Runaway Bay Area housing prices — fueled by strong employment and scarce inventory — have started stalling in San Mateo and Santa Clara counties, hinting that even well-salaried professionals have had enough.
Resale home prices dropped year-over-year in February in Santa Clara County by 16% and in San Mateo County by nearly 6%, according to a report released Thursday by real estate data firm CoreLogic. Overall median home prices for the nine-county region surged by 4.6% to $790,000, led by strong gains in the East Bay.
CoreLogic analyst Andrew LePage said high mortgage rates and a bumpy stock market late last year slowed home sales. But he said that a recent drop in rates and more homes for sale could lead to a rebound.
"Those factors are likely putting some would-be buyers back into home-shopping mode," LePage said. "This includes people who stepped to the sidelines last year either because they had been priced out by higher rates and prices or because they felt the housing market was near a peak and it could pay to wait."
Local real estate agents report strong demand but also some signs of slowing, with high-end properties sitting longer on the market.
Year-over-year prices climbed in few spots last month, according to CoreLogic data from Bay Area counties: median sale prices for resale homes grew 9.4% to $820,750 in Alameda, rose 5.5% to $600,750 in Contra Costa, and 6.7% to $1.23 million in Marin.
But the super-heated prices in tech-heavy counties dropped: Santa Clara home prices fell from from $1.29 million last February to $1.09 million this year, while San Mateo dropped from $1.45 million to $1.37 million, and San Francisco remained flat at $1.45 million.
Transactions fell 12% from the previous year, and were the lowest mark for February sales since 2008.
The record streak of rising Bay Area home prices started in April 2012, when the median sale price in the nine county region was $425,000 according to CoreLogic. Over the next seven years, median sale prices have more than doubled, hitting a peak of $935,000 last May.
Interest rates have remained at historically low rates, and have dropped in recent months. The average 30-year fixed mortgage is at 4.28 percent, a drop from a recent high of 4.9% in November, according to Freddie Mac.
Bay Area real estate agents say the market has remained strong, especially for starter homes listed at or below the region's median sale price. The more-affordable East Bay has seen prices and sales grow.
Matt Rubenstein, an agent with Compass Real Estate in Contra Costa County, said homes listing between $800,000 and $1 million were moving quickly, and with multiple offers. Properties near public transit remain attractive for East Bay commuters heading into San Francisco.
One recent single family home listing in Walnut Creek drew several competitive offers, he said, and will likely close over the $1.1 million asking price. "I don't see it slowing down," Rubenstein said.
Buyers with more cash are picking and choosing through limited inventory, and waiting for better deals, agents said.
San Jose agent Gustavo Gonzalez, president of the Santa Clara Association of Realtors, said the market remains robust — as long as sellers price their homes fairly. Buyers have been hesitant to jump into deals when sellers ask for top-of-the-neighborhood prices, he said.
"Everything is moving quickly," he said, "if you price it right."
Gonzalez sees plenty of demand in the East San Jose foothills. He has a half-dozen buyers looking for homes between $750,000 and $1.6 million, he said. Several are getting help from family members to make the hefty down payments.
"It's really hard without the support of people with deeper pockets," he said.
Fremont agent Nancie Allen, president of Bay East Realtors Association, said the market has cooled, but sellers can still expect healthy appreciation on their homes. "Overall, prices are really good," she said.
A recent open house in Fremont for a single family home listed at $900,000 drew about 50 people, she said. With lower interest rates, she added, "people are feeling a little more confident."
