Record high home prices are taking their toll even on a market that is used to pricey properties. June sales of both newly built and existing homes in the San Francisco Bay Area dropped just more than 9 percent compared with a year ago, according to CoreLogic.
The survey covers both single-family homes and condominiums in Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma counties.
“Last month’s home sales were the lowest for June in four years, and the year-over-year drop in the total number of transactions was the largest in 14 months,” said Andrew LePage, a CoreLogic analyst. “A portion of last month’s year-over-year sales decline reflects one less business day for recording deals this June. But affordability and inventory constraints are likely the main culprits in last month’s sales slowdown.”
The median price of a Bay Area home sold in June hit $875,000, up 12.9 percent compared with June 2017. That is the highest price on record. Annual price gains over the last six months were twice what they were a year ago, reflecting high demand and low supply of homes for sale.
“Price growth is only part of the problem that home shoppers have faced,” LePage said. “The median price paid for a Bay Area home this June was up almost 13 percent year over year, but the principal-and-interest mortgage payment on that median-priced home was up about 22 percent because of the rise in mortgage rates – more than half a percentage point – over the past year.”
Northern California appears to be going through the same problem as the state’s southern half, which saw a dramatic drop in June home sales as well. Additionally noteworthy is that these numbers include sales of newly built homes.
California building permits for single-family homes have been rising sizably and steadily over the past year, according to the California Department of Finance. More supply should translate to more sales, but, again, high prices and higher interest rates are hitting affordability hard.
Bay Area home sales fell annually in all counties except San Francisco. Sales there increased 2.4 percent. San Francisco had the highest median home price of all Bay Area counties at $1,341,000 in June, an increase of 7.3 percent annually.
Sales of newly built Bay Area homes were nearly 32 percent below the historical average, going back to 1988. Much of that is because the homebuilding recovery is still ongoing and housing starts are still below average.
Sales of existing homes, even factoring out the boom years from 2003 to 2006, when risky loans fueled the market, were 7.6 percent below the long-term average for June.