Bay Area home sales show slowest September in three years

Bay Area home sales sagged last month — the slowest September in three years. But as sales dwindled, in a reflection of the region's shrinking home supply, buyers continued to bid up the region's notoriously high prices.

The median sales price of a single-family home in the Bay Area jumped 15.5% on a year-over-year basis, the sharpest gain since May 2014.

First-time buyers face a "daunting challenge here," said Andrew LePage, research analyst for the CoreLogic real estate information service, which on Friday issued its latest report on the housing market for the nine-county region. "Can you imagine being out there looking for anything under $500,000?"

To illustrate just how dire the affordability crisis has become, he offered these numbers: In Santa Clara County, where the median price of a single-family home now stands at $1,075,000, homes selling for $500,000 or less accounted for just 8.7% of all sales last month — down from 12.8% of the single-family homes sold in September 2016. Meanwhile, houses selling for $800,000 or higher, accounted for 75.8% of all sales — up from 62.4% a year earlier.

Bay Area home sales
San Francisco shrouded in fog with Mt Diablo in the distance

Across the bay in Contra Costa County, a relative bastion of affordability, the share of homes selling in the lower-price ranges is also shrinking. Homes selling for $500,000 or less accounted for 37.5% of September sales in Contra Costa County — down from 50.2% a year ago. During the same time period, the share of homes selling for $300,000 or less was halved, dropping from 14.1% of all sales to 7%.

For the nine-county region as a whole, the median price last month was $768,000, up from $665,000 in September 2016.

It's a sellers' market, yet many potential sellers are choosing to sit tight.

They don't want to pay capital gains penalties, or they prefer to sit on their equity, or they can't imagine where else they would move in the region to find something remotely affordable, agents have observed. These tendencies play out in city after city: The number of active listings plunged year-over-year in September by 38% in Concord and 23% in Walnut Creek, according to the Bay East Association of Realtors.

Consequently, when a home hits the market, said Kevin Kieffer, a Keller Williams agent in Walnut Creek, "There's no lingering. None. Stuff that goes for sale, goes."

In Silicon Valley, agents lately have adopted the strategy of listing homes below their market value to attract buyers who then bid up the price, almost like an auction. Looking at transactions between Sept. 12 and Oct. 15, Alain Pinel agent Mark Wong counted nearly 70 sales for $200,000 or more above the asking price in Sunnyvale, Cupertino, West San Jose and Saratoga. Of those, he said, seven sold for at least $500,000 above asking price.

He and other agents said they have noticed a growing number of off-market sales, where agents quietly hear about soon-to-be-available properties and notify clients who make offers — avoiding the competitive bidding of the marketplace.

"There's a ton of that," said agent Joban Brown, of Fisher and Brown Real Estate in San Jose. "It kind of makes it unfair if you're in the market, looking." On the other hand, he said, if a buyer is lucky enough to plug into an off-market sale, he or she "may find something that's more of a fair value."

Tribune Content Agency
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