For how long will the upswing in the real estate market continue?
I get this question all the time, as do most of my colleagues. The correct answer, unfortunately, isn’t so easy to provide. We are seeing unprecedented record highs in every respect: price per foot, average/median sales prices, and record lows for number of homes for sale and days on market.
Redwood City is among the top players in setting these records. Almost every time a home closes we see an old record shattered and a new one set. Q2 2015 demonstrates the increased frenzy to buy into Redwood City, as the average sales price from the prior year jumped by over 25%. The average home price in Redwood City during this period was $1,472,121 – up from $1,175,396 from the same time last year.
Not only is the average sales price at all-time highs, but so are the number of offers and percentage over asking. In Q2 2015, buyers offered, on average, 12% over asking compared to 8% in 2014.
A great example is my listing at 950 Pleasant Hill in Redwood City that sold in Q2 2015 and set a new record as the most expensive home ever sold in that neighborhood. This turnkey home appealed to some of the most discriminating buyers in that neighborhood and generated a lofty sales price that still holds the record. I listed that home right at market price and it still received a bid 13% over asking.
Part of the cause for the extreme prices is the record low inventory levels. In Q2 this year we had on average 88 homes for sale per month in all of Redwood City. Last year for the same time it was 116, a drop of almost 25% in inventory.
Given the factors contributing to the increasing prices, we don’t foresee a slowdown in the immediate future, but do know that there will be a correction at some point. In the meantime, sellers shouldn’t wait for the correction but should instead take advantage of the high demand and low inventory. And buyers can’t try to predict when and how the market will change. If a long term home is the goal for their purchase, then we still believe that now is a perfect time to buy a home.