California remains one of the least affordable housing markets in the nation. According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, the Sunshine State harbors four of the five least affordable housing markets. For a fourth consecutive quarter, San Francisco, CA held the lowest spot among major markets on the affordability chart. However, activity in the Bay Area appears to be slowing down. The San Francisco real estate market witnessed temperance in both sales volume and asking prices. While the change is minimal, it does provide encouraging prospects for those investors actively participating in the market.
“There’s not a lot of oomph in the market post-midsummer,” said Andrew LePage, an analyst at San Diego’s DataQuick. “The pace of price appreciation has slowed if not halted, although it’s still up by a very impressive amount compared to a year ago.”
According to DataQuick, approximately 7,595 new and existing homes in the Bay Area were included in transactions over the month of October. The amount of homes that changed hands represents a 3.9% drop from the same time last year, and an 11.2% drop from historic averages.
Despite the recent decreases, a year-over-year increase was seen in price appreciation. For the 19th consecutive month, the median price rose compared with a year earlier, coming in at $539,750, up 29.7% from the same time last year. The average cost of a home in this area increased slightly (1.8%) since September.
Foreclosures and short sales, or distressed properties if you will, comprised nearly 14% of all the existing home sales in October. While these properties proceed to reduce the average price of home sales, their transaction rate is less than half of what we saw the year before. However, distressed property sales may not be the only factor bringing down the average asking price for a home in this region.
According to one company’s analysis of MLS data in the Bay Area, price reductions were commonplace for the month leading into October. Approximately one-fifth of the listings in each county, except San Francisco metro, received price reductions. The city itself witnessed 13% of the houses sold receive a similar reduction.
Real estate agents, buyers and sellers all noted that a slowdown is palpable, although that is typical in the fall and winter. Buyers, in particular, have a better opportunity for staying within their budget.