The sizzling Bay Area housing market cooled in August following one of the most dramatic run-ups in recent years, according to a report released Friday.
After months of increases, single-family home sales dropped 3.2 percent from a year ago, and were down 8.8 percent from July, according to real estate information service DataQuick. While the median single-family price of $588,000 extended several months of double-digit annual gains, it was 3.9 percent lower than it was in July, the first such drop in six months, DataQuick reported.
The market is stabilizing, said Arvin Paredes of Keller Williams in Campbell. "The competitive market made it super-exhausting for people," he said. "They're exhausted from looking for places, school's back in, and the market tends to slow down seasonally in the fall."
Jim Kabel, a remodeling contractor in San Jose, might be a poster child for the new market conditions. He started looking for a home several months ago but lost out several times to higher bidders. Recently, though, he snagged a townhouse in San Jose.
"Earlier in the season it was much busier with multiple offers, and people were bidding higher than what I was offering," Kabel said. "Now it's calmed down quite a bit. Places are staying on the market longer, prices are dropping and there's much less competition."
That means shopping for a home is likely to be less of a challenge in the coming months, said DataQuick's Andrew LePage.
"Compared to the last four to five months, the evidence is that it will be a pleasurable experience for home shoppers," he said. "There is more to choose from and prices aren't leaping any more."
That's what Louis and Keelin Marcoux found after months of getting beaten out by higher bidders for homes in Pleasanton. Louis Marcoux, an executive with a Pleasanton medical electronics firm, said they lost out on three houses, only to win the fourth time around in August.
"It was a blessing in disguise" to be beaten out on the other homes, he said. "It is a better house, a better location, and everything we were looking for. Prices started to cool down just a tiny bit by the time we came to it. It's definitely a little less competitive."
The months-long trend of strong annual price gains is expected to taper in the fall with fewer buyers, a greater selection of homes to buy and rising mortgage rates.
"There's not quite the frenzy there was before," said Lanny Baker, chief executive of Zip Realty. "Higher prices and higher interest rates are causing that."
In Alameda County, the median price for existing single-family homes was $570,000, up 32.6 percent annually but unchanged from July; in Contra Costa County, $435,000, up 39.4 percent annually but down 3.3 percent from July; in Santa Clara County, $744,500, up 24.1 percent from last year but nearly unchanged from July, and in San Mateo County, $867,500, up 33.5 percent from last year and up 4.1 from July.
Real estate agents report increasing supplies of homes for sale in some -- but not all -- parts of the Bay Area, giving buyers more choices and more time to make a decision to buy. There are still multiple offers and all-cash sales, but the number has dropped.
The new market conditions mean Sagar Pandey, a civil engineer in Southern California, can take his time shopping for a home in San Ramon. "I have a lot of family members up there and it's time for me to slow down a little bit," he said.
Pandey plans to look around for at least two months to find the right place. It's taking longer to sell a home in Contra Costa County, especially homes priced around $700,000 to $800,000, said Marilyn Cunningham of Executive Brokers in Walnut Creek.
"We have seen a slowdown in our pending sales" in August, she said, a change from six months ago when "in three days you had at least several offers. There's definitely been a shift in the market."
Nearly 10 percent of the homes listed last week in central Contra Costa County had price reductions, said Kevin Kieffer, a Danville real estate agent. He said some sellers overshot the market and had to pull back. "There's more of a selection for buyers, and more of an opportunity to come in at the asking price or even below it," he said.
Even in Silicon Valley, where the number of homes for sale has dropped since August, the frenzy has eased because there are fewer buyers, said Carl San Miguel, president of the Santa Clara County Association of Realtors. "The pressure is off at this point," he said.
Condos, which made up about a fifth of all sales, are still going strong, with sales at an eight-year high for the month of August. The median price of a condo was $445,000, up 39 percent from a year ago.