Home - April 25, 2013
- The San Ramon Valley Real Estate Market: Still Hot- With No Bubble in Sight! - March 20, 2013