Buyers find more choices of homes

Bay Area market showing early signs of cooling

If it seems like more “For Sale” signs are popping up in your neighborhood, you’re not imagining things.

In most parts of the Bay Area, more people put their homes on the market in August than they did last August, and this month is on pace to be the biggest September for new listings in many years. Combine that with a small slowdown in the pace of sales, and buyers are finding a little more to choose from in a market that has been starved for inventory.

“The market has shifted. The foot has come off the accelerator but we haven’t seen the foot slam on the brakes,” said Jordan Levine, an economist with the California Association of Realtors.

The number of existing, single-family Bay Area homes for sale on Sept. 8 was 34 percent higher than the same date last year, the association said last week in its report for August. The median time on market before an offer was accepted was 18 days in August compared with 15 days in July and 15 days in August of last year. The median price for an existing, single-family home was $935,000, down 4.6 percent from July but up 10 percent from last year, the report said.

Statewide, active listings were up 17.2 percent from August 2017, the fifth and largest of five consecutive monthly increases. Before that, active listings had declined for 33 straight months.

Levine attributed the shift to a rise in the number of people moving to other states, afford-

ability falling to a 10-year low, and — among investors — fear of Proposition 10 passing in November. Prop. 10 would overturn the state’s Costa-Hawkins Rental Housing Act and let cities — or their residents by the initiative process — impose stricter forms of rent control, including on singlefamily homes and condos. They could also limit price increases on units when tenants move out.

“I’ve had an influx of inquiries” from people who own second homes, some of which are rented out, said Dona Crowder, a Coldwell Banker agent in San Francisco. She has brought them up to date on Prop. 10, she said, and “I think you will see rental houses being sold if that passes.”

In San Francisco, new listings in August were below last year, but September is on track to “blow by recent totals,” said Patrick Carlisle, chief market analyst with Compass, a real estate brokerage.

In the first 20 days of September, 738 homes, condos and other residential properties were listed in San Francisco, he said. If that pace continues, new listings could top 1,000 for the month, compared with 749 last September and 785 the one before that.

Carlisle noted that only 21 of this month’s new listings specified that the homes or condos were under lease and subject to a tenant’s rights for possession, “so it doesn’t look like Prop. 10 is a major motivator to sell.”

In Alameda and Contra Costa counties, new listings this month are on pace to be the highest since 2011, said Michael McFann, chief technology officer for the Bay East Association of Realtors.

In San Mateo and Santa Clara counties, September new listings totaled 419 and 905, respectively, through Thursday, according to MLSListings, the multiple listing service for those counties and three others.

At that pace, they could reach 628 and 1,357 for the full month, surpassing last year’s totals of 527 and 983 and becoming the biggest September for new listings since 2010.

“We believe we are on the edge of a market trend. We do hear, anecdotally from some brokers and agents ... that there is more inventory and buyers are slower to action,” Jim Harrison, CEO of MLSListings, said in an email. “It will take some time before we know if this is a longerterm trend.”

Lisa Cantrell put her newly remodeled townhome in Fremont on the market this month because she couldn’t take the commute to her job as a dispatcher for a transportation company in East San Jose. In the past six months, it has grown from 30 minutes to between 45 and 60 minutes, and that’s leaving at 6:15 am. Coming home, it’s worse.

She was hoping to list it at $749,000, which is what a unit in worse shape in her complex had sold for two months earlier. But another unit had just come on the market at $649,000, so she listed hers at $699,000 on Sept. 5. Over the next two weekends, 75 groups toured the house, but she got only one offer, for $735,000. “I wasn’t going to be greedy, I just took it,” she said.

Cantrell purchased a brand-new home in Sparks, Nev., where her employer has an office. Her new house is more than twice the size of her old one and the lot is more than 10 times bigger. It cost $426,000, “with all the upgrades,” she said. She gets to keep her old salary, plus there’s no state income tax in Nevada.

Santa Clara County has been the Bay Area’s price appreciation leader since last fall. In July, the median price paid for a new or existing home or condo in the county was $1.1 million, up 17 percent from July 2017, according to data service CoreLogic. That increase led more people to sell, but “the pool of buyers is shrinking because it’s so expensive,” said Quincy Virgilio, a Coldwell Banker agent in San Jose.

Priced out of Silicon Valley, first-time buyers Emily and Jason Lopez are closing next week on a house in Gilroy with three bedrooms plus a bonus room. It was the first home they looked at, and snagged it at the asking price, $740,000. “It had everything we were looking for and was move-in ready,” said Emily Lopez, a high school English teacher in east San Jose. “We put in some loan and appraisal and inspection contingencies,” she said. “Our agent said just a few months ago you couldn’t do that.”

Even so, “I feel like the inventory is still not good. There wasn’t a lot to choose from in our price range.” Most homes “are either really expensive or need lots of work,” she said.

Tom Watson, an agent with Climb in Oakland who works in San Francisco and throughout the East Bay, said he typically has “about eight buyers in my pipeline: getting approved, looking, writing offers. In the last three months I’ve had one, maybe two buyers.” On the flip side, he normally has one or two listings; now he has 10 clients who are selling or getting ready to list.

Most of his listing appointments “are people saying, ‘I’m at or near retirement, I can’t believe my house is worth what it’s worth. I’m cashing out and getting out.’ I have people who moved to Oregon, Redding. Most are people whose house is a significant portion of their net worth. They are moving to markets where they can buy houses for $200,000 or $300,000,” Watson said.

In San Francisco, September is always a big listing month as sellers try to squeeze in between the fog days of August and the winter holidays.

“Our surge this month seems ... to be on par with the last couple of years, but what I’m seeing is potentially not as many buyers ready to tackle that kind of inventory,” said Redfin agent Miriam Westberg. But supply and demand vary greatly by house and neighborhood. “It’s a bit unpredictable. It’s not citywide. It’s almost property specific,” she said.

Some homes are sitting longer than they would have at the beginning of the year, while others are still getting 10 offers. Neighborhoods such as Noe Valley, Eureka Valley and Dolores Heights are as popular as ever, and anything priced between $1 million and $2 million “remains highly competitive,” Westberg said.

The new federal tax laws that took effect this year and rising mortgage rates could finally be having an impact on buyers. On their federal returns, taxpayers cannot deduct more than $10,000 in income, property and other state and local taxes combined, and they can deduct interest only on up to $750,000 in mortgage debt, down from $1 million on mortgages taken out before Dec. 14, 2017.

The average rate on a 30-year mortgage has risen to 4.65 percent from 4 percent since the start of the year, according to Freddie Mac.

The big question is whether inventory will continue to increase, and whether it will draw discouraged buyers back into the market. “Buyer response data won’t really start to be available for another three weeks or so,” Carlisle said.