The third quarter of the year tends to bring some of the slower months in terms of market activity for the Bay Area. While some of this is due to seasonal traveling, it’s also a common Bay Area trend that those choosing to relocate to a highly desired school district or kid-friendly neighborhood, make the move ahead of time in the spring. Naturally, this results in a healthy slowdown from the more robust pace of Q2. In recent years, however, we’ve seen minimal fluctuation in year-over-year trends affecting the Bay Area’s third-quarter marketplace.
Restricted inventory and the Bay Area’s generally high demand persisted throughout the summer this time around, causing a continual rise in average sales prices year-over-year for most of the region. Of course, we didn’t see record-setting prices as we did in Q2, or as many double-digit percentage hikes that have become all too commonly associated with the Bay Area in recent quarters. But the region as a whole did experience a 9 percent jump in the overall average sales price from Q3 2016.
A recent realtor.com article it explained that, “As the supply of homes for sale continues to decline year-over-year, homes are selling ever faster, and for ever-higher prices.” That’s definitely the case for what we continue to see here in the Bay Area. San Francisco, Mid-Peninsula, North Bay, and East Bay all posted the highest Q3 average sales prices since 2008 this quarter.
However, that doesn’t mean that certain markets didn’t experience a bevy of price reductions and increasing average days on market (DOM) during the summer doldrums. Buyers in San Mateo County benefitted the most, at the expense of sellers who priced their properties a bit too confidently, in only paying 88 percent of the original list price for homes which did require a price reduction. Alternatively, in the East Bay, price-reduced homes in both Alameda and Contra Costa County still garnered 94 percent of the initial asking price.
Unsurprisingly, it was San Francisco’s single-family home market which saw the largest profit margins from an environment where properties continue to sell over asking price. On average, homes in the city that sold in Q3 without any price changes, ended up selling for 19 percent more than what they hit the market for. As that steady competition and solid purchasing power continues to fuel San Francisco’s market—along with San Mateo and Marin County too—it’s the more affordable and suburban communities of Contra Costa and Sonoma County attracting these eager buyers. Both counties were the only two in the Bay Area to experience an increase in the total number of homes sold from Q2 to Q3 this year.
While we saw lower sales volume tallies across all seven Bay Area counties that we serve, when compared to the activity in Q2 2017, most figures remained in line with what we experienced a year ago in Q3 2016. With current economic outlooks, we don’t anticipate any dramatic changes in either direction moving forward into Q4 and the end of the year.