Bay Area March Home Sales Experience Seasonal Jump Month to Month, But Dip Year Over Year; Median Sale Price Climbs Above $800,000 to New Peak
New data released today by CoreLogic shows a total of 7,122 new and existing houses and condominiums were sold in Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco,* San Mateo, Solano and Sonoma counties in March 2018, up 43.9 percent month over month from 4,948 sales in February 2018,** and down 3.3 percent year over year from 7,362 sales in March 2017. Since 1988, the average change in San Francisco Bay Area home sales between February and March is an increase of 39.8 percent. March sales have ranged from a low of 4,898 in 2008, to a high of 12,645 in 2004. March 2018 sales were 17.1 percent below the March average of 8,590 sales since 1988, when data for this report began (data start dates vary by county).
In March 2018, sales of newly built homes—detached houses and condos combined—were 27.1 percent below average for the month of March, while resales were 15.8 percent below the month’s average. Ignoring the 2003–2006 housing boom that was fueled by risky home loans, March 2018 resales were 11.7 percent above the long-term average for the month.
“The February-to-March surge in home sales is a seasonal norm, and although March sales fell slightly year over year, they were the second-highest for that month in the last five years,” said Andrew LePage, a CoreLogic analyst. “Amidst the ongoing inventory crunch, total sales during the first three months of this year fell about 3 percent from the first quarter 2017. Sales of newly built homes in the nine-county region remain well below average, and fell 8 percent year over year in the first quarter. Only Alameda and Santa Clara counties posted first-quarter annual gains in new-home sales—5.6 percent and 31.4 percent, respectively.”
The median price paid for all homes sold in the San Francisco Bay Area in March 2018 was a record $820,000, up 9.3 percent month over month from $750,000 in February 2018, and up 14.7 percent year over year from $715,000 in March 2017. The region’s prior peak median was $784,000 (reached in November 2017). Adjusting for inflation, however, the Bay Area’s median sale price in March 2018 was 0.3 percent below its June 2006 inflation-adjusted peak.
For the past six months, the San Francisco Bay Area region has posted an average year-over-year gain in its median sale price of 12.8 percent, up from an average year-over-year gain of 6.4 percent during the same six-month period a year earlier. On a year-over-year basis, the median sale price has risen for 72 consecutive months—since April 2012—and gains have been double-digit for the last eight months.
“The Bay Area has experienced some of the state’s strongest home price growth throughout the past year, but last month’s 14.7 percent year-over-year increase in the median sale price also reflects a change in market mix, where a higher share of transactions is occurring in mid- to high-priced markets,” LePage said. “Similarly, the March 2018 medians in Marin, Santa Clara and San Mateo counties jumped between 23 percent and nearly 34 percent year over year as a greater share of activity occurred in the higher price ranges. That’s at least partly because the inventory of more affordable homes is so limited in those counties. The rise in home prices and, more recently, mortgage rates means homebuyers face significantly higher mortgage payments, helping to spur interest in adjustable-rate mortgages, or ‘ARMs,’ which have lower initial rates and payments. ARMs made up 25 percent of the region’s home purchase loans in March, up from just under 23 percent a year earlier, while in Santa Clara County 41 percent of last month’s purchase loans were ARMs, up from about 34 percent in March 2017.”
Home sales of $500,000 or more accounted for 77.7 percent of all sales in March 2018, up from 73.3 percent in February 2018, and up from 72.1 percent in March 2017.
Additional San Francisco Bay Area Highlights for March 2018:
- Absentee buyers—mostly investors, but also second-home buyers—bought 19.6 percent of all homes sold in March 2018. This was down from 21 percent in February 2018, and up from 18.1 percent in March 2017. The absentee buyer share peaked at 28.4 percent in February 2013, and the monthly average since 1988 was about 15 percent.
- Jumbo mortgages accounted for 40.2 percent of the total number of home purchase loans used in the San Francisco Bay Area in March 2018, up from 33.8 percent in February 2018 and 34.6 percent in March 2017.
- Jumbo loans represented 62.6 percent of the total dollar volume of all home purchase originations in March 2018, up from 55.7 percent in February 2018 and 55.4 percent in March 2017. Jumbo loans are those that exceed the “conforming loan limit,” which is set by regulation and varies by county. Nationally, the base conforming loan limit for single-family homes this year is $453,100, but high-cost areas—including most of the San Francisco Bay Area—have higher limits of up to $679,650. A rise in the jumbo mortgage share of home purchase loans can be related to higher home prices, an increase in the share of sales occurring in the market’s higher end or the greater availability of funding for jumbo loans.
- Government-insured Federal Housing Administration (FHA) loans accounted for 5 percent of home purchase loans in the San Francisco Bay Area in March 2018, down from 8.3 percent in February 2018 and 12.9 percent in March 2017. Low-down-payment FHA loans accounted for a substantially higher share of home purchase loans in the more affordable stretches of the Bay Area. For example, Solano County had the highest FHA share in March 2018 at 14.9 percent, followed by Contra Costa County at 11.4 percent and Napa County at 11 percent.
- Real estate-owned (REO) sales represented 1 percent of total Bay Area home sales in March 2018, down from 1.4 percent in February 2018 and 1.7 percent in March 2017. REOs are homes that lenders took back through foreclosure and then sold on the open market.
* San Francisco County, March 2018 data was estimated due to late data availability.
** When necessary February 2018 data was revised. Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.
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