Average sold price is $548K; average listing price is $673K
Looking to buy a house in Davis? With a limited number for sale, it’s going to take persistence and a willingness to act fast.
Although the numbers fluctuate daily, there typically have been 70 to 95 Davis homes for sale at a time during the past two months. And the overall number of year-to-date home sales for 2014 is a bit lower than this time last year. But prices are running higher — up about 10 percent, on average.
For well-tended homes priced under $550,000 — which in the current Davis market roughly translates to three bedrooms, two baths and something less than 1,800 square feet — multiple offers are not uncommon.
Consider a recent sale on Pamplona Avenue — an attractive 1977 home with three bedrooms and two full baths, covering 1,754 square feet, with a high ceiling in the living room. Claire Black Slotton of First Street Real Estate worked with seller Marlyn Mainard to get the house prepared for the market.
“She had a pest report, a roof report and a city resale report prepared, and all the work recommended by those reports had been done,” Black Slotton said.
The house also received a fresh coat of paint, the bathrooms and kitchen were spruced up and the ceilings were refinished to remove the outdated “popcorn” textured material. Some old track lighting was taken out, as was all of the seller’s furniture so the home could be staged for an open house.
“By the end, it was really beautiful,” Mainard observed.
The house was priced at $540,000, pretty close to the middle of the market.
“We had a broker’s open house on May 24, and an open house on Saturday and Sunday of Memorial Day weekend,” Black Slotton said. By Tuesday’s end, there were three offers on the property, the highest being $555,000.
“I didn’t really expect it to sell that fast, even though I was told that it would,” Mainard said.
Cory Gold, vice president of Coldwell Banker-Doug Arnold Real Estate, said he’s likewise seeing “multiple offers on houses that are in excellent shape (or have been completely remodeled), and are priced competitively relative to other homes that have recently sold.”
And while prices are rising — the average sold price is currently about $548,000 — “we are not yet at the 2007 peak of home prices,” Gold observed. After the market summited seven years ago, Davis home prices dropped back to approximately 2003 levels.
“Prices are now coming back,” Gold said, but in Davis they have not matched 2007′s peak.
By contrast, in portions of the Bay Area — particularly in Silicon Valley — home prices are now above 2007′s levels. Last week, the national Case-Shiller Home Price Index reported a 20.9 percent average increase in Bay Area home prices since March 2013. Many real estate market observers now regard the Bay Area as the nation’s most expensive and most competitive residential market, and the squeeze on prospective buyers as they compete for a finite number of homes is acute.
As economist Leslie Appleton-Young of the California Association of Realtors told the San Jose Mercury News last week, “For every six-figure software engineer, you have people working in the service industry, in restaurants and retail and living in very high-density situations or moving farther out where there’s affordable housing or rental housing.”
In the late 1990s and early 2000s, that kind of pressure led a number of families with jobs in the Bay Area to look at homes in Davis. Local real estate professionals say they aren’t seeing that sort of trend in Davis, at least not yet. The comparatively high cost of gasoline makes long-distance commuting expensive, among other factors.
But there are a number of Bay Area residents who are choosing to retire in Davis to be closer to children and grandchildren who live here. And while Davis home prices are expensive by Sacramento region standards, they are more affordable than parts of the Bay Area.
Black Slotton said she’s working with several retirees who are interested in Davis property, and Gold agreed that the trend for retirees to settle in Davis “has been going on for a while.”
From high-end to duplexes
Gold said he’s also seeing “renewed interest in higher-end properties. … The university is bringing in a number of new professors, and we’re also seeing a number of doctors buying houses.
“Lending doesn’t seem to be a big issue,” Gold added, “and appraisals are not as big of an issue” as was the case in some recent years. “We don’t have many deals falling apart because the loans didn’t come through.”
Another trend Gold noted is that more deals involve contingent offers, involving the buyer selling another property.
“In the past, most sellers didn’t want to look at contingent offers,” Gold said. “But we are seeing more sellers open to accepting a contingent offer on a short-term basis. And that’s loosening up the situation for a number of move-up buyers within Davis.”
Duplexes also are hot right now.
“We’ve seen investors coming in and buying those — a nice duplex can come on the market, and sometimes it’s gone the next day,” Gold said.
Not every property sells quickly.
“Some houses are sitting on the market because they’re overpriced,” Black Slotton said. “Instead of pricing based on recent sales, some sellers want to price based on where they think the market will go if prices keep going up.”
These sellers may end up dropping their asking prices in order to close a deal. And, Black Slotton added, “The buyers will bid up the price (through multiple offers) if they think it’s worth more.”
Currently, Davis homes are typically selling for 98 or 99 percent of the asking price, on average.
There also continues to be a considerable differential between home prices in Davis and in nearby Woodland.
“The average listing price in Woodland is running around $347,080, with an average price per square foot around $170,” Gold said. “In Davis, the average listing price is around $673,363, with a price per square-foot around $316.”
Woodland sold prices are averaging somewhere in the higher $200,000s. New homes being built in Woodland range from the high $200,000s into the $400,000s.
New homes, changing conditions
Market conditions are expected to change a bit as new homes are built at The Cannery a development at Covell Boulevard and J Street that broke ground in May. The project — which will be built over a period of years — will include a mix of housing: 295 single-family detached homes, 72 single-family attached homes, 96 stacked-flat condominiums, 40 to 60 “permanently affordable” apartments and 40 accessory dwelling units (aka “granny flats”).
With the first homes on the market sometime in 2015, The Cannery will be the biggest addition to the local housing stock since Wildhorse was built in the late 1990s.
Dave Taormino, co-owner of Coldwell Banker-Doug Arnold Real Estate, predicted that new homes in The Cannery will be “positive overall” for the local real estate market. The development will mean “an increase in inventory, with more selection for buyers,” he said. “There will be some move-up opportunities,” leading to existing homes going on the market.
This will “increase the average days-on-the-market to 75 days for resale homes,” Taormino predicted, meaning prospective buyers wouldn’t feel as much pressure to make an immediate offer when an attractive resale home comes on the market.
Taormino also predicted that The Cannery homes will result in “less appreciation (in home prices in 2015) — 5 percent, more or less.” And that will mean “more equilibrium between buyers and sellers.”
Other possible new home projects around town — some of which have been under discussion for years — appear to remain on hold. At UC Davis, the student apartments in the West Village project are now complete, but there’s no indication that construction will begin soon on the single-family-home portion of West Village, reserved for UCD faculty and staff.
Mark Ruthheiser, assistant director of the real estate services department at UCD, said the university and the development company Carmel Partners “are still in discussions” regarding the single-family homes in West Village.
It is also unclear when construction might begin on the Chiles Ranch project on East Eighth Street, near the Davis Cemetery. Approved in 2012, Chiles Ranch would include 77 single-family homes and 30 attached units.
And finally, interest in the vacant eight-acre Grande Avenue property, which has been owned by the Davis school district since the 1970s, has not led to action. The site was divided on paper into 40-some lots in preparation for possible development.
Three times this year, the Davis school board posted on its agenda a closed-session item to discuss a possible sales price for the Grande property. Any deal for the land would be discussed and voted on in open session and that has not materialized yet.
— Reach Jeff Hudson at email@example.com or 530-747-8055.