By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.
What we’re seeing is a market that’s improving overall, but that continues to struggle with supply – especially in certain pockets like the San Francisco Bay Area.
2013 brought about vast improvements in the state’s luxury markets, with sales of homes costing $1 million or more soaring 45% to their highest level in six years, according to La Jolla-based housing data company DataQuick.
Last year, luxury buyers purchased 39,175 homes costing $1 million or more, up from 26,993 in 2012. This was the highest number of sales in the upper price range since 42,506 in 2007.
More than 10,000 buyers paid cash for their new homes, underlining the fact that the luxury end of the market hinges on a different set of economic factors than the rest of the market. Luxury sales tend to be fueled more by tech IPOs and stock market gains, while the middle and lower end tend to be moved more by job growth and local economies.
Manhattan Beach had 439 home sales over $1 million – the most in the state.
Meanwhile, prices are also soaring in the state’s supply constrained markets, but the lack of inventory has started to show up in slower sales.
In a separate analysis, DataQuick reported home sales in the San Francisco Bay Area had their slowest December in six years due to lack of available homes for sale. A total of 6,714 new and resale houses and condos sold in the nine-county Bay Area in December, up 0.8% from November, and down 12.7% from the same month the previous year.
The median price paid for a home in the Bay Area in December was $548,500, which was 0.3% lower than November, and 23.9% higher than December 2012.
Using this data as a basis to look ahead, we can likely expect California’s luxury market to continue to strengthen this year, while buyers in the middle range in tighter markets like the Bay Area will likely be in for a year of multiple bidding.
If you’re a buyer in this situation, our advice is to hang in there, be patient and be ready to move fast when houses in your price range come on the market. You can prepare yourself by getting pre-approved for a loan early and working with an agent who knows the local market inside out.