Median home sale prices in the Bay Area dipped ever-so-slightly in March, marking the end of a record-breaking seven-year streak as even high salaries and low-interest rates failed to entice buyers into the country's most expensive market.
Prices for existing homes in the nine-county region fell 0.6%, while the number of home sales plummeted 14% from the previous March, according to a report released by real estate data firm CoreLogic. Declining sales and prices in the core Silicon Valley counties of San Mateo and Santa Clara led the drop-off, with starter homes still fetching more than $1 million keeping buyers on the sidelines.
Home sales scraped to lows not seen for the month since March 2008, according to the survey. CoreLogic analyst Andrew LePage said the decline continues a slow-down from mid-2018, when more homes started to be put up for sale.
"Beginning in late spring last year, some potential buyers got priced out and others simply stepped out of the market amid concerns prices were near a peak," LePage said. "The next two months will likely clarify whether many of those who put plans on hold in 2018 are being lured back into the market by this year's lower mortgage rates, higher inventory and buyers' improved negotiating position."
The record-breaking streak pushed Bay Area homes prices to the tops in the nation, led to seven-figure bidding wars on fixer-uppers, and alarmed state lawmakers concerned that the desperate housing shortage was threatening the long-term economic and social health of the region.
As tech giants Apple, Google, Facebook and other software and service companies added high-salaried employees in the last seven years, a lack of new housing brought pain for would-be buyers and gain for long-time homeowners.
For now, buyers seem to say they've had enough. Overall transactions dropped 14.2%.
Home sales flagged 14.3% Santa Clara County and 11.8% in San Mateo County. Median sale prices fell by 11.1% to $1.2 million in Santa Clara County and 2.4% to $1.5 million in San Mateo County from the previous March.
But the days of high prices have yet to cease.
The median sale price for an existing homes in the nine-county region was $860,000 in March, down from $865,000 the year before and from a peak of $935,000 in May, according to CoreLogic. Year-over-year prices stayed flat last month, according to CoreLogic data from Bay Area counties: median sale prices for resale homes grew 1.2% to $870,00 in Alameda, and 10% to $1.6 million in San Francisco.
But most other counties felt the chill. Prices fell in 1.1% to $603,000 in Contra Costa County, and dropped 6.3% to $1.2 million in Marin County
The flat market comes as the Silicon Valley economy storms forward. Interest rates for standard 30-year mortgages have dropped to 4.2% from a recent high of 4.9% in November.
The regional job market grew 2.4% from the previous March, outpacing the state growth of 1.4% and national growth of 1.7%, according to the Bay Area Council. But even as workers flock to the region, residential building permits were down 5% in the first two months of the year, according to the council.
Agents report healthy demand for lower-priced starter homes, but also an increase in homes for sale. But clouds have been gathering for some time.
Julius Chau, an electrical engineer in San Jose, recently decided to put one of his rental properties, a three bedroom house in Evergreen, on the market. He grew tired of the hassle managing the San Jose property and saw healthy returns on a sale, he said.
The home he bought two decades ago for $300,000 sold for $1 million this month. He received about a half-dozen serious offers, and the deal was sealed within two weeks of the home going on the market. "It was a pretty smooth process," said Chau.
But he probably won't invest in another Bay Area rental. With high mortgages and costs, he said, "the cash flow isn't great."
Mark Wong, an agent with Alain Pinel, said properly priced homes still sell quickly. The entry-level market, around $1 million in much of the Peninsula, remains hot. In addition to Chau's home, Wong recently sold two other single-family homes for around $1 million within three weeks of listing.
"The high-end price is definitely softening," said Wong, based in Saratoga. "The entry-level is really strong."
East Bay sales remained strong, with agents reporting solid interest in homes under $1 million in good school districts.
Nancie Allen of Masterkey Real Estate in Fremont said balance between buyers and sellers is coming back. The market remains spotty — certain neighborhoods remain strong, while others are less desirable, she said.
"It is so local," Allen said. "We're in shifting markets."
