The rate of home sales in one of the country’s hottest housing market, the San Francisco Bay Area, dropped -10% in August 2018. This is the slowest rate of home sales the Bay Area has seen in 7 years. Additionally, the total volume of sales in the Bay Area was nearly -18% below its August home sale averages going back to 1988.
Andrew LePage, an analyst with CoreLogic, said, “Much of this recent slowdown (in the Bay Area) can be attributed to a lack of affordable inventory on the market. Unlike the frenzied markets of the mid 2000’s, many (consumers) are struggling to buy today.”
Simultaneously, the UBS Global Real Estate Bubble Index 2018 report indicated, “…real prices in San Francisco climbed +9% since last summer and now exceed their 2006 peak by more than +20% amid a thriving economy, non-cash earnings by many tech employees and buoyant foreign demand.”
UBS indicated, “The City is approaching a high valuation risk.”
The median home price in all 9 counties within the Bay Area was $830,000 in August 2018. This price represents an annual increase of +12.4%. CoreLogic’s LePage said, “While the Bay Area’s median sale price rose more than +12% y/y in August 2018, monthly mortgage payments on a median priced home jumped +21.5% due to the roughly +0.7% point gain in mortgage interest rates over the same period.”
Talk about the effects of a 10% jump in prices and a+21.5% jump in monthly payments within an already sky high market in which the majority of people living in the Bay Area cannot afford to buy a home.
No wonder inventories in San Jose rose an eye popping +67% in Q3 2018 compared to Q3 2017 and Oakland inventories rose +26% in Q3 2018 compared to the same time last year, according to Trulia.