Compass Northern California Quarterly Report: Q1 2019

Chief Economist Selma Hepp offers a brief synopsis of first-quarter real estate activity in each of Compass’ Northern California regions. The accompanying links lead to the full report for each area, where you can access the latest regional and community-specific market data and statistics to help you make a better, more informed home-buying or selling decision.

Q1 2019 Regional Summaries

Contra Costa County

Similar to the Bay Area overall, home
buyers in Contra Costa County in the first quarter of 2019 generally showed
restraint, bringing home sales activity below levels seen in the same period
last year. While sales mostly slowed across all price ranges, buyers of homes
priced between $2 million and $3 million maintained their momentum keeping
sales activity on par with last year. This price range has been popular in
Contra Costa over the last year.

At the same time, available inventory
continued to improve across all price ranges with an overall increase of about
12 percent and all price ranges positing 10-plus percent increases. Buyers of
homes priced between $2 million and $3 million saw the largest increase in
options compared with last year. 

Despite more inventory, buyers remained
reluctant and unwilling to engage in bidding wars or pay more than the asking
price. Price reductions, while fewer than during the winter months, still
remained elevated compared to last year with 2 in 10 homes selling below listed
price. The median sales price perked up about 2 percent compared to last year’s
first quarter.

Looking Forward: With the arrival of spring, many home buying conditions improved, including lower mortgage rates, more inventory, and realigned seller expectations – all of which should signal opportunities for home buyers in coming months and are reflected in increased buyer interest.  

Click here to read the full Q1 2019 Contra Costa County real estate report.


East Bay

While East Bay housing market activity in the first quarter showed
similar restrain as most of the other Bay Area markets, buyer demand of homes
priced above $2 million remained strong and notably above last year’s first
quarter activity. Most of the slowdown in sales came from homes priced between
$1 million and $2 million, which could be a result of detrimental impact of the
tax reform among the buyer group which may be more sensitive to lower home
deductions.

 Buyers in the East Bay also saw continued
improvement in inventory among all price ranges, with largest increases again
among homes priced between $1 million and $2 million. Buyers continued to take
longer to decide on buying homes leading to longer time on market and more
price reductions compared to the same period last year. With affordability as a
main concern for some buyers, homes priced below $1 million saw relatively more
price reductions than higher priced homes. As a result, the pressure on median
home price growth continued to ease.  

Looking Forward:  Following a difficult quarter, spring has brought improved home buying conditions, including lower mortgage rates, more inventory, and realigned seller expectations – all of which signal opportunities for home buyers and are reflected in improved home buying sentiment.

Click here to read the full Q1 2019 East Bay real estate report.


Marin County

Sausalito, California, Residential Building, Residential District, Restaurant

As in most of the Bay Area, first quarter housing market activity in
Marin remained challenging, leading to fewer overall sales compared to last year.
However, most of the decline in sales came from homes priced above $3 million,
while lower priced homes fared relatively better than in most of the other Bay
Area regions.

Meanwhile, the inventory of homes for sale continued to increase compared
to a year ago, albeit at a lower pace than in some other regions. Homes priced
above $3 million saw a relatively larger increase in inventory than lower
priced homes.

Buyers remain trepid amid the economic and political uncertainties that
characterized the first quarter, taking longer to make a decision and seeking
price reductions. However, while the price reductions are elevated compared to
the year before, they have declined since winter peaks. Most of the homes sold
below asking price were higher priced homes. As a result, median price growth
stalled in the first quarter.

Looking Forward:  Following a challenging beginning to the year, spring home buying season offers improved opportunities for buyers, including lower mortgage rates, more inventory, and improved balance between buyers and sellers already leading to more optimistic buyer sentiment than in recent months.

Click here to read the full Q1 2019 Marin County real estate report.


Napa County

Napa’s first quarter housing market faced challenges including continued
slowing of overall home buyer demand and rainy winter conditions, leading to
fewer homes sold compared to last year’s first quarter. While fewer homes were
sold across price ranges, sellers of homes priced between $1 million and $2
million faced relatively more resistance from buyers, while buyers of homes
priced below $1 million demanded more discounts. 

Availability of for-sale inventory continued to improve in the first
quarter with buyers across most price ranges having more options than in the
last year. Buyers, however, remained reluctant, taking much longer to make a
decision than in the last couple of years.

Although buyer reluctance led to fewer bidding wars over the last two
quarters, the last couple of months showed some rebound in buyer competition
with more homes selling over asking price than during the winter lows. Still,
notably more homes sold below asking price than last year. Home price growth,
while weakening in the first quarter, picked up again as March rolled around.

Looking Forward: With improved home buying conditions in recent months, not least of which are lower mortgage rates and slower price growth, home-buyingdemand should pick up. Napa County’s relative affordability make it especially attractive to Bay Area buyers.

Click here to read the full Q1 2019 Napa County real estate report.


San Francisco

San Francisco’s slowing housing market activity which started in the
fourth quarter 2018, continued to trend lower in the first quarter leading to
fewer units sold across all price ranges. 
Homes priced between $2 million and $3 million saw a relatively larger
decline on a year-ago basis which was the case in most Bay Area regions.

Despite slight improvements, for-sale inventory remained a challenge and
buyers continued to face limited options. However, buyers remained relatively
more enthusiastic than elsewhere in the Bay Area, with buyers of both
single-family homes and condominiums more likely to absorb the newly available
inventory and homes more likely to sell over the asking price than not. Six in
ten homes continued to sell above asking price with the average premium keeping
relatively steady at 13 percent. As a result, San Francisco did not see an
increase in price reductions compared to last year’s first quarter, unlike many
other regions in the Bay Area.  

Looking Forward: San Francisco homebuyers remain determined, helped by improved home buying conditions, better financial markets, lower rates and possibly increased competition from newly minted IPO beneficiaries.

Click here to read the full Q1 2019 San Francisco single-family homes real estate report.

Click here to read the full Q1 2019 San Francisco condominiums real estate report.


Mid-Peninsula

Following the overall slowing of housing market activity in the Mid-Peninsula
in the later part of 2018, first quarter finished with a continued decline in
total number of homes sold, except for a jump in sales of homes priced below $1
million. At 5 percent fewer sales in the Mid-Peninsula in the first quarter, this
decline is relatively smaller than in adjacent San Francisco and Silicon Valley
where declines averaged over 10 percent.

For-sale inventory continued to improve, mostly among homes priced above
$1 million while fewer and fewer lower priced homes were available for sale.

Buyers remained restrained and fewer homes sold over asking price
compared to the first quarters of previous years. However, recent months have
shown some renewed enthusiasm leading to a pick up in buyer activity and
bidding wars. Overall, 6 in 10 homes continued to sell over asking price. In
addition, slowing of median price growth, which started in the second half of
2018, reversed some in March, showing a positive increase year-over-year.

Looking Forward: With the arrival of spring, many home buying conditions improved, including lower mortgage rates, more inventory, rebound in financial markets and realigned seller expectations – all of which should signal more opportunities for home buyers and a stronger housing market in the coming months.

Click here to read the full Q1 2019 Mid-Peninsula real estate report.


Silicon Valley

Silicon Valley continued to see
relatively muted housing market activity in the first quarter, especially when
compared to last year’s uncharacteristically dynamic conditions. Nevertheless,
while total number of homes sold declined, winter’s build-up in affordably
priced inventories in Santa Clara County helped push sales of those homes above
last year’s levels. Largest decline in home sales activity was among homes
priced above $3 million.

At the same time, while Silicon
Valley continued with inventory decreases, the remainder of Santa Clara County experienced
relatively larger increases in the number of homes for sale compared to other
Bay Area regions, and the increases were widespread across price ranges.

Buyers remained restrained and less
likely to engage in bidding wars than in previous years. However, improved home
buying conditions and lower mortgage rates brought back some enthusiasm leading
to a bounce back in the share of homes selling over asking price. About 50
percent of homes sold over asking price at the end of the quarter.

Declines in sales of higher priced
homes, coupled with buyer restraint, led to a decline in median home prices on
a year-over-year basis. However, median prices are still in line with levels
prior to last year’s extraordinary jump in prices, averaging almost 30 percent
at times.

Looking Forward: With improvement in buying conditions such as lower mortgage rates, more inventory, lower median prices, buyers are facing great opportunities this spring. Renewed interest is also evident in improved home buyer sentiment in March.

Click here to read the full Q1 2019 Silicon Valley real estate report.


Sonoma County

While the spirit of rebuilding continued in Sonoma County in the first
quarter, housing market activity remained affected by similar buyer restraint as
in other Bay Area regions. Sales activity continued to trend below last year’s
levels, though the largest relative declines were among higher priced homes,
especially those priced above $3 million which showed virtually no sales in the
first quarter.

Meanwhile, following strong increases in for-sale inventories during the
winter months, sellers took a step back, leading to much smaller increases in
inventories on an annual basis, especially among homes priced below $1 million.
Overall, inventory is still higher than last year.

Post-fire bidding wars and rapid price growth continued to wane, and
together with restrained buyers, led to lower prices than March 2018. Median
prices are now back to levels seen in October 2017, prior to the wildfires.
Sellers also adjusted their expectations and homes were priced at levels
aligned with buyer’s willingness to pay, resulting in fewer overall price
reductions than during the winter months.

Looking Forward: The extreme rains that have been pelting Sonoma County are beginning to slow, and an increase of sunny skies should kick off a delayed buying season. Another wildcard for Sonoma County might be that many fire survivors will running out of the two years of Like-Kind housing provided by insurance companies. That will likely force the decision to build, buy or move on. Since the cost of building has risen substantially, primarily due to the price of both materials and labor, many survivors may be coming into the market for comparable existing home options.

Click here to read the full Q1 2019 Sonoma County real estate report.


Sonoma Valley

Housing market activity in the first quarter in Sonoma Valley continued
at a slower pace, resulting in fewer homes sold compared to last year’s first
quarter. Slower sales activity reflected a similar sentiment seen across the
region. However, unlike the rest of Sonoma County or other Bay Area regions, Sonoma Valley did not see an uptick in listing
inventory. The persistent rains this winter and spring
seem to have kept sellers from bringing their properties to market. One good sign is that open house activity has
been strong despite the rain, indicating that buyers’ intent doesn’t appear to
have been dampened by the weather. 

Buyer restraint continued to hold back demand for homes resulting in more
price reductions and lower sales price than the original asking price. Median
prices, while slightly lower than in the first quarter last year, returned to
levels seen prior to wildfires, which led to remarkable price growth in first
half of last year. 

Looking Forward: Sonoma Valley remains a favorable market for buyers, both for primary homebuyers and second-home buyers due to its proximity to San Francisco and other Bay Area job centers. With improved buying conditions, such as lower rates, lower home prices, and reduced financial market volatility, home buyers once again have a great opportunity to buy in Sonoma Valley.

Click here to read the full Q1 2019 Sonoma Valley real estate report.


Lake Tahoe/Truckee

Much like in the Bay Area, first quarter housing market activity in the Lake
Tahoe region continued to slow compared to last year’s first quarter. Decline
was relatively more notable in March compared to the previous two months,
likely due to a spike in sales activity in Lake Tahoe last March as well as relatively
snowier conditions this winter.  

For-sale inventory showed improvement, with an increase among both
single-family and condominiums. Buyers, however, remained restrained and took
longer to make a decision, leading to more price reductions and lower sales to
original asking price ratios than in recent quarters.

Looking Forward: Home buying conditions have recently improved, including lower mortgage rates and more inventory, once again spiking consumer home buying sentiment. Upcoming Bay Area IPOs should also bring some enthusiasm to Lake Tahoe housing markets.

Click here to read the full Q1 2019 Lake Tahoe/Truckee single-family homes real estate report.

Click here to read the full Q1 2019 Lake Tahoe/Truckee condominiums real estate report.

Editor’s note: This report reflects the Northern California areas in which the company formerly known as Pacific Union operates.

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Shared with permission from the Pacific Union Blog