Sales of both new and existing homes in the San Francisco Bay Area dropped -9% in June 2018 compared with Bay Area home sales in July 2017, according to CoreLogic. This dive isn’t as deep as the -11% drop in Southern California home sales but, – -9% is -9%.
San Francisco County was the only Bay Area County among Alameda, Contra Costa, Marin, Napa, Santa Clara, San Mateo, Solano and Sonoma Counties that escaped this dramatic drop in home sales. In fact, San Francisco home sales increased +2.4% in June 2018.
Almost as startling, the June 2018 median price of a Bay Area single-family-home was $875,000, an increase of +12.9% compared with June 2017. This median price point is the highest on record.
Even more eye-popping is the median price for a single family home in San Francisco, $1.341,000, an increase of +7.3% annually. San Francisco’s median home price is the highest median price among all Bay Area counties.
Clearly, home sales in Northern California are having the same problems as in Southern California…affordability, rising interest rates, tax bill changes, prices rising 2 X faster than wages, low inventories, etc.
Sales of newly built Bay Area homes are -32% below historical averages going all the way back to 1988. Some say that much of this huge lag in newly built home sales is due to a homebuilding recovery that is ongoing still under-producing housing starts. Others say this lag is due to lack of and/or excessively high labor costs, skyrocketing material costs (particularly with newly imposed tariffs) and lack of and/or excessively high land costs. Throw in rising interest rates and tight lending practices to these recurrent reasons.
Even factoring out the boom years during 2003-2006 while risky loans were rampant, California’s new and existing home sales in June 2018 are down -7.6% compared to long-term averages for June home sales.
As we wrote a couple of weeks ago, what’s happening now in both northern and southern California is likely to happen where you are, if it isn’t happening already. Polish your boots…again.