What Do I Know?

Lost and Confused Signpost

Kind of a long hiatus…but I’m back! Ready for the new era of Real Estate…sort of! So I put  nice listing on the market a couple of weeks ago on Pompano and I expected the same insanity with it as I had on my Beach Park listing a month or so ago. I knew in the first hour of the first open house that the market was a tad slower. We did fine of course, still had multiple offers but it just wasn’t as zany as it was just a few weeks before. Who knows why? Kids out of school? Folks on vacation? You’re guess is as good as mine. It could also been because  4 other 2 story 4 bedroom houses came on the market the same week?

Well, some of the other places out there had the same experience. Decent response but not crazy, not 10 offers. Not $300,000 over asking. What’s my assumption? The market is cooling off a tad. That probably means it’s a good time for some buyers I’m working with to, at least, have less competition.

What do I know? I know nada! Yesterday, after encouraging some folks to write an offer on a house in Belmont listed for $1,098,000 cuz of the lower level of activity in the market….we end up in a 10 offer frenzy. $1,098,000 turned into $1,400,000.

I guess the point is, this market is VERY strong. It ebbs and flows but often the ebbs don’t last too long. Last week we had an economist speak at our office and she’s of the opinion that this market has another 2 to 3 years of life left in it. That’s based upon the large number of Silicon Valley companies that are scheduled to go public in the next 18 months and the fact that the average cost per square foot here (1250) is so much less than it is in places like Hong Kong or Shanghai where it approaches $7000 per sq ft. What a scary thought, huh? Prices could go up another 25%? Sheesh.

 

 

Into The Void

void

This year has been almost indescribably crazy so far and prices are reaching heights that even I didn’t dream of. I think it’s really safe to say that $1,300,000 is the floor when it comes to single family home values right now. Three bedroom ranchers are ranging now between $1,350,000 and $1,420,000. What do you do if you want to live in Foster City but can’t afford that? Welcome to The Void.

A couple of months ago I predicted that there wouldn’t be a 3 bedroom townhouse in Foster City that didn’t sell for at least $1mil this year. Ha! What did I know! Today we have had three 2 bedroom townhouses close at $1mil or more! In January there were two 4 bedroom townhouses that sold for $1,000,000 and $1,020,000. Today there are two 4 bedroom townhouses in escrow that will close at $1,175,000 and $1,200,000 and another one is set to look at offers on Friday and it’s priced at $1,099,000. Last week I presented an offer on a small 3 bedroom townhouse at Harborside that was listed for $995,000. Nice place! The most money ever spent on this size unit was $930,000…in December. They got 16 offers and it’s in escrow just under $1,300,000. I thought the offer I wrote was insane at $1,200,000!

This is what I mean about the Void. A gap has been created between single family values and townhouse values in Foster City. If you want to live in Foster City but can’t afford $1,400,000 or more you have to settle on a townhouse or condo. The demand is great. there’s an old phrase that nature abhors a vacuum. The disparity between $1,020,000 for a 4 bedroom townhouse and a rancher at $1,400,000 was too great. The void needed to be filled. Large townhouses are now WAY in demand. Actually…small townhouses are too…if you want to live in the Mid Peninsula instead of Fremont or South San Jose.

It’s a pretty freaking scary thing to step into that void though. You better have ALOT of down payment money since finding a few comparables for the appraiser is going to be a challenge. That’s what’s happening though.

The New New Normal

carrott

A couple of years ago I wrote a post about the market’s “new normal”. That normal is old now. We have a new new normal now. This could be as strange a new normal as I’ve ever seen. Maybe even as strange as that carrot up there. For 25 years I’ve had a common routine when it comes to showing houses to buyers. We go out, usually on the weekend, I enter the house via my lock box key and we proceed to examine the place and the lot. Simple right? That process repeats itself at the next house and the next…and with other clients later on that day…etc. What’s changed you ask? The feeding frenzy in all it’s radiant glory and beauty! Now when I show a property I need to enter the house…and close and lock the door behind us! I need to do that because well over half of my showings lately other people follow us in! On multiple occasions  while I’m out in the back yard with my clients 3 or 4 other groups come on in when they see an open door. It becomes an impromptu open house! I have to run around and throw everybody out so we can leave!

“Oh, aren’t you holding it open?” they say. Right! The amazing thing is how they all seem to be RIGHT THERE right after we go in. Prospective buyers just hanging around, lurking in front of houses for sale…looking for somebody to let them in. It’s freaking WEIRD! I kid you not folks…this happens to me every weekend now! Sorry, I just am not going to hold an open house on somebody else’s listing. Lately, before we go in I look around the street and see if anybody is sitting in a car. If they get out…I tell them to forget it. Lay down the boundary right away. “Sorry…call your agent, or Redfin or something!”

It doesn’t stop there though. The astonishing conversations I hear at ACTUAL open houses boggles my mind. Like the guy who asks the listing agent (in a room full of potential buyers) “How much over the asking price should our offer be?” Nice poker face, huh? Make sure you tell other interested parties how much you’re going to offer! What’s worse though is the expectation that the listing agent KNOWS what it’s going to sell for! He or she has NO CLUE folks. I swear, I could write a book on stuff I’ve heard people say at open houses…out loud.

“Will the seller fix all these things in the report?”

“If we work with you will that guarantee we will get this place” That to the agent holding it open, again, in a room full of other prospective buyers.

” Will the seller take less?” I always love that one…it’s a personal favorite. I usually reply “If the house is on the market in 3 months then maybe, but based upon the fact that there’s been 150 people in here so far today I’m willing to bet that more that a few people will express enough interest to buy it sooner rather than later…and I’m thinking that somebody in that bunch will most likely write an offer OVER ASKING.

It’s the New, New Normal. Playing now at a listing near you.

 

 

Real Estate Diaspora

diaspora

Sort of coming on the heals of that last post I wrote about changing criteria is the also new phenomenon of buyer flight to the East Bay and South San Jose. It’s a veritable Real Estate Diaspora. Folks that would just as soon live in Foster City are taking flight and buying in Fremont or Blossom Valley.

Yesterday I looked at offers on a condo on Lido that I had listed. We got 13 offers and it went WAY over the $829,000 asking price. The question for buyers now is, what can we do if you can’t afford at least $1,000,000 on a home? Incredibly, you’re not going to be able to buy in Foster City now unless you buy a condo. Townhouses and Single Family are out. Last week an agent friend of mine won a bidding war on a 3 bedroom townhouse in Mountain View that was also listed for $829,000. It sold for $1,051,000. You can still get a townhouse for less in San Bruno, Pacifica, South San Francisco or Daly City but like I said before you might not be too happy with the schools there.

This diaspora I’m talking about is coming as a shock to the agents in Fremont and South San Jose. As recently as November, single family houses were getting multiple offers and selling for $20,000 over asking. Now they’re getting a gazillion offers and going for $150,000 over asking. In just a few months this has happened. Last week I wrote an offer on a fixer upper 3 bedroom house in the Cambrian section of South San Jose. It was listed for $725,000. They got 27 offers. Many from the Peninsula the listing agent told me. It sold for $860,000. Today, I wrote an offer in Fremont on a house listed for $789,000. The agent told me she had 26 offers!! The majority from Peninsula and San Jose agents! I think this house is going for $900,000.

What a freaking world! Meanwhile, my seller on Lido is moving to Oregon where he’s found a 3400 sq ft house with a master suite that’s about as big as his Lido condo…for $510,000. No competition either!

As an agent, this sure is a strange phenomenon. I had a fellow agent tell me he wouldn’t work with a buyer unless they were qualified to $1,300,000. Sheesh! Buy a condo for $800,000 or compete in Fremont and then have a 2 hour commute. If you’re lucky enough to get the Fremont house in the first place!

Altered Criteria

Path across labyrinth

One thing that always happens in hot markets is a buyers criteria gets reduced. In a slow market a buyer can afford to be picky and bad locations, plenty of needed improvements or schools that don’t have API scores over 900 can eliminate a property from someone’s choices. Not now though! I mention the API score thing because, in my experience, the better the school the more desirable the home. In fact, I’d say that the quality of the schools has really become the Holy Grail when it comes to where people want to live. One of the things that is REALLY shocking me in this particular market is how the escalation of prices has significantly eroded even these dearly held notions.

The truth is that if you’re qualified up to $1,000,000 and you want to buy a house in an area with API scores over 850 you’re pretty much screwed in the area between Millbrae and Redwood City. As I’ve written about before…it won’t be long until that’s the case with townhouses in Foster City as well. This is actually amazing and what’s happening is that folks are deciding that buying in San Mateo (for example) is better for their situations than buying in Fremont or South San Jose where schools are better. In the last several months 7 houses have sold in San Mateo Village over $1,000,000. I clearly remember when a house on Pasadena Street there listed for $305,000 and I thought the sellers were crazy. A million dollars for The Village? Amazing! The API for the school there, George Hall, is 823. I also heard about another house in San Mateo on the west side with the school’s API of 831 just sold $500,000 over asking at $2,200,000.

Last year I had a listing in South San Francisco that got 2 offers and sold for $15,000 over asking. The market in Foster City was super hot then too. The reason for the slowness there? The school’s API is 800. Last week I listed a townhouse up there in an area where the school’s API is 818…I have 11 disclosure packets out on it today and I’m looking at offers on Monday. 9 of the 11 disclosures are from agents in San Mateo and Burlingame. Their buyers would prefer the Mid Peninsula but they have to compromise. My suspicion is that what they’re deciding is to buy in these areas but have their kids attend a private school. Either that or decide to move to Fremont or Blossom Valley and commute to San Francisco (or San Mateo or wherever).

What a choice these prices are putting on people! Buy here and get something much smaller than you need or want…if you can buy at all, or eliminate most of your criteria including good public schools to save yourself a 2 hour commute. The storm that I thought was coming is really a lot worse than I thought.

Foster City 2014 Condo/Townhouse Statistics

OrderStatistics

As I’ve mentioned before on this blog, condo/townhouses are a lot more difficult to draw conclusions about because there are problem projects and great projects and some are way up and others not so much. Thus that should be considered when thinking about the overall statistics about FC. Let’s get started…how about the total number of units sold. Here’s the history:

2006…240

2007…165

2008…112

2009…140

2010…143

2011…144

2012…156

2013…169

In 2014 the number was 176. Pretty interesting since there has indeed been low inventory. It’s nowhere near the high of 2006 but I suspect that unlike many years, everything that came up sold. Now how about the average prices:

2006…$661,993

2007…$694,026

2008…$635,839

2009…$577,267

2010…$577,150

2011…$512,192

2012…$551,000

2013…$657,000

In 2014 we hit an all time high….$744,522! Most projects in Foster City did indeed have all time highs as well. What’s 2015 going to bring? More all time highs if you ask me. We’ll see…

Foster City 2014 Statistics

stats

So every year I write this post and the story has been pretty much the same…less sales as the result of bad inventory. Last year I marveled at the fact that only 106 single family houses sold in 2013 and how that was the lowest number since the lean year of mortgage meltdown in 2008…when there was only 99 closed sales. Well, in 2014 there were 99 closed sales. Again, this wasn’t because of low demand. It wasn’t because there was an international crisis that stopped the market. It was simply because there was no inventory.  I also marveled at the fact that the average days on the market in 2013 was only 20 days. That was miniscule compared to 37 in 2006 (the market’s previous high point) and then 65 in 2009. Guess what? In 2014 the DOM was 15!!!

Now for the really scary numbers. Here’s a breakdown of the average sales prices since 2006:

2006…$1,078,000

2007…$1,113,000

2008…$1,118,000

2009…$1,010,000

2010…$1,004,000

2011…$976,000

2012…$1,021,000

2013…$1,236,000.

Hold onto your hats…the average sales price for 2014 was $1,359,000! I mentioned this before, but there was only ONE home that sold under $1,000,000 in 2014. In 2013 there were 22 sold under $1,000,000. Today there’s a new listing on Beach Park that came up for $1,748,000. The most money EVER spent for a house on that stretch of Beach Park? $1,400,000. The most in ANY stretch of Beach Park…$1,540,000. We’re on a wild ride, huh?

Highs & Lows 2014-Condo/Townhouses

OK, so how about these guys:

 

MOST EXPENSIVE CONDO/TOWNHOUSE:

promo

740 Promontory Point #3404 This large 2697 sq ft unit sold for $1,290,000. The high in 2013 at Promontory Point was $1,012.500. Same size place.

HIGHEST PRICE PER SQUARE FOOT:

ERICK

834 Erickson at Winston Square, in only 1380 sq ft, sold for $1,050,000…a whopping $760.00 per square foot.

LOWEST PRICED CONDO:

ADMIR1

2110 Admiralty Lane This little 1 bedroom unit closed for $337,500. The 2013 low…$280,000.

LOWEST PRICE PER SQUARE FOOT:

ADMI1

1214 Admiralty Lane The Admiralty is always going to come in last it seems. This 3 bedroom unit sold for $510,000…or $338.00 per square feet.

LONGEST ON THE MARKET:

till

1082 Tiller This unit was on the market for 105 days, but was originally listed as a short sale and was rescued by the market and sold as a regular sale for $848,000.

GREATEST OVERBID:

PORTO

664 Portofino So much for Island J’s problems. This unit was listed for $825,000 and sold for $995,240. An overbid of $170,240!

GREATEST AMOUNT UNDER THE ORIGINAL LIST PRICE:

TOWNG

219 Town Green Lane It’s actually very remarkable that so few places sold under asking…I only found about 5 out of 176. The place closed $45,000 under asking. Very unusual last year.

Highs & Lows 2014-Houses

 

 

Happy New Year! Now let’s see what happened in 2014.

 

MOST EXPENSIVE HOUSE;

ports

620 Portsmouth This 5 bedroom, wide water gem at Whalers in 2710 sq ft sold for $1,930,000. The 2013 high was an aberration, a 4300 sq ft waterfront that went for $2,225,000. The 2012 high was $1,520,000.

 

HIGHEST PRICE PER SQUARE FOOT;

 

ARUBA

934 Aruba This 1810 sq ft waterfront at Plum Isle went for an amazing $1,750,000…or $966.00 per square foot. Last years high was $807.00 and I thought that was massive.

 

LOWEST PRICED HOUSE:

 

MAIN

200 Mainsail This fixer upper Eichler sold in May for $981,000. Incredibly, it was the ONLY single family house in Foster City to sell under $1,000,000 in 2014. Interestingly, the buyers fixed it and flipped it in July for $1,455,000.

 

LOWEST COST PER SQUARE FOOT:

 

PUFFIN1

217 Puffin This fixer sold for $1,140,000…after awhile on the market too. It’s all of 2540 sq ft making it sell for $448.00 per square foot.

 

LONGEST ON THE MARKET:

TEAL

633 Teal  This place was on the market, technically, for 157 days. That’s a bit unfair since it was on at the end of 2013 and didn’t sell. The sellers changed agents and 25 of those days were lost during the agent change. Nevertheless, it was on for awhile. The second longest house took only 35 days to sell.

GREATEST OVERBID:

ARUBA

Guess what? It’s that Aruba house again! This place was listed for $1,288,000 and the sale price was $1,750,000. $462,000 over asking. Amazing.

GREATEST AMOUNT UNDER ORIGINAL LIST PRICE:

BARK

112 Barkentine This place sold in 24 days, but it went $110,000 under asking. Go figure.

 

 

 

Numbers

I saw some numbers this morning that shocked me…and that’s actually kind of an amazing thing all by itself. In 2013 (which was a great year by the way) the slowest month for sales was, not surprisingly, December. In December of 2013 there were 1188 transactions. Compared that to 1878 transactions in September of 2013…the highest month.

In 2014 the biggest sales month was May and it came in at 1718 transactions. Less, but not enormously. The number for December 2014 was what was most surprising. There were only 629 sales. Less by almost half of the already low number of 2013! This number didn’t come as the result of a slower market and low demand…it came because of the incredible lack of inventory. What’s just as scary is the fact there was only 945 sales in November 2014….and 1538 in November of 2013.

Right now today there’s 4 whole properties on the market in Foster City. Two houses and two condos. That’s it! If this doesn’t turn around the January 2015 number is going to resemble Decembers number. It’s really scary out there.