San Francisco Bay Area Real Estate Report Including Napa Valley
Bay Area Homes Sales Lowest for a January in 11 Years; Sales Sputter Amid Affordability Constraints, Stock Market Volatility and Government Shutdown
New data released today by CoreLogic® shows a total of 3,857 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 January 2019. This number is down 27.8 percent month over month from 5,343 sales in December 2018,* and down 14.9 percent year over year from 4,534 sales in January 2018.
Total January 2019 home sales in the San Francisco Bay Area were the lowest for that month in 11 years, since 3,586 homes were sold in January 2008. Sales have fallen on a year-over-year basis the past eight consecutive months, with declines ranging from 0.2 percent in July 2018 to 21.6 percent in December.
Since 1988, the average change in San Francisco Bay Area home sales between December and January is a decline of 29.1 percent. January sales have ranged from a low of 3,586 in 2008, to a high of 8,298 in 2005. January 2019 sales were 33.1 percent below the January average of 5,770.
In January 2019, sales of newly built homes (detached houses and condos combined) were 56.6 percent below the month’s historical average, while resales were 30.3 percent below the month’s average. Ignoring the 2003–2006 housing boom that was fueled by risky home loans, January 2019 resales were 26.8 percent below the long-term average for the month.
“January marked the second consecutive month in which Bay Area home sales were the lowest for that month in 11 years,” said Andrew LePage, a CoreLogic analyst. “Many of the deals recorded last month reflect purchasing decisions made during the holidays, from Thanksgiving 2018 through early 2019. Buyer enthusiasm during this period was dampened by a variety of forces including affordability constraints, stock market volatility, concerns home prices had peaked, and uncertainty triggered by the partial federal government shutdown that began on Dec. 22, 2018. However, this January’s slowdown was likely tempered by a significant drop in mortgage rates that began in December, improving affordability at a time when inventory was up year over year. Compared with December 2018, the annual decrease in home sales this January was lower in seven of the region’s nine counties.”
The median price paid for all homes sold in the San Francisco Bay Area in January 2019 was $730,000, down 7 percent from $785,000 in December 2018 and up 2.2 percent from $714,500 in January 2018. On a year-over-year basis, the median sale price has risen for 82 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 2.2 percent year-over-year gain in the Bay Area’s median sale price last month was the lowest in two years, dropping sharply from the median’s 13.8 percent annual increase in January 2018,” LePage said. “The median’s smaller annual gains in recent months reflect much slower home sales amid year-over-year inventory gains. Changes in home prices this year will hinge largely on the direction of mortgage rates, inventory, jobs and incomes. Last month’s year-over-year declines in the median sale price in Alameda, Napa and San Mateo counties likely reflect, at least in part, a change in market mix, where a lower share of sales occurred in higher-cost areas.”
Home sales of $500,000 or more accounted for 73.7 percent of all sales in January 2019, down from 77.1 percent in December 2018 and up from 72.1 percent in January 2018.
Additional San Francisco Bay Area Highlights for January 2019:
Absentee buyers—mostly investors, but also second-home buyers—bought 17.6 percent of all homes sold in January 2019. This is up from 16.1 percent in December 2018, and down from 21.2 percent in January 2018. The absentee buyer share peaked at 28.8 percent in February 2013, and since 2000, the monthly average has been 16.5 percent.
Jumbo mortgages accounted for 30.8 percent of the total number of home purchase loans used in the San Francisco Bay Area in January 2019, up from 30.3 percent in January 2018.
Jumbo loans represented 51.5 percent of the total dollar volume of all home purchase originations in January 2019, down slightly from 51.7 percent in January 2018.
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 2019 is $484,350, up from $453,100 in 2018. In high-cost areas, including most of the San Francisco Bay Area, the limit is now $726,525, up from the 2018 maximum of $679,650.
Adjustable-rate mortgages (ARMs) made up 22.1 percent of the number of purchase loans used to buy homes in the Bay Area in January. This is down from 25.7 percent in December 2018 and up from 19.4 percent in January 2018. 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. In January 2019, the median price paid for Bay Area homes purchased with ARMs was $1,095,250, compared with a median of $730,000 for all homes purchased. The ARM share ranged from 3 percent of purchase loans in Solano County to 38.5 percent in San Mateo County.
Real estate-owned (REO) sales represented 1 percent of total San Francisco Bay Area home sales in January 2019, up from 0.8 percent in December 2018 and down from 1.4 percent in January 2018. REOs are foreclosed homes that lenders sold on the open market.
* When necessary, December 2018 data was revised. Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.
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