Home sales and prices scarcely inch ahead
Recent housing gains far below double-digit pace of runaway market years
Is the Bay Area housing market losing steam? Could be.
With more buyers saying “no” to mile-high prices, September sales of single-family homes were up a modest 2.3 percent from a year ago — a far cry from the red-hot market of the past several years. And even more revealing, June-through-September sales for the nine-county region were down 5.1 percent from the same period of 2015.
That’s the upshot of a new report from CoreLogic, the real estate information service. The numbers mirrored the observations of brokers and agents, who cited pushback from buyers after years of bidding wars and spiraling prices.
“Buyers are kind of digging their feet in and saying, ‘We’ve hit a threshold of pain in terms of affordability and you’ve got to say no,’ ” said Jennifer Branchini, past president of the East Bay Association of Realtors. “It’s going to be a big issue going forward. It’s not going away.”
In Santa Clara County — the heart of Silicon Valley — the median price was frozen in place from the year before, at $910,000, and the number of sales declined a hair, by 0.3 percent. September sales dipped 4.7 percent in San Mateo County, while rising just 0.2 percent in Contra Costa County and 2.9
percent in Alameda County.
The market was more robust in some of the more affordable inland areas, including Solano County, where sales were up 19.1 percent and the typical home cost $349,000, up 5.4 percent.
Looking at the nine Bay Area counties as a whole, the median price rose 2.3 percent to $675,000.
The typical house cost $498,000 in Contra Costa County, up 3.8 percent from a year earlier; $718,500 in Alameda County, up 7.5 percent; and $1.14 million in San Mateo County, up 7.1 percent.
Those still are hefty prices, to be sure. But the rate of appreciation is well off the double-digit clip of the old runaway market.
“The market’s sort of correcting itself, given how high prices had gone,” said Andrew LePage, research analyst for CoreLogic. “Given that the job market is healthy and mortgage rates are low, it suggests that the affordability problem has worsened and we still have inventory constraints in a lot of markets.”
As always, lack of inventory — housing supply, in the vernacular — is the crux of the region’s crisis.
Chris Trapani, founder and CEO of the Sereno Group, did some additional data-crunching to show just how scant the supply has become in Santa Clara County.
“January of 2000, right before the Nasdaq peak, was known as the all-time low” for inventory in the county, he said. “We didn’t actually eclipse that low until January of 2014, and then 2015 was even lower. And then the start of 2016 was a little click up — a nominal increase.
“We’re running on three to four years now of the lowest consecutive starts for inventory that we have on record.”
Trapani’s analysis of the Multiple Listings Service shows 1,510 active listings for single-family homes in September — down from 1,750 in September 2015 and down even further from 1,804 in September 2014.
On top of that, his September data show a 7.6 percent year-over-year decline in closed deals.
“It makes you wonder” whether prices “have gotten out of reach for an increasing number of buyers,” he said.
Prices remain high, Trapani, said, “but that’s because the inventory is so low. It doesn’t take that many buyers to buoy that kind of market.”
And the supply is stagnant, in his estimation, often because so many owners fear paying capital gains taxes on houses that have wildly appreciated, sometimes by millions of dollars. “They consider the taxes and say, ‘I’m not going to make that move.’ ”
Given the nature of the market, it can take some maneuvering to close a deal.
Nicole and Murray Dennon moved in 2012 from Seattle, where they owned a 3,500-square-foot Crafts- man-style home, to Los Gatos, where they bought a house from friends — a 1,350-square-foot bungalow for the couple and their two children. A year ago, they began looking for a bigger place and were repeatedly frustrated by the prices, to the point that they feared they would have to leave the area even though they have a respectable income.
Murray works in the tech sector. Nicole is from a successful farming family. Yet “there were moments when we went, ‘Wow, did we make the right move, coming here?’ ” Nicole said.
Meanwhile, their agent, Kim Richman of the Sereno Group, spotted a house in Los Gatos last spring: a 2,500-square-foot fixer-upper with four bedrooms that listed for $2.4 million.
The Dennons — who built their house in Seattle — were willing to put in the sweat equity. But the house was owned by a family whose members couldn’t decide whether to sell and pulled the property off the market. Richman kept negotiating, quietly. The owners were stop-and-go, but in the end, after rounds of offers and counteroffers, agreed to sell — for $1.95 million. However, they put multiple contingencies into the contract, including that the Dennons sell their bungalow within two weeks of signing.
The bungalow went in less than a week for $1.42 million — $30,000 under the asking price — and the Dennons will soon move into their fixer-upper.
“We’re here for life,” Nicole said, “back in a big ol’ house.”