Would-be San Francisco Bay Area homebuyers spooked by fast-rising home prices, a brief uptick in mortgage interest rates and potential fallout from the federal government shutdown took a break from their home search in the third quarter of 2013, spurring a slowdown in home sales that, for the first time in recent memory, was accompanied by a decline in median home prices, according to an analysis of MLS data by the research division of Better Homes and Gardens Mason-McDuffie Real Estate.
Ironically, the slowdown coincided with a measurable improvement in the inventory of homes for sale in the nine-county Bay Area. Regionwide, there were 7,024 existing, single-family detached homes listed for sale across the Bay Area on Sept. 30, the last day of the third quarter, up 15 percent from 6,105 homes available for purchase at the end of the second quarter but 17 percent below the 8,511 homes on the market at the end of last year’s third quarter.
Sales of existing, single-family detached homes declined by 2 percent from 14,370 in the second quarter to 14,072 in the third quarter and were down 5 percent from 14,795 homes sold in last year’s third quarter. The slower pace of sales was largely responsible for a 2 percent decline in the Bay Area’s median sales price, which dropped from $740,567 in the second quarter to $725,788 in the third quarter. Even so, the third quarter median price was 27 percent higher than it was in the third quarter of 2012 – a sign of just how much home prices have recovered in the past year.
Santa Clara County was No. 1 in the Bay Area with 2,998 homes sold in the third quarter, followed by Alameda County, with 2,896 homes sold, and Contra Costa County, with 2,856. Seven of the nine Bay Area counties included in the analysis reported a decline in sales on a quarterly basis and five experienced a drop in home sales on an annualized basis. The most dramatic changes occurred in Marin County, where home sales were down by 12 percent quarter over quarter, and in Solano County, where sales plunged 23 percent on an annualized basis.
San Francisco recorded the Bay Area’s highest median sales price of $1,163,556 for the quarter, followed by San Mateo County ($1,148,586) and Marin County ($1,041,048). Solano County, which at $294,931 had the region’s lowest median sales price, experienced the Bay Area’s largest percentage increase on a quarter-over-quarter and an annualized basis. Its median sales price jumped 9 percent from the previous quarter and 41 percent from the third quarter a year ago.
Homes continued to move quickly when competitively priced. Regionwide, homes were on the market an average of only 38 days before receiving a final purchase contract, unchanged from the second quarter but down significantly from an average of 56 days during last year’s third quarter. Among Bay Area counties, Alameda County recorded the lowest average number of days on market with 22, while Napa reported an average of 61 days.
According to Keith Robinson, COO, Better Homes and Gardens Mason-McDuffie, “Looking ahead, the recent slowdown demonstrates that although there has been a significant real estate recovery in the Bay Area there are many factors that could affect the market’s performance in the coming months.” Should home prices remain steady during the winter quarter and Congress avoid further government shutdowns and act on other important fiscal issues, homebuyers may return to the market refreshed and looking for competitively priced properties to live in or maintain as rentals.
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