Well, this is new: Price cuts on Bay Area homes are surging
You're listening to the spoken edition of the San Francisco Chronicle. Well, this is new price cuts on bay area homes are surging by Kathleen Pender. They're not exactly doorbuster deals, but bay area home sellers are cutting their asking prices at the highest rating years October is typically a big month for price reductions as sellers try to close deals before the market slows way down between thanksgiving and early February. But the number and percentage of homes with a price cut surge last month to their highest level for the month of October since at least twenty twelve in the bay area and twenty eleven statewide the jump in price cuts, which hit every bay area county is another side that after years of stratospheric increases prices are leveling off and buyers gaining a little more power in what had been a strong sellers market price cuts are a leading indicator because they're reflected immediately said Patrick Carlisle, the chief Mark. Analyst with a compass real estate brokerage although bay area home prices are still going up on a yearly basis home sales median prices and days on the market are considered lagging indicators because it can take a month or longer for deals to close in San Francisco. The number of homes with a price cut in October nearly doubled to two hundred thirty eight from one hundred twenty four last October, according to data from real tour dot com that's nothing compared to Santa Clara county where the number of price cuts rose to eight hundred eighteen last month more than six times last year's number Santa Clara county had been one of the nation's hottest markets this year and the bay area's price appreciation leader until September. Clearly, there's a market shift said rich Bennett, a zephyr agent in San Francisco, he just cut the price on an eighteen hundred thirty two square foot Victorian condo in popular Hayes valley by one hundred thousand dollars. He listed the. Page street home in mid October at just under one point seven million, which was realistic considering it has three bedrooms parking and a laundry porch and is quote, absolutely adorable. He said, but the buyers didn't come in October. We saw more inventory come on the market the economics of the bay area haven't really changed and it said, but if you don't have people beating down your door after two to three weeks, it's time to consider a price change. He has another listing right around the corner, a one bedroom single family home on lily street that he listed two weeks ago at one point one two five million dollars within a week. It had a preemptive author and the sale is now pending single family homes are still a hot commodity in San Francisco. Another condo just down page street from his listing. Also had a one hundred thousand dollar price cut it sold in February for about one point four million and went on the market again at one point. Three nine five million in early October. Now, it's listed at one point two nine five million below its last sales price. That's a good indication of how the market has shifted Bennett said even Palo Alto famous for its multi-million dollar tear downs is seeing price. Reductions Remax realtor. Karen, FANG said she listed a house near Stanford University on a one and a half acre lot with a ton of deferred maintenance for four point one million dollars in mid August since then the average rate on a thirty year fixed rate mortgage has risen from three point five percent who almost four percent the cost of building materials, which the home would need has also gone up after reducing the price to three point five million the Palo Alto property closed October thirtieth for three point eighteen million. Nearly a million dollars less than the original price in San Mateo. Dennis Pantano of Pantano properties. Just sold a house on Texas. Way for one point six million dollars after four price cuts. He listed the nineteen hundred ninety square foot house for about one point seventy five million in mid June. But within ten days the number of listings in San Mateo around that price jumped to nine from two had he listed it in may, it would have had lots of offers. He said it's an illustration that not every house sales at full price or over buyers. Meanwhile, sometimes have to be convinced that a price reduction doesn't mean there's something wrong with the house said Paul kitchen, a compass agent in San Francisco, there are a couple of places that came on the market that were seemingly reasonably priced. He said, but buyers expect to pay ten to fifteen percent over asking we say, let's put in an offer at asking we have to convince them. There's nothing wrong with the property kitchen has a client who offered the asking price on a home that had a price reduction, and it was accepted even though there were contingencies. The buyer was somewhat surprised that they had time to do the diligence. We had encouraged he said oddly, Carlisle said he's seeing price increases on homes that haven't sold until recently egregious underpricing was very common strategy in San Francisco and other parts of the bay area. He said agents would price ten to twenty percent below with the seller would accept hoping to get five ten or twenty offers and drive the price way beyond reason. Now when a home doesn't sell within a few weeks, the agent may increase the price. So as not to put sellers in the uncomfortable, but not illegal position of having to reject a full price offer that was lower than what they would accept.