'Modern' Optimism Reigns

Skin of Bay Area bubble still market-strong according to our Eichler real estate experts
Fridays on the Homefront
A number of things come into play this year that have an impact on the Bay Area real estate market, including four consecutive years of double-digit increases in
regional real estate prices, a new tax law, and even an unsettled Washington, DC. Two mid-century modern real estate specialists we consulted predict a slowing of Bay Area home value inflation and possibly even relief for the inventory crunch. Photo: David Toerge
Fridays on the Homefront
Renee Adelmann of Marin Modern Real Estate.
Fridays on the Homefront
Monique Lombardelli of Modern Homes Realty.

Picture MAD magazine's clueless icon Alfred E. Newman as a Bay Area realtor. Above his head, in a dialogue balloon, are the words, "Bubble? What bubble?"

Even real estate professionals more shrewd than young Alfred E. are showing little fear that the Bay's residential real estate boom has topped out as they share market forecasts for 2018. They do, however, see a slowing of home value inflation and possibly even relief for the inventory crunch that has prompted some to see signs of the aforementioned bubble.

"I think most people are feeling confident about 2018," observes Renee Adelmann, broker and co-owner of Marin Modern Real Estate and affiliates around the Bay. When she has discussed the topic with colleagues, Renee admits, "I think most people felt pretty confident, but that's because that's their livelihood, and they want to feel confident."

Monique Lombardelli, broker and CEO of Modern Homes Realty in Palo Alto, jumped into the discussion, stating, "Eichlers are doing wonderfully because we are considered ‘the perfect price point' in the Bay Area."

Both women agree with much of the industry consensus projected by analyses and reports from professional associations, web-based real estate companies, and financial service firms. For the Bay and the California coast in general, inadequate available home stock continues to drive a sellers market.

A report from Zillow said 50 homes in the South Bay fetched at least $200,000 over asking price in 2017, including one extreme example in which a Sunnyvale home sold for $2.47 million over its $1,688,000 listing price.

Redfin reports that one-quarter of all Bay Area homes sold last year were on the market for two weeks or less, with 19 percent going in the first week. The web company, incidentally, has made eight predictions of its own for 2018 in the area, including continued fast sales.

"We're very much a sellers market in the Bay Area," Adelmann agrees. She said one metric for that assessment is an available home inventory that will take less than 2.5 months to sell, adding, "Most places in the Bay Area have a one-and-a-half month inventory of available property, and that's really low."

Still, changes may be afoot.

"The new tax agenda this year has people uneasy," Lombardelli says, spying potential slowing in the sales pace as a result of the new tax law. "Buyers are basically losing around $75,000 in deductions."

"A lot of the tax [changes] are putting money into wealthy people's pockets, and wealthy people are still buying," Adelmann said dryly.