Q32012_QuarterlyReport_ezine_2

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Table of Contents Bay Area: Is the Housing Slump Over?

3

Going, Going, Gone! The Return of Bidding Wars

4

CONTRA COSTA COUNTY

6

EAST BAY

10

MARIN COUNTY

14

NAPA COUNTY

18

SAN FRANCISCO

22

SONOMA COUNTY

30

SONOMA VALLEY

34

TAHOE/TRUCKEE

38

Bay Area: Is the Housing Slump Over?

By now you’ve heard the optimistic news emanating from the media and real estate experts across the country: Housing markets are back on their way up.

Home values are rising, foreclosures are dropping, and housing starts are increasing. In addition, recent action by the Federal Reserve should contribute to the climb by pushing down mortgage rates and boosting home prices.

Sounds like great news, and it is – and there are strong indicators the trend will continue, thanks to sustained job growth, low interest rates, and aggressive buyer demand.

If there’s a downside to all this, it’s that buyers who have been waiting on the sidelines hoping to pounce on a foreclosure or distressed property have likely missed their opportunity. The records being set for number of homes sold in the Bay Area are being accomplished with limited inventory, and this will contribute to price appreciation.

The combination of buyer demand and a continuing constrained supply of available homes is leading to a return of one of the hallmarks of the heyday of Bay Area real estate: the bidding war.

Multiple offers on well-­priced properties are becoming the norm in many areas, and we predict housing will be 3 to 6 percent more expensive by this time next year.

For more about the return of the bidding wars, read our exclusive feature story on the following page. And best wishes for a happy, healthy, and productive year-­end!

Mark A. McLaughlin, CEO, 3DFLÀF 8QLRQ ,QWHUQDWLRQDO Please remember to seek out local news, trend analysis, and expert advice for your real estate decisions.

Going, Going, Gone! The Return of Bidding Wars Throughout 2012 we’ve seen continued improvements in our housing markets, and our predictions of enjoying the best real estate year in the Bay Area since 2006 seem to be coming true.

Q3 has also brought the re-­emergence of another characteristic of the heights of Bay Area real estate: bidding wars.

Multiple offers on desirable properties have become common, and the bidding wars that result can test the nerves of the most seasoned real-­estate veteran.

Sellers in many Bay Area regions may receive 10 to 20 competing offers for a well-­priced home; some homes are even luring 30 offers.

Our regions experiencing the most bidding-­war activity in Q3 included the East Bay, Contra Costa County, Marin County, San Francisco, and Sonoma Valley. Sonoma County as a whole saw moderate numbers of multiple offers. Napa County and the Tahoe/Truckee area had the fewest bidding wars. $ UREXVW HFRQRP\ D VN\URFNHWLQJ KRXVLQJ PDUNHW DQG ZDYHV RI WHFK GROODUV à RZLQJ IURP 6LOLFRQ 9DOOH\ VSXUUHG bidding wars during the real estate boom of the last decade. Today’s bidding wars owe more to the laws of supply and demand: too few homes on the market for too many eager buyers.

After years of stagnation, the pent-­up demand for homes in the Bay Area today is palpable, fueled by historically low interest rates, economic growth, and an increasingly expensive rental market.

The problem: There’s precious little to buy.

Prospective sellers are waiting on the sidelines, unwilling or unable to enter the marketplace. More than a quarter of all Bay Area homeowners today remain underwater, owing more on their mortgages than their properties are worth. Others won’t sell because they don’t have enough equity yet to buy another home, or are holding out for higher price points.

This reluctance has driven down the supply of housing inventory across the Bay Area, which usually averages four to six months, to below two months in many regions. Cue the feeding frenzy, as hungry buyers compete against each other to land one of those homes.

Bidding wars can be great news for sellers who price their properties appropriately.

One of our real estate professionals recently helped a Bay Area client sell a home that attracted 27 bidders after just one week on the market. “The seller was completely taken aback by the interest in the property,� our real estate professional said. “We had to be careful with the pricing, but the market was hurting for inventory.�

The home was offered at $417,000, slightly higher than comparable homes in the area. The eventual winning bid FDPH LQ DW PXFK RI LW LQ FDVK 7KH ÀQDO VHOOLQJ SULFH QHDUO\ PDWFKHG ZKDW WKH RZQHUV SDLG LQ

Looking ahead, multiple offers will likely stay on the scene for a year or more, although gradual increases in home values will bring more homeowners above water and back in the market.

Meanwhile, although it can be frustrating for buyers to compete in a bidding war, it’s not necessarily a losing proposition. To improve your odds: ‡ *HW SUH DSSURYHG ² QRW MXVW SUHTXDOLÀHG IRU D ORDQ DQG RIIHU WKH KLJKHVW SULFH \RX FDQ ‡ 0DNH WKH KLJKHVW GRZQ SD\PHQW \RX FDQ DIIRUG DQG RIIHU PRUH FDVK LI SRVVLEOH ‡ ,I \RX DUH SUH DSSURYHG DQG WLPH SHUPLWV FRQVLGHU GRLQJ LQVSHFWLRQV LQ DGYDQFH RI \RXU RIIHU The seller would likely respect your intent -­-­ and you may then consider waiving any unnecessary contingencies to expedite the process. ‡ 'RQ¡W IRUJHW WKH SHUVRQDO WRXFK $ ´EX\HU¡V OHWWHU¾ WKDW OHWV WKH VHOOHU NQRZ KRZ PXFK \RX ORYH and want the home can often spell the difference between two similar offers.

And listen to the real estate professional representing you. He or she has unique knowledge about the neighborhoods and homes you’re evaluating, as well as expert insights into market conditions, and can give you valuable advice to tip the scales in your favor.

Bay Area 10-­Year Overview Here’s a look at home sales in the Bay Area’s real estate markets in the third quarter of 2012, with a glance back at the 10 preceding third quarters.

Quarterly Real Estate Report Q3 2012

CONTRA COSTA COUNTY

(OOHQ $QGHUVRQ Senior Vice President, Contra Costa County

ellen.anderson@pacunion.com 6\FDPRUH 9DOOH\ 5RDG :HVW _ 'DQYLOOH &$

Quarterly Real Estate Report Q3 2012

CONTRA COSTA COUNTY A Member Of Real Living

Contra Costa County: Q3 Results Like other Bay Area real estate markets, buyers vastly outnumbered sellers in the third quarter, resulting in multiple ELGV IRU IDLUO\ SULFHG SURSHUWLHV ² RIWHQ MXVW GD\V DIWHU KRPHV ZHUH ÀUVW VKRZQ WR SURVSHFWLYH EX\HUV +RZHYHU KRPHV SULFHG VLJQLÀFDQWO\ EH\RQG WKHLU DSSUDLVHG YDOXH VDW RQ WKH PDUNHW ORQJHU Home sales have been rising all year, and the third quarter was no different. Sales would have been even higher if not for the limited supply of homes on the market.

Home prices showed an increase in Lamorinda – Lafayette, Moraga, and Orinda – and a small gain in Alamo, 'DQYLOOH DQG %ODFNKDZN ZKHUH WKH VXSSO\ RI GLVWUHVVHG SURSHUWLHV RIIVHW SULFH DSSUHFLDWLRQ RQ RWKHU SURSHUWLHV in the area. /RRNLQJ )RUZDUG The end of the third quarter saw a small spike in the number of properties coming onto the market, which may continue into the fourth quarter, but activity will slow as the year draws to a close. Business is expected to pick up again in January and February and on into the spring.

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Median Sales Price

Months’ Supply of Inventory

Quarterly Real Estate Report Q3 2012

CONTRA COSTA COUNTY A Member Of Real Living

$YHUDJH 'D\V RQ WKH 0DUNHW

Percentage of Properties Under Contract

Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

CONTRA COSTA COUNTY A Member Of Real Living

A Closer Look at Contra Costa County

Quarterly Real Estate Report Q3 2012

EAST BAY

3DP +RIIPDQ Senior Vice President, Managing Broker, East Bay Region

phoffman@pacunion.com 0RXQWDLQ %RXOHYDUG _ 2DNODQG &$

Quarterly Real Estate Report Q3 2012

EAST BAY A Member Of Real Living

East Bay: Q3 Results Buyers continued to outnumber sellers in the East Bay during the third quarter, and bidding wars among buyers FRQWLQXHG DSDFH $OPRVW SHUFHQW RI DOO KRPH VDOHV LQ RXU (DVW %D\ RIÀFHV LQYROYHG PXOWLSOH RIIHUV Buyers had to move quickly, as many homes sold within weeks of coming on the market. The supply dropped RII VLJQLÀFDQWO\ GXULQJ WKH SDVW \HDU \HW VDOHV FRQWLQXHG WR FOLPE KLJKHU SDUWLFXODUO\ LQ WKH VXE PLOOLRQ PDUNHW 0XOWLSOH RIIHUV RQ KRPHV KHOSHG GULYH SULFHV KLJKHU DQG ÀQDO VDOH SULFHV LQ WKH UHJLRQ DYHUDJHG SHUFHQW RI the list prices. /RRNLQJ )RUZDUG The East Bay remains popular for buyers unable to get a home in San Francisco. Prices are moving higher, which should coax more sellers to put properties on the market. Home sales are expected to remain strong through the fall, followed by a typical slowdown during the holidays and then pick back up again DIWHU WKH ÀUVW RI WKH \HDU ,I WKH HFRQRP\ FRQWLQXHV WR UHERXQG DQG LQWHUHVW UDWHV UHPDLQ ORZ DOO VLJQV SRLQW WR a busy spring.

'HÀQLQJ WKH (DVW %D\ 2XU UHDO HVWDWH PDUNHWV LQ WKH (DVW %D\ LQFOXGH 2DNODQG =,3 FRGHV DQG $OEDQ\ %HUNHOH\ El Cerrito; Kensington; and Piedmont. Sales data in the charts below includes single-­family homes in these communities.

Median Sales Price

Months’ Supply of Inventory

Quarterly Real Estate Report Q3 2012

EAST BAY A Member Of Real Living

$YHUDJH 'D\V RQ WKH 0DUNHW

Percentage of Properties Under Contract

Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

EAST BAY A Member Of Real Living

A Closer Look at the East Bay

Quarterly Real Estate Report Q3 2012

MARIN COUNTY

%UHQW 7KRPVRQ Senior Vice President, Marin County

brent.thomson@pacunion.com 5HGZRRG +LJKZD\ 6XLWH _ 0LOO 9DOOH\ &$

Quarterly Real Estate Report Q3 2012

MARIN COUNTY A Member Of Real Living

Marin County: Q3 Results Homes sold briskly in the third quarter, despite the constrained inventory levels that currently bedevil all real estate markets in the Bay Area.

Open houses were well-­attended throughout the quarter, attesting to the pent-­up demand among buyers, and Mill Valley remained especially popular. Most sales involved multiple offers.

Home prices are creeping up but nowhere near the highs of 2006, and it may take several years before those ZKR ERXJKW KRPHV DW WKH SHDN RI WKH PDUNHW ZLOO VHH VLJQLÀFDQW SULFH DSSUHFLDWLRQ $ ELJ SDUW RI WKH ORFDO UHDO HVWDWH PDUNHW W\SLFDOO\ LQYROYHV WUDGH XS EX\HUV EXW WKDW¡V EHHQ GLIÀFXOW IRU KRPHRZQHUV XQDEOH WR VHOO DW WKH prices they expected. /RRNLQJ )RUZDUG Home stagers are busier than they’ve ever been. That’s a welcome sign that the housing shortage may lessen in the very near future, but other indicators suggest sellers might wait until the spring before joining the market. Recent action by the Federal Reserve to push down interest rates should further encourage buyers.

'HÀQLQJ 0DULQ &RXQW\ 2XU UHDO HVWDWH PDUNHWV LQFOXGH WKH FLWLHV RI %HOYHGHUH &RUWH 0DGHUD )DLUID[ .HQWÀHOG /DUNVSXU 0LOO 9DOOH\ 1RYDWR 5RVV 6DQ $QVHOPR San Rafael, Sausalito, and Tiburon. Sales data in the charts below includes single-­family homes in these communities.

Median Sales Price

Months’ Supply of Inventory

Quarterly Real Estate Report Q3 2012

MARIN COUNTY A Member Of Real Living

$YHUDJH 'D\V RQ WKH 0DUNHW

Percentage of Properties Under Contract

Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

MARIN COUNTY A Member Of Real Living

A Closer Look at Marin County

Quarterly Real Estate Report Q3 2012

NAPA COUNTY

/LQGD &DUUROO Branch Executive, Napa County 707.251.8805 linda.carroll@pacunion.com 0DLQ 6WUHHW _ 1DSD &$

Quarterly Real Estate Report Q3 2012

NAPA COUNTY A Member Of Real Living

Napa County: Q3 Results Our real estate professionals had a busy summer, with increasing numbers of interested homebuyers at all price points – especially at the higher end of the market, which remained red-­hot throughout the quarter. In Napa, anything priced under $700,000, if priced well, sold immediately. In St. Helena, anything under $1 million sold equally fast.

7KH VXSSO\ RI KRPHV RQ WKH PDUNHW UHPDLQHG WLJKW ,QYHVWRUV ZHUH DFWLYH SUHVHQWLQJ D FKDOOHQJH IRU ÀUVW time buyers because investors often are able to submit all-­cash bids. All this activity helped push home prices moderately higher, although they remain below the highs reached in 2006 and 2007.

Wine Country properties remained popular, and a recent trend of Asian investment in the area resulted in at least one winery sold to an Asian buyer. /RRNLQJ )RUZDUG October is shaping up to be another busy month, with year-­over-­year sales growth expected to continue unabated. After the typical slowdown during the holidays, we look for another busy year ahead, helped by a rebounding economy and historically low interest rates.

'HĂ€QLQJ 1DSD &RXQW\ Our real estate markets in Napa County include the cities of Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville.

Sales data in the charts below includes all single-­family homes in Napa County.

Median Sales Price

Months’ Supply of Inventory

Quarterly Real Estate Report Q3 2012

NAPA COUNTY A Member Of Real Living

$YHUDJH 'D\V RQ WKH 0DUNHW

Percentage of Properties Under Contract

Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

NAPA COUNTY A Member Of Real Living

A Closer Look at Napa County

Quarterly Real Estate Report Q3 2012

SAN FRANCISCO

3DWULFN %DUEHU President, San Francisco Region 415.345.3001 patrick.barber@pacunion.com 2QH /HWWHUPDQ 'ULYH %XLOGLQJ & 6XLWH _ 6DQ )UDQFLVFR &$

Quarterly Real Estate Report Q3 2012

SAN FRANCISCO A Member Of Real Living

San Francisco: Q3 Results The summer months typically see a slowdown in home sales, but this summer was anything but slow. An exceptionally tight supply of homes on the market resulted in frenzied activity among buyers looking to get into contracts at all price points, and multiple bids were the norm for all fairly priced properties.

Sellers found themselves choosing among multiple offers – in some cases 20 or more – which helped push single-­ family home prices higher across the city. Prices are now very close to the highs reached at the peak of the market in 2005-­2006.

Noe Valley was one of the hottest real estate markets in the quarter. Sales volume in the neighborhood was VKDUSO\ XS D WUHQG DOVR VHHQ LQ WKH UHVW RI WKH FLW\¡V 'LVWULFW ZKLFK LQFOXGHV &ROH 9DOOH\ 'XERFH 7ULDQJOH Haight-­Ashbury, and Twin Peaks.

In the condominium market, limited inventory woes continued through Q3, with the months’ supply of inventory tightening up. Even though inventory was down 40 percent, sales were up 38 percent, year over year – a tremendous increase. /RRNLQJ )RUZDUG Our real estate professionals are hearing of a sharp increase in business for stagers, who typically prepare properties for sale, and for professionals who do pre-­sale inspections, so expect to see a wider selection of homes for sale over the next six months.

Single Family Homes – Median Sales Price

Condominiums – Median Sales Price

Quarterly Real Estate Report Q3 2012

SAN FRANCISCO A Member Of Real Living

Single Family Homes – Months’ Supply of Inventory

Condominiums – Months’ Supply of Inventory

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Quarterly Real Estate Report Q3 2012

SAN FRANCISCO A Member Of Real Living

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Single Family Homes – Percentage of Properties Under Contract

Condominiums – Percentage of Properties Under Contract

Quarterly Real Estate Report Q3 2012

SAN FRANCISCO A Member Of Real Living

Single Family Homes – Sales Price as a Percentage of Original Price

Condominiums – Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

SAN FRANCISCO A Member Of Real Living

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'LVWULFW %HUQDO +HLJKWV &HQWUDO :DWHUIURQW 'RJSDWFK ,QQHU 0LVVLRQ 0LVVLRQ %D\ 3RWUHUR +LOO 6RXWK %HDFK South of Market, Yerba Buena.

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Quarterly Real Estate Report Q3 2012

SAN FRANCISCO A Member Of Real Living

Quarterly Real Estate Report Q3 2012

SAN FRANCISCO A Member Of Real Living

Quarterly Real Estate Report Q3 2012

SONOMA COUNTY

5LFN /DZV Senior Vice President, Sonoma County 707.547.3800 rick.laws@pacunion.com 0HQGRFLQR $YHQXH 6XLWH _ 6DQWD 5RVD &$

Quarterly Real Estate Report Q3 2012

SONOMA COUNTY A Member Of Real Living

Sonoma County: Q3 Results The housing recovery in Sonoma County continued at a steady pace, with a marked increase in sales and VWHDG\ XSWLFN LQ KRPH SULFHV 'HPDQG ZDV SDUWLFXODUO\ KLJK DW WKH VWDUW RI WKH TXDUWHU IRU KRPHV SULFHG EHORZ $500,000, and we saw increasing demand for all homes priced below $800,000.

The supply of homes remained exceptionally tight. Foreclosures, short sales, and other distressed properties helped keep the housing inventory high in past years, but there were fewer bank-­owned properties coming to market in the third quarter. Meanwhile, potential sellers were reluctant to put their homes on the market – some because the drop in values left them owing more on their mortgage than their home is worth, and others because they don’t have enough equity to move up to a higher-­priced home. /RRNLQJ )RUZDUG With demand pushing prices higher, we expect to see more sellers motivated to post for-­sale signs in coming months. Low interest rates, an improving economy, and pent-­up demand are expected to keep the market busy well into 2013.

'HÀQLQJ 6RQRPD &RXQW\ Our real estate markets include the cities of Cotati, Healdsburg, Penngrove, Petaluma, Rohnert Park, Santa Rosa, Sebastopol, and Windsor. Sales data in the charts below includes all single-­family homes, farms, and ranches in Sonoma County.

Median Sales Price

Months’ Supply of Inventory

Quarterly Real Estate Report Q3 2012

SONOMA COUNTY A Member Of Real Living

$YHUDJH 'D\V RQ WKH 0DUNHW

Percentage of Properties Under Contract

Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

SONOMA COUNTY A Member Of Real Living

A Closer Look at Sonoma County

Quarterly Real Estate Report Q3 2012

SONOMA VALLEY

-LOO 6LOYDV Branch Executive, Sonoma Valley

jill.silvas@pacunion.com %URDGZD\ 6WUHHW _ 6RQRPD &$

Quarterly Real Estate Report Q3 2012

SONOMA VALLEY A Member Of Real Living

Sonoma Valley: Q3 Results The Sonoma Valley communities of Sonoma, Glen Ellen, and Kenwood continued to face a limited supply of KRPHV IRU VDOH 9LUWXDOO\ DOO KRPHV WKDW ZHUH SULFHG ´ULJKW¾ LQ WKH H\HV RI EX\HUV UHà HFWLQJ D WUXH YDOXH LQ WHUPV of location and condition, generated multiple offers.

Buyers looking for second homes accounted for an increasing share of the market. First-­time buyers faced extra challenges because often they were in competition with investors able to pay more and submit all-­cash bids.

Home prices rose in the quarter, albeit moderately, although they remain below levels reached in 2006. On a positive note, 50 percent more properties priced above $1.5 million sold in the third quarter than in the second quarter. /RRNLQJ )RUZDUG The limited housing supply may continue through the fourth quarter and into 2013, encouraging multiple offers. First-­time buyers may still face competition from investors, particularly in the under-­$500,000 PDUNHW DQG PD\ ÀQG WKHPVHOYHV RQ WKH ORVLQJ VLGH RI ELGGLQJ ZDUV PRUH WKDQ RQFH 'HÀQLQJ 6RQRPD 9DOOH\ Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the charts below refer to all residential properties – including single-­family homes, condominiums, and farms and ranches – in these communities.

Median Sales Price

Months’ Supply of Inventory

Quarterly Real Estate Report Q3 2012

SONOMA VALLEY A Member Of Real Living

$YHUDJH 'D\V RQ WKH 0DUNHW

Percentage of Properties Under Contract

Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

SONOMA VALLEY A Member Of Real Living

Quarterly Real Estate Report Q3 2012

TAHOE/TRUCKEE

6DOO\ *DUGQHU Branch Executive, Tahoe/Truckee 7DKRH &LW\ _ 7UXFNHH sally.gardner@pacunion.com

Quarterly Real Estate Report Q3 2012

TAHOE/TRUCKEE Tahoe/Truckee: Q3 Results Third-­quarter real estate activity in the Tahoe/Truckee region was dominated by a limited supply of inventory and resulting bidding wars among buyers. All single-­family homes and condominiums priced in line with their appraised values got multiple offers, with homes priced from $300,000 to $600,000 especially popular.

Many properties in the region are second homes for Bay Area residents, and activity spikes whenever prospective buyers are able to spend a few extra days in the area. Accordingly, the week before and after the Fourth of July were extremely busy.

September was also busy after students returned to school and buyers sought to close deals so they could VSHQG WKH ZLQWHU KROLGD\V VNLLQJ 6DOHV ZHUH VWURQJ LQ 7UXFNHH ZLWK VLJQLĂ€FDQW ODNHIURQW VDOHV DV ZHOO /RRNLQJ )RUZDUG Unlike traditional residential markets, winter in the mountains can be an active sales time. If skiing conditions are good, the winter months have historically seen strong sales, particularly in larger homes suited for families or groups.

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Single Family Homes – Median Sales Price

Condominiums – Median Sales Price

Quarterly Real Estate Report Q3 2012

TAHOE/TRUCKEE Single Family Homes – Months’ Supply of Inventory

Condominiums – Months’ Supply of Inventory

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Quarterly Real Estate Report Q3 2012

TAHOE/TRUCKEE &RQGRPLQLXPV ² $YHUDJH 'D\V RQ WKH 0DUNHW

Single Family Homes – Percentage of Properties Under Contract

Condominiums – Percentage of Properties Under Contract

Quarterly Real Estate Report Q3 2012

TAHOE/TRUCKEE Single Family Homes – Sales Price as a Percentage of Original Price

Condominiums – Sales Price as a Percentage of Original Price

Quarterly Real Estate Report Q3 2012

TAHOE/TRUCKEE A Closer Look at Tahoe/Truckee

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