Lamorinda Real Estate — Bidding Wars at Fair Market Value

2 05 2012

In the last couple of months, the majority of homes that we’ve brought to market have had multiple offers, with a concentration in the price segments below about $1.2M.  The swift change in the market tide has caught buyers off-guard, since it represented such a profound shift from the past several years.  In spite of the bidding wars, there is a moderation and grounding to them that we did not see in the frenzy of the market heights in 2004-2005.

With about 5-6 multiple offer transactions to look back upon as a listing agent over the last couple of months, none of the buyers over-paid for the homes purchased, and none of them had any issues with bank appraisals.  With clear memories of the recent, painful real estate downturn, buyers are bidding cautiously and armed with information on relative value — careful to not pay more for a property than it is worth.  My frame of reference spans price points beginning around $750,000, up to and including a property priced at about $1.9M.  The latter experience occurred last weekend with 4 offers for an extraordinary Orinda property on 2 acres with its own Cabernet vineyard!  In case you are curious, just click here.

So, what’s driving this behavior?  Aside from a rising stock market, encouraging economic data, a market that most see has having hit bottom, and essentially free money (after adjusting for inflation) — we are experiencing a case of severe inventory shortage.  As of today, there are 153 active properties on the market in Lamorinda and 131 pending in escrow — so, just over one month’s available inventory.  For realistic sellers, its a great time to be on the market.  For buyers… a bit more challenging.  Let’s compare our market to other parts of the country.

According to recent Wall St. Journal article, “Stunned Home Buyers Find the Bidding Wars are Back”, Chicago is sitting at over 9 months of inventory, San Francisco and Washington, DC are each at 3.4 months of inventory, and the heart of California foreclosures — Sacramento — is down to about 1.5 month!!!  The multiple offer environment is not unique to our world of Lamorinda real estate, but the demand for housing here is certainly stronger than in most areas of the country.  As reported in the WSJ, the online brokerage RedFin has stated that 84 percent of its agents have found themselves writing offers in a competitive environment across the Bay Area, and 71 percent in southern California.

There are certainly some potential headwinds ahead for the housing market, however the diversified strength of the local economy will mitigate the strength of them, if they start to blow.  All of these facts reinforce why this is such a special place to live… a belief clearly shared by many who are actively competing to call Lamorinda their home, too!


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Categories : Lafayette CA Real Estate Market, Lamorinda Real Estate Forecast, Lamorinda Real Estate Market Statistics, Orinda, CA Real Estate

Lafayette CA Real Estate — Still a Bay Area Bargain

27 04 2012

Lafayette and the broader Lamorinda area may still be a bargain on a relative basis, compared to other parts of the San Francisco Bay Area.  A recent article published on 24/7 Wall Street, showed that two Bay Area cities are in the Top 5 most expensive places to live in the U.S. — San Francisco and San Jose.  In fact, San Francisco was listed as the most expensive housing market in the US at a median price of approximately $612,000 for a single family home — or $422 per square foot.  By comparison, the Lamorinda market average home price sat at $371 per square foot as of April 1st this year.

With the benefit of technology enabling mobile work environments and the highly diversified economy for our area, I believe we will see more migration to Lamorinda from San Francisco and potentially from the SF penninsula/Silicon Valley.  In fact, this was reinforced during a lengthy discussion I had with the head of residential lending and private banking for a Bay Area-based bank that targets higher net worth clients. With a broad view of what is transpiring in the SF and penninsula/Silicon Valley markets, she believes that buyers across the continuum are getting priced out of the market due to the enormous amount of wealth that is being created in the technology sector. Furthermore, with rental prices escalating at a phenomenal pace, renters will look closely at buying — eventually jumping into the market.  On a relative basis, our home prices are a “bargain” compared to other comparable markets in the south bay, peninsula, Marin, or SF.  This will feed all segments of our market, and due to Lamorinda’s geographically constrained supply of homes, market dynamics of supply and demand should push prices up.

Additionally, Lamorinda is one of the most commute-friendly suburban areas in the Bay Area, with ready access to San Francisco via car or BART.  San Francisco is undergoing a tech explosion in the south of Market area that is pushing further south past the ballpark. For a city that has not been particularly hospitable to business, it is encouraging to see the transformation taking place.  Unlike the previous “dot.com” tech boom, this one seems to have “legs” and is underpinned by a foundation based upon real market needs and revenue growth.  We will all benefit from the prosperity of this powerful new growth in San Francisco, and I believe it will result in even a higher demand for housing in our beautiful community.


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Categories : Lafayette CA Real Estate Market, Lamorinda Housing Market, Lamorinda Real Estate, Uncategorized

The Bulls Stampede in Lafayette, CA Real Estate

15 04 2012

March 2012 marked the “running of the bulls” here in our world of Lafayette, CA real estate, and more broadly throughout Lamorinda.  This may be a situation where a picture is “worth a thousand words”… not that I’d ever subject you to that much of my verbiage in one post!

As of the end of March, the Lamorinda real estate market was down to 1.35 months of inventory against the market’s leading edge — pending sales.  It’s hard to remember when we last saw that, but I’m betting it was in 2005, or thereabouts!

Even more profound is the performance of certain segments of the market.  Properties under about $1.2M have been on fire, as evidenced by the following chart that shows that this segment is down to just 1 month of inventory:

Moving slightly up market to the $1.3M – $2M range, we see a rather substantial shift in the market with it approaching 3 months of inventory:

Finally, as we move above $2M into the luxury home segment of Lamorinda real estate, we see that we have a much different picture than in the lower price ranges:

As we conclude the first couple of weeks of April, the market momentum continues with 106 Active properties on the market and 84 Pending, as of today.  The appetite for homes in Lamorinda’s lower price ranges continues.  In the last month, we’ve had 3 listings in Lafayette under $1M, and all of them have had at least 3 offers — one going almost 7% over the list price with 4 offers.

Sellers and buyers alike are a bit tentative in this market, not quite sure what to make of it.  We clearly expected a much stronger 2012, and were confident that we had reached the market bottom in 2011, but we didn’t expect to see the energy that has been displayed in the last couple of months.  After having their way with sellers over the last 4+ years, buyers are struggling in the lower price ranges with the sudden shift in power.  Sellers in the upper price ranges are trying to gauge demand and set their prices appropriately, without being too aggressive, or leaving money on the table.

Stay tuned… we’ve got an interesting spring market unfolding before us!


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The Lafayette, CA Real Estate and Broader Lamorinda Housing “Recovery”

31 03 2012

Not that we need external validation that the “housing recovery” is alive and well in our world of Lafayette,CA real estate, and the broader Lamorinda real estate market — but, even the national “experts” seem to be lining up in unison that they are surprised by the surge in the market.  According to an article this week in the Wall St. Journal, a non-profit think tank called the Urban Land Institute employed the expertise of 38 economists in arriving at a prediction that national housing starts would almost double by 2014 from the 2011 level. Furthermore, they predict that housing prices on a national level could start to turn back up at the rate of about 3.5% annually by 2013.

Some of you may remember Dr. Kenneth Rosen, former Professor at UC Berkeley, and one of the people who was calling for the imminent demise of the housing market back in 2004-2005.  He now has his own consulting group and believes that the URI forecast is much too optimistic.  He is concerned that possible changes in capital gains treatment could negatively impact the real estate recovery.

Another random indicator that we are well on our way to “recovery” is the very significant number of real estate transactions occurring with investors and second home buyers. According to another article in the WSJ, real estate investor transactions rose a staggering 65% in 2011, and accounted for 27% of all home sales nationally!  When the “smart” money jumps into a market, it usually means that the downturn is over.  Also of considerable note is the jump in second home sales which accounted for 11% of all residential real estate sales in 2011.  These homes were the ones that were the first to dive in value as we entered the recession, and now they are reinforcing the foundation of a national recovery.  It’s all very good news!

In case anyone is doubting a “recovery” in Lafayette, CA real estate or the overall Lamorinda market, all they need to do is take a look at our stats.  As of today, March 31, there are 115 homes “active” on the market in Lamorinda, BUT there are 125 “pending” in escrow.  Based upon the market’s leading edge “pending” sales, we now have less than one month’s inventory available in the market!!!  This means continued challenging times for buyers who are suddenly finding themselves competing for scarce inventory, particularly at the lower price points.  I would be the first to admit that I didn’t see this aggressive resurgence coming at this pace.  After 4 years of uncertainty and encountering a multitude of clients facing challenging times, it’s nice to see much more positive economic times, both in the present moment, as well as ahead.


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Lafayette, CA Real Estate — Multiple Offer City!

27 03 2012

As we climb up the walls of the market canyon after several years of darkness, we are struck by the blinding brightness of the sun and a healthy real estate market!   Ok… perhaps that’s all a bit melodramatic, but this year does feel a bit like an old Stanley Kubrick sci-fi movie!  I don’t think I ever expected to see a 2012 market quite as wild and crazy as this one has been.  To put matters immediately in perspective, as of this morning, there are only 56 active properties on the market in the world of Lafayette real estate, and there are 52 presently pending in escrow.  Essentially, we have only one month of available inventory, which explains the wild and crazy ride that many of us have been on in this business.  Even though I went on record months ago stating that I believed we would look back and see that the housing market turned up this year, let’s be clear… the “housing crisis” is over.  Even the most critical national real estate pundits are finally having to admit that we’ve finally climbed out of the “canyon”.

So, what’s life like, post housing crisis?  After being in hibernation for 4+ years, the buyers have awakened with a fierce appetite for homes, and there aren’t enough tasty properties to go around.  As a result, welcome to “multiple-offer city” — the new world of Lafayette, CA real estate.  The hunger to buy real estate is not evenly distributed across all price points, rather it seems to be fiercely concentrated in the sub-$1.2M market.  We’ve had three listings on in the last month within this price range, and all have sold with 4+ offers.  The craziest was our recent one at Attri Court in Lafayette where the property went on the market a weekend ago at 1pm Saturday.  Between that Saturday afternoon and 6pm on Sunday, 27 real estate agents had shown the property!!!  That was coupled with an open house where over 150 people showed up… stacking cars up 6+ deep in the court, and out onto Reliez Valley Road.  Our client called us at 6:30 PM and told us that people were still showing up at her door, long after the signs were taken down!

We had no idea what to expect as we accepted offers this past Friday.  Clearly, the furious level of activity caught many buyers off-guard, and they became hesitant to engage in what they believed would be a frenzy of offers.  As it turned out, we received 4 offers, and an experienced, professional agent properly coached her clients about what they needed to do to buy the home without over-paying for it.  The process demonstrated that we are in a transitional period of the market, with the delicate balance of power shifting to sellers in the most affordable price ranges.

As a buyer, it is clearly a difficult time… much more so than I would have predicted. While I admit to getting “scooped” on the “multiple offer” story by the Contra Costa Times over the weekend, while much of this post lied dormant in “draft” mode on Word Press, I did go on-record months ago correctly calling the market turn-around this year.  After 3-4 years of a recessionary market, it’s going to take at least a couple of months for buyers to learn that retrospective “comps” are no longer an indicator of market value — particularly when those comps were from before the market reignited.

Stay tuned as we take a look at what’s going on up-market in the days ahead.  Fasten your seat belts… 2012 could be an interesting ride for Lafayette, CA real estate and the greater Lamorinda real estate market!


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Lamorinda Real Estate — Climbing Out of the Canyon

24 02 2012

As I’ve often written, you never know that you’ve reached the bottom of a market until its on the way up.  In recent months, I’ve strongly suggested that we had hit bottom in the world of Lafayette real estate, as well as the greater Lamorinda area, and would maybe see some upward trajectory to the market in 2012.  For what its worth, it now appears that the national media is coming to a similar conclusion with the fictitious “national market”, and is starting to run positive stories on the resurgence of real estate markets across the US.

According to a Wall St. Journal article from earlier this week, “Sales of previously owned homes in the U.S. rose last month to the highest level in nearly two years, and the inventory of unsold homes contracted to a level considered healthy by economists, positive signs for the housing market.”  Additionally, Guy Berger, U.S. economist with RBS Capital Markets, wrote that some of the recent growth in home sales may have been the result of the mild winter. “But for the most part, it seems that the housing sector may have turned the corner.”

It’s too early to see all of the positive indicators reflected in the housing statistics for the Larmorinda real estate market.  Sometimes it’s simply the intangible, subjective factors that one has to run with to anticipate a turn in the market.  A week ago I was working with our client on the evaluation of 4 offers received on a Lafayette home priced just under $1M.  While I can’t yet share where the offers came in, the quantity of offers and their financial strength certainly was a quick litmus test for the market.  Furthermore, as part of my due diligence, I spoke to the respective agents and gained further insight into the buyers’ motivation level.  Clearly, the experience reinforced my positive outlook for the market.

We have another Lafayette home that is just about a week away from closing escrow and was purchased before completion by a reader of this blog.  Ironically, within about 2 weeks of going into escrow, we received several online inquiries about the property via its website — from both agents and buyers.  One buyer said that she found it by searching for “Coming Soon” real estate in Lafayette!  She is highly motivated to buy and frustrated by the low inventory in her price segment.

Sometimes, just talking with other brokers can yield insight to the market and a feeling for what lies ahead.  While viewing new properties to the market on Tuesday,  we had numerous agents ask us what sorts of properties we have on their way to the market — all telling us that they have many buyers with unsatisfied needs based upon current inventory.

If you’ve ever been at the bottom of a canyon, you know that the climb out can be slow and sometimes fraught with some setbacks along the way.  I think we’ve begun our journey out, and will soon be able to look down and see some of the scattered debris left in the tracks of the market below.


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Categories : Lafayette CA Real Estate Market, Lamorinda Real Estate

Random Thoughts in the World of Lamorinda Real Estate…

16 02 2012

Ah… what to write?  Do you really want to hear that economists at the International Builders Show are predicting a 16% improvement in new home sales for 2012, or that they think that the market “bottom” (in the non-existent “national market”, of course), will finally be reached in a year or so?  Does anyone really care, or hold them accountable for their predictions?  Personally, I view economists similarly to meteorologists.  Most of us wish we could get compensated for being right less than 50% of the time.  Locally, inventories climbed about 25% in January, while sales remained flat.  About one in four homes are selling — so all is well in the winter world of Lamorinda real estate!

There is always demand in a healthy Lafayette real estate market for great homes at fair prices.  One of our blog readers is the fortunate buyer of a spectacular, newly-constructed home in Lafayette that he was able to purchase prior to it going on-market. In fact, there seems to be so much pent-up demand for great homes in this price segment that we received numerous inquiries about this property via it’s website. Unfortunately for those people, the home was already in escrow.  The whole experience did validate the power of blogging, online marketing,  and proper use of Search Engine Optimization to insure that the client websites we build are actually found  by real buyers.

Other Thursday musings… if you haven’t yet attended any of the speaker series events at the incredible Lafayette Library and Learning Center , you are missing one of the great resources of this community.  As some of you may know, I am a life-long, passionate photographer who spends much of my time away from real estate, immersed in photography.  Last Sunday, the Lafayette Library brought in world-renowned portrait photographer, Michael Collopy, who spoke for over an hour about his impressive career photographing  the last 5 US Presidents, Mother Theresa, and almost every notable celebrity you can think of.  It was a fascinating glimpse into a man who has been able to live his passion, as well as into the personalities of many of the celebrities on the other side of his lens.  You can sign up for notifications of upcoming events via the Library website, or by “Liking” them on Facebook.  By the way, don’t forget to “Like” us on Facebook, too!


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Categories : Lafayette CA Real Estate Market, Lamorinda Real Estate, Uncategorized

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