The Bay Area real estate market continued its roaring recovery in September, as buyers took advantage of ultra-low mortgage rates to scoop up a shrinking number of homes for sale at an astonishing pace.
The median price for an existing, single-family home in the Bay Area was $1,060,000 in September, which was down 0.7% from August’s all-time high but up 20.5% from September of last year, according to a California Association of Realtors report issued Monday.
Statewide, the median price set a fourth consecutive monthly record, rising to $605,680, up 0.8% from August and 17.6% year over year.
More alarming: The median number of days it took to sell a California single-family home fell to 11 in September, the lowest number recorded since the association started keeping track in 1982 and down sharply from 24 in September 2019. In the Bay Area, the median time on market narrowed to 13 days in September from 15 in August and 23 in September 2019.
“Buyer demand remains robust. We see that in the mortgage applications, we see that in the price numbers for the Bay Area, in the unsold inventory numbers which declined. That is driving this rebound in sales but it is also making the market more competitive. Homes are selling quicker and for buyers, there’s not a lot of inventory to choose from,” said Jordan Levine, the association’s deputy chief economist.
Agent Justin Palmer of Avenue 8 represented a family that is closing this week on a home in the Oakmore section Oakland. It was listed at $1.2 million, attracted multiple offers and sold in less than two weeks for $1.45 million. It has almost 3,200 square feet so on a price-per-square-foot basis, “it was really good and it appraised for a higher number than they bought it for,” Palmer said.
The buyers had been renting in San Francisco. “Like most people, this year made them re-evaluate their lives and preferences. They were seeking a little more space so they could both work from home and wanted more space for their young child,” Palmer said. The seller was a widow ready to downsize.
The sale epitomized what has been going on in the Bay Area. “Oakland in general this year has been on fire,” although condos are cooler than single-family homes. “We’ve seen such a large migration from San Francisco, people needing more space, whether that’s outdoor space or room for a second office,” Palmer said. The pandemic has “absolutely” pulled sales forward. “I think a lot of people’s five-year plans were condensed into 2020.”
On a month-to-month basis, the median price paid for a home in September fell in Solano, Contra Costa and San Mateo counties, (down 2.9%, 2.7% and 2.2%, respectively), and rose in all other Bay Area counties, led by Napa and Marin (up 3.8 and 2.5%, respectively).
Year over year, prices rose in all Bay Area counties, ranging from 8.1% in San Francisco to 20.6% in San Mateo.
Sales remained brisk, up 2.6% month-to-month and 34.2% year over year. They were especially strong in San Francisco and Marin counties, up 90.2% and 53.4% respectively,year over year. The report includes sales of existing, single-family detached homes advertised on a Multiple Listing Service. It excludes new construction and condominiums, which make up a larger percentage of sales in San Francisco than other counties.
Condos, especially in the city’s downtown and South of Market areas, have been arguably the weakest spot in the Bay Area as buyers have cooled on communal, high-rise living during a pandemic. However, separate data from the Realtors association shows that San Francisco condo sales in September were up about 30% from August and 63% from last September, not as robust as single-family home sales but hardly a slowdown. The median price paid for a San Francisco condo in September was about $1.2 million, down 4.2% from August and down 7.8% year over year.
Condos were “more of a mixed bag,” with a “big increase in sales even as the price has softened,” Levine said.
For the Bay Area as a whole, condo sales last month were up 11% from August and 36% from last September while prices rose 2.5% and 6.4%, respectively.
“We do see more weakness on the rental side of the market due to the nature of the downturn we are in, where the effects of this pandemic-related shutdown have been borne by folks at the lower end of the income spectrum,” which tend to be renters, Levine said.
That could deter some investors from buying lower-end properties to rent out, which could explain some of the relative weakness in condo pricing.
Sales in resort communities remained especially brisk in September as buyers unable to travel clamored for vacation homes, often where they could work remotely. South Lake Tahoe home sales increased 105.4% year over year.
Ultra-low mortgage rates and constrained supply, especially for lower-priced homes, have fueled price increases. The number of active listings statewide fell 56% year over year for homes priced at less than $1 million, compared to a 30.4% drop for those listed between $1 million and $3 million and a 19.4% decrease for homes over $3 million.
“With the statewide home price hitting new highs for the past four months, it’s sounding like a broken record as California home sales and prices continue to outperform expectations,” the association’s Chief Economist Leslie Appleton-Young said in a press release. “However, with the shortest time on market in recent memory, an alarmingly low supply of homes for sale, and the fastest price growth in six and a half years, the market’s short-term gain can also be its weakness in the longer term as the imbalance of supply and demand could lead to more housing shortages and deeper affordability issues.”