Redhot housing market cools
June sales fall most places, prices level off in some parts of Bay Area
The Bay Area housing market showed continuing signs of sluggishness in June, with slower sales and mixed but overall lower prices.
The median price paid for all new and existing homes and condos sold in the nine counties last month was $855,000, down 0.3% from May and down 2.3% from a record high of $875,000 in June 2018, according to a report issued Friday by research firm CoreLogic.
The total number of homes sold fell sharply last month to 7,357, down 11.4% from May and down 12.6% from last June. Normally, sales rise between May and June — since 1988 they’ve gone up 3.6% on average.
June a year ago is when the Bay Area’s redhot market began to show signs of slowing.
“Many buyers began backing out of the market last spring and summer due to a tight inventory, rising prices and increasing mortgage rates,” CoreLogic analyst Andrew LePage said in a news release. “This year, prices have flattened or dipped on a yearoveryear basis in many markets, and thanks to lower interest rates many home shoppers face at least slightly lower monthly mortgage payments than they would have a year ago.
“Despite the lower cost for some, plus a healthy economic
backdrop, the housing market remains sluggish with activity dropping across the homeprice spectrum. This suggests many wouldbe buyers are still priced out or are concerned about buying near a possible price peak.”
Census data released Thursday seems to bear that out. The homeownership rate in the San Francisco metro area dropped to 51.7% in the second quarter, its lowest rate since 2012. It was 56.4% in the same quarter last year and 57% in the second quarter of 2015. This area includes San Francisco, San Mateo, Marin, Alameda and Contra Costa counties. Nationally, the homeownership was 64.1% in the second quarter, down slightly from 64.3% the same quarter last year.
Although the median home price in June for the whole Bay Area was down from last year, it was up in five counties — Contra Costa, Marin, Napa, San Francisco and San Mateo — and unchanged in Alameda and Solano. Only Santa Clara and Sonoma posted decreases.
So why was the Bay Area median price down? It’s based on sales in the nine counties together. It can be down, even when most counties are flat to up, “if there’s a significant shift in market mix, such as a higher share of homes selling in more affordable areas this year versus last,” LePage explained.
This June, for example, Contra Costa, Napa and Solano counties made up 30.8% of regional sales, versus 29.8% last year, so a larger share of sales this June were in the more affordable counties. Meanwhile, the highcost counties of Santa Clara, San Francisco and San Mateo made up 39.5% of regional sales this June versus 41.5% last year.
Shifts toward more or less of a particular hometype category — such as new home sales, which tend to be more expensive — can also influence the regional median, he said.
In Santa Clara and Sonoma counties, June was the fifth consecutive month of lower sales compared with the same months last year.
The median price paid for a resale, detached home fell from 2018 levels for at least the third consecutive month in Alameda, Marin, Santa Clara and Sonoma counties.
“If demand wanes and inventory mounts, prices could soften more. However, lower mortgage rates might still help trigger stronger buying, putting upward pressure on prices. So far, the inventory level indicates the Bay Area has transitioned from a seller’s market to a more neutral market, but not an outright buyer’s market,” LePage wrote.
In a separate report focusing on the second quarter, Compass noted that while Bay Area home sales were about 5% lower than last year’s second quarter, sales of homes above $3 million surged, bringing them in line with last year’s historical peak.
This could be a reflection of this year’s increase in the number of initial public offerings, as well as the “general accumulation of wealth,” Compass chief economist Selma Hepp said.
Peninsula Realtor Ken DeLeon noted that foreign buyers, especially from China, are still active in the $10 millionand up range. However, their purchases of homes in the $2 million to $4 million range “has tapered off, almost to zero,” The imposition of more stringent capital controls has made it hard for most people to get money out of China, unless you’re “uber wealthy,” DeLeon said. Most Chinese buyers purchasing highpriced homes in the Bay Area are doing it through their companies, he added.