Much like the third quarter of 2014, the fourth quarter showed few surprises. Both high average sales prices and low sales volume—products of strong demand and depleted inventory—continued across the Bay Area. For sellers, these combined trends continued to spell major profits.
All seven counties we represent saw year-over-year average home sales price gains of at least 7 percent. Meanwhile, inventory shortages continue to be a major factor for prospective buyers. This quarter’s sales volume numbers were, by and large, very similar to those of Q4 2013.
An emerging trend found in Q4 2014 was that of buyers’ increased due diligence, taking the time to thoroughly investigate the market more so than they did earlier in the year. This was reflected in the average days on market (DOM), which rose to 40 days this quarter—a slight jump from the average 36 DOM in Q3—but in line with the seasonal equilibrium of the previous year.
San Francisco rebounded nicely from a down third quarter, leading the Bay Area with a $1.535 million average home sale price, up an impressive 12 percent from Q3 2014 and 14 percent from Q4 2013. This also occurred as the city saw a 9 percent sales volume gain from Q3. Average condominium sales prices in the city stayed above the $1 million mark for the fifth straight quarter, although sales volume was slightly down both from the previous quarter and from Q4 2013. With a host of massive construction projects underway, the condominium market is expected to open up nicely by 2016.
Looking forward, we feel confident that the market will continue to act in very much the same fashion as it has over the past few years. What this means is sales prices will continue to rise as inventory remains very tight. A recent report from the California Association of REALTORs® (CAR) predicted a 5.2 percent rise in the state’s median home price in 2015, down from more than double that figure as predicted prior to 2014. However, CAR Vice President and Chief Economist Leslie Appleton-Young added, “The state will continue to see a bifurcated market, with the San Francisco Bay Area outperforming other regions, thanks to a more vigorous job market and tighter housing supply.”
Bay Area sellers are well aware that they can fetch record prices for their homes, but the uncertainty remains as to where they would move once transitioned to the buyer side of the fence. In all, this market remains red hot, and will continue to generate great returns for sellers for the foreseeable future. Still, opportunities are certainly at hand for those buyers willing to pay top dollar.
Posted on February 22, 2015 at 9:26 pm by Kim Barnes