California’s Robust Housing Market
According to the California Association of Realtors recent sales activity report, California’s housing market remains robust. As of May, the median days on the market for the state dropped nearly 60% to seven days. The median price for single-family homes (SFH) set another new record high, topping $818,260, showing a year over year increase of 39.1%. Condos and townhomes also set records, rising from a median price of $464,900 to $592,000.
In the Bay Area, the sales price to list price ratio was 109.3%, a signal of a very competitive market for buyers.
Bay Area sales rose to triple-digits compared to last year, mainly due to the Covid-19 lockdowns. You can see the sharp increase in sales starting in January 2021 in the chart below.
When you graph all California Counties based on the percentage of homes sold above asking price, Santa Clara County came in at #3, just below Alameda and Contra Costa Counties. Santa Clara County is the third from the left on the graph below.
Fueling appreciation growth is low inventory and high buyer demand. Inventory continues on a declining trend. In May 2020, there was approximately 4.3 months of inventory available. In May 2021, inventory dropped to 1.8 months. Active listings are still less than half of what was on the market in 2020. So if you’re thinking about selling, now is an excellent time to evaluate your options.
No Bubble, Real Estate Market Is Fueled by Traditional Buyers not Speculators
Economists are reporting that the Bay Area’s frenzied market isn’t a real estate bubble; it’s a reflection of economic strength, buyer demand, and too few available homes. CoreLogic’s deputy chief economist, Selma Hepp, was recently quoted in The Mercury News. “Pent-up pandemic demand is driving prices. It’s traditional buyers, not speculators.”
To further prove Hepp’s point, an analysis of FHA loans by American Enterprise Institute of Bay Area properties showed the lowest loan delinquency rates. The 2007 housing crash was caused by rising loan defaults. Given mortgage lending reforms, many homeowners have mortgages supported by government-backed loans.
Economist Chris Thornberg of Beacon Economics, a long-time trusted Sereno source for forecasting, recently presented his analysis in collaboration with San Jose State University and Bridge Bank. Thornberg concurs that the housing gains are sustainable. The biggest concern isn’t a “bubble” but supply.
The charts below, using data collected from CoreLogic, details yearly growth in California, the SF Bay Metro Area and San Jose housing markets, 9.3% and 8.3% respectively. With low supply of inventory and new construction, significant changes in the trajectory aren’t expected.
The Santa Clara County Market
With few exceptions, most Santa Clara County cities/neighborhoods saw an increase in median home price.
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