Executive Summary:

• Overall Bay Area home sales (single-family homes and condominiums) declined by 17 percent year over year in November, with all counties and price ranges posting decreases.
• Year to date, total 2018 sales are 5 percent below last year; however, sales of homes priced higher than $1 million are still trending above 2017 levels.
• Some communities — particularly Marin County’s San Anselmo and a few others in San Mateo and Contra Costa counties — continued to post more sales compared with last year.
• Inventory jumped by 27 percent year over year in November, with homes priced below $1 million up by 27 percent, homes priced between $1 million and $2 million up by 39 percent, and homes priced above $2 million up by 9 percent.
• The Bay Area’s median home price appreciation slowed to 3 percent on an annual basis, the least growth since August 2016. Home prices in Sonoma County posted a 5 percent decline due to more lower-priced sales.
• Buyers of affordable homes responded the most to changing market dynamics. Price reductions increased by 16 percentage points, from 16 percent last year to 32 percent this year, mostly for homes priced below $1 million in Santa Clara and Sonoma counties.
• Most of the inventory increases and price reductions were in areas that lack access to employment centers and transit corridors.

The rebalancing of Bay Area housing markets that started several months ago continued in November, with buyers taking a notable pause. However, with extra inventory on the market — especially in the more affordable price range — cooling competition, and more price reductions, buyers are seeing more opportunities heading into 2019.

Overall Bay Area home sales declined by 17 percent in November, with all counties and price ranges posting drops from the same time last year. Table 1 summarizes November year-over-year changes in home sales by price range and county. While sales were generally down, a few bright spots remain in Alameda County’s $1-million-to-$2-million range and in both East Bay counties for sales over $3 million. There were about 940 fewer Bay Area home sales compared with last November, with more than 70 percent of the decrease for homes priced below $1 million.

Table 1: November year-over-year change in home sales by Bay Area county

Source: Terradatum, Inc. from data provided by local MLSes, Dec. 7, 2018

Year to date, total 2018 sales are 5 percent below last year, though sales of homes priced higher than $1 million are still trending above 2017 levels. Table 2 summarizes the changes in total year-to-date sales by price range and Bay Area county. Of the nearly 3,000 fewer sales compared with 2017, almost half is due to declines in Santa Clara County and mostly for homes priced below $1 million. Sales of homes priced above $1 million made up for some of the losses below $1 million, mostly due to price growth moving from below $1 million to above $1 million. San Francisco is the only Bay Area county where 2018 sales are outpacing 2017 levels.

Table 2 also illustrates 2018 year-to-date percent changes in sales compared with 2017 and 2016. While 2018 sales are closer to 2016 activity — only 2 percent below — some areas, such as Alameda, Marin, and San Francisco counties, are still trending above 2016. However, Napa and Sonoma counties show the biggest declines compared with 2016, which could be driven by the impact of the October 2017 wildfires. For more on the impact of last year’s wildfires on Wine Country housing markets, refer to this recent analysis.

Table 2: Year-to-date change in home sales and percent change compared with 2016 and 2017 by Bay Area county

Source: Terradatum, Inc. from data provided by local MLSes, Dec. 7, 2018

Furthermore, while a county-level analysis might provide an idea of general trends, it’s important to note that recent sales declines varied among local cities. Also, in looking at three-month (September to November) changes compared with the same period last year, there were some areas with notable increases in sales. Table 3 shows the 10 Bay Area cities (those with at least 30 sales in 2018) that posted the largest gains over the last three months compared with the same period in 2017, as well as those with the largest declines. Marin County’s San Anselmo stands out with the largest increase in sales over last year, along with other cities in San Mateo and Contra Costa counties. Cities that saw the largest declines were more widely geographically distributed across the Bay Area.

Table 3: Bay Area cities with the largest annual home sales increases and declines, September through November

Source: Terradatum, Inc. from data provided by local MLSes, Dec. 7, 2018

With buyers taking a pause and sellers believing that now is a good time to list their homes, inventory has improved significantly over the last few months, with a 21 percent year-over-year increase in October and a 27 percent annual increase in November. However, looking at the overall Bay Area, average inventory in 2018 is still on par with 2017 and 8 percent below 2015 and 2016 levels. Figure 1 illustrates inventory levels in November over the last three years. Note that while November 2018 levels certainly outnumber last year’s supply, in some markets, 2018 is only slightly above or at 2016 levels. Thus, even with inventory increases, Bay Area housing markets are still historically undersupplied.

If you want to discuss how this affects you, give us a call.  We’d be happy to help. You can reach us at: Peter: (415) 279-6466, or Jane: (415) 531-4091.

Finally, the Happiest of Holidays to everyone, and a very Happy and Healthy 2019!