Hard Bidding in the Bay Area

The market in the Bay Area is like nowhere else in the country right now, with bidding wars pushing prices into places we haven’t seen since 2007-2008. Silicon Valley is ground zero for these bidding wars, with some average-looking homes selling for millions, in some cases receiving 50+ offers. Our agents in the area have the scoop on some of these great stories:

Listed by Andrea Szekrenyi, Keller Williams Benchmark

San Jose
Beds: 3
Baths: 2
Sq. Ft.: 1,300
Listed: April 5, 2012
Closed: Pending
Asking Price: $350,000
Final Sales Price: Pending
# Offers: 53

“My client offered $375,000 with 20% down, and was willing to cover $20,000 for a low appraisal with ten-day contingency, said Redfin agent Frank Wong. “The seller got 53 offers on the home, and the listing agent finally had to tell people to stop submitting offers.”

Cupertino
Beds: 4
Baths: 2
Sq. Ft.: 1,685
Listed: March 27, 2012
Closed: April 26, 2012
Asking Price: $879,000
Final Sales Price: $1,050,000
# Offers: More than 50

“This was a well-maintained 1972 home being sold by the original owner. My clients offered $927,000. Sellers had more than 50 offers and sold to an all-cash buyer for more than $1 million.”

Listed by Edna Eng, Alain Pinel Realtors

San Jose/Campbell
Beds: 2
Baths: 2.5
Sq. Ft.: 1,622
Listed: April 10, 2012
Closed: April 24, 2012
Asking Price: $475,000
Final Sales Price: $540,000
# Offers: 16

“This townhouse was listed for $475,000 and has a $389/month homeowners fee,” said Redfin agent Miawand Bayan. “My clients offered $486,000, all cash with no contingencies and a ten-day closing. The result: The home was pending after seven days with 16 offers. It went to an all-cash buyer for over $520,000 with a seven-day closing and no contingencies. That’s $40,000-$50,000 over asking on a townhouse with a $400 per month HOA.”

Listed by Chris Iverson, Intero Real Estate Services

South Palo Alto
Beds: 2
Baths: 1
Sq. Ft.: 971
Listed: March 27, 2012
Closed: April 26, 2012
Asking Price: $948,000
Final Sales Price: $1,350,000
# Offers: 12

“It’s a nice 971-square-foot home, but I wouldn’t have guessed it was $1.35 million-nice,” said Redfin agent Brad Le. “We offered all-cash at $970K, but with 12 offers, anything can happen and it sold for 42% above asking price.”

Listed by Minxue Qian, Intero Real Estate Services

Cupertino
Beds: 4
Baths: 2
Sq. Ft.: 1,659
Listed: March 28, 2012
Closed: April 25, 2012
Asking Price: $998,000
Final Sales Price: $1,105,000
# Offers: 8

“My clients offered $1 million,” said Redfin agent Brad Le. “The seller had eight offers quickly, and sold for more than $1.1 million. It was only on the market seven days before going under contract.”

Listed by Deborah A Rossetto, LEGACY Real Estate & Associates

Fremont
Beds: 3
Baths: 2
Sq. Ft.: 1,849
Listed: March 9, 2012
Closed: April 20, 2012
Asking Price: $599,950
Final Sales Price: $615,000
# Offers: Approx. 7

“We knew this home would go for more than asking price, so we offered $605,000, which put us in the middle of the pack of six or seven offers,” said Redfin agent Miawand Bayan. “The sellers counter-offered $610,000 to all of the top four offers. My clients didn’t want to lose the house, so I recommended they actually counter-offer above the seller’s counter. We offered $615,000 and my clients got the home.”

Case-Shiller: A Brutal Winter for Home Prices

It’s time (a bit past time, actually) for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Bay Area* as of January:

Sixteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between December and January (one less than between November and December): Washington DC joined Phoenix and Miami with an increase. No data was available for Charlotte in January. Oddly, San Francisco had the largest drop at 2.5%.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of the Bay Area’s tiers fell in January. Month to month, the low tier was down 0.7%, the middle tier fell 1.0%, and the high tier decreased 2.5%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Another gain here, with the best January showing since 2006, when 11 markets were increasing.

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Bay Area Stagers, Handymen Now Available in Open Book

Once you decide to list your home, you may need some work done to make it sparkle on opening day. But, who will you trust to do the work? That is the $631,500* question.

You want the best referrals, ratings and information to make that decision. That’s why we’ve expanded Redfin Open Book to include reviews of handymen and stagers in the Bay Area.

Now home-selling clients can search for the best professionals to prepare their home, then rate and review the work done once the transaction closes. Every time a Redfin client uses a service provider, she’ll have an opportunity to review their work, and those reviews will accumulate over time. Open Book’s information is verifiable – only Redfin clients will review service providers—not some handyman’s brother making Mr. Joe Hammer look good when he’s actually just barely adequate. Plus if you sell with Redfin, we’ll match up to $250 toward your home improvements.

We’ve partnered with some of the best professionals we’ve worked with and screened them thoroughly. We’ll post every review, good, bad, or ugly, right on their profile just like we do with our own agents.

Besides the Bay Area, Open Book for Sellers is now available in Boston, Chicago, Seattle, Southern California and the Washington DC area.

* The median sale price of a single-family home in San Francisco in February 2012.

More Madness in South San Francisco

We told you about Mid-Peninsula Madness last month, but it looks like our Bay Area real estate soothsayer Brad had only seen the tip of the iceberg. More iceberg surfaced last week with my South San Francisco Team. We saw five homes receive a combined 67 offers. That’s a new record for us. With the exception of one, all the offers we wrote were at or above list, but the homes went to even higher offers, several of which were sweetened with no contingencies.

Part of this is the hunger for homes caused by the low inventory, but part of it is that we’re seeing homes priced low to intentionally start bidding wars. It’s working:

Here’s what I’m advising my clients:

• Come in with a competitive mindset, knowing that the list price is often the bottom starting point
• Sign up for Instant Updates to let you know immediately when a new home comes on the market that meets your search criteria. If you’re going to make an offer, you want it to be the first
• Make your first offer your best offer, since you won’t necessarily get a second chance

*Update: Redfin’s real estate analyst just ran the numbers and found that more than 80% of offers written by Redfin agents in the Bay Area this year have come up against multiple offers. That’s up from 73% as of Feb. 23.

Home Buyers and Investors Duke it Out in Bay Area

We’ve told you a few times recently about the inventory shortage happening in many parts of the Bay Area. But now, we’re seeing more and more often that buyers can’t beat investors who are coming in with all-cash offers and soaking up what little inventory there is.

First-time buyers are trying to step up to the challenge by offering over asking and shortening contingency periods, but they still need a lot of cash down to secure anything these days. We’re waiting, hoping and begging sellers to wake up and list their homes so we can end the inventory crisis!

The other new happening is on the pricing side of things. My colleague had three appraisals done last week, and two came in above contract price, one of them (in Danville) at $50,000 above the purchase price. She acknowledges that it might not be the new norm, but when representing buyers, we’re disappointed at the depleted inventory, but thrilled to let the clients know that their property is worth more than the purchase price!

The February Housing Market Numbers

• Prices staying steady, nudging up: Single-family homes reached their highest median sale price since October, finishing the month of February at $631,000, up 6.3% from January’s 12-month low of $594,000 and up 3.6% from February 2011.

• Supply still bumping along the bottom: The number of homes for sale on the last day of February was 820, down only 1.6% from January, but still in a year-over-year freefall of 42.2% compared to February 2010. The months of supply are still near a low, with only 2.13 months of inventory, where 5-6 is considered a balanced market. Needless to say, the few sellers out there are in the driver’s seat.

• Buyers and investors show a fighting spirit: The average sale-to-list price in San Francisco peaked up over 100% again, after falling to 98.9% in January, showing that buyers are not shying away from bidding wars.

Is the Bay Area Really That Bad?

The short answer is “yes.” Most analyses only care about the raw number of homes for sale in a given market vs. another market. What about population? The visualization below puts the number of listings against the number of households in the market to show where the shortage is really hurting the most. As you can see, the Bay Area has it tough. This is partially due to the Bay Area also having the strongest rental market in the country, but for people looking to buy, it’s a jungle out there.

Float over any county on the map or its colored bar on the table for more details about inventory in that city.

What are Buyers Thinking?

Numbers tell about actions, but what’s the mentality of the Bay Area buyers who are choosing now to jump into the market? We surveyed local buyers, and they shed some light on what’s going through their minds:

• Prices will go up in 2012: 77% of Bay Area buyers believe prices will either stay the same or rise from 2011 to 2012. Only 18% say prices will fall.
• Prices will go up in 2013: 78% of Bay Area buyers believe prices will either stay the same or rise from 2012 to 2013. 12% say prices will fall and 10% don’t have an opinion.
• They’re showing interest: 70% list low interest rates among their top reasons for buying in this market. That was the top reason for looking right now in the Bay Area.
• They small supply gives them heartburn: 70% also list their major concern with buying right now is the low inventory situation, and only 30% list falling prices as a major concern for them.

Case-Shiller: Only the Bay Area’s High Tier Fell in December

It’s time (a bit past time, actually) for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Bay Area* as of December:

Eighteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between November and December (one less than between October and November): Only Phoenix (for the third month in a row) and Miami saw an increase. This month Detrioit beat out Chicago and Atlanta for the bottom spot, falling 3.8% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

Two of the Bay Area’s three tiers actually rose in December. Month to month, the low tier was up 0.9%, the middle tier rose 0.3%, and the high tier decreased 0.4%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Tiny improvement, better than a year ago, but worse than December 2009, when 5 cities saw an increase.

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Redfin Brings Transparency to Title, Inspection, Mortgage, Staging

Big news! Today, Redfin is launching a major expansion to our charter as a technology-powered real estate broker: Redfin Open Book, a local reviews site for lenders, inspectors and title companies.

Later this spring, we’ll add the stagers, landscapers and handymen used by sellers to get their home on the market.

Our goal is to ensure our customers get the best service at every step of a deal, by bringing together the best local team and holding that team accountable for the best result.

The Goal: Better Service
Unlike Angie’s List, Open Book is completely free. And unlike Yelp, it’s completely focused on the folks who serve our customers when buying or selling a home.

There are no kickbacks from anyone we include or recommend. In fact, there’s no revenue model at all for Open Book, not now nor in the foreseeable future.

The goal is simply better customer service. The best real estate agent in any market is good because of her own skills, but also because of her team, and her ability to hold that team’s feet to the fire when a loan or a listing is on the line.

As Redfin’s online traffic and transaction volume grows, our influence over all the folks who provide real estate services grows too. We want that influence to lead to better performance across the board for our customers.

This means that our focus is quality, not quantity. We don’t want to be the phone book, showing every lender or inspector in town. We want to be a reliable guide to the partners you should actually use, in any market we serve.

Today, people mostly take their agent’s recommendation for an inspector or a lender. But we think customer recommendations are important too, in finding an inspector who will tell you when to walk away from a crumbling house, or a lender who will steer you toward a cheaper loan, even if it pays him less.

This is crucial information, which is why Open Book, while intended for our own customers, is available to everyone browsing our site.

Our Advantage: Redfin-Certified Reviews
No one else could build such a reliable reviews site for real estate vendors.

Because we honcho a transaction the whole way through, hundreds of times a month, we know which inspectors and lenders our customers are using. Redfin’s online Deal Room, for tracking who is supposed to do what to close on time, stores information about thousands of vendors in a big database.

And we already survey every customer, deal or no deal, so it’s easy to ask each customer about his lender, inspector or stager. This means that we can validate every review, to avoid the bogus reviews from vendors’ friends and competitors that plague most review sites.

At some point, we’ll probably solicit reviews from the general public, but we’ll always highlight the reviews that came from actual customers, just because we can verify that the customer did in fact use the vendor she’s reviewing.

Our Investment: Redfin-Certified Partners
As with our brokerage, we aren’t just offering technology; we also offer a human touch. The inspectors, lenders and stagers who get the best reviews qualify for an additional level of certification, as Redfin partners.

Redfin has hired a team of former Redfin agents to interview potential partners, briefing each one on Redfin’s mission and our service expectations. We then monitor the partner’s performance. The ones that make the grade are certified as official Redfin partners. In Open Book, a tiny Redfin ribbon appears beside their profiles.

These are the folks our agents are most likely to recommend to our customers.

Over time, we’ll ask each certified partner to deliver premium service to our customers. This may entail attaching digital photos to an inspection report, or offering to refund the inspection fee if an unexpected repair crops up within 60 days of the closing.

We expect to drive plenty of customers toward our partners; if history is any guide, we’ll have to be careful to ensure no one gets overwhelmed.

And of course we’ll also be careful to strike a balance between ensuring our partners build a profitable business, and giving Redfin customers premium service. Inspectors, stagers and lenders who want to apply to be a certified partner can email us at openbook (at) redfin (dot) com.

Where We’re Starting: Washington DC and the San Francisco Bay Area
For now, the reviews are available only in the Bay Area and Washington DC.

To find Open Book, just click the “Buying” link at the top right of any page on Redfin.com, and choose “Open Book” from the menu. As we capture more reviews in the coming months, we’ll launch Open Book in more markets, for a wider range of services.

Mid-Peninsula Madness!

It’s always pretty crazy in the mid-Peninsula, but these last couple of weeks have been INSANE! Palo Alto and Menlo Park are the hub of all this activity:

• South Palo Alto: On this $1.1m, ~1,100 sq. ft., 3 beds, 2 baths home, there were 16 offers. It went to an all-cash, no contingencies offer.
• South Palo Alto: On a $950k, ~1,100 sq. ft., 3 beds, 1 bath property, there were another 16 offers, and more than one was all-cash. It went to an all-cash, no contingencies offer.
• Menlo Park/Alameda Area: On a $1.2m, ~1,400 sq. ft., 3 beds, 2 baths home, the seller took a lower offer than the top, but it was an all-cash buyer with no contingencies and 3 free months of rent back.
• Menlo Park/Flood Park Area: On a $1.2m, 1,890 sq. ft., 4 beds, 2 baths home there were eight offers, and it went to an  all-cash, no contingencies offer.

What I’m telling my clients now is to write a nice cover letter to the seller, and to use a local and reputable lender. And, if at all possible, win the lottery.

Sellers Still in Control in San Francisco

The name of the game is fast sales in San Francisco, and buyers and sellers are both playing. There are plenty of qualified buyers – they are just looking for great deals. Sellers especially seem more dedicated than ever to sell so they can either start over and buy something less expensive or avoid a short sale or foreclosure. Both the data and our experience are saying that there is still a lot of real estate to choose from and deals to be had!

Sales Drop More Than 40% in January

The seasonal drop in reported sales has landed hard in San Francisco. There were 297 sales of single-family homes, condos and townhomes in San Francisco, representing a sharp decrease of 41.7% since December 2011 and a drop of 18.6% since January 2011.

San Francisco Median Sale Price Jumps 4%

The median sale price for a single-family home in San Francisco was $619,000, up 4% from December 2011 and up 3.3% year over year from January 2011. The per-square-foot price didn’t do as well, down 1.4% month over month and 6.4% year over year.

Supply Bounces Back from December Low

January showed it’s still a seller’s market in San Francisco, but not as pronounced as in December. There were 312 single-family homes for sale in San Francisco at the end of January, a 3.3% increase over the previous month, but still a 41.6% drop from January last year.

Given the pace of sales and the number of homes on the market, it would take 2.6 months to sell through the current inventory, a term known in the industry as “months of supply.” In a market balanced between buyers and sellers, we’d expect to see 5-6 months of supply, so this represents a strong advantage for sellers in San Francisco, but still a significant jump from December’s 12-month low in months of supply.

Redfin’s housing market data combines public records, local multiple listing services, for-sale-by-owner and other verified sources. The data is validated by Redfin analysts to ensure it is comprehensive and accurate. Redfin publishes these reports each month on or around the 10th of the month, for the previous month. As a tech-focused broker, Redfin is the only company with access to this level of data.

Case-Shiller: Another Winter for Home Prices

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – November data is released in January).

Here are the basic Case-Shiller stats for the Bay Area* as of November:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between October and November (the same as between September and October): Only Phoenix saw an increase, for the second month in a row. This month Chicago bumped Atlanta out of the bottom spot, falling 3.4% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

The Bay Area’s middle and high tiers fell in November, while the low tier inched up. Month to month, the low tier was up 0.2%, the middle tier fell 1.6%, and the high tier decreased 1.0%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just five months ago, all twenty cities saw month to month gains. Now just one is not the red.

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