Bay Area home sales ground down in October, with seasonal slowing and further indications that buyers are taking a wait-and-see approach before plunging into a record-setting market.
Home sales in the region dipped 4 percent from the same time last year, with more buyers sitting on the sidelines in Santa Clara, Alameda and Contra Costa counties, according to a monthly report released Friday by real estate data firm CoreLogic.
The median sale price in October for existing homes in the nine county region rose 6.9 percent over the previous year to $860,750. Real estate watchers say that is a strong showing in any normal market — but it’s the slowest rate of growth in the Bay Area in more than a year.
CoreLogic analyst Andrew LePage said price growth has slowed as buyers pulled back from sky high price tags. “There’s been a psychological shift in the market,” he said. “It can only go up, up and away for so long.”
Shoppers might find better deals in the next few months, but available homes and interest rates will influence the market. “The bad news for buyers is mortgage rates,” LePage said. “They’re facing a significantly higher monthly payment.”
Interest rates in the last year have ticked up nearly 1 percentage point, to 4.8 percent, on a standard, fixed-rate 30 year mortgage, according to Freddie Mac.
The real estate market continues to reward long-time homeowners with huge gains in property values, even as newcomers and first-time buyers are increasingly reluctant to drain their life savings and sign for big mortgages.
Median sale prices have climbed, year-over-year, every month since April 2012, a record-setting streak.
Gains in median sale prices around the Bay Area counties slowed from their scorching pace, with existing homes in Santa Clara rising 6.7 percent to $1.2 million, San Mateo jumping 8 percent to $1.45 million, Alameda climbing 5.7 percent to $861,000, Contra Costa increasing 3.4 percent to $600,000, and San Francisco rising 5.3 percent to a region-high $1.5 million.
Homes sales in October were the lowest for the month since 2011. Overall sales in Bay Area counties have dipped, year-over-year, for the last five months. Contra Costa sales slipped 10 percent, Santa Clara fell 8 percent, and Alameda dropped 9.4 percent, while San Mateo remained flat.
Local agents report less interest in open houses and more sellers forced to lower prices. Price cuts and longer sale times have become more typical, but most agents are unwilling to yet call it a buyer’s market. Home inventory, while growing, is still historically low, and the strong local economy continues to add new jobs and attract workers from around the globe.
“We’re at a point now where I think salaries just can’t keep up with home prices,” said Tim Ambrose, agent with Berkshire Hathaway and president of the Bay East Association of Realtors. “Buyers just can’t go that high any more.”
Buyers are less active during the holiday season, he said, but sellers are typically motivated if they are selling in November and December. “The market is changing,” Ambrose said. “I’m noticing it throughout the Bay Area.”
San Jose agent Jeff Hansen said the market for condos has cooled in recent months. Identical units are fetching less than they did in the summer peak. But Hansen added, “It’s not a horrible time to be selling. It’s still a seller’s market.”
Will Doerlich of Realty One Group in San Ramon said buyers are finding more choices in the East Bay, and homes are staying on the market longer. The sweet spot remains between $550,000 to $900,000 for most families, he said.
He added that concerns about future interest rate hikes “got some people off the fence.”
Mark Wong of Alain Pinel in Saratoga had a seller negotiate with a low-ball offer and reach a deal that satisfied both parties. But he said it’s not quite a buyer’s market. “The prices haven’t come down yet,” Wong said. “Not yet.”
LePage said the slow pace of sales could have been worse. The region was buoyed by transactions in Sonoma and Napa counties, which bounced back from devastating fires in 2017.
Homes in the middle and high-end of the market are moving more briskly, LePage said. About 8 in 10 homes in the Bay Area sold for more than $500,000.
Bargain hunters and first-time buyers stayed away, with sales of homes under $800,000 dropping 16 percent and under $500,000 dropping 21 percent, according to the company.
