Rising Housing Costs Hit the Bay Area’s Most-Affordable Communities the Hardest

Executive Summary:

  • Bay Area home sales decreased by 11 percent year over year in August, the second-largest decline following June’s 10 percent drop, dragging year-to-date sales down by 2 percent.
    • Marin and Napa counties, however, saw increased sales — a positive reversal from previous months.
    • Homes sales slowed notably in Alameda and Contra Costa counties compared with previous months of strong growth.
    • Sales of homes priced between $2 million and $3 million came to a screeching halt in August.
  • Inventory continued to improve, up by 5 percent from August 2017 after 16 consecutive months of year-over-year declines.
    • Eighty percent of the supply increase came from more inventory in Santa Clara County, followed by Sonoma and Alameda counties.
    • Other counties also had slightly more inventory except for San Francisco.
    • Most of the increase in inventory was for homes priced between $1 million and $2 million.
  • The Bay Area’s median home price rose by 12 percent on an annual basis. Santa Clara County continued to post nearly double that rate of appreciation, with prices up by 21 percent year over year.
  • Slowing price growth that started in the spring continued in all Bay Area counties except Napa.
    • Slowing price growth was most notable in Santa Clara County, followed by Marin and Contra Costa counties.
  • Absorption rates continued to decline in Silicon Valley and Marin County, followed by Sonoma County.
  • Overall, Bay Area absorption rates continued to trend lower, falling from 43 percent last August to 37 percent now but in line with August 2016.
  • Santa Clara County posted the largest absorption-rate decline, followed by Alameda and Sonoma counties. Price reductions also rose, from 15 percent last August to 19 percent today.
  • Affordability concerns are impacting budget-constrained buyers, especially in Sonoma County.

Check out the full article here with detailed information from Pacific Union’s Chief Economist Selma Hepp.

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