Tight Inventory Still Holding Back Bay Area Home Sales

All the ingredients for a red-hot housing market in the Bay Area are there – a robust economy, tech companies that are churning out high-paying jobs, very strong demand from well-qualified buyers, and home prices that are climbing at a healthy pace. The only thing that’s missing is enough homes for anxious buyers to purchase. While inventory has edged up in some areas lately, it’s still way too low to satisfy buyer demand, and that’s clearly having an impact on sales.


Bay Area home sales last month – both new and existing units – were down 7.5 percent from the same period last year, according to DataQuick, the La Jolla-based real estate information firm. Last month’s level were 17.4 percent below the May average dating back to 1988. The biggest sales decline in the Bay Area were in Sonoma County (down 28.2 percent) and Napa County (22.3 percent). San Francisco was the only county with a sales increase over last year.

At the same time, prices for those scarce listings have been steadily increasing. According to the DataQuick report, the Bay Area’s median sale price hit $617,000 in May, up 18.9 percent from May 2013. We’ve certainly seen those price gains in many of our markets as homes continue to attract multiple offers and bids over the asking price, in many cases.

For those frustrated buyers, there’s reason for optimism, according to DataQuick analyst John Karevoll. “Virtually all the technical indicators are pointing in the direction of more market normalization,” he said, but admitted he is surprised it’s taking so long to get there.

“Right now we’re keeping an eye on prices,” Karevoll said. “While some of the Bay Area counties have already re-reached or passed their pre-recession price peaks, the region as a whole is on pace to reach that point later this summer.”

One segment of the market that is showing no signs of slowing is the Previews luxury market. We’ll be releasing our monthly luxury market reports in the coming days, but just to give you a quick glimpse: Silicon Valley sales over $1.5 million climbed 15.8 percent last month from a year ago and sales over $3 million were up 24%.

For the overall housing market to keep up with the luxury end, however, we’re going to have to see inventory come back to normal, healthy levels. Here’s hoping for a lot more listings across the board as the summer buying season gets into full swing in the weeks ahead!

Janice Lee
415-832-9151
JaniceFLee@gmail.com
www.JaniceLeeHomes.com
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