If you live in Northern California, it’s probably no surprise to hear that Bay Area home prices continue to climb, seemingly with no end in sight. For homeowners, that’s great news, but for prospective buyers, that means the search for their next Bay Area home is often an overwhelming journey… but not only because of prices. Thanks to the fact that fewer homes are being sold, there’s less inventory and more competition between buyers. So why is it that when the market favors sellers so much, they’re still reluctant to sell?
At the heart of the issue is that countless Bay Area homeowners want to sell… but not before they find another home to purchase. And that requires somebody else making a move first. It’s like a grand-scale game of musical chairs, or a classic western standoff (except “drawing” in this scenario is being the first to grab the “For Sale” sign).
Meanwhile, an increase in inventory would help bewildered buyers, who typically find themselves standing shoulder-to-shoulder with half a dozen other buyers on any listing. In fact, it’s a situation that even builders are currently unable to solve. As Andrew LePage, a real estate analyst for CoreLogic noted, “We’ve got a pressure cooker situation where new construction doesn’t come close to meeting the demand for housing.” And in the midst of all of this, Bay Area home prices continue to climb, primarily benefiting homeowners whose next step involves exiting the Bay Area completely (thus avoiding the local housing shortage).
So what do the numbers look like? For starters, the median sale price climbed a staggering 20% between Alameda and Contra Costa County over the course of 2 years (in June 2017, the average single family home sold for $725,000 versus $605,000 in June 2015). These homes also require an average of only 21 days to sell—a shockingly low timeframe compared to the 60-day national average.
Similarly, inventory remains at one of its lowest points on record: Just barely over a “month” of houses currently supply the Bay Area. In other words, if no more homes were listed, it would only take a single month for the Bay Area to sell through what’s currently available. In a traditionally “balanced” market, that figure would need to be around 6 months!
For homeowners who have considered selling, this may seem like a mixed blessing: You’re likely seeing record-high values for your home… but it might be trickier relocating to another part of the Bay Area. But there’s good news: Among various strategies for low-inventory markets, savvy buyers and sellers have begun using an additional form that essentially says, “My offer on your property is only binding if I’m able to sell my own property in the meantime.” This allows you to make offers on relocation properties without needing to have already sold your current home, which means you can take advantage of housing prices right now—all without worrying about finding another home after you’ve already packed up.
So what are you waiting for? Make the first move! If you’re interested in capitalizing on your hard-earned equity, or strategies that can make buying & selling homes in the Bay Area more worry-free (including the “Contingency for Sale of Buyer’s Property” mentioned in this article) contact Lifestyle Real Estate Services today! As experts in Bay Area real estate, we’ll help make the transition to the next chapter of your life as smooth (and profitable) as possible.