October Bay Area Housing Sales Slow, but Pricing Takes a Big Jump
Reflecting the chronically tight supply of available homes, Bay Area housing sales fell in October from a year earlier as prices marched up across the nine counties by nearly 11 percent. The region’s median sale price of a single-family home was $800,000 and surpassed $1 million in four of its counties.
In Santa Clara County, where the housing supply is about half of what it was a year ago, the median price reached a new peak: $1,125,000 for a single-family home, up a whopping 19.7 percent from October 2016. Even in Contra Costa County, overall one of the region’s more affordable areas, the median jumped 16.2 percent to $580,000.
“It’s a sign of the times and a sign of the housing affordability problem the Bay Area continues to wrestle with,” said Andrew LePage, research analyst for the CoreLogic real estate information service, which on Wednesday released its latest study of market conditions. They are “brutal for a first-time buyer.”
Between May and October, the region posted an average year-over-year jump in its median sale price of 11.7 percent — up from 5 percent for the same six-month period in 2016. Double-digit gains are again the norm, as they were when the region was rebounding from the Great Recession.
It’s Economics 101: When there are few houses and plenty of potential buyers, prices go up.
“Buyers are lining up like the Apple store,” said Tim Ambrose, president-elect of the Bay East Association of Realtors. “They’re carefully watching what’s coming to the market because they want to get their offers in as soon as they can.”
Describing price trends, he offered this analogy: “It’s like what happens after a hurricane. The price of bottled water goes through the roof. That’s the market we’re in.”
Hilary Yeung understands that market.
She is an accountant. Her husband, Johnny Feng, is a materials manager in tech. With their two young children, they live with Feng’s parents in Santa Clara and have been looking off and on for a house of their own since 2014.
“But every time we started looking at the market, it was up five percent, and the next time 10 percent,” said Yeung. “We were getting pretty frustrated.”
They were typical Silicon Valley buyers, said Mark Wong, their Saratoga-based agent with Alain Pinel: “People are so anxious to get a house. They know that if they wait, they’re out-bidded.”
This fall, Yeung and Feng got serious about their search, determining they had been priced out of the South Bay communities to which they aspired. They moved their hunt to Fremont, found a two-story townhouse that listed for $650,000 — and quickly put in their bid for significantly more than the list price.
Theirs was one of 16 offers and Yeung was “pretty nervous. Because we really liked this house. It’s move-in ready and has a nice backyard for the kids to play. It’s small — 1,200 square feet — but it’s like a start-up home for us. We really wanted it. But what if we didn’t get it? Prices would keep going up, right?”
They got it.
Throughout the Bay Area, only 5,374 single-family homes sold in October, making it the slowest October in four years. Some of that slowdown is attributable to the devastating wild fires in Sonoma and Napa counties, CoreLogic noted, but regionwide it’s the recurring cycle of low inventory and high prices that largely accounts for the sluggish sales activity.
“I’ve got folks who’ve been shopping for something in the $1 million or $1.2 million range in Walnut Creek or Pleasant Hill and there’s nothing for them,” said Keller Williams agent Matt Rubenstein, who is based in Danville. “There’s just really nothing to see.”
At lower price points — $500,000 to $700,000 — prospects improve, he said: “In Martinez, you can get a single-family residence that starts with a 5 or a 6. But it’s still competitive. Folks are writing respectable offers on properties, and a lot are for over asking.”
According to CoreLogic, the share of homes selling in the lower-price ranges keeps shrinking.
Homes selling for $500,000 or less accounted for 37.7 percent of October sales in Contra Costa County — down from 50.2 percent a year ago. Sales of $800,000 or more accounted for 28 percent of Contra Costa sales in October, up from 23.5 percent in October 2016.
Four or five months ago, Chad and Cassidy Gagnon — newlyweds looking for their first house — began to study the market: “You’re looking every day online, putting in the filters and searching,” Chad said. “You see something you like and save it.”
Planning to have a family — and hoping to minimize the commute for Cassidy, a pediatrician — they zeroed in on three communities with reputations for good schools: Pleasanton, Dublin and San Ramon. In November, with Ambrose as their agent, the Gagnons bid on a house that listed for $1 million in Pleasanton. They offered $1.1 million. There were eight other offers and it went for $1.2 million.
Chad, who works in security, imagined the kind of house they might have bought back in Rhode Island, where he grew up: “We’d probably be right on the ocean for that kind of money.”
Undaunted, they next set their sights on a 2,040-square-foot home in Dublin: four bedrooms and 2.5 baths in a secluded neighborhood with hiking trails out back. It listed for $990,000 and drew multiple offers including the Gagnons’ own generous bid: “After the first experience, where you’re up against eight other people, it kind of forces you to give a little extra,” Chad said. “We also wrote a letter to the seller, talking about ourselves — why we were looking to buy and how we wanted to start a family. I think we all agree that the letter was probably a determining factor.”
In other words, their offer was accepted: “We lucked out.”