Bay Area home prices reach another record in May.
Tight inventory reduces sales in less costly areas
An increase in sales among higher- end homes drove Bay Area prices to another record in May, according to a new CoreLogic report.
The number of homes — new and resale — that sold for $ 800,000 or more last month jumped 21.1 percent year over year, making one of the costliest markets in the U. S. even pricier.
However, the more affordable communities, with median prices of $ 500,000 or less, saw a decrease in sales. Solano County, for example, saw its sales drop 3.3 percent compared with May 2017. Prices there rose 8.4 percent.
Selma Hepp, chief economist for Pacific Union and the Mark Co., explained that the decrease in sales is because fewer houses are becoming available, due to “the high Silicon Valley appreciation.”
“The conditions are not necessarily favorable for people to sell,” Hepp said, adding that rising prices would make it hard for them to move up. “I think we’ll see long inventory shortages because of it.”
“Inventory is tightest in the most affordable communities, because you have the highest number of people in those areas, and there’s not a lot of new supply being added,” said Andrew LePage, a CoreLogic analyst.
In San Francisco, where the median price of a home rose 14.9 percent to $ 1.38 million, 607 homes were sold, a 6.1 percent increase from last year.
The slight uptick of sales comes at a time when Bay Area home sales continue to set records: In May, the median price paid for a home climbed to $ 875,000, setting a record for the third consecutive month. San Mateo County matched San Francisco’s $ 1.38 million median to top the region, with Santa Clara County next at $ 1.2 million.
The lowest median price, by far, was in Solano County, at $ 430,000.
Don’t expect Bay Area prices to fall anytime soon.
“If there’s no shock to the housing market, because inventory remains so tight, there’s a good chance there will be plenty of upward pressure on prices,” LePage said.
Hepp said that the new data are scary and make her question the longtime issue of affordability in the region.
“People may start taking a step back after they see so much appreciation,” she said. “We may see a little slowing in the market.”