Pacific Union Quarterly Report: Q2 2017
For the most part, the number of Bay Area homes for sale did not improve in the second quarter from one year earlier, except in Marin County and Sonoma Valley. Consequently, home prices rose in all regions year over year except for Sonoma Valley.
Below, Pacific Union Chief Economist Selma Hepp offers a brief synopsis of second-quarter real estate activity in each of Pacific Union’s regions. The accompanying links lead to the full report for each region, where you can access the latest regional and community-specific market data and statistics to help you make a better, more informed homebuying or selling decision.
Contra Costa County
Second-quarter housing market activity in our Contra Costa County region made for another healthy spring season. Sales of higher-priced homes were stronger thanks to more inventory. The region’s relative affordability continues to attract buyers in search of excellent schools who are priced out of other Bay Area regions.
Buyers showed renewed enthusiasm, while some sellers were forced to be more realistic and reduce their prices. Multiple offers were not as common as in quarters past, although prices grew moderately. Homes sold rather quickly, with many properties leaving the market in less than two weeks. Concern remains around the lack of first-time buyers who are priced out of the Contra Costa County market; without them, entry-level homeowners may not have anyone to sell to when they want to move up.
Looking Forward: With summer in full swing, activity will slow down until September, when the new school year brings more active buyers and sellers. The aforementioned buyer enthusiasm suggests that fall will bring more activity and heightened competition among buyers.
Click here to read the full Q2 2017 Contra Costa County real estate report.
The East Bay housing market continued to outshine others in the Bay Area, with stronger sales activity than last year and higher median home price growth. Lower-priced homes remained in high demand, and buyer competition again increased, with 8 of 10 homes selling for more than its asking price. The seasonal increase in homes for sale helped meet eager buyer demand, although inventory levels remain critically low.
Median home prices continued to increase strongly in the region’s most popular communities, especially walkable neighborhoods near BART stations. Unlike in some other Pacific Union regions, few East Bay sellers keep their homes off the MLS, helping to ensure that they receive the optimum price. Demand for higher-priced homes has also rebounded in the East Bay, and more such properties were sold in the second quarter than during the same period last year.
Looking Forward: While a seasonal slowdown may occur during the summer, there will be no shortage of East Bay buyers once the traditionally brisk fall season gets underway. Low inventory will keep a lid on market activity, and continued demand should push prices higher.
Click here to read the full Q2 2017 East Bay real estate report.
Marin County homebuyers once again showed signs of renewed enthusiasm in the second quarter, particularly for homes priced above $2 million. Demand rebounded at the higher end of the market, and the number of homes priced above $3 million sold so far this year has increased by one-third from the same period last year.
With inventory levels relatively unchanged from one year earlier, the median home price grew moderately in the second quarter, and heightened purchase activity left fewer homes available for sale. Bidding wars increased, and more homes sold over asking price than during the same period last year.
Looking Forward: A seasonal slowdown traditionally occurs during the summer months, but September will bring buyers back to the market. With low inventory still a concern, buyers may face stiff competition and rapidly growing prices.
Click here to read the full Q2 2017 Marin County real estate report.
Following a slower-than-usual start to the year, buyers in our Mid-Peninsula subregion showed a renewed optimism in the second quarter. More homes sold than during the second quarter of 2016, with a notable jump for those priced between $2 million and $3 million. The region’s ongoing inventory shortage unfortunately did not improve much, which, combined with increased sales, caused the months’ supply of inventory to drop to a two-year low.
A lack of homes for sale again created a competitive market where almost 8 in 10 homes sold above the asking price – especially homes priced between $1 million and $2 million. Bidding wars caused homes to sell for an average of more than 10 percent higher than original prices. Low inventory and strong buyer demand pushed home prices higher, reversing slowing price trends seen in the second half of last year.
Looking Forward: A strong end to the current quarter suggests that San Mateo County buyers remain enthusiastic, but a dwindling number of homes for sale will keep a lid on future activity. We expect the summer months to bring the usual seasonal slowdown, followed by a busy fall season beginning in September.
Click here to read the full Q2 2017 Mid-Peninsula real estate report.
Napa County‘s second-quarter housing market activity showed the strongest increase from last year of all Bay Area regions. Buyers were especially busy in the latter part of the quarter thanks to more homes for sale, although the added inventory was insufficient to meet the increased demand. Buyers were particularly interested in homes in more affordable price ranges, while luxury buyers held back.
For traditional buyers, heightened demand led to more bidding wars. Consequently, a higher share of homes — 4 in 10 — sold for more than the asking price than during the same period last year. And while Napa remains one of the more balanced Bay Area markets, the median price of affordable homes increased faster than in other regions.
Looking Forward: The summer months may bring a seasonal slowdown to Napa County’s housing market, although increased buyer demand suggests that the fall season will be a busy one. Retiring baby boomers and relative affordability in Napa County will continue to create buyers.
Click here to read the full Q2 2017 Napa County real estate report.
Second-quarter housing market activity in San Francisco was characterized by heightened buyer activity amid declining inventory conditions. These combined forces led to higher absorption rates, bringing the supply of homes for sale to a two-year low. Strong buyer activity also led to diminished days on market across all price ranges.
Price appreciation for new condominiums remained constrained in San Francisco neighborhoods where much construction has occurred, such as South of Market. Existing condominiums showed slow price growth, although they fared relatively better in the second quarter than in prior months.
Looking Forward: Although we expect third-quarter sales to reflect a mild seasonal lull, the Bay Area’s reliable and impressive core economic drivers should continue to fuel demand for San Francisco real estate. And despite mortgage interest rates that remain historically low, the possibility of increases may motivate some homebuyers who have been sitting on the fence.
Click here to read the full Q2 2017 San Francisco real estate report for single-family homes.
Click here to read the full Q2 2017 San Francisco real estate report for condominiums.
While Silicon Valley‘s second-quarter home sales were on par with the same period last year, homebuyers this year showed renewed enthusiasm and a willingness to engage in bidding wars. More homes sold above the asking price, particularly higher-end properties, with 7 in 10 homes priced between $2 million and $3 million selling for more than the original price.
Heightened buyer demand coupled with continued supply challenges led to most of the region’s inventory being absorbed, and supply levels dropped to a two-year low. Affordable homes left the market at one of the fastest rates in the Bay Area. That combination again pushed home prices higher, reversing the slowing price trend seen in the second half of last year.
Looking Forward: While the return of enthusiastic buyers bodes well for Silicon Valley’s housing market, inventory shortages will remain a concern. The summer months should bring a seasonal lull in activity, but September is expected to kick off another strong fall homebuying season.
Click here to read the full Q2 2017 Silicon Valley real estate report.
The second quarter in Sonoma County continued the tale-of-two-housing-markets scenario that began last year. Fewer homes priced below $1 million sold when compared with the same period last year, while home priced between $1 million and $3 million saw activity jump by almost 50 percent. The inventory of higher-priced homes increased notably from last year, while the number of lower-priced homes rapidly declined. Inventory constraints were amplified by sellers’ concerns of being unable to find move-up homes.
An uptick in demand led to increased competition among buyers, who were more likely to engage in bidding wars and pay premiums. While Sonoma County buyers still face less competition than they do in some other Bay Area communities, half of the homes sold for more than the asking price.
Looking Forward: We expect the summer months to bring the typical seasonal slowdown, although the momentum we observed over the last few months should return in the fall. With no lack of buyer demand, Sonoma County real estate activity will remain strong in the second half of the year.
Click here to read the full Q2 2017 Sonoma County real estate report.
Following unseasonably low inventory in the first quarter, the second quarter brought Sonoma Valley sellers off the fence, and supply conditions improved. Eager buyers welcomed more homes to choose from, and they remained persistent and competitive. The market continued to challenge first-time buyers, who faced increasing prices and a brisk sales pace. To exacerbate the situation, many new listings hit the market priced well above $1 million.
All-cash purchases continued to be common in Sonoma Valley, accounting for almost 4 in 10 home sales. Cash remained king in multiple-offer situations, another reason that first-time buyers should remain persistent if they want to succeed.
Looking Forward: A seasonal slowdown is expected during the summer months; however, strengthened buyer demand suggests that September will kick off another solid autumn homebuying season. Improved inventory levels may provide much-needed relief and create a better balance between buyers and sellers. Price reductions are already occurring, and if they continue, even more buyers may appear in the latter months of the year.
Click here to read the full Q2 2017 Sonoma Valley real estate report.
As the Lake Tahoe/Truckee region is largely a second-home market for many buyers who own primary homes in the Bay Area, real estate activity there has an undeniable effect in the region. As Bay Area housing markets heated up again in the second quarter, so did Lake Tahoe, which saw a brisk pace of sales in the latter part of the quarter, helped by more homes on the market.
Buyers felt a greater sense of urgency, and homes sold faster than in the past couple of years. The brisk pace of sales fueled absorption rates, and buyers scooped up the extra inventory that hit the market. Sellers were also more realistic than in years past, which allowed for a greater balance between buyers and sellers. Home price appreciation remained level, and the region’s median price increase was mostly driven by a higher share of bigger-home sales.
Looking Forward: Unlike in the Bay Area, the Lake Tahoe region doesn’t typically see a late-summer slowdown; vacationing families may decide to purchase a second home before the summer ends and children return to school. We expect the current healthy sales activity to continue for the next four months, although it will likely begin to soften after Thanksgiving.
Click here to read the full Q2 2017 Lake Tahoe/Truckee real estate report for single-family homes.
Click here to read the full Q2 2017 Lake Tahoe/Truckee real estate report for condominiums.