Real Estate Roundup: San Francisco Home Price Gains Decelerate by 20 Percent

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious:
CONSIDERABLE COOLING IN SAN FRANCISCO PRICE APPRECIATION
Annual home price gains slowed in more than half of the major U.S. real estate markets in October, even as the median sales price reached a 73-month high.
According to RealtyTrac’s October 2014 Residential & Foreclosure Sales Report, the national median sales price for single-family homes and condominiums was $193,000 in October, a 16 percent year-over-year gain and the highest since September 2008. The company says that annual home price gains decelerated in 54 percent of large U.S. metro areas, including Northern California’s two biggest regions.
Real estate prices in the San Francisco metro area were up 12 percent year over year in October, compared with 34 percent one year ago, RealtyTrac’s data shows. A chart accompanying the report also shows an appreciation drop-off in the San Jose region, albeit a less dramatic one than its neighbor to the north.

---

OLD-GROWTH TREES ADD BIG VALUE TO LUXURY PROPERTIES
Add towering, majestic trees to the long list of amenities that luxury homebuyers will pay up for, The Wall Street Journal reports.
Old-growth white oak and bay trees were a big draw for Sonoma homebuyers Mac and Leslie McQuown when they purchased a former sheep ranch in the city nearly two decades ago. In 2006, the couple bought more than 40 130-year-old Sevillano olive trees for $2,200 each and had them transported almost 300 miles to the property. The article says that each olive tree would now command about $5,000.
The Wall Street Journal notes that while some deep-pocketed homeowners may choose to transplant trees, those over 12 feet tall cannot be moved over freeways or bridges. Wes Kocher, a spokesman for nonprofit organization International Society of Arboriculture, told the publication that homes with mature, well-tended trees can fetch premiums of up to 20 percent when they sell.

---

U.S. RENTS RISING FASTER THAN INFLATION RATE
Renters hoping for a little pricing relief may not get it in the upcoming year, predicts a recent MarketWatch report.
Citing data from the National Association of Realtors, the publication says that rents are expected to increase by 3.9 percent in 2015, down from this year but still more than double the projected consumer inflation rate. The article notes that low housing inventory and a lack of affordability are keeping demand for rental units high and vacancy rates low.
The U.S. apartment vacancy rate is 4 percent in the fourth quarter of this year, and although rates are predicted to inch up over the next two years, the market will still likely be skewed in favor of landlords.
(Photo: Flickr/Images Money)

Real Estate Roundup: Bay Area Home Prices Could Match Record High Soon

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious:

http://www.aag.com

BAY AREA HOME PRICES COULD SURPASS PEAKS LATER THIS SUMMER

Late last week, we reported that while single-family home prices in some Bay Area counties have already topped their prerecession peaks, the median price across the overall region had yet to reach its 2007 pinnacle. But that milestone could occur as soon as the next few months, according to a new report from DataQuick.
“While some of the Bay Area counties have already re-reached or passed their pre-recession price peaks, the region as a whole is on pace to reach that point later this summer,” DataQuick Analyst John Karevoll said in a statement.
DataQuick’s report, which includes statistics for both single-family homes and condominiums, places the current median price across the nine-county region at $617,000, a gain of 19 percent since last May and the highest since late 2007. The company says the Bay Area’s median price peaked in the summer of 2007, at $665,000.

---

NUMBER OF UNDERWATER HOMES PLUNGES IN SANTA CLARA COUNTY
Silicon Valley’s exploding economy has helped drive up home prices in parts of the region, causing more homeowners to regain equity and the number of underwater homes to decrease dramatically.
A recent San Jose Mercury News article says the number of underwater homes in Santa Clara County declined from 136,000 in 2012 to 81,000 in 2013, a 40 percent drop.
“Equity is coming back, and people are breathing a sigh of relief,” David Ginsborg, of the Santa Clara County assessor’s office, told the newspaper. “Properties are worth more than what people paid for it.”
The article notes that southern Santa Clara communities pummeled hardest by the housing – including Gilroy and Morgan Hill — are now leading the county in value gains, thanks in part to a surge in nearby construction activity.

---

SAN FRANCISCO NATION’S MOST EXPENSIVE, FASTEST-RISING RENTAL MARKET
Anyone seeking to emigrate from the Big Apple to San Francisco isn’t likely doing it to save a few bucks on rent, a recent Zillow suggests.
In a study published on its blog, Zillow pegged the median monthly rent for a two-bedroom apartment in San Francisco at $3,550, the highest in the U.S. and $50 more per month than in the New York City metro area. San Francisco rents increased nearly 16 percent year over year in May, the largest gains in the country.
While median rents across the Bay in Oakland aren’t quite as preposterous, they’re hardly a bargain at $2,450 per month. Oakland rents have increased by about 11 percent over the past year, the third-biggest jump in the U.S.

---

BUYERS’ BIGGEST OPEN-HOUSE BUMMERS
Even in markets where sellers hold the upper hand, there are some definite no-nos to steer clear of during an open house.
USA Today has compiled a list of the top 10 open-house donts for sellers, starting with sage advice to avoid helicoptering around buyers during walk-throughs. You also don’t want a soundtrack, a house that’s too hot or cold, or odors of any kind (and do hide the kitty-litter box while you’re at it).
Also, the article recommends enlisting the services of top-notch real estate professionals you trust to engage with prospective buyers — not ones who spend the entire open house with their nose buried in an iPhone.

Bay Area Leads U.S. in 2014 Luxury-Home Sales Growth

Last month we crunched the numbers and found that luxury-home sales volumes grew by double-digit percentage points in the first quarter across Pacific Union’s nine Northern California regions. Now, a report from Redfin shows that three Bay Area regions are leading the nation in high-end home sales growth this year.

Homes in San Francisco’s Presidio Heights, the sixth priciest luxury
neighborhood in America, according to a Redfin report.

Redfin’s 2014 Luxury Report, which defines luxury homes as those in the most expensive 1 percent of properties, ranks Oakland as the top U.S. market for luxury sales-volume growth through April, with a gain of 96.2 percent. San Jose placed No. 2, with luxury sales increases of 91.2 percent, followed by San Francisco, at 72.2 percent. Across all of the U.S. metro areas included in the study, high-end home sales were up 21.1 percent in the first four months of 2014.

Luxury sales gains in the Bay Area were even more impressive given the flat to negative growth observed in the remaining 99 percent of the market. Nonluxury sales increased by 2.2 percent in Oakland through April, while declining by 1.9 percent in San Francisco and 7.3 percent in San Jose.
Redfin’s study also found that San Francisco had the most expensive luxury-home prices in the country. San Francisco buyers would need to shell out $5.35 million to afford the minimum-priced luxury home — not to mention earn $916,000 per year. That translates to a monthly mortgage payment of more than $21,000, assuming a 30-year, fixed-rate loan.

San Jose ranked fourth in the country for highest minimum luxury-home price: $3.38 million. With a minimum price of $2.1 million, Oakland just missed the top 10 but still bested the national average of $1.66 million.

San Francisco and San Jose also placed among the top 10 markets with the highest percentage of all-cash luxury sales, 55.7 and 48.8 percent respectively.

So in which Bay Area neighborhoods can buyers expect to pay the most for a top-end home? In San Francisco, tony Presidio Heights — where the average luxury home costs $7.5 million – leads the pack. Two other San Francisco neighborhoods also ranked among the 10 priciest luxury enclaves in the U.S.: Pacific Heights ($7.2 million) and Russian Hill ($6.5 million).

In the San Jose region, Old Palo Alto is the most expensive luxury neighborhood, with the average home commanding $4.7 million. Unsurprisingly, real estate classified ads website operator Movoto just named Palo Alto the second wealthiest small city in the U.S.

Meanwhile, the small city of Piedmont boasted the largest luxury prices in the Oakland metro area, at $2.6 million.

California Luxury Buyers Far Prefer Hilltop Views to Oceanfront Homes

Luxury homebuyers in California love hilltop views. An oceanfront home? Not so much.
Forty-one percent of buyers who purchased luxury homes in the state last year opted for a property with a hilltop view, according to a survey by the California Association of Realtors, which defines a luxury home as one costing $1 million or more. Just 10 percent bought an oceanfront home.
In fact, hilltop homes were so popular that they bested oceanfront homes and ocean-view homes combined (38 percent).
Sixteen percent of buyers in 2013 picked up luxury homes located near golf courses, followed by those in mountain areas (12 percent), resort areas (9 percent), lakefront (4 percent), and ski resorts (1 percent).

Most homes sold for $1 million to $2 million (76 percent), with 13 percent priced from $2 million to $3 million, 6 percent from $3 million to $5 million, and 3 percent from $5 million to $10 million.
Luxury buyers had a median income of $350,000, according to the survey, and a median age of 53. Seventy-one percent were Caucasian, 74 percent had a college degree, and 48 percent were single.
One-quarter of luxury buyers cited the desire for a larger home as the main reason for their purchase, while 20 percent said they wanted to upgrade their location.
The survey found that 35 percent of luxury buyers paid cash for their property, compared with 27 percent of traditional buyers and 11 percent of first-time buyers.
Because luxury buyers are likely to have larger incomes, they were also able to make average down payments of 30 percent — 5 percent higher than traditional buyers. Nearly 56 percent of luxury buyers financed their down payments via personal savings, while about 28 percent used proceeds from an investment.
In the Bay Area, luxury-home sales have jumped dramatically over the past year — up an average 27 percent from the first quarter of 2013 to the first quarter of 2014 in Pacific Union’s nine Northern California regions.
By the way, luxury buyers’ love of views was confirmed in another recent survey mentioned on Pacific Union’s blog. That Realtor.com survey found that 44 percent of buyers consider the home’s views of mountains, oceans, or cityscapes to be the second most important feature when considering a luxury purchase. The most important feature, at 54 percent, was a chef’s kitchen. 
(Image: Flickr/Sonny Abesamis)

Luxury Buyers Looking for Chef’s Kitchen, Spacious Views

What amenities are most important to affluent buyers in the market for a luxury home?

A recent survey by Realtor.com found that the most popular feature, sought by 54 percent of luxury buyers, is a spacious chef’s kitchen equipped with the very finest high-end appliances and cabinets. (Granite countertops are still popular, although other materials such as glass, soapstone, and metals are the current rage.)

The second most popular feature, with 44 percent of the vote, is a sprawling view of the world beyond — ocean, mountains, or cityscape — followed by the square footage of the property (38 percent) and an expansive master suite (36 percent).

According to the survey, 13 percent of respondents said they are ready to buy a luxury home and another 26 percent are considering a high-end home purchase.

“The luxury home buyer is an important contingent of today’s real estate market, as luxury homes tend to drive trends throughout the entire balance of the marketplace,” Realtor.com spokeswoman Barbara O’Connor said in a statement accompanying the survey results.

“We are seeing large portions of buyers throughout the country … eyeing luxury homes,” she said. “This means sellers, builders, and certainly Realtors, should all be paying particular attention to desired luxury amenities, such as chef-quality kitchens and master suite features, to close deals for them.”

Forty percent of luxury buyers say the biggest challenge in searching for a high-end home is to find a property that meets their family’s needs; 20 percent say it’s the limited number of properties on the market.

Survey respondents in Northeast, Pacific, and Mountain states said the minimum price point for luxury housing is $1 million. In South Central, North Central and South Atlantic states, the minimum falls to $500,000.

Christie’s International Real Estate’s recently released 2013 Luxury Defined report found that sales volume for homes priced above $1 million jumped 62 percent year over year in San Francisco. Luxury buyers in the city paid an average of $829 per square foot, less than those in New York and Los Angeles.