Buyers in the typically ferocious San Francisco Bay Area real estate market looked decidedly less enthusiastic in December, as sales dropped despite more discounts, according to a report Wednesday from Compass.
The tech-hotbed logged 22% year-over-year transaction declines in December, the brokerage said. However, total activity in 2018 showed a slight improvement over 2017, with a 1% increase across the Bay Area, driven by the highest end of the market, which logged the largest transaction gains.
The median home price in December in the Bay Area was $860,000, a 2% decline from the same time in 2017.
But as transactions slowed in December, inventory inevitably rose.
Housing stock rose 31% across the entire Bay Area, led by homes priced below $1 million, which logged a 35% increase in stock in the year to December. The inventory of homes between $1 million and $2 million saw inventory levels rise 37%, according to the data.
The exception was the upper echelons of the market. Homes priced at $3 million and more saw no change in inventory levels.
On a county level, Santa Clara County logged the largest inventory increase in the Bay Area (66%). And while San Francisco saw some increase in inventory in the last months of 2018, the county was the only one to log a year-over-year stock decline in December (-1%).
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“When examining inventory gains, it’s important to keep in mind that the increases come on the heels of very low levels of homes for sale,” Selma Hepp, Compass chief economist, said in the report.
“Thus, even with more homes for sale, inventory in Santa Clara County reached only a 1.7-month supply in December from 0.7 months last year, which is notably below the six-month supply mark considered to be a balanced benchmark between buyers and sellers,” she added.
As some buyers decided to pause in December—a result of multiple uncertainties including political issues, financial volatility and concerns over economic growth—others proceeded more cautiously, the report said.
In December, Bay Area homes sold in an average of 28 days, almost two weeks longer than at the same time last year.
In response, sellers reduced asking prices to lure buyers. Across the Bay Area, the share of price reductions doubled, increasing to 33% in December 2018, from 15% a year earlier, the report said.