Inventory Shortages Continue to Drive Bay Area Housing Prices.
While the most recent Gallup poll indicates that the rising price of gas has impacted confidence in the U.S. economy, a February report by Fannie Mae shows that Americans are still growing optimistic about their ability to find a home, get a mortgage, and become homeowners. But in California — where inventory has been consistently low and many buyers have had a difficult time purchasing homes — a question arises: Is this optimism finding its way into Bay Area real estate where Bay Area housing prices are volatile?
Let’s look at the past few months in the San Francisco metropolitan area. As predicted, there was a slowdown in much of the data between November and January. For instance, the median sale price dropped about 9% in January, marking the first point since February of 2013 where the average list price was higher than the closing price. In that same timeframe, the number of homes sold shrunk, partly due to the fact that significantly fewer properties were added to the market over the holidays. The average time it took a property to sell also grew, peaking at 39 days in December.
That being said, February’s data might indicate a reversal of many of those trends and another optimistic year for Bay Area real estate—at least for sellers. In our area of focus (which consists primarily of Alameda and Contra Costa counties) closing prices are already jumped 7% from their January slump. Even better, at $500,000, the median closing price was 11% higher than in February 2014 and a staggering 43% higher than in 2013. And while the typical home recently took longer to sell than in past years (December 2014’s peak is the highest in the last 24 months), the current “days on market” figure is only 28 days—its shortest time since last summer.
In sum, February could be a fantastic start for spring sales. But at 1.2 “months” of supply, inventory remains exceptionally low. So low, in fact, that it’s been two years since we last saw these numbers. That’s a good thing for homeowners—it gives them greater influence over housing prices, for example — yet it leaves many prospective buyers wondering if the biggest hurdles to home ownership in the Bay Area aren’t mortgages and interest rates, but simply availability. In the short-term, this is a problem that can only be solved if more homeowners choose to sell.
We should have a better view of the market trends leading into the spring when the data for March home sales becomes available next week. In the meantime, if you are interested in taking advantage of persistent inventory shortages by placing your Bay Area home on the market this spring or summer, we’d love to help get you started on the right foot. Contact us today!