Bay Area’s runaway housing market taps the brakes
When Sean Cook put his family’s San Jose, Calif., home up for sale for more than $3 million this summer, he assumed it would fly off the shelf in a week or two. A similar house in his neighborhood took just three days to sell for $3.3 million in the spring.
But two months after Cook’s four-bedroom home in the desirable Willow Glen neighborhood hit the market, he still hasn’t received a single offer — even after he shaved $200,000 off the price last month. “Given the way the market has been,” he says, “you feel a wee bit disappointed.”
After a record-setting runup, the Bay Area’s red-hot housing market appears to be cooling. “For sale” signs are lingering longer in homeowners’ front yards, and alerts of price reductions — sometimes for hundreds of thousands of dollars — are cropping up on Zillow. And an array of market data — including sale prices, inventory numbers and tallies of discounted listings — supports the notion that the market has shifted in some counties.
Local agents blame an increase in inventory, buyer fatigue, rising mortgage interest rates and over-eager sellers inflating their prices higher than even the region’s turbocharged market can support.
Even at a cooler pace, the Bay Area’s market continues to generate a heat that would be described as scalding anywhere else in the country. But the recent slowdown has left sellers scratching their heads, and potential buyers breathing sighs of relief.
“This is a market shift of sorts,” said Oakland-based agent Kerri Naslund-Monday of Keller Williams Realty. “For the Bay Area it won’t be dramatic; it will just be a pause.”
Wannabe buyers, discouraged after getting outbid again and again, are pulling back, said Sean Manning, a San Jose-based real estate agent with Sereno Group.
“They kind of got fed up and threw their hands up in the air and said ‘OK, we’ve got to take a break here,’” Manning said.
An increase in inventory also is allowing buyers to be more selective. More homeowners — unaware that the market has cooled slightly, and excited by the high offers their neighbors scored in previous months — are deciding to list their own properties, Manning said.
In Oakland, for example, the number of single-family homes for sale last month jumped 18 percent over the year before, according to MLS data from the Bay East Association of Realtors. Meanwhile, the number of homes sold decreased 11 percent.
In Santa Clara County last month, 25 percent of homes sold for less than their asking price, up from 19 percent in August 2017, according to MLSListings. Meanwhile, 68 percent of Santa Clara County homes sold above their asking price last month, down from 75 percent in August 2017.
That trend didn’t show up in San Francisco or San Mateo counties.
Agents say buyers aren’t willing to pay quite as much as they were several months ago. In Alameda County, 27 percent of homes sold for less than their asking price last month, up from 21 percent in August 2017, according to the Contra Costa Association of Realtors. Sixty-four percent sold for more than their asking price last month, down from 70 percent in August 2017.