Burlingame Real Estate On Fire - Part 2

Supply and demand at work

In my recent post “Burlingame Real Estate on Fire” I described the dramatic increase in Burlingame home prices as a result of limited supply. While the price increases are quite common at the moment in many locations in the Bay Area, Burlingame is the third most desirable City in the Northern California and certainly deserves a closer look (to find out why, please read my previous write-ups Why is Burlingame so Desirable? and Why is Burlingame So Desirable? More Reasons and More Facts). In my previous post I used data from the beginning of the year until March 22^nd, in this one I am commenting on the sale data for the period from March 23^rd until May 10^th.

Within 6 weeks since March 23^rd we observed market forces at work. The increased demand and led to significant increase in the listing and selling prices (81% of homes sold in first 3 weeks of March sold above the listing price) and that led many owners in Burlingame to believe that it might be the right time to sell. Let’s then look to what happened since March 23^rd .

The number of listed, pending and sold homes dramatically increased. In the period of last 6 weeks 33 homes sold comparing to 36 that sold during 11 weeks from the beginning of the year until March 22^nd. As of today (May 10^th) we have 27 homes active and 32 are pending and 68% of all homes sold from the beginning of the year were sold at or above the listing price. This number increased to 76% for sales completed during the last 6 weeks. Six of the ten most expensive homes sold during that time are located in Easton Addition reasserting this area as either one of the most, or the most desirable part of Burlingame.  But if so many homes were sold or are being sold at the present time, is it enough to cool down the demand and slow down the price increases? Will prices continue increasing or the market already picked? We will find out in next few weeks.

The next couple of weeks will clearly show the direction of where the market is heading and sustainability of the recent price increase. In the meantime, let me share with you interesting homes that either recently sold, are pending, still active on the market at the present time or just are worth of showing.

A few months ago San Francisco Magazine heralded Burlingame Terrace to be among 10 up and coming neighborhoods in the Bay Area. Here are pictures of few homes in this neighborhood.

1321 Sanchez Av (still active as of May 8^th)

1105 Edgehill Dr (pending)

 736 Neuchtal Av (pending)

Willborough Pl (none of these properties are on the market at the present time) - a block-long strip of early 20th century Tudor revival homes. To read more about this place click here: Willborough History.

EASTON ADDITION:

1401 Vancouver (pending)

BURLINGAME HILLS:

105 La Mesa (pending)

Will prices in Burlingame continue increasing as fast as until now or increased number of houses on the market will put further increases in check at least for now? As I mentioned in my previous post: “By summer 2013 we will know if it is a transition to a fully fledged boom or something else…”.

BURLINGAME REAL ESTATE ON FIRE

Reasons behind limited inventory

Most of the Burlingame houses are selling like hot-cakes, often being sold right after they are put on the market. But there are other properties that linger for many days and sell only after drastic price reductions. So, why are some properties selling quickly while others are stuck in purgatory? For example, the 2504 Hillside Dr (sold in February) and 2301 Poppy Dr (sold in January), both located in a very desirable Easton Addition neighborhood. The first sold in zero days at the listing price ($2,475,000) and it took 108 days and 2 price reductions for the latter to sell for $1,183,000 or $215,000 (15%) below the listing price. Is it just the matter of proper pricing or do the recent price increases apply only to new or perfectly renovated and modernized homes?

To answer this question I analyzed prices of numerous Burlingame homes that sold in 2012 and most that sold in 2013. My analysis of these listings showed that clients are quicker to spend significant funds for perfect properties. However, they still bargain very hard while buying older, less desirable properties. While doing that they often submit low ball offers not afraid to lose a deal if a Seller does not respond to their offers. This might be one reason for the small amount of listings on the market as owners of older properties still have little incentive to put their properties for sale at a low price.

I have recently asked several potential clients in Burlingame how much they would pay for the house at 1417 Vancouver if it was sold today, assuming that it is in exactly the same condition as it was when it was sold at the end of December, 2011. This property was originally listed in August 2011 for $1,328,000. Sellers lowered the price first to $1,258,000 then to $1,185,000 and then to $1,090,000.  The house sold finally for $1,070,000 on Dec 29, 2011 after 5 months on the market. My clients answer might (or might not) surprise you. Most of my responders felt that $1,090,000 listing price correct and in a competitive situation they would offer $20k or $30k over the listing price, but not more. This confirmed our market read that prices for older houses (even well prepared for sale and staged, but not significantly improved or modernized) are still close to their historic lows despite the perceived recent market boom. This of course will change sooner or later if supply of properties continues to be very low.

Let’s quickly look on what is happening on the Peninsula real estate market since the beginning of 2012. The market picked up around March 2012, initially for the very low end ($300k) properties in places like Daly City and San Francisco as buyers realized that it might be cheaper to buy again instead renting. By mid of summer all Peninsula, including Burlingame was on fire, but mainly below $800k with as many as 50 simultaneous offers per listing. Overall, 269 single family homes sold in Burlingame in 2012 with the 5 La Strada Ct being the most expensive for $3.1 M or $400k below asking and 128 days on the market (DOM). As the year progressed, the DOM number kept falling down and by end of the 2012, 70 homes (or 26% of all homes sold) sold in 10 days or less.

So, how are things looking for 2013? 36 houses sold in Burlingame by March 22^nd  (for 16 out of them the escrow closed during first 3 weeks of March). 13 of those sold in March (81%!) were sold at or above the listing price. 10 of houses sold in March (or 63%) were sold in less than 10 days on the market. The 2517 Valdivia Wy house in Ray Park sold in 9 days for $2,410,000 or $460,000 above the asking price! The only reason that more homes have not sold is the small supply - there are simply not enough homes on the market. We see a very clear acceleration in sales (fewer days on the market and more sales above the listing price). So what makes the market in Burlingame so special? For quite some time Burlingame has been considered to be the 3rd most livable City in Northern California following only San Francisco and Palo Alto (Why is Burlingame so Desirable? and Why is Burlingame So Desirable? More Reasons and More Facts). Burlingame is close to San Francisco (20 min ride to the downtown SF) and very close from the San Francisco Airport. It always had good schools that are getting even better. The API scores for its five elementary schools in Burlingame oscillate between 954 (Franklin) and 883 (McKinley). Burlingame Intermediate School (BIS) has a score of 903 and Burlingame High School (BHS) - 869. Demand for these schools is so high that Burlingame Elementary School District just repurchased the Hoover school that was closed many years ago and is planning to open it soon. There is no doubt that good schools are behind the recent climb in demand for real estate in Burlingame. It is clearly on every prospective buyer mind when searching for a new home.  

So what lies ahead for Burlingame's real estate market? For now demand will be growing as demand simply exceeds supply. Opening of the Hoover Elementary might bring even more families with children to Burlingame and reflects increasing demand for Burlingame’s schools. If the low house supply continues even prices for older, less perfect properties will start climbing again. This should encourage more sellers to list their properties. The price increases might slow down for a bit, but probably not for very long. This analysis assumes no major changes in global economy, as in the case of significant economic downturn, all these predictions might be entirely off.   My analysis applies to the Burlingame houses priced between $1 to $ 3M. Please note that houses priced below $1M are already selling at premium independent of their conditions. A “tear down” property at 2415 Hillside sold on March 14 for $1,175,000 or $276,000 over asking (31%!) For properties priced between $1 and $3 M there is a clear separation in demand and sellability of new and perfect properties versus the older ones. The Burlingame market for this price range is very different than it was before. The current “real estate boom” is a market in transition. By summer 2013 we will know if it is transition to a fully fledged boom or something else…

BURLINGAME TERRACE

Do you read San Francisco magazine? If not, make sure to track the January 2013 issue and check its cover story – Project Utopia, edited by Jenna Scatena. It is a refreshing look on 10 up and coming Bay Area neighborhoods based on the 10 criteria yielded from the poll of 200 “Bay Areans”. What makes the ideal neighborhood?

1. Affordability
2. Safety
3. Walkability to amenities
4.  Public transportation
5. Proximity to work
6. Accessibility of nature
7. Culture (theater, art)
8. Parking
9. Good schools
10. Ethnic and economic diversity

 OK, you will most likely not agree with the all selected neighborhoods, especially if you have children in the school age and your main concern is to find a neighborhood with best schools. But I will weigh in on their choice # 10, Burlingame Terrace, only.

I'm sure you will agree with this choice, especially since schools there are excellent. If you want to read about remaining neighborhoods, such as Ocean Beach, Polk Gulch, Richmond Annex and others, I recommend that you find a copy of the magazine to read about them (if you have a problem with locating a copy – contact me and I will email you a copy of the entire article).
 

Let me start with location of Burlingame Terrace - it is the area between Broadway and Peninsula Ave and California Drive and El Camino Real in Burlingame. Please note that technically, according to the local realtor association, the area referred by the magazine as Burlingame Terrace is a combination of two adjacent areas in Burlingame: Burlingame Terrace (from Broadway to Oak Grove Ave) and Burlingame Downtown (from Oak Grove Ave to Peninsula Ave). Here are some of the benefits of Burlingame Terrace, as defined and highlighted by the San Francisco magazine:

 

• Affordability: B- (cost of 2 bedroom house starts is around $750k+)
• Walkability to amenities: B (Burlingame Ave is 10 min walk)
•  Public transportation: B (Two Caltrain stations – one operates on weekends only. Free shuttle to Millbrae BART station, bus)
• Weather: A (mostly sunny – even in summer)
• Safety: A- (“crime is very uncommon in Burlingame’s residential area, especially violent crime” – according Captain Mike Matteucci)

There are many good restaurants in walking distance (Burlingame Ave area). And of course schools. Burlingame schools are among the best on the Peninsula. McKinley elementary with API score of 882 in 2012 has dual language track (English and Spanish), Burlingame Intermediary has a score of 903(!) and Burlingame HS with the score of 869 is second best in the San Mateo County, just one point behind Millbrae’s Mills HS.

And what is bad? Let me quote San Francisco magazine: “It’s a far cry from being culturally diverse”. Another – really expensive parking tickets ($72).

Feel free to contact me if you have more questions about Burlingame Terrace or would like me to show you the neighborhood.