Bay Area home sales continued to lose steam in January, but the median price of a single-family house once again rose modestly on a year-over-year basis as buyers competed for a shrinking supply of homes.
The median price of a Bay Area home in January was $645,000, up 3.8 percent from January 2016. That’s a far cry from the double-digit appreciation that was once de rigueur for the nine-county region. Still, discounting a single month — March 2016, when the median price stayed absolutely flat — January was the 58th consecutive month that saw a year-over-year increase in the median price.
“Price appreciation has gradually ratcheted down,” said Andrew LePage, research analyst for the CoreLogic real estate information service, which crunched the January numbers.
As causes of the slowing market, he pointed to “thin inventory” — the chronically few home listings — and buyers’ concerns about prices having soared beyond their reach in recent years. Factor in the rising mortgage rates of the past three months, which can add several hundred dollars to a monthly payment, and the current market can be nerve-wracking for potential buyers.
“I’ve been praying high and low,” said Demi Marquez, who with her husband Roy hopes to move from their Walnut Creek condominium — purchased about 15 years ago for $305,000 — to a $998,000 single-family home, also in Walnut Creek.
Preparing to make their formal bid this week, she said, they face tough competition from other interested buyers for the three-bedroom, 1,700-square-foot house — which is 51 years old, though freshly renovated, and just big enough for eight-year-old son Mason to finally get a dog. Yet even with Roy’s salary as a controller for a firm in San Francisco, Demi said, “We are struggling, trying to buy this place. Walnut Creek has become untouchable.”
Region-wide, sales were sluggish, up just 1.4 percent from the year before — slow even for January, typically a slow sales month.
In fact, 37 percent of January sales were concentrated in three of the Bay Area’s most affordable counties: Contra Costa (where the median price was $500,000), Napa ($608,796) and Solano ($359,550). The sales volume was up 14.7 percent in Solano County, the heftiest increase in the region, while prices appreciated most dramatically in Napa County, up 20.6 percent from a year earlier.
“The more affordable the market, the more likely you’re going to see year-over-year gains in sales,” LePage said.
In the heart of Silicon Valley, sales dipped 9.3 percent in San Mateo County, while the median price rose 7.7 percent year-over-year to $1,050,000. Sales fell 2.5 percent in Santa Clara County, where the median rose just 2.4 percent to $850,000.
Speaking Monday, Sereno Group agent Kevin Swartz said, “There’s only 659 homes that went on the market in February in all of Santa Clara County. And when we look back at the year prior, there were 1,105 active listings in February 2016 — and 1,057 in February 2015. So we’re at half the inventory that we’re used to seeing, and that is a significant change.”
Across the bay in Alameda County, January sales rose 3.7 percent from a year earlier and the median price inched up 2.7 percent to $667,500. In Contra Costa County — generally more affordable, despite exclusive pockets like Walnut Creek — sales rose 4.3 percent and the median climbed 11.2 percent to $500,000.
Kevin Kieffer, a Keller Williams agent based in Walnut Creek, said the spring market “should be accelerating by now, but I haven’t seen an acceleration.”
He has noticed that many buyers who move up to costlier houses are choosing not to sell their old homes: “If you have a $600,000 home and you’re going to move up to a million-dollar home, you’ll keep the old place and rent it for $3,300 a month. Plus, you’ll get the depreciation (on taxes). A lot of folks like that, and that’s one of the reasons you’re not seeing too many houses coming to market.”
Kieffer, who represents the Marquez family, recently analyzed prices in a one-mile-radius area of Walnut Creek and was surprised to find only 13 homes had sold there since mid-March 2016. “In past years, I’d expect to see 40-50 sales through that area” in the same time period.
Given the slim pickings, he said, some “buyers have lowered their standards in terms of saying, `Hey, I think we better get a fixer-upper.’ You just can’t be as choosy anymore.”
Swartz, the Sereno Group agent, observed a different behavior set: “Buyers know inventory is low, but they also know that prices don’t seem to be going up as they had been. So they’re really patient, really picky.”
He described a recent open house for a 2,000-square-foot Eichler home that listed for $1,748,000 on a busy street in Sunnyvale.
“It was the first week in January and there was nothing out there — inventory was so low,” he said. “And we had 100, maybe 120, groups come through the open house and there was lots of interest — but there were only two offers. And one offer was right around asking” — the listing price — “and the other was all-cash for $1,855,000. It was from someone who was moving over from China, where they had a business, and they were expanding into Silicon Valley.”
The all-cash bid won.
This is the kind of story that makes Mark Vandevoorde nervous.
A software engineer, he rents in Sunnyvale, and his non-renewable lease is up in August. He wants to buy a house, and would like to be under contract by early June.
Vandevoorde loves Eichlers, those retro-cool, mid-century homes with open floor plans and loads of floor-to-ceiling windows. But since getting serious about his house search in the fall, he hasn’t had any luck: “I’ve bid three times and every time I’ve come in second,” he said with a rueful chuckle.
One of his bids was on a five-bedroom Eichler that listed for about $2.5 million in Los Altos: “One of those huge A-frames with an atrium. It was like a museum. It was a well-kept antique — except for the yard around the pool. The decking there, it was a disaster,” he said.
“I bid around $2.75 million and it went for about $50,000 more than that,” Vandevoorde said.
“I’m a little apprehensive, I have to say,” he confessed, now that spring is almost here. “As that June deadline approaches, I’m going to start bidding on conventional houses, not just Eichlers. Because I’ve got to have something.”