Bay Area home prices rose at their slowest year-over-year pace in almost two years last month, another sign of a decelerating market.
The median price paid for a home or condo in the nine counties was $815,000 in November, down 3.8 percent from October and up 3.8 percent from November 2017, research firm CoreLogic said in a report issued Friday.
The median price is down 6.9 percent from its all-time high of $875,000 set in June.
Year over year, the median price had been rising in the double digits for 13 consecutive months until September, when it rose 9.3 percent. October’s gain was also 9.3 percent, so November’s 3.8 percent increase marks a significant slowdown in appreciation.
The Bay Area median price hasn’t fallen year over year since March 2012, when it dipped 0.6 percent to $358,000. Since then, it has risen for 80 straight months, said CoreLogic analyst Andrew LePage.
Sales of new and existing single-family homes and condos, meanwhile, totaled 6,147 in November, down 14 percent from October and down 15.2 percent from November of last year. Sales typically slow between October and November, but the average decline since 1988 is only 8.8 percent.
“November’s slowdown affected all major price categories, including a nearly 10 percent annual drop in $1 million-plus sales, which have fallen year over year in two of the last three months. Higher mortgage rates worsened affordability constraints this year, and in recent months, stock market volatility could have contributed to a high-end pullback,” LePage said in a press release.
On the bright side, the stock market correction drove investors into the safety of Treasury securities, driving their prices up and yields — which move in the opposite direction — down. The average interest rate on a 30-year mortgage, which tends to follow the 10-year Treasury yield, fell to 4.55 percent this week from almost 5 percent in mid-November, according to Freddie Mac.
Home prices rose last month on a year-over-year basis in all Bay Area counties except Napa and Sonoma, where they fell 6.8 and 5.3 percent, respectively. Those declines “likely reflect, at least in part, market-mix changes that occurred in November of last year following the October 2017 wildfires, which caused some deals to close in November 2017,” LePage said.
“That was the beginning of the rush to shelter,” said Rick Laws, regional vice president in Sonoma County with the Compass real estate brokerage. “Some people immediately went out and bought homes.”
Soaring prices lured more sellers into the market but caused some buyers to back off. That, “coupled with the falloff once everyone who was a fire victim found someplace to live, caused demand intensity to slack off,” Laws said.
“I think the market (in Sonoma County) is experiencing the same sentimental adjustment the rest of the Bay Area and nation are,” Laws said. “There has been a pullback by buyers that’s going to cause prices to settle back. I think buyers will stay back until spring.”
He predicts that in the spring, “there are going to be a lot of people in rentals who will have to make a decision about whether to rebuild, sell (their empty lot), buy an existing home or find a spec property because their rental money is going to run out.”
Most insurance companies provide up to two years of living expenses to people who lost homes in last year’s fire. Some are already reminding their policyholders of this, Laws said. In the spring and summer, “I think you will see increased activity, a mini-rush to shelter if you will.”
Jenny Romeyn and her husband, Ramin Ramhormozi, decided to sell their 3,800-square-foot home in the upscale Skyhawk area of Santa Rosa because they wanted to be closer to downtown, near both their jobs and their children’s school.
Romeyn said she figured “now is the time to get out of the bigger home market. I felt like once everything is rebuilt in Fountaingrove, it wouldn’t be a good time to sell. We will be up against all these brand-new homes. Right now there was nothing like ours on the market.”
They got their home ready to list, but buying a new home was “a bit harder than I thought it would be,” she said.
The couple found a 2,100-square-foot home in need of renovation that was originally priced at $905,000 in September. Romeyn considered that price “ridiculous” considering “it hadn’t been touched” since the 1950s, she said. It even had a carpeted rumpus room with an indoor grill.
The price had later been reduced to $699,000, and the sellers accepted their offer of about $623,000.
They immediately listed their large home at $1,395,000 and within a week had an all-cash offer for $1,350,000, which they accepted. The buyers even gave them two months of free rent so they could continue to live in it while they renovate and expand their new home.
Both deals closed last month.
Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender
Article source: https://www.sfchronicle.com/business/networth/article/Bay-Area-home-prices-rose-at-slowest-pace-in-13495864.php
