At a time of the year when sales typical rise around 5 percent, the number of single-family homes and condos that traded hands in San Francisco last month dropped 7 percent, from an upwardly revised 514 in March to 478 April, which is 12.3 percent lower versus the same time last year.

Recorded home sales across the nine-county Bay Area (6,943) dropped 5.1 percent in April and were down 9.2 percent, year-over-year, for the slowest April in six years.

At the same time, the median price paid for those 478 homes in San Francisco last month ($1,247,500) was 4.0 percent lower than the record $1.3 million median sale price recorded in April of 2016 while the Bay Area median ($750,000) was 8.7 percent higher versus the same time last year.  San Francisco was the only Bay Area county to record a year-over-year decline in terms of the median sale price.

As we noted seven months ago, the recorded sales volume in San Francisco was being goosed by contracts for condos in new developments that were signed (“sold”) many months prior but were closing escrow in bulk as the buildings came online in the middle of 2016, while signatures on new contracts were down 20 percent over the past year despite an average of nearly 60 percent more inventory from which to choose.

In Alameda County, recorded homes sales in April (1,415) were 6.5 percent lower on a year-over-year basis with a recorded median sale price of $780,000 (which was 7.7 percent higher versus the same time last year). And sales in Contra Costa County (1,318) were 9.1 percent lower with a median price of $579,000 (11.3 percent higher versus the same time last year).

Home sales in Santa Clara County last month (1,590) were 12.8 percent lower versus the same time last year with a median price of $920,000 (up 6.9 percent) and sales in San Mateo County (556) were down 8.6 percent with a median sale price of $1,210,000 (up 12.87 percent, year-over-year).

And up north, recorded sales in Marin (320) were actually up 1.9 percent versus the same time last year with a median price of $1,035,500 (up 7.9 percent). Sonoma County sales in April (514) were 10.6 percent lower with a median price of $568,000 (up 12.5 percent) and sales in Napa (101) were 19.2 percent lower on a year-over-year basis with a median price of $625,500 (8.7 percent higher versus the same time last year).

Keep in mind that while movements in the median sale price are a great measure of what’s selling, they’re not necessarily a great measure of appreciation or changes in value and are susceptible to changes in mix, as opposed to movements in the Case-Shiller Index.

72 thoughts on “Bay Area Home Sales Slip, Slowest April in Six Years”
  1. There are a few interesting points to pick apart:
    1) Outside of SF, we are seeing lower sales volumes but rising prices. This suggests lower inventory levels (supply) and higher or equal demand. Outside of SF, the market consists of mainly SFHs.

    2) In SF, the sales volumes are down and median prices are down too (-4%). This happens during a time when inventory of newly constructed condos has increased significantly. This suggests that the share of condos vs SFHs sold has increased. On average, condos are cheaper than SFHs, so a higher share of condos vs SFHs should lower the median price of units sold.

    3) Here is the main take-away: Prices of SFHs in SF and the entire Bay Area are still on the rise. An important driver of this is the decreasing inventory of SFH for sale. New condo construction might have impacted the prices for condos, but it is neither a proxy nor an early-indicator for SFH prices. At least this is what the data suggests so far.

    1. Hence, why I say no to condos, yes to SFHs. I, too, track SFH sales in my neighborhood and frankly most if not all are selling well over asking. Yes, we can argue that the list prices were set low but again we are starting to see Central and Outer Sunset homes starting to touch 1.5M. Gosh, I remember when hitting 1M was a decent milestone…

    2. From bloomberg earlier today San Francisco Goes From First to Worst in U.S. Home-Price Gauge:

      “San Francisco…was the country’s weakest market in the first quarter, with values falling for the first time since 2011.…Single-family home prices in the region that includes San Francisco and San Mateo counties dropped 2.5 percent from a year earlier, the worst performance among the 100 largest U.S. metropolitan areas, according to an index released Wednesday by the Federal Housing Finance Agency.”

      Emphasis mine.

      1. Look at the following passage from the article above: “sales in San Mateo County (556) were down 8.6 percent with a median sale price of $1,210,000 (up 12.87 percent, year-over-year).”

    3. i live in orinda and I can confirm house prices are definitely moving up, much much up in some cases, and its pretty much all SFH.

  2. It’s the context that one should look at.

    Sales volume was down 2.3% nationally in April. The West lagged that number and was down 3.3%. So, with a 5.1% drop for April, the Bay Area is significantly lagging the rest of the country and the West in home sales.

    Meanwhile, in arguably the hottest RE market in the country right now, inventory slipped to a record low in April and sellers are taking advantage of it in structuring great deals.

  3. Per Bloomberg today: “San Francisco, which in recent years had the biggest home-price gain in the U.S., was the country’s weakest market in the first quarter, with values falling for the first time since 2011.”

    1. That FHFA index quoted in the Bloomberg article is a joke, at least when it comes to the Bay Area. It only considers mortgages up to $636k. Assuming a 20% down-payment, this includes only houses that are sold for up to $800k. In SF and San Mateo, that represents a small portion of the market. One explanation for the price fall is that it captures predominantly smaller condos, for which the price has fallen over the past year. See original passage below:

      “The FHFA index may leave out a large portion of buyers in the region. It only measures purchases financed with conforming loans, which in the San Francisco Bay area are capped at $636,150, well below the median price of more than $1 million.”

        1. Oh, I didn’t know that. But the market for SFHs that cost less than 800k is quite small in SF, so the index doesn’t capture the vast majority of sales.

          1. While it’s true that the index isn’t based on the vast majority of single-family home sales in San Francisco proper, it’s not limited to homes that cost less than $800K.

            And the index is certainly a better marker for movements in the lower end of the Bay Area market, which is the segment that’s currently outperforming the luxurious top, correct?

  4. Maybe the central question is the following: Why is the inventory of SFH falling across the region despite record high prices? Here are two possible explanations:
    1)As prices were falling from 2008 to 2011, many possible seller delayed the sale. This inventory came back to the market in 2012-2016. Now this inventory pile up has been drawn down.
    2) People prefer to rent out a house, rather then sell it. If you can rent out your home for SFH for $5k a month, you can retire and live of that elsewhere. Airbnb presents another option to avoid selling your place.
    3) People fear that their kids will be priced out if they sell now and move elsewhere. I heard that’s what happened to people that sold in the 2000s. They might have left the city for Stockton or Sacramento, where real estate prices never came back as strongly as in the Bay Area.

    Are there other explanations?

    1. People are afraid that their buying power is going to be reduced due to forecasted rising interest rates. So they may be trying to race to buy something now at a slightly higher price rather than be left with a higher payment for a smaller home.

    2. They all sound plausible

      4) The Bay Area population continues to rise, but the availability of land to build new SFH is way out/up on the perimeter. You can redevelop a parking lot to a condo tower, but you can’t place many SFH there.

      1. I’m not sure if there is much overall Bay Area population growth. There were those figures recently about a net outflow from SC and SM counties.

        Beyond that, as it pertains to SFHs, even the outskirts are running out of land on which to build SFHs. Don’t forget that a lot of East Bay land is set aside and not available for development. In the Tri-Valley area much of the empty hillsides are preserved. In the corridor from Dublin to SR (IIRC Bollinger Canyon Rd.) there was a big development a number of years back but it was pretty much restricted to near into BC Road. The hills around it will be untouched. Likewise the North Bay counties are pretty much off-limits to major SFH developments as is Pacifica. The Peninsula is pretty much built out as is inner SJ.

        What you see in Dublin and SR now are townhome type projects with tiny lots and common walls.

        An old commercial site in PH was entitled for homes ( 40 or so townhomes) recently and developers came out of the woodwork to bid on it – in part because there are so few available parcels in WC, PH and Lafayette on which to build new housing.

        Short of infill, the Bay Area is running out of developable land.

        1. I think you can argue that their is still room for some SFH in the Bay area depending on how the old military installations can be developed from Hunters Point, to Alameda Naval Air Station to the Old Oakland Navy Hospital and the huge swath of old Concord Weapons Station. I know a lot of it is being pushed and developed for denser multi unit housing but wonder how much of that is a good thing..

          I can see Hunters Point w candlestick nearby redevelopment dropping some of the mixed and instead having even a more of a townhome, row house type neighborhood development if it was wasn’t so expensive too build.

          I would rather see a bay point type SFH development with restored shoreline replacing the runways at old Naval Alameda Air Station which is constrained on how many you people can realistically get on & off the island @ peak times (ferry terminal will offer some commuter options but still limited) and Concord Weapons station be heavy on SFH development as extension of existing Concord/Walnut Creek SFH neighborhoods with tie in to extended Iron Horse trail/Mt. Diablo trail system. In other words, provide some local balance to Oakland’s Jack London & Brooklyn Basin development and Walnut Creek’s/Concord’s downtown apartment blitz respectively.

          1. The Concord Weapons’ Station is potentially one of the last remaining sites for large scale SFH development though aren’t there toxic and other issues there?

            There was an article a number of years back looking at developable land in major US metro areas and it noted that, had not the environmental protections been in place, the Bay Area’s population would be 11 million or so. Of course it’s good the hills were preserved from development.

            But it will be a constraint of any future large Bay Area population growth. If you look at the cities which added the most folks in the past year almost all were “land rich” areas. The Texas metros are growing like gangbusters with Houston about to overtake Chicago as the 3rd largest city. Atlanta is about to surge past 6 million residents. Seattle was, percentage-wise, near the top in growth for large cities and, though it’s no Houston, it has lots of developable land- as it is Seattle is adding 5K plus units of housing a year and will continue to do so at least through the mid-2020s.

            The Bay Area will need to infill but the issue is where? SF can’t absorb many more people or jobs. The upper Peninsula refuses to increase density along El Camino which is mostly parking lots and one-story commercial buildings from SSF to Burlingame.

            At some point a more aggressive regional co-ordination of planning and public resources has to emerge or the Bay Area will lose economic ground relative to places like Atlanta.

    3. Most recent stats for SFH inventory in SF proper (month of April) are 355, in line with past years 2014 (328) and 2015 (362). Only in 2016 did we get a spike (440).

      1. Well, there is a big graph at the top of the article with data in it that shows median sales price doubling in 7 years while volume went by down…

    1. certain segments of stock market are undervalued. it is not uniform across industries or companies

  5. I already showed you the Bloomberg Startup Barometer which indicates the startup bubble has already popped. Many of them are running on fumes right now.

    The stock market is overvalued by 18 of 20 commonly used metrics, with some only having been exceeded in 1929 and 2001. S&P market cap to GDP is in the 85th percentile, which tells us that there is a lot of voodoo and hopium out there vs real productive growth. Market breadth is weak with ten large caps accounting for almost half of gains this year. S&P 500 adjusted for CPI has surpassed the last two bubbles.

    The housing market is probably near fair value nationwide, but certainly not in SF. If you look at the affordability level it is a joke, it shows that SF housing has become a luxury item for a wealthy few. Luxury items perform poorly during economic downturns.

    Meanwhile US household debt has hit a new record high, and we’ve doubled the national debt since 2008 plus added over $3T to the Fed balance sheet, to fund this illusion of prosperity, meanwhile all this debt is a drag on future growth. On top of these you can add auto and student loans bubbles, plus a big crisis brewing for pensions and insurance companies who have been crushed by a decade of ZIRP.

    1. So your argument is that we are NOW at the end of the business cycle and should sell all our stock and real estate assets in the bay area? Should we stash the cash in the mattress or invest in real estate outside the bay area?

      1. It really depends on your timeframe. If you are into real estate or stocks for short term profit, we’re probably much closer to the top than bottom, so you could take some profits now to buy on the next dip. For long term there’s not much better alternative, but I would think about a hedging strategy for stocks. Basically, you can never time it, but you can be prepared with some sort of plan for yourself when it does come. The worst thing you can do is whistle doo-dah like so many people are right now.

        1. Hey, I’m whistling doo-dah right now. I believe that’s the best long term investment strategy. Looking back, the people that just kept their investments in 2008 (be it stocks or real estate in SF) have a great return to show in 2017. The ones that lost out were those that sold at the wrong time, did (or couldn’t) get back in around 2011.

          1. What if you sold in 2006 and bought back in 2012? Come on, it is really that hard to figure out if assets are relatively cheap or expensive, most people know instinctively but they overthink it. I’m not saying you should pick tops or bottoms, that’s for fools, but if you can catch even 50% of the move you’ll crush the buy and hold strategy with its huge drawdowns.

    2. Riiigght.

      If the startup bubble has popped already, that’s great news. The bubble has popped and didn’t affect the region’s unemployment rate. Great news for SF housing prices

      1. Agree this market is showing great resilience. On the other hand, I have a friend who works in marketing for a startup and he’s worried that he will be laid off very soon, but nevertheless he is shopping for an SF condo up to $900k. There’s still a lot of optimism out there and we’ll see if it’s justified.

        1. I can’t speak to your friend, but the labour market is still pretty good and hopefully he’d find something quickly. Maybe the job market is marginally less strong than last fall, but still hot.

        2. Does your friend have a partner who is also high earning (like so, so many buyers in SF and region)? Then don’t worry about him. If your friend doesn’t buy, or loses the place to foreclosure, someone with a job at a company like Salesforce, or some attorney, or other professional (likely couple) etc, will buy it. That is why this local market is resilient. Now, if a true national recession across all sectors hits, you would be right. But you persistently wag your finger at the tech sector without understanding how large it is, and despite the existence of bogus companies, ignore just how many stable and strong ones.

          1. I am well aware of the strength of big tech, my point is that it will not protect SF real estate from a big correction. All you have to do is look at the chart above, the S&P crash in late 2015 was mostly caused by Chinese stocks and had nothing to do with tech at all, yet we saw a good dip in median home values after that. Another example is Toronto housing, which recently saw a flurry of people walking away from their deposits and a sudden 50% spike in inventory after Home Capital problems came to light. All of these bubbles are interconnected, and a huge part of the market is just sentiment, so it can sour very quickly based on any one of them falling over.

          2. Crash not because of how far it fell, but how quickly it fell over a very short period. SPX went from around 2075 to 1865 in just a few days, quite a few people got woke up by that little trembler.

          3. It closed today at 2415. So if you sold then you would have missed out on 25% appreciation in 18 months.

            Hardly a “crash”

          4. sabbie you are certainly no master of the market. 2015 was not a crash. the only people who lose are those that sell out during a crash. good stocks are long term holds and selling during a downturn is one of the worst things you can do to a balanced portfolio. in regards to tech propping up the market. only 8% of SF workforce is tech, and 2/3 of that at big companies like salesforce. although this 3% of SF startup tech workers can inflate the market, they cant crash it

          5. This metric has nothing to do with the future of big tech companies. Insiders sell shares of their own companies because they already own tons of shares and want to diversify. Fortunately, there’s an example right here: Marc Benioff sold 30,000 shares of Salesforce. He owns 34 million shares. Should he buy even more? Of course not.

          6. You are certainly no master or perhaps you are too young to remember: if you didn’t sell during the 10% drawdown in mid 2008, you experienced another 45% loss, and didn’t get back to even until three years later. But if you didn’t sell during the first Nasdaq drawdown in 2000, then you got hit for another 75% and didn’t get back to even until sixteen years later. But if you adjust for inflation then you are still down about 50% from the peak of that bubble.

          7. Sorry was looking at an older chart, you’re still down around 25% sixteen years later.

          8. Sabbie has been preaching the bubble for at least 2 years. If he put his money where his mouth is and sold all his stock and SF real estate investments, he should be down 20-30% compared to everyone else who stayed invested. I suggest to take his advice on how a 20% correction feels like seriously, as he is feeling it every single day.

          9. Sabbie, are you saying that the smart thing would have been to sell at that day in 2015 when SPX was 2075?

            More pertinently, does the same apply to real estate? Should we have also sold real estate in 2015 because those were the top valuations?

          10. Ahh, bubble talk. Here’s a savvy commentator doubting whether Facebook would survive past 2013.

            Here’s someone claiming the market was overvalued in 2012.

          11. Let’s dial the Wayback Machine a bit further shall we?
            Brutus and Jack, banking savants. Course I suppose we can argue in the long run they had the Big Picture right: the sun DID come up the next day…being September, that was probably true even out in the avenues.

          12. If you are a short term SF RE investor and sold at the first real sign of weakness in 2015, you have missed out on little to no gains, depending on the sub market. RE has poor liquidity and by the time the economy slows you’ve already taken a big hit. Buying at this level is simply high risk, low reward, IMO.

            As for stocks it’s a little different due to easy liquidity. If you had sold in 2015, you would have missed nothing for about a year of sideways action, then could have bought back in on the post election rally for the low cost of commissions. However with stocks you don’t really need to ever sell, because there are various hedging strategies available.

            I’ve been looking at $4-5M sales in D5 this morning and vast majority have been purchased all cash. That’s not “good paying jobs” sorry that’s funny money. If you think that sort of thing will last into infinity you are crazy.

          13. sabbie, if you bought the S&P in 1995 (just as relevant as cherry picking 2000), then you would have earned 8.9% annually. thats very hard to beat. if you wouldve sold in the times you suggest, then you wouldve lost out. the market is good long term. timing it is not an advisable strategy

          14. Sabbie – once again, you fail at 101. $4m to $5m+ sales have *always* been cash only. Nobody gets mortgages for ultra high end. How can you not know this?

          15. That’s weird. When 526 Duncan was purchased for $6.1 million a few years ago, by a former Facebook engineer no less, it was financed with a first mortgage for $3,240,000 and line of credit for up to $1,000,000 more (as we reported at the time).

            In fact, the vast majority of home purchases in this price range are not “all cash.” And many of those purchases which are “all cash” at closing are quickly recapitalized to incorporate a debt component.

          16. That’s jibber jabber, I work in the business and there were plenty of mortgages in that price range.

            Just one example- 525 28th Street in Noe just sold all cash. It previously sold in 2014 and a loan was taken out for $2.55M. Per public records.

            You want so badly to believe that these prices are supported by fundamentals but they are not. BUBBLE.

          17. @Sabbie – in 2014/2015 there were signs to some of us that Bay Area RE was getting too frothy. As an investor it’s not a case of just selling. One would take a huge hit on capital gains taxes based on the big run-up in prior years. I exchanged my rentals for properties in the NW in 2014/2015. First, to get a much better ROI and secondly anticipating that the NW would significantly outperform the BA and California in appreciation over this coming decade.

            Though I don’t expect any kind of crash in BA prices, there are more and more signs of systemic weakness in the local market and that will translate, IMO, to a prolonged period of under appreciation here relative to certain other markets. RE is still a great investment and I’ve done much better with my RE portfolio than with my stock portfolio. The caveat is that, for small investors, now may not be the time to be buying up BA homes/condos.

          18. You played it smart I think. I have a friend who also sold his SF condo in 2015 and exchanged it for a multi unit in a second tier city. Personally I am holding my local rental until retirement in 20+ years. But also, although I had more cash to spend on another property by 2014, I held off on buying, I am keeping dry powder for the next dip and will buy in a second tier city as well.

          19. I exchanged to a first tier city as I was looking for good appreciation and a great ROI. There are some good second tier cities which give a steady but small appreciation yet offer great ROIs. One can’t time the market, but about the time I purchased in Seattle the prices really took off their. My places are up maybe 20%. That can’t keep up and I wouldn’t want it to as we know what uber appreciation did to the Bay Area. Hopefully other metro areas will learn from the BA’s mistakes. Owning a personal residence here is fine but my concern about California is some proposed stuff in Sacramento which would drive more businesses from this state and potentially hurt investment real estate. Including a statewide universal health care system (cost pegged at 400 billion/year) funded by a 15% payroll tax and potential other new taxes.

          20. I stand corrected. My experience conversing with people in construction and real estate in lots of markets (Marin, NYC, others) these folks have said, properties selling for over 3m are pretty much always all cash. Maybe this is just not true in SF, maybe it’s related to the need to value company stock in the purchase.

          21. Why put quotes around all cash when it is all cash and a subsequent refinance? it’s still all cash at close.

    3. Meanwhile, NASDAQ is hitting new all-time highs today. However one might hand-wring over household debt and auto loans, the Bay Area is far more well-positioned than most.

      1. That’s true.

        And yet with the unemployment rate in San Francisco nearing a historic low (recently driven by a decrease in the labor force rather than increase in actual employment) and mortgage rates under 4 percent, home sales in San Francisco have dropped despite an increase in inventory, pricing for new construction is being squeezed with slowing sales, and home sales across the Bay Area in April were the weakest in six years.

        Which brings us back to the topic and trends at hand…

    4. Intelligent perspective thank you, and I generally agree, though you state it much better than I.

      I’m hoarding cash and will decide if I buy housing to rent out or stock to appreciate and collect dividends with less hassle, once this cycle this crashes in recession. It’s getting closer.

      Thinking more stock side but housing maybe since I believe Bay Area RE and desire ability will remain poditive for decades to come despite the bitter naysayers….and I’m thinking rent to my kids, with discount of course, keep it in the family… they get it back when I die anyway. but that assumes they want to stay here and they are still years off from that regardless.

      But buying a condo in Oakland or Berkeley to then rent out once things settle down and prices fall 20% or more? Sure maybe??

      I wouldn’t buy an sf condo downtown to rent out unless we see another major housing bust which seems unlikely but ya never know.

  6. I’m sorry I’m not a drinker of the Realtors serving up kool aid. Do we really need 500 cloud storage companies. Real Estate and the Stock Market ride in cycles. Keep believing the old saying, This time is different.

    I’m sitting on the sidelines waiting with my cash.

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