What Is The Correct Pricing Strategy in Today’s Market?

In the Tri-Valley, which includes Dublin, Danville, Pleasanton and San Ramon, I have started to notice more price reductions, especially homes that are over $1.4 million.  Does this mean there is a market slowdown, or is it just because of incorrect pricing strategy?  It seems as though many homes have been listed anticipating that prices will continue going up as it has in the past few years.  I think this is starting to slow down.  For example, Dublin Ranch has been super hot in the past few years but there is currently a home on the golf course that was originally listed for $1,5888,888 and recently cut its price to $1,399,999.  This is nearly a $200,000 drop!  Two years ago, this would not have happened.  I am starting to see more and more examples of this.

Make no mistake, the market is still very good and this is not to say all homes in this price range need price cuts, but that pricing strategy should be in line with what buyers are feeling.  If a home is priced in anticipation of a 14% increase, then it might be priced too high and will need to be adjusted down.  When a home is priced too high to start, it will get less attention than if it is priced at market value or slightly less.  If a homeowner must reduce the price on a home, they have much less leverage in negotiations moving forward.  On the other hand, if a home is priced at market value or slightly below, it will get much more attention and potentially more offers. I recently listed a home for $1,299,900 and it ended up getting eight offers and will close much higher due to multiple offers.  The end result was that the sellers got the number they were looking for.  I am not saying this strategy is the correct one for every situation but you must be aware of the market conditions in your specific neighborhood to come up with an effective pricing strategy.

 

Dublin Real Estate Market Update

We are approaching the Spring selling season here in Dublin, CA and the real estate market looks like it is heating up again.  There are few homes on the market and they are going pending fast. As of this writing, there are 40 single family homes on the market with a median time on market of just 15 days and median list price of $1,027,000.

Looking at pending sales, there are currently 34 single family homes pending sale with a median time on market of just 12 days.  This means the market looks to be hot again this spring.  I think many people are looking to get in before the Fed increases rates.  I recently submitted an offer for a client in the $900k range and they had multiple offers and went pending for significantly over asking.

The Dublin real estate market never ceases to amaze me,  you think it might slow down but it hasn’t so far.

Dublin School Board Approves Plan for Second High School!

This is big news for residents of East Dublin, who have long been asking for a high school on the East side of town where most of the new developments are.  The school overcrowding problem was too great to ignore.  Neighboring cities of Pleasanton and San Ramon are of similar size and both have two high schools each. This will make Dublin, CA an even more desirable city to live in, and I would think it would help real estate values also!  Here is a copy of the press release:

FOR IMMEDIATE RELEASE
February 23, 2016 
BOARD APPROVES RECOMMENDATION TO PLAN SECOND HIGH SCHOOL IN DUBLIN
The Dublin Unified Board of Trustees unanimously approved a recommendation at Tuesday night’s regular meeting to initiate planning for a second high school to be constructed on the east side of the Dublin community.
The recommendation was presented by Superintendent Stephen Hanke following six months of work by the Facilities Master Plan Committee, which reached consensus on the plan at their February 16 meeting, setting the stage for Tuesday’s Board approval. The approved plan will be contingent upon land acquisition and funding availability.
The approved recommendation includes a master plan for a new second high school site for up to 2,500 students. The planned high school will be a non-satellite, self-contained program. Construction should be done in phases with the first phase targeting 1,000 student capacity with a completion date of the first phase no earlier than fall of 2021.
“The numbers are clear, Dublin needs a second high school,” said Superintendent Stephen Hanke. “We are excited about putting plans in place to make it happen in phases. We thank the FMPC for the hard work put into this plan and to our community for the continued support of our schools.”
Expansion of the high school would occur in a second phase of approximately 500 students as capacity warrants and funding is available. Further expansion would be in increments of 500 students as capacity warrants and funding is available until 2,500 capacity is reached. Targeted completion dates for additional phases are still to be determined.
The recommendation does not include identification of land or funding sources. The district will be working to secure land as well as funding through multiple sources (GO Bond Measures, Mello Roos, Developer Mitigation Agreements/Fees, state funding, City and local partnerships) to begin the construction process. The Board was also presented with potential contingency options should necessary funding not materialize.
The district initiated the Facilities Master Plan process in August 2015. A Facilities Master Plan Committee (FMPC) was formed with the charge to examine and discuss the facilities needs of Dublin Unified based on the mission, vision and goals of the district. Information on high school growth was provided to the FMPC by the district and Master Plan consultant LPA. On February 16, the committee reached consensus on the recommendation that was brought to the Board of Trustees on Tuesday night.
“The Board feels strongly that a second high school is the right direction for the district in order to continue to offer the best educational opportunities for our students,” said Board President Dan Cunningham. “We appreciate the work of the Facilities Master Plan Committee and the input we have received from the community. Both have been invaluable to this important process.”

Home Warranties- Are They Worth It?

During the escrow process, I always recommend to my clients that they get ahome warranty, even if the seller refuses to pay for it.  I have found they more than pay for themselves.  In a recent case, one of my clients discovered their double oven malfunctioned shortly after close of escrow.  We called the warranty company and they sent one of their certified repairmen, but they could not fix it due to the fact the needed part was no longer available.  We were stressed over the situation, but the company quickly informed us they would replace the entire oven, which costs over $2,000!  This was a big surprise to me they would actually replace the oven since the required part was no longer being manufactured.  In several other cases, many issues with plumbing leaks, HVAC and electrical problems have been taken care of by home warranties for my clients.  Home warranties usually start at around $385 per year and then go up from there depending on what options you add, such as refrigerator, washer & dryer, etc.  They also charge a $65 service call fee any time you need something done.  However, considering today’s costs for labor and parts, they usually pay for themselves over the course of the year, especially if the home is over 10 years old. So don’t forget to order that home warranty during escrow, you’ll be glad you did!

How’s The Market?

We are well into the first quarter of 2015 and in many ways, it looks similar to last spring: low inventory, low interest rates and strong demand.  In January 2015, only 17 single family units were sold and there was only a month of inventory available.  If you’ve been to open houses, you have seen they are well attended and homes are still selling quickly, usually in under 30 days.  What does this mean for this Spring?  The tell-tale signs are that the market will again be hot.  I am already seeing multiple offers and it’s not even Spring yet. I personally don’t think we’re going to see the crazy overbidding that’s been happening the last few years but it looks like it will be a brisk market again.

Market Stats- Dublin, CA for January 2014

In January 2014 the to date average days on market is 21. However, average days on market has been going up. In Dec. 2013 it was 28 days and in Jan. 2014 it went up to 39 days. This doesn’t say a whole lot because just 1 or 2 homes that have been on the market for a long time (like the ones well over $1million) will skew the average days on market. Homes in the “sweet spot” of under $850k sell very quickly. Median sales price was $685,000 in Dublin for detached single family homes in January. This is down from December 2013 when median price sold was $848,000. To me, average price is more telling because it gives an overall view of the market, whereas median price just tells you the price that was in the middle. It just depends on what kind of homes happened to sell that month. That being said, average sales price in Dublin for single family homes was $787,931 in January.

Interestingly, average price per/sq. ft went up to $369 from $360 in Dec. 2013. There is only about 1 month of inventory in Dublin right now, which is quite low. Homes are selling for an average of 99.12% of list price now. This will be an interesting stat to keep track of. Last July homes were selling for an average of 105% of list price. As of this writing, there are 39 single family homes active on the market with an average price of $1,098,000.

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Dublin, CA Housing Stats for October 2013

Although we are well into Fall and headed toward Winter, buyer demand in Dublin, CA remains strong.  Currently, there is only one month of inventory available.  As you can see from the graph below, homes sell for 100% of list price in Dublin.  Days on the market for detached single family homes is about 19 year to date.  As of the end of October 2013, there were 35 active homes on the market, 49 pending and 38 sold, with average selling price of $798,000 for detached homes.  However, the market is slower than it was this past summer.  Inventory is down to 35 active homes compared to 55 in August.  Average days on market is up to 26 compared to 12 days in August. (click on images to make larger)

Graph DOM                       Monthly Stats

As of today, average 30 year fixed loans are 4.38%, which is higher than this year’s low but still good.  It will be interesting to see how the market responds in 2014.

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