Atherton wealthiest city in U.S.; California has 23 on the top 100 list
Atherton, home of former Google CEO Eric Schmidt and Facebook chief operating officer Sheryl Sandberg, was the wealthiest city in the nation for the third-consecutive year, with an average household income of $450,700 — and a median-home price of $9 million.
The average Atherton family, if there is such a thing, earns about 5.5 times more than the average household in the state — about $82,000 in 2017, according to Bloomberg Richest Places annual index.
Atherton benefits from being near Silicon Valley and its tech giants and a short drive from Stanford University. The city’s annual household income easily outpaced the second-place Scarsdale, N.Y., at $417,000.
Atherton’s median-home price was $9 million in December 2018, more than double the $4.26 million a year earlier. However, only three homes sold in Atherton in December, so the median price is greatly skewed.
California has 23 cities on the top 100 wealthiest cities list, including fourth-place Los Altos Hills at $386,000 and fifth-place Hillsborough at $373,000.
Ten California cities finished in the top 50, including Montecito (No. 28), part-time home of Oprah Winfrey, and Malibu (No. 43), where many celebrities live, including Leonardo DiCaprio and Julia Roberts.
Feature photo of Holbrook-Palmer Park in Atherton. Photo of Sheryl Sandberg by Krista Kennell/Shutterstock
Luxury home sales slow, especially in Oakland and San Jose
High-end home sales are slowing nationwide and in California, as the rollercoaster-like ride on Wall Street has affected the market and wealthy buyers, according to a new report.
Luxury home sales nationwide dropped 3.9% during the fourth quarter compared to a year ago, the first time in more than two years.
The biggest challenge may not be price, but more related to supply. Nationally, there were 6.5% fewer $2 million-plus homes in the final quarter of 2018 vs. a year ago, the seventh-consecutive quarterly decline.
While it’s far from a pity-the millionaire, sky-is-falling situation, high-end home prices, especially in California, affect the overall market. A deep-pocketed buyer — either from equity gains in their current home value or stock prices on Wall Street, or both — who purchases a luxury home paves the way for a middle-income family to move up to a new home. It’s a critical cycle that helps the housing supply.
Decline of high-end home supply likely propped up prices
Nationally, the average sale price for luxury homes — considered the top 5% of the market — increased 4.7% to $1.77 million during the fourth quarter, compared to 3.2% in third-quarter 2018, according to Redfin. The rest of the market, considered the “other” 95%, increased 4.3% to $341,000.
California, where the median-home price is almost $600,000, is a bit of a difficult market to gauge the impact of luxury home sales since there are several regions, such as the Bay Area, where finding homes for less than $1 million is tough and $2 million-plus sales are common.
California and the West Coast also has a dramatic effect on the national luxury home market. A big decline or double-digit gains on the West Coast has a ripple effect nationwide.
“When we’re examining the most expensive segment of the housing market nationwide, a disproportionate amount of the movement seen in prices and and sales is driven by activity, or the lack thereof, in major expensive coastal markets like San Francisco and San Jose, where sales fell by double digits while price growth slowed or reversed at the end of the year,” says Redfin chief economist Daryl Fairweather.
San Diego soars, San Jose tumbles
In fact, the Golden State had only one city crack the top 10 cities with the largest price gains during the October-through-December period.
San Diego-area high-end home prices jumped to $2.96 million, a 15.2% increase compared to fourth-quarter 2017. San Diego finished in a distant fifth place, far from the 35% gains in first-place West Palm Beach, Fla.
On the flip side, San Jose and Oakland were among the 10 cities nationwide with the largest declines in luxury home prices during the fourth quarter compared to a year ago. San Jose, arguably one of the best high-end markets for the past five years, had luxury home price sales fall to $2.22 million, a 5.9% drop from a year ago. San Jose finished at No. 6 on the list, but nowhere near the 31% plunge in Sarasota, Fla.
And Oakland, considered a bargain compared to across the bay neighbor San Francisco, had high-end home prices dip 1.6% to $2.23 million, the 10th-largest decline in the U.S.
But those declining prices and a serious lack of housing helped high-end homes sell fast in Oakland, San Jose and other high-income areas of the state.
Moving fast, even with slower sales
Four of the five fastest-selling luxury markets were in California during the fourth quarter, including first-place Oakland, where homes entered escrow in 28 days. San Jose and San Francisco finished in second- and third-place at 32 and 39 days, respectively. Los Angeles was No. 5, behind Seattle, at 54 days.
But fast-selling homes and even higher prices could slow in the coming quarters, warns Redfin’s Fairweather.
“In the fourth quarter of 2018 there was a lot of economic uncertainty — mortgage interest rates peaked in November, and the stock market was all over the place,” he says. “This may have encouraged luxury sellers to hold on to their real estate assets and also caused luxury buyers to be reluctant to make major home purchases.”
Photo of luxury home in Carmel by EQRoy/Shutterstock
About the author
Ron Trujillo, an award-winning business journalist-turned-public relations executive, is the editor-owner of CalHomeNews and can be reached at firstname.lastname@example.org.
Expecting to pay above the listing price? That’s so 2017
Above-listing price offers and bidding wars are coming to an end, as buyers pull pack amid higher mortgage rates and more homes on the market.
Nationally, only 19.4% of home sales were above the listing price in December, the seventh-consecutive month the percentage has declined — and far from the modern-day peak of 24% in May 2018, according to Zillow.
Blame California for much of the decline. The share of homes selling above listing price in San Jose has dropped 46.6 percentage points, from a record 82.9% to 36.3%, while San Francisco has fallen 26.7 percentage points from its peak to 42.6% Los Angeles has dropped to 26.3%, about 20 percentage points less than its peak.
Granted, homes in these three California markets are still selling fast — about 22 days in San Jose and 37 days in Los Angeles, according to the California Association of Realtors — but would-be buyers have more choices and homes to visit.
Los Angeles’ unsold inventory, basically how long it would take for the number of homes on the market to sell with the current supply, increased to 4.1 months in December 2018 compared to 2.8 months a year earlier. The Bay Area’s unsold inventory reached 2.1 months in December 2018 vs. 1.3 months a year earlier.
Housing experts say the percentage of homes selling above the listing price will likely continue to decline as buyers become more choosy with more homes on the market, and sellers become more realistic with their listing prices as the housing market slows.
Photo of downtown San Jose by Stellamc/Shutterstock
Cash deals slow in much of U.S., but LA and San Diego buck trend
Cash is always king, and it’s becoming more common for home deals in Los Angeles and San Diego, according to ATTOM Data Solutions.
All-cash purchases increased 11% in Los Angeles and up 10% in San Diego in 2018 compared to 2017, the latest evidence that the housing market remains solid in Southern California.
Los Angeles and San Diego were the only two California cities to crack the top 20 list of regions with the largest gains in cash purchases in 2018. Manchester-Nashua, N.H., topped the list with an impressive 89% increase in all-cash deals.
However, cash deals are definitely slowing nationwide, as the once red-hot housing market cools down. Almost 28% of purchases were cash transactions in 2018, down from the peak of 38% in 2011.
Photo illustration of cash by Rrraum/Shutterstock