Key Trends In Your Local Market
Peninsula/South Bay home prices remained relatively stable in April. Furthermore, home and condo prices fell only slightly statewide. California median home prices declined 1% according to the California Association of Realtors.
Typically, it is best to look at yearly comparisons for housing data because it removes seasonal variations. However, during the pandemic it is important to look at changes on a month-to-month basis. By this measure, Santa Cruz’s single family home and condo prices both saw healthy gains. San Mateo and Santa Clara saw dips in single family home prices, but condo prices rose.
May Housing Market Update for the Peninsula/South Bay
While the pandemic’s impact on the housing market progressed rapidly in March, the April housing market data illustrates a stable market, albeit at a new normal. The graph below illustrates the available housing inventory by week rather than by month (as is typical) to illustrate how the market has changed over a shorter timeline. We can see that inventory levels declined in March, but have since climbed for seven straight weeks as more homeowners become comfortable with listing their home. Meanwhile, a significant number of sellers have remained in the market, and this so-called floor might indicate that active listings have fallen as far as they will go.
Another sign that the housing market may already be turning around is the number of listings under contract. During the week of March 25th, listings under contract hit a low. Since then, listings under contract have more than doubled and are approaching the levels we saw in early March. This indicates that people are forging ahead, aided by technology.
As mentioned earlier, the Peninsula/South Bay housing market looked stable in April. Measured on a yearly basis, both San Mateo and Santa Clara’s home prices finished higher than at this point last year. Although the pandemic and stay-at-home orders dampened buyer demand, the number of active listings also decreased, which buoyed prices. Appreciating prices typically signal a healthy demand for the available housing and encourage sellers to price their homes slightly above comparables.
The sale-to-list ratio reflects the change in the original list price of a home and the final sale price. For example, a ratio of 100% means that a home sold for the price at which it was most recently listed. In the Peninsula/South Bay, single-family homes almost always have higher sale-to-list ratios than condos. Sale-to-list price ratios remained strong in April with buyers making offers at just above list price to put a listing under contract. This is another indication that home prices are stable; sellers are not making any additional price concessions to sell.
Months supply of inventory measures how many months it would take for all current listings on the market (including listings under contract) to sell at the current rate of sales. In April, the inventory of single-family homes decreased but not nearly as much as the sales volume, which caused a large jump. Still, months supply in Santa Clara (2.5) was low even by California standards.
Sales volumes fell dramatically in the Peninsula/South Bay due to dampened demand and fewer available options on the market. Compared to last year, sales are down by over a third.
Looking ahead to June, we anticipate more growth. We expect buyer demand to pick back up as fears of a steep price decline lessen. Look for more agents to leverage the latest technology to give buyers the ability to tour homes in compliance with state and local laws.
As we discussed in previous newsletters, the fundamentals of the housing market were strong before the global economy stalled, which we believe will help us all navigate this difficult time with as little consequence to the market as possible.
As always, we remain committed to helping our clients achieve their current or future real estate goals. Our team of experienced professionals would be happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.