Signaling a market in transition amid a surge in new listings, the median price paid for a new or existing Bay Area home or condo last month was $815,000, down 1.8% from August but up 9.3% from September 2017, research firm CoreLogic said.
While still robust, that 9.3% gain was the smallest year-over-year increase for any month since June 2017, when it rose 9.2%. Last September, the median price was up 13.7% year compared with the previous September.
Sales in the nine-county region dropped sharply to 5,970. That was down 22.1% from August and down 18.9% year-over-year. That was almost twice the normal drop between August and September and the lowest sales count for the month of September since 2007.
These numbers are for sales that closed last month. They don't fully reflect how buyers and sellers are responding to a recent spurt in inventory, because it typically takes a month or so for accepted offers to close.
"There is still a gap between sellers who are trying to extrapolate out what they have seen in the past three or four years in price increases and buyers who have more options to choose from. I think that still has several months to play out," said Jordan Levine, senior economist with the California Association of Realtors.
Throughout the Bay Area, new listings, active listings and price reductions all surged last month year over year, said Patrick Carlisle, chief market analyst with the Compass real estate brokerage.
The change was most striking in Santa Clara County, which had been one of the nation's hottest markets for most of this year. There, new listings of existing, single-family homes were up 83% year-over-year in September, active listings were up 120% and the number of homes with price reductions was up 308%, Carlisle said.
In San Francisco, the comparable numbers were 28%, 8% and 32%, respectively.
If you compared September 2018 to September 2016, the increases were much less dramatic. That's because the Bay Area market was "ferociously hot" from 2017 through this spring, Carlisle noted.
Last week, the California Association of Realtors reported that the number of existing, single-family homes on the market in the Bay Area was 44 percent higher in September than in September of last year. Statewide, active listings rose only 20 percent, the sixth consecutive month of increases following 33 straight months of declines.
Levine said the market is transitioning from a strong seller's market to more equilibrium.
"The market is less competitive, with a lot more listings for buyers to choose from. That, taken together within higher interest rates and higher prices, has cooled demand. You are seeing time on market come up a little bit, premiums are coming down to list (price) or a little lower." There are "more active listings that haven't sold yet that have price reductions," he said.
"We are still forecasting that prices are going to go up, but at a slower pace than what they had been for most of the past year," Levine said.
Garrett Frakes, managing partner with brokerage firm Polaris Pacific, said, "We are shifting to a more balanced marketplace where buyers are being more judicious, more careful and more thoughtful and willing to step away from a deal if it doesn't meet what they want."
As an example, Frakes said he recently received a postcard from a Realtor about a home in Burlingame, an "undersupplied" market where prices "have run up dramatically in the last two or three years."
The home was listed at $2.5 million and a year ago it probably would have sold for $2.6 million, he said.
"This time it sold for $2.4 million in 18 days." It likely had one offer from a buyer who was willing to close in 18 days but not willing to pay more than asking price. "The seller probably had a good agent who said this is where the market is, if you don't take this deal, the likelihood is it's not going to get much better."
One of the new condo developments Polaris is marketing is the Alexandria, which is nearing completion in San Francisco's Richmond District. With only six units left, Polaris cut prices on a couple of them. A one-bedroom plus den unit with 1,098 square feet listed at $1,219,000 on Sept. 1 is now listed at $1,150,000. Frakes said it's not unusual to lower prices on the last few units of a development and that response to other new condos is strong.
He said Polaris started marketing Mira, Tishman Speyer's luxury condo complex in South Beach, two weeks ago and already has contracts signed for 25 units. The development has 236 market-rate units and 156 below-market rate.
"We are definitely staying flexible and listening to what the buyers are telling us," he said.
Many people would welcome a more balanced market, as long as prices don't crash and wipe out homeowners' equity.
"From the standpoint of affordability and homeownership, slower growth in prices would be a good thing, Levine said. "It would give incomes a chance to catch up and get back some affordability."
