Jan Gray woke up Monday morning to an offer on a home she listed three days earlier. She was shocked.
Coastside real estate agents like Gray are encountering competition like they’ve never seen before for the expensive, luxury properties that used to see much less activity. That offers some explanation for the 10 percent year-over-year rise in home sale prices in Half Moon Bay from a year ago. This is according to an analysis of data from Zillow Group Inc., the online real estate company whose website is widely used by Coastside agents.
This upward trend, despite the pandemic, holds true for the entire Coastside, where prices are up 9 percent overall.
“The buying public are just flies on honey,” said Gray, a Realtor doing business on the coast for more than 40 years.
In addition to shorter wait times, real estate agents report buyers making multiple offers and raising their offer price. These behaviors are typical for “starter” homes, those lower priced and affordable for first-time, young buyers.
But those types of homes are rare, said Patrick Ryan, a Realtor at Compass, a real estate company with offices across the U.S., but who specializes in Coastside properties.
“It’s very hard to find anything under $1 million,” Ryan said, remembering a time just a few years earlier when he would regularly list $500,000 condominiums.
According to Ryan, the agent’s rule of thumb used to be, “The more expensive the home, the fewer the buyers you have to do it.”
“We’re seeing a market where all price ranges are seeing activity. That’s what’s driving up the average price,” he said.
About a month ago, Ryan listed a two-bedroom, one-bathroom house in the west side of Moss Beach for $775,000. The home got 10 offers. After a bidding war, it eventually sold for $860,000, more than 10 percent higher than its original listing.
A new order of operations has surfaced for Ryan: Homes under $1 million see multiple offers and over the asking price. Homes under $2 million see multiple offers or sell quickly at or slightly above the original list price. Homes more than $2 million — many of them — will get multiple offers.
He has adjusted his rule of thumb accordingly: “If you can live in it, it’s going to get multiple offers.”
Ryan’s Moss Beach sale was a month ago, and he hasn’t listed anything like it since.
Much of the ensuing activity has been driven by buyers with high incomes.
According to Cheryl Young, senior economist at Zillow, February was poised to be a strong home buying season. Had the market followed its normal course, prices would have risen steadily at the start of the summer. And by midsummer, as more sellers feel confident listing their properties, prices would have dropped.
“Like a pressure valve releasing,” Young said.
Sheran Honneyman, Realtor at Keller Williams Peninsula Estates, saw the market halt in March as the initial impact of the pandemic set in. At the time, many of the buyers she represented spoke warily of the market: “The market is going to crash.” So they waited for a price drop in hopes of a benefit. “They realized they were wrong,” Honneyman said of the buyers who held out.
Instead, others quick to move scooped up what few houses were available.
“People realized this (pandemic) is not going away, and the home became more important,” Honneyman said. “They want more space. They want more yard. They want more house.”
Many of these buyers wanting more and bigger homes are Coastside residents ready to upgrade, with a few coming from elsewhere seeking a scenic environment or a second home. According to the real estate agents interviewed for this story, these buyers tend to skew older.
While Ryan is encouraged that some of his clients are young, a majority are locals. He worries about the lack of diversity on the coast.
“I’m fearful,” he said. “We need new, young homeowners coming into our community.”
Under COVID-19, strict protocols have restricted the number of homes that agents are able to list. No longer able to attend in-person previews, which used to draw anywhere from 30 to 50 buyers’ agents into a home, real estate agents are slower to find and secure a home for a buyer.
Though it is difficult to measure how many fewer listings resulted from the new restrictions, the sales agents say the Coastside’s inventory has always been limited and at the whim of longtime, older residents deciding to sell. This pattern holds up now.
Gray has sold homes for residents who decided to retire to places like Idaho and Utah and for whom the pandemic is prompting new questions about residence.
The rising home prices on the Coastside, which she attributes to difficulties inherent in developing on the coast, have allowed these clients to walk away with $1 million in their pockets.
Her recent client whose home sold in less than a week lived in Moss Beach for about 25 years.
“The folks thinking of retiring are going ahead to do it,” she said. “It’s kind of like a second life for them.”