Bay Area home prices keep rising, and sales drop again

Bay Area home prices rose in January, and sales dropped again — continuing trends in one the nation's least affordable housing markets.

A new CoreLogic report reveals that median home prices in January were up 13.1% over January 2017, to $710,000 for all homes sold in the Bay Area. The median price in San Francisco, though down from December, remained above $1 million.

This is no surprise: The median home price has risen, on an annual basis, for 70 consecutive months, beginning in April 2012. The last six months have seen double-digit increases, and the January numbers reflect the largest increase since September.

"Six consecutive months of the overall median sale price rising year over year by double digits stands out to me," said Andrew LePage, a research analyst for CoreLogic, an Irvine, Calif., property data and analysis firm. "It really reflects a low inventory of homes for sale, especially in more affordable price range."

The areas with the largest price increases were San Mateo County, where prices rose 31.4%, and Santa Clara County, with a 22.3% rise. Both are areas of enormous growth in tech jobs. The San Jose metro area was predicted to be the hottest housing market of 2018 by some industry analysts, largely due to the tech boom.

Bay Are housing market
Aerial Photograph of downtown San Francisco and the Bay

The number of homes sold continued to decline. Compared with last year, home sales in the Bay Area were down 7.8% in January. This decrease was sharper at the lower end of the market, with sales of homes priced below $500,000 down 25%.

"This was the slowest January in total Bay Area home sales in 10 years," LePage said. "Again, I think that mainly comes back to inventory and affordability."

The report also reflected a sharp drop in sales from December to January, which industry experts said is normal. This year, sales in January were down 5% from December, more than the average drop of 3%.

Absentee buyers, including investors and second-home buyers, accounted for more than a fifth of the market at 20.9%. That's up from 18% in December. A year ago, their share was similar. Absentee activity peaked at 28.4% of the market in February 2013, according to CoreLogic.

Gregg Lynn, a broker at Sotheby's International Real Estate in San Francisco, said a drop is normal after some of the market's busiest months. Lynn works almost exclusively in San Francisco and operates at the higher end of the market.

"Many people think that the time between Thanksgiving and New Year's is a time when people like to be going to parties and giving gifts, but we're really, really busy in the real estate market," Lynn said. "Then in January, nothing happens — nothing."

He said the decrease was consistent with a slow period that continues into February. "It crystallizes a lot of what we've been feeling," he said. "The appetite from buyers is very, very strong, but there haven't been a lot of great properties, there have not been great homes to see."

He said he is preparing for a busier March as more listings come on the market.

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Home prices Housing markets Purchase Real estate CoreLogic California
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