A continuing inventory shortage may be the primary reason why Bay Area home sales declined in October compared to a year ago, the first year-over-year drop in sales since February. But the limited number of homes on the market has also kept home price moving higher as we edge closer to yearend.
CoreLogic, the real estate information firm, reported that that there were 7,673 new and existing home sales in October (the most recent figures available). That’s down 2.4 percent from September and 2.5 percent from October 2015 – the first YOY drop in eight months.
Napa County had the biggest YOY decline at 23.6 percent, although the small number (just 94 sales) may have exaggerated the decline. Elsewhere, San Francisco home sales were off 9.7 percent, Santa Clara County -8.8 percent, San Mateo County -8.5 percent, and Alameda County -8.2 percent.
“This decline could be the result of lower affordability and also a still-tight inventory of homes for sale,” said Andrew LePage, research analyst with CoreLogic. But he noted that sales did increase in some of the Bay Area inland areas, home to the region’s most affordable homes.
To be sure, Sonoma County had the biggest increase in sales at 14 percent, followed by Solano County at 9.7 percent, and Contra Costa County at 8.2 percent. Marin County was the only other county with an increase in YOY sales, up fractionally at 0.6 percent.
The Bay Area median sale price continued to move higher in October, rising 4.3 percent from a year ago to stand at $635,000.
All Bay Area counties saw an increase in median prices, led by Alameda County with a 13.8 percent boost to $632,500. Napa County recorded a 13.4 percent rise to $567,000 and Solano County had a 13.2 percent increase to $339,750. Santa Clara, San Francisco, and San Mateo counties all had double-digit increases in median prices.
Below is a market-by-market report from our local San Francisco Bay Area offices:
San Francisco – The market has shifted but is still strong, reports our Lakeside office manager. There was a bump in inventory after Labor Day that has slowly been dissipating. At the same time buyers have become more cautious impacted by international events and erratic stock prices. We are seeing fewer offers generally, and many times even when a property is well priced and well presented there may be no offers at all after the first 10 days, which is contrary to the experience sellers have learned to expect over the past 18 months. Nonetheless, the market appears to be strong, properties are selling and prices are holding near what they have been for the past quarter. However, sellers who have an expectation of prices higher than or even with recent comparable sales are being frustrated and sometimes failing to sell their property. Our Lombard office manager says the market was cooling in its own right, but now the holidays are compounding the slowdown. Still a few listing agents state, “I’m expecting at least x offers, don’t bother writing unless it’s at least $___.” A buyer’s agent ignored that, wrote under asking, was the only offer and ratified. Lots of different stories on both sides of the deals that wouldn’t have happened two months ago.
SF Peninsula – In San Mateo County there were 196 properties for sale Nov. 9-12 this year compared to 162 during the same period in 2014. There were 248 ratified sales during that period this year vs. 206 last year. We are still experiencing multiple offers (2-4) on properties appropriately positioned in the market and a higher number of offers in competition for prime properties. One Burlingame property received 10 offers with seven all cash. Another home in San Mateo had six offers. In both cases, most of the offers were substantially higher than the asking price. The market is steady for San Mateo. There is a slowdown in activity but our local office is holding steady with sale and listings.
North Bay – Although there is a general seasonal slowdown as we approach Thanksgiving, our Greenbrae manager is still seeing steady new sales coming in – just not at the frantic pace as earlier this year. Our Greenbrae/Larkspur offices have experienced a flurry of new sales over the last two weeks (26 to be exact) with very quick closes – from 7 to 10 days. It would seem there are a number of buyers who must close by the end of the year. Listings are staying on the market longer and many seeing offers the second or third week versus multiple offers the first week. Novato agents have seen a slight increase in activity over the past few weeks from buyers attempting to purchase before year-end. Our local manager is anticipating the traditional slowdown over the holidays, but agents are still seeing a few new listings coming to market during a time when there is less competition and fewer multiple offers. Our Sebastopol manager says there was a noticeable drop in attendees at open houses the Sunday before Thanksgiving, but the market remains healthy for this time of year. Many agents are busy showing properties and writing offers. We have a few sellers ready to come to market after the Thanksgiving weekend, and many others preferring to wait until spring. The general Southern Marin market has slowed, however offers and multiple offers are happening on the most desirable properties. The luxury market has slowed down as expected approaching the holidays. However, demand is steady and agents are getting a fair amount of activity above $2 million.
East Bay – Inventory has decreased and new pending sales have slowed in the San Ramon Valley area. The Lamorinda market has been steady in recent weeks.
Silicon Valley – Our Cupertino manager says inventory continues to drop. There is lots of interest, but nothing to sell. We have had a few sales of homes that have been on the market for months and suddenly get multiple offers. The Los Altos area market has picked up steam again. Properties that were sitting are now going under contract. Our San Jose Almaden office is seeing the holiday slowdown as far as new listings coming to market. They are also seeing a lot of listings coming off the market for the holidays. Inventory (countywide) for SFR and C/T is down 11% over the same time last year. The sales are steady. Sale prices are remaining strong. Almaden sale prices are up 10% over last month and 19% over November of last year. Blossom Valley sale prices are up 3% over last month and 12.5% up over November of last year. Cambrian prices are flat from last month and up 10.5% over last year. As expected, the local Willow Glen listing inventory continues to contract as we get deeper into the holiday season. At one point listings dipped into the high 30s. Agents are expecting this number to continue to decrease as we get closer to yearend. This is not good for buyers as they continue their strong demand for homes. Open house traffic is still heavy and buyer demand is and will continue to outpace supply as we move towards yearend. As inventory decreases, sales remain brisk. Properties are receiving multiple offers and if priced attractively selling quickly. It appears that there are a good number of buyers who want to secure a home prior to yearend.
South County – Agents are reporting that the general consensus among home sellers is to wait until after the first of the year to list their properties. This is resulting, once again, in an inventory shortage. Buyers remain interested in homes in the South County—but the issue of supply and demand is once again influencing the market. With too many buyers trying to purchase too few properties, it is rapidly becoming a sellers’ market again. This past weekend, an agent held a “high-end” listing ($1.7 million) open and saw 17 potential buyers come through on Saturday and with just a few less the next day as well. Many buyers are finding listings in South County to be bargain priced compared to similar properties in the heart of Silicon Valley.
Santa Cruz County – The market in Santa Cruz County has been red hot this year. NAR did a marketing piece showing that this county is the 12th hottest market in the nation at this time. Currently we have lower inventory than this time last year and just slightly fewer sales. Most of the months have had higher sales than the previous year except for October, even with the lower inventory. The Previews Market has been very hot in Santa Cruz County this year, and recent weeks have been no exception. The number of sales did decrease a little bit in October and now in November, however, in comparison to last year there are about equal or more sales each month.
Monterey Peninsula – The luxury properties with exceptional locations and views along the Monterey Peninsula are getting the most attention as of late. There is a property along the famed 17-mile drive that has been on the market for six months and is now under contract. We are seeing activity in the surrounding vicinity of the Lodge at Pebble Beach with an increase in walk-in traffic. The Carmel market in the $2-3 million price point is very active with several under contract and closing in the last two weeks. The local market has cooled off a bit but the out-of-area buyers are still on the lookout for that desirable location that makes the Monterey Peninsula so desirable to call home.
Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James.