The San Jose housing market has cooled more than any other in the country — and it's still the hottest in the nation, according to a recent Zillow survey.
The bidding wars and quick cash sales have abated, and home sellers are cutting prices more often and waiting longer to close deals than a year ago. But middle-income families still struggle to afford the median priced home of $1.2 million in the San Jose metro area. A typical family needs to put about $600,000 down to fit that mortgage comfortably in their budget.
"Buyers are not being forced into crazy bidding wars to leapfrog each other into a house," said Zillow economist Jeff Tucker. But, he added, "It has been the hottest market in the country. In a lot of ways, it still is."
The Bay Area housing market has rocketed up and pushed out many would-be buyers. Median sale prices for existing homes have climbed, year-over-year, every month since April 2012, according to real estate data firm CoreLogic. These rising prices — the median sale price in January for the nine-county region was $750,000 — have slowed Bay Area home buying to its lowest level in a decade.
Sales slumped nearly 13% in January from the previous year. Agents say homes priced over $2 million are spending longer on the market, and CoreLogic data found transactions for luxury homes in San Mateo and Santa Clara counties dropped by more than 25% in December and January.
Real estate agent Ramesh Rao said higher-end properties in Cupertino and Saratoga are taking longer to sell. "At the moment, it is neither clearly a sellers' market nor a buyers' market," Rao said in an email. "The market is moving sideways."
Zillow measured the slowdown by charting home listings with a price cut, the length of time it takes to sell, and the sale-to-list price ratio. Last year, homes in San Jose metro took 41 days from listing to close, a remarkably quick turnaround given the typical steps a home sale requires — bank approval, inspections and insurance. It took 49 days in the San Francisco and Oakland metro area.
"That's just lightning fast," Tucker said. Some of the quick deals could be attributed to all-cash offers with buyers agreeing to take properties as-is, with no contingencies, he said.
San Jose homes now take about 60 days from listing to closing, while homes in the East Bay and San Francisco take 57 days to finalize a sale, according to Zillow.
About 15% of homes listed in the San Jose metro area took a price cut. Homes still sold for a robust 97% of asking price. Last year, the typical property sold for a 7% premium over asking price.
In the East Bay and San Francisco, 11.5% of sellers dropped prices and sold their homes for an average of 98.6% of the asking price.
But even as the market cools, median home values have surpassed $1 million in the San Jose metro area and ticked up to $957,000 in the San Francisco metro. At those prices, a family in Santa Clara County making the county's median income of about $107,000 would need to put $614,000 down to keep mortgage payments at 30 percent of their monthly earnings.
Agents say demand remains robust, despite the few hints of a slowdown.
Agent Mark Wong of Alain Pinel said demand is strong for entry-level homes, listing for about $1 million, on the Peninsula. Wong sold two homes recently in Mountain View and San Jose for more than the asking price and with no contingencies. Both sellers accepted offers within two weeks, he said.
On a recent weekend, Wong had 50 people tour an open house during a rainstorm. "Lots of people still want to get into the market," he said. "I don't think it's slowing down."
Will Doerlich with Realty One in San Ramon said homes for sale have increased in East Bay cities, and sellers have been willing to accept more contingencies on offers.
But in San Ramon, Dublin and Pleasanton, he said, "it's extremely busy and extremely competitive, still."
