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Bay Area Home Sales Fall Sharply, Marking the Slowest November in Four Years; Median Sale Price Annual Gain of 3.8 Percent is Smallest in Nearly Two Years
New data released today by CoreLogic shows a total of 6,147 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 November 2018. This number is down 14.1 percent month over month from 7,158 sales in October 2018,* and down 15.2 percent year over year from 7,253 sales in November 2017.
Total November 2018 home sales in the San Francisco Bay Area were the lowest for that month since November 2014 when 6,047 homes were sold. Sales have fallen on a year-over-year basis the past six consecutive months. June sales fell 8.3 percent, while July and August sales declined 0.3 and 9.7 percent, respectively. September sales fell 18.8 percent while October sales declined 6.5 percent.
Since 1988, the average change in San Francisco Bay Area home sales between October and November is a decline of 8.8 percent. November sales have ranged from a low of 5,127 in 2007, to a high of 11,906 in 2004. November 2018 sales were 19.5 percent below the November average of 7,640.
In November 2018, sales of newly built homes (detached houses and condos combined) were 41.8 percent below the month’s historical average, while resales were 16.3 percent below the month’s average. Ignoring the 2003–2006 housing boom that was fueled by risky home loans, November 2018 resales were 11.8 percent below the long-term average for the month.
“October’s 15.2 percent year-over-year drop in Bay Area home sales marked the second largest annual decline in almost 2½ years, behind a nearly 19 percent drop this September,” said Andrew LePage, a CoreLogic analyst. “November’s slowdown affected all major price categories, including a nearly 10 percent annual drop in $1 million-plus sales, which have fallen year over year in two of the last three months. Higher mortgage rates worsened affordability constraints this year, and in recent months, stock market volatility could have contributed to a high-end pullback. Market corrections can spook high-end buyers and leave some with inadequate funds to cover down-payment and closings costs.”
The median price paid for all homes sold in the San Francisco Bay Area in November 2018 was $815,000, down 3.8 percent from $847,000 in October 2018 and up 3.8 percent from $785,000 in November 2017. The $875,000 median price in June 2018 was the highest ever recorded.
On a year-over-year basis, the median sale price has risen for 80 consecutive months (since April 2012). Gains had been in the double digits for 13 consecutive months prior to September 2018. The last time the annual gain in the median sale price was lower than this November’s 3.8 percent increase was in January 2017, when it was 1.3 percent.
“Annual gains in the overall median sale price trended lower in most Bay Area counties in November, while Napa and Sonoma counties recorded year-over-year declines of 6.8 percent and 5.3 percent, respectively,” LePage said. “However, those annual declines likely reflect, at least in part, market-mix changes that occurred in November of last year following the October 2017 wildfires, which caused some deals to close in November 2017. Looking at specific home-type categories, the median price paid in November 2018 for resale detached houses fell slightly on a year-over-year basis in Marin and Santa Clara counties — down 1.3 percent and 2.1 percent, respectively — in addition to annual declines of 10.7 percent in Napa County and 7.8 percent in Sonoma County. Annual declines in the median sale price can be a sign that home prices have flattened out if not declined. However, one month doesn’t make a trend and the annual decreases could also reflect changes in the types of homes that are selling. The price picture is likely to become clearer over the next few months.”
Home sales of $500,000 or more accounted for 79.8 percent of all sales in November 2018, down from 80 percent in October 2018 and up from 76.6 percent in November 2017.
Additional San Francisco Bay Area Highlights for November 2018:
►Absentee buyers — mostly investors, but also second-home buyers — bought 16.2 percent of all homes sold in November 2018. This is down from 17 percent in October 2018, and down from 18.1 percent in November 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 39.1 percent of the total number of home purchase loans used in the San Francisco Bay Area in November 2018, down from 41.4 percent in October 2018 and down from 40.7 percent in November 2017.
►Jumbo loans represented 60.2 percent of the total dollar volume of all home purchase originations in November 2018, down from 63.6 percent in October 2018 and down from 62.3 percent in November 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 this year is $453,100, but high-cost areas (including most of the San Francisco Bay Area) have 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 25.2 percent of the number of purchase loans used to buy homes in the Bay Area in November. This is down slightly from 25.9 percent in October and up from 23.8 percent in November 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. This November, the median price paid for Bay Area homes purchased with ARMs was $1,130,500, compared with a median of $815,000 for all homes purchased. The ARM share ranged from 5.1 percent of purchase loans in Napa County to 42.1 percent in Santa Clara County.
►Real estate-owned (REO) sales represented 0.6 percent of total San Francisco Bay Area home sales in November 2018, up from 0.5 percent in October 2018 and down from 1 percent in November 2017. REOs are foreclosed homes that lenders sold on the open market.
* When necessary, October 2018 data was revised. Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.
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