I hope you and your family had a wonderful Christmas and a
Happy New Year! It has been a very
dynamic year for real estate and here is my 2014 Year End Real Estate Review.
Alan Wang Realty
Group Expansion
In 2014, Alan moved into the top 1% of Keller William Agents
in Northern California and Hawaii. In
2015, Alan will join the Agent Leadership Council at Keller Williams Cupertino
and chair the Education Committee to pursue his passion in developing a new
generation of Realtors that must innovate in order to serve an ever-evolving
customer base. He will take on a bigger
role in education both within the area as well as nationally.
The demand for my services has grown immensely. In order to consistently provide the highest
level of service and results to service your real estate needs, I am adding more
talent to support you. I am pleased to
welcome Victoria Bi who has joined the team. Victoria is a finance veteran and shares my
vision in providing the highest level of service and drive towards results for
our customers. I would also like to
welcome Joe Chames who leads Transaction Coordination to ensure that the
process is smooth and seamless throughout.
There is a technology department in progress and there will be more to
report on that front later in the year.
We are also searching for an Administrator. If you have any candidates do pass them our
way!
None of this would have been possible without you keeping me
top of mind whenever real estate needs arise for you, your family, friends and
colleagues.
Without further adieu here is the 2014 Year End Real Estate
Review!
2014 Snapshots by
Quarter
We kicked off 2014 coming off of 50% (25% year-over-year) overall
price gains in 2012 and 2013. 2014
started off the same as the two previous years, a Sellers market with multiple
offers, where Buyers were competing for a small number of homes regardless of
location through Q1 and Q2 of this year.
Q3 yielded some interesting dynamics with overall price
increases slowing but varying depending on which of the two sub-markets the homes
were in. The first market we will call
“Prime Locations” defined as areas with strong schools and/or close proximity
to companies for ease of commute. The
second market we will call “Outskirt Locations” which may or may not have some
level of schools but are typically further from companies in the Southbay or the
San Francisco/Peninsula locations.
Prime Locations
“Prime Locations” continued to see competitive multiple
offers and low inventory, although price increases in these areas have been
less aggressive. There has been some
opportunity on higher end homes with prices over $2 million that have sat a few
weeks longer than usual and not selling with multiple offers as frequently. This is a high price point for most dual
income families, which is likely reducing the amount of Buyers who can afford these
homes. However, due to low inventory, high
demand, strong schools and convenience to work, these areas will continue to be
strong, but price increases may not be as aggressive as they have been over the
last 3 years.
Outskirt Locations
“Outskirt Locations” in the summer months of Q3 and into Q4 there
was a slowdown in these locations. The
seasonal summer increase in inventory caused homes to sit from 17 to even over 30
days. Instead of multiple offers, some
owners had to settle for price reductions or take a lower price as no offers were
coming in. In September and October the
market hit a 45 day lull, where Buyers were priced out, fatigued or were simply
on vacation and no where to be found. This was a calm and quiet that was
concerning.
Wildcards: Interest
Rates and the Technology Industry
The holidays are typically a time when Buyers take off for
the holidays and activity is generally slow.
Inventory levels typically shrink in this time period, which was the
case this year as well. Oddly Buyers
awoke from their slumber and were out and about purchasing homes. The suspicion is that the recent news from
the Federal Reserve about interest rates rising are causing people to head out
and try to purchase again. If history is
any indication, low interest rates and initial rate increases are usually
followed by a rush of Buyers who wish to capitalize on the lower rates. We close out the year at about an average
price increase of 11%, down from 25% the year before.
The other wildcard is the health of the technology
industry. There are ongoing debates
about whether we are in a technology bubble or not. One thing is for sure; the health of the
technology industry has a direct correlation with how the companies and more
importantly their stocks are performing.
The majority of customers have a large component of their downpayment
tied to stock options and employee stock purchase plans. As far as next year is concerned there
continues to be strong hiring from the top companies in the area as well as a
large number of technology startups sprouting in all locations.
2015 Outlook
The Federal Reserve has indicated that they will increase
interests rates but likely slowly and steadily.
Quantitative easing has been tapered back. The US economy is humming along with lower
unemployment rates, 5% growth, stock market at all time highs and falling gas
prices. My opinion is that due to the
artificially low rates and quantitative easing, this caused the housing market
to rebound much faster than it would have in a normal market. Likely this was by design, but that means
that we have recovered ahead of the economy and why prices have gone up so quickly. While I do not have a crystal ball, I expect
the early quarters to have continued low inventory and many Buyers making a
dash before rates go up. “Prime Locations” will hold steady and still
field multiple offers. “Outskirt
Locations” will likely have smaller price gains and may have a longer time on
the market. Overall we will still see
price increases but likely at a slower rate than the last 3 years in 2015. It will be interesting to see how much longer
this remains a Sellers market and when prices will truly start to level.
As Single Family Home supplies are low and prices high, Buyers
who were priced out are increasingly turning towards Townhomes. $1 million buys you a townhome in “Prime
Locations.” Multiple new homebuilders
have inventory coming online in 2015.
However, most likely this won’t be enough to satisfy the demand in the
areas where hiring is outpacing the supply of homes coming on the market.
Sellers and Buyers
Sellers should consider selling as soon as possible as price
increases are slowing and inventory is low at the moment. Buyers the slower increases in prices is
overall good news as it makes it easier to compete for homes. Rates will be going up so locking in a lower
rate now would be a great idea, but do keep in mind that we are likely
approaching the peak for this upturn. Do
reach out to us for your personalized strategy and plan for your unique
scenarios.
In Closing
2015 will be another exciting year for real estate. I remain humbled by the trust and support you
have all shown over the last 11 and a half years. I look forward to continuing being your real
estate advocate. I wish you a wonderful
2015 in all of your endeavors!
