Bay Area Housing Market Caps 2018 With Slowest December Sales in 11 Years;
Mortgage Rates, Stock Market Volatility, Affordability & Other Factors Weighed on Market
New data released today by CoreLogic shows a total of 5,341 new and existing houses and condominiums were sold in Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma counties in December 2018. This number is down 13.2 percent month over month from 6,154 sales in November 2018,* and down 21.6 percent year over year from 6,814 sales in December 2017.
Total December 2018 home sales in the San Francisco Bay Area were the lowest for that month in 11 years, since 5,065 homes were sold in December 2007. Sales have fallen on a year-over-year basis the past seven consecutive months. The December decline was the largest during this seven-month period.
Since 1988, the average change in San Francisco Bay Area home sales between November and December is a gain of 7.8 percent. December sales have ranged from a low of 5,065 in 2007, to a high of 12,349 in 2003. December 2018 sales were 34.8 percent below the December average of 8,190.
In December 2018, sales of newly built homes (detached houses and condos combined) were 44 percent below the month’s historical average, while resales were 33.3 percent below the month’s average. Ignoring the 2003–2006 housing boom that was fueled by risky home loans, December 2018 resales were 30.3 percent below the long-term average for the month.
“Last month, the San Francisco Bay Area logged one of its sharpest declines in home sales since the end of the last housing downturn,” said Andrew LePage, a CoreLogic analyst. “Sales in the region fell to the lowest level for a December in 11 years, and the nearly 22 percent year-over-year drop in activity was the largest for any month in more than eight years. The decline reflects a variety of factors. Mortgage rates hit a seven-year high in November, affecting December closings, and stock market volatility created an additional headwind in high-end markets. Meanwhile, some would-be buyers remain priced out or unwilling to buy amid concerns prices have overshot a sustainable level.”
The median price paid for all homes sold in the San Francisco Bay Area in December 2018 was $785,000, down 3.7 percent from $815,000 in November 2018 and up 4.6 percent from $750,500 in December 2017. The 4.6 percent year-over-year gain in the median sale price in December 2018 marks the second lowest for any month since January 2017, when the gain was 1.3 percent. The November 2018 median rose 3.8 percent year over year.
On a year-over-year basis, the median sale price has risen for 81 consecutive months (since April 2012). Those gains have been in the single digits each month since September 2018. June 2018 had the highest ever median sale price: $875,000.
“The nine-county region’s overall median sale price in December 2018 was the lowest since last February but still 5 percent higher than a year earlier,” LePage said. “At the county level last month Napa and Sonoma counties logged small annual declines in their overall median sale prices for the second month in a row—declines likely related at least in part to the wildfires those counties suffered in the fall of 2017. The median price paid for resale detached houses, specifically, last month fell year over year in those two counties as well as in two others—San Mateo and Santa Clara. Such declines can indicate a ratcheting down or leveling off of price appreciation, if not an annual price decline, but they can also reflect changes in market mix, such as a reduction in the share of higher-end homes selling.”
Home sales of $500,000 or more accounted for 77.1 percent of all sales in December 2018, down from 79.8 percent in November 2018 and up from 75.4 percent in December 2017.
Additional San Francisco Bay Area Highlights for December 2018:
► Absentee buyers—mostly investors, but also second-home buyers—bought 16.1 percent of all homes sold in December 2018. This is unchanged from November 2018, and down from 18.4 percent in December 2017. The absentee buyer share peaked at 28.8 percent in February 2013, and since 2000, the monthly average has been 16.6 percent.
► Jumbo mortgages accounted for 39.6 percent of the total number of home purchase loans used in the San Francisco Bay Area in December 2018, up from 39.1 percent in November 2018 and up from 39.2 percent in December 2017.
► Jumbo loans represented 60.8 percent of the total dollar volume of all home purchase originations in December 2018, up slightly from 60.3 percent in November 2018 and up from 60.4 percent in December 2017.
► Jumbo loans are those that exceed the “conforming loan limit,” which is regulated and varies by county. Nationally, the base conforming loan limit for single-family homes in 2018 was $453,100, but high-cost areas (including most of the San Francisco Bay Area) had higher limits of up to $679,650. A rise in the jumbo loan share of home purchase loans can be related to higher home prices, an increase in the share of sales occurring in the market’s higher end or the greater availability of funding for jumbo loans.
► Adjustable-rate mortgages (ARMs) made up 25.7 percent of the number of purchase loans used to buy homes in the Bay Area in December. This is up slightly from 25.3 percent in November 2018 and up from 22.6 percent in December 2017. ARMs, which offer lower initial interest rates and monthly payments compared with fixed-rate mortgages, are more common in the middle and high-end of the market where the impact on monthly payments is larger. Last December, the median price paid for Bay Area homes purchased with ARMs was $1,137,500, compared with a median of $785,000 for all homes purchased. The ARM share ranged from 5.3 percent of purchase loans in Solano County to 39.4 percent in Santa Clara County.
► Real estate-owned (REO) sales represented 0.8 percent of total San Francisco Bay Area home sales in December 2018, up from 0.6 percent in November 2018 and down from 0.9 percent in December 2017. REOs are foreclosed homes that lenders sold on the open market.
* When necessary, November 2018 data was revised. Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.
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