PLENTY OF BAY AREA BUYERS, BUT WHY ARE THEY HESITANT?
June 25, 2019 — Source: Compass Blog
- While April’s momentum is slightly slower in May, May sales are still only 2 percent below last year’s highs after double-digit declines earlier in the year.
- Home sales momentum remains solid in East Bay. Napa sales finally jumped 6 percent after a 6-month losing streak, averaging 20 percent annual declines.
- Affordable sales picked up again with sales of homes priced below $1 million up 3 percent year-over-year, the first two-month consecutive annual increase in the last four years.
- For-sale inventory growth is slowing after the winter jump with homes averaging seven days longer on the market.
- San-Francisco continues to see significant inventory declines with May down 19 percent YOY (four months of declines averaging 20 percent).
- Buyer competition picks up again with 58 percent of homes selling over the asking price.
- Bay Area housing market correction resembles “Table Top” with prices remaining flat, compared to “Mountain Top” seen in the last cycle when prices fell significantly following the peak.
Following a solid improvement in the Bay Area housing markets in April, May homes sales activity continued with the momentum, albeit slower. Total home sales were 2 percent below last May, following April’s upwardly revised 1 percent year-over-year decline. The rate of declines has slowed considerably after double-digit declines seen in the first few months of 2019. Taking the first five months of the year together, sales are 5 percent below last year.
However, while declines continue to be driven by slower sales in Santa Clara and San Mateo, East Bay home sales are keeping the momentum. Napa sales jumped 6 percent after a 6-month losing streak, averaging 20 percent annual declines. San Francisco, the spotlight of expectations around IPO impacts, remained relatively flat with last year, down 1 percent, though San Francisco sales peaked last May at the highest numbers of May sales in at least the last four years. Overall, most all markets except Sonoma saw improvement in sales in at least one price range. Table 1 summarizes year-over-year changes in the number of homes sold by price range.
Source: Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2019
As noted in last month’s analysis, the most encouraging improvement considering Bay Area’s affordability concerns is the increase in sales of homes priced below $1 million, which showed its first two-month consecutive annual increase in the last four years. Figure 1 illustrates the trend of year-over-year changes in home sales by price range. As Table 1 suggests, the increase in lower priced sales is mostly driven by East Bay, but also Santa Clara where lower priced sales have been increasing since the beginning of the year after drops averaging 40+ percent in 2018. In contrast, San Mateo, San Francisco and Marin continued to see declines in lower priced sales as that inventory has largely disappeared – for example, in the three regions, less than a third of homes available for sale are priced below $1 million.
Figure 1 Year-over-year change in the number of homes sold