In a rapidly changing market, more data is always useful. One strong market indicator in the Bay Area is luxury sales — properties over $3M — which hit historic highs in Spring 2022. However, pending sales have dipped year-over-year. Have a look at this graph for more numbers.
Continuing a trend we’ve been seeing since ringing in the new year, Santa Clara County house and condo sales volume was down in May compared to one year ago. This led to a jump in the median sales price and a dip in average days a property is spending on the market. We’ll see if this seller’s market keeps up in June, or if higher interest rates lead to a sales pause.
With the Fed about to increase interest rates another three-quarters of a point, Wall Street is reacting, and not in a good way. The Dow Jones lost 876 points Monday — or nearly 3 percent — Nasdaq fell 4.7%, and the S&P 500 lost nearly 4%. Overall, the market is down 20% since January. Want to get more numbers? Have a listen to the PBS News Hour.
A lot of Bay Area cities are blaming each other for the housing shortage we’re all experiencing, but the truth is we aren’t building enough new housing anywhere, and we haven’t for a while.
Permits were issued for 119,636 new homes statewide in 2021 – just two thirds of the projected need – and this year it’s expected to be even less, with only a fraction in Santa Clara County. If this comes to pass, it will be the 30th year out of the past 35 that California has failed to meet housing production goals. And even permitted projects face false starts and stall outs due to shortages of labor and materials, as well as ever-present community pushback.
Bottom line: Unless hundreds of thousands of new homes are built this year and for many years thereafter, Bay Area home prices will continue to rise, and this will continue to be a seller’s market.
It’s the same story we’ve been seeing for a while in the Santa Clara County market, where sold houses in April were down 21% over last year, available houses are spending 33% less time on the market, and average sales prices are up a whopping 21% from ‘21!
Meanwhile, condos are spending less than half the time on the market that they did a year ago, but average sales prices are up just 10% year over year.
