An increase in the inventory of homes for sale in the nine-county San Francisco Bay Area during the first quarter of 2014 failed to either boost home sales or put the brakes on rising home prices, according to an analysis of MLS data by the research division of Better Homes and Gardens Mason-McDuffie Real Estate.
The year-long run-up in home prices has been welcome news to Bay Area home sellers and was the primary reason for a 36 percent quarter-over-quarter increase in the inventory of homes available for purchase. Yet, for many homebuyers, more listings meant more buyers competing for the opportunity to buy a home, and more competition often meant multiple offers and higher purchase prices. As of March 31, 2014, the final day of this year’s first quarter, 5,203 existing, single-family detached homes were listed for sale region-wide, compared with 3,289 homes on the market on December 31, 2013 – the final day of the fourth quarter. Despite the increase, inventory remained well below the 6,179 homes offered for sale on the final day of last year’s first quarter.
With rising prices making it more difficult for buyers on a budget or with lower down payments to successfully negotiate a purchase, the number of homes sold in the Bay Area declined by 27 percent on a quarterly basis to 8,790. That compared with 12,115 homes sold in the fourth quarter and 10,248 sold in last year’s first quarter. For the Bay Area as a whole, the median price of a home sold rose from $725,964 in the fourth quarter to $744,660 in the first quarter, an increase of 3 percent, but was 24 percent higher than in the first quarter of 2013, when it was $598,440.
The number of homes sold fell on both a quarterly and annualized basis in all nine counties, yet all nine reported double-digit, year-over-year increases in the median sales price and seven of nine reported higher median prices on a quarterly basis. Contra Costa County led the way with 1,833 homes sold during the quarter, followed by Alameda County, with 1,765, and Santa Clara, with 1,737. Regionwide, homes were on the market an average of 56 days in the first quarter, up from 46 days in the fourth quarter and 53 days in last year’s first quarter. At the county level, homes in Napa County averaged a high of 168 days on the market while homes sold in an average of 29 days in Santa Clara County.
Luxury-home buyers with cash or large down payments helped boost the median sales price in several counties. San Mateo County reported the region’s highest median sales price of $1,328,811 for the quarter, while Solano County reported the lowest median price of $302,940. Median home prices were up 14 percent quarter over quarter in Marin and San Mateo counties, while Napa County reported a 33 percent year-over-year increase, followed by Marin County (+31 percent). San Francisco, Solano and Sonoma each registered 25 percent year-over-year increases in their median home price.
According to Rich Casto, Chief Strategy Officer, “Looking ahead to the peak home buying and selling season, homeowners who have regained equity lost during the economic downturn may decide now is a good time to sell their homes – particularly if their plans don’t include finding a replacement home. Sellers who do plan to buy another home may make the sale of their home contingent on their ability to complete a purchase.” Rent-back agreements between sellers and buyers also may become more common. Former homeowners who lost their homes to foreclosure or completed a short sale may add new competition if there is sufficient inventory and financing available. Both homebuyers and home sellers will benefit from the knowledge offered by an experienced REALTOR®, who can help them navigate a rapidly changing real estate market.
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