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Stephanie Chuang reports on a very hot real estate market here in the Bay Area that has multiple offers above the asking price becoming the new norm.
If you’re looking for a home in the Bay Area, you will probably need two things on your side: luck, and a lot of cash.
Those who aren’t willing to compete with up to dozens of other offers on a home are now trying to buy it – hours after it’s listed on the market.
The new trend has been dubbed by realty experts as “flash sales” – any sale that happens within 24 hours.
For example, a home in East Palo Alto on Gates Street was put on the market on March 19. It got nine offers the same day and sold for above asking price within 24 hours.
Glenn Kelman, CEO of online real estate brokerage Redfin which is set up in 19 U.S. markets, said that trend is growing in the Bay Area and calls it “Ground Zero” for an incredibly hot housing market, one that experienced an incredible boom at the start of 2013 in January.
“In the Bay Area in the past six months, we’ve seen 1,000 homes get under contract in less than 24 hours. It used to be a fast sale was three days – now, it’s three hours,” Kelman said.
Ken DeLeon, a realtor, said his latest listing is a 1200 square foot home in Palo Alto that he just put on the market Thursday. “The amazing part is just within 24 hours, we already had a client with a Chinese all-cash buyer offer us more than 300,000 above and we said, ‘No thank you, please wait,’” DeLeon said.
He and other realtors said they’re still catering to those wealthy foreign buyers, mostly from China and Russia; however, with historic-low mortgage interest rates and an inventory that’s also hitting record lows, they said the competitive cash offers are no longer limited to the high-end homes.
“That’s the main trend. It’s spreading out to other neighborhoods that once weren’t so hot,” added Kelman.
The Silicon Valley Association of Realtors compiled data from MLS listings for the South Bay. According to its numbers, for single family homes between February 2012 and February 2013, inventory was slashed by 52 percent in Santa Clara Country and 44 percent in San Mateo County.
Both experienced more than 30 percent in increase of median sale price. Redfin’s numbers show just how competitive it’s gotten in the last couple of months.
A San Francisco home in the Sunset District had 29 offers, a townhouse in Oakland got 15, and one on Dauphine Avenue in Fremont was hit with a stunning 65 offers. That house eventually sold for at least $100,000 more than the half-a-million asking price.
“There are sometimes traffic jams outside open houses,” said Kelman. “Folks get worried they can’t wait for the offer deadline on Sundays, so they make a preemptive strike to try and buy it on the spot.”
He said Redfin and other companies offer “mobile alerts” that let customers know almost immediately after there’s a new listing on the market. He believes that has also contributed to the high competition and quick sales.
Both he and DeLeon agreed on one more thing: the only relief, if it comes, will be when people decide to start selling, and when you’re talking about the Bay Area, there is no way to predict when that will happen, or if prices will go up or down.
“I hate it when people ask me about Bay Area real estate because it defies all the laws of physics,” Kelman lamented. “When you look at Chicago real estate, Atlanta real estate, you know what goes up must come down. It’s going to act like a normal economic market, but in the Bay Area, it seems there’s all sorts of money from the tech economy. There’s all sorts of people who want to move here for the sun. I can’t way when it will ever let up.”