Where are the money coming from?
01/2016: Bay Area real estate had its strongest January in 3 years. Across the region’s nine counties, 3,372 single-family homes were sold.
Likewise, the median cost of homes rose by 16.5 percent from the year before, to $635,000, with similar year-over-year gains posted in Silicon Valley and the East Bay. In Santa Clara County, the $830,000 median was up by 11.4 percent from a year earlier, while in Alameda County, the $660,000 median represented a 14.8 percent gain from January 2015.
“There continues to be a lot of stress on the affordability front,” said Andrew LePage, research analyst for the CoreLogic real estate information service, which released the latest numbers. He observed that the region’s $635,000 median would once again buy next to nothing in the Silicon Valley hub, “except maybe a small vacant lot.”
Alain Pinel broker Rainy Hake, based in Saratoga, concurred: “Most of the homes that you have at this price point are kind of nondescript. It would be interesting to take that money and move to Portland, (Oregon), or Austin, Texas. We’re seeing a lot of exits from the Bay Area to some of these marketplaces that are more affordable and have an up-and-coming lifestyle.”
That said, the relative strength of the Bay Area market remains a matter of perspective.
For while the year-over-year numbers were robust, the volume of home sales across the region dipped markedly from December to January: down 36.1 percent for the region. Santa Clara County’s month-over-month sales were down 37 percent, while Alameda’s dropped 40.7 percent.
And viewed historically, January’s three-year sales high was actually about 20 percent lower than the average January, going back to 1988, which is as far back as CoreLogic’s database extends.
Still, LePage cautioned against reading too much into the month-to-month numbers, which also show a small decline in median prices.
January and February typically are slow months, as many people avoid house hunting during the winter. Also, December sales were unusually high as agents and loan writers finally got the hang of new federal mortgage rules that went into effect in October and delayed many closings until year’s end. Hence, the January sales drop-off may look unnaturally steep.
Amid the stock market downturn and China’s slowing economy, some agents have sensed a softening in home prices, especially in luxury homes.
While it’s possible that high-end sales “could eventually be impacted by an ongoing stock market downturn,” LePage said, “it’s also possible … that you would see what some people consider ‘safe haven’ investing, where wealthy individuals choose to park money in high-end real estate.”
Such trends are hard to measure, he said, but “as deals close over the next few weeks, we’ll begin to see whether there’s been an impact.”