Average sales prices in the Bay Area followed the first quarter trend of remaining steady, but also proved to be a bit stronger as we moved into the second quarter of the year, and what’s typically our busier Spring selling season. We didn’t see double-digit hikes that had become prevalent in recent quarters, but we did record a healthy 7 percent jump in the overall average sales from the previous year and a 14 percent gain from the previous quarter.
An article published in The Mercury News in July stated that, “Bay Area home prices have continued their stratospheric surge, as the low housing supply combined with intense demand last month to further heat up the market.” Additionally, all four regions of the Bay Area posted record high average sales prices in Q2, while realtor.com’s hotness index pegged the San Francisco-Oakland-Hayward area as the second hottest in the country.
It’s worth noting however, that while the press reports on the higher prices, apparently frenetic pace and the overbidding—the numbers can be deceiving at times—as certain areas and price points do offer a more balanced market than it may appear on the surface. We did see buyers finding more room to negotiate this quarter, taking advantage of early price reductions or properties that had sat idle on the market for too many days. However, the continued record breaking prices happening across many parts of the Bay Area did encourage more sellers to jump into the market in Q2, and many got more than their initial asking price. For example, single-family homes in San Francisco that required no price change sold, on average, at 18 percent over asking. This same trend occurred in both Alameda and San Mateo Counties, but at an over-asking rate of 9 percent for properties priced just right to begin with.
We saw a much higher sales volume numbers in Q2 than we did at the start of the year in Q1, which is to be expected given the seasonality of the market. The 60 percent increase in overall sales volume quarter-over-quarter, across all seven Bay Area counties that we serve, is due in part to the fact that more people who may have been waiting on the sidelines during the holidays are now jumping into the spring selling season. That said, a majority of the Bay Area has been dealing with some degree of limited inventory issues over the past few years, further explaining why Q2’s overall sales volume hovered at only a 2 percent gain year-over-year. That rate depicts a much more accurate representation of the sales activity when looking at each region and county individually, as volume in the East Bay is going to be much higher than San Francisco’s, given the limited number of available homes and condominiums on the market.
The Bay Area’s market has been consistently competitive with rising average sales prices and low inventory continuing to be a factor. Combined with the fact that Q3 has typically been strong over the past 10 years, it wouldn’t be a stretch to suggest that this trend will continue into this next quarter.