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Peninsula-Silicon Valley Market Update August 2022
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Same As It Ever Was(A Return To Normal)
Markets have definitely cooled across the Bay Area over the past few months. But despite alarming headlines housing continues to show tremendous strength and resiliency when viewed in historical context. This report will review recent housing performance in the core Peninsula market.
Home Prices
Median sales price in July is down (9.6%) from the spring peak in May. This is not unprecedented, however. Prices were down (8.3%) during the same period in 2019, and (9.6%) June to August 2021.
Slowing sales and downward pricing pressure is the norm during the summer season. 2020 was an exception as the onset of the pandemic caused normal seasonality to shift out a few months.
Appreciation Rates Have Calmed
While short-term prices have dropped, the longer-term trend is still upward. Price appreciation is flat to slightly positive, and current home prices are on par or just above where they were a year earlier.
Q3 tends to be a strong home-buying period so we will see what happens in the next few months.
An interesting side note; nationally the cost of buying a home in June of this year the highest it's ever been. This reflects the shortfall of available housing relative to demand.
Inventory Returning to Normal
Bay Area housing inventories always run very lean compared to the rest of the country. But since early 2021 peninsula homes were selling faster than new ones came to market, drawing down inventories to as low as 0.5 months.
Inventory is returning to historic norms of 2 - 2.5 months. Still tight, this inventory expansion has contributed to a more balanced market dynamic. We're seeing patient buyers, and sellers willing to negotiate (some) for the first time in years.
Competition
Rationality has returned and today the asking price actually means something, or should anyway. Massive overbidding is rare, as is egregious underpricing in most cases. Good homes are still competitive and multiple bids still occur, but the feeding frenzy has subsided for now.
Velocity
A few months ago most houses sold in the first weekend. Today 3 - 4 weeks is both common and entirely normal. With average Days on market hovering around 20 we still have a robust, high velocity market.
Competitionand Velocity
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Robert Purnell
Real Estate Advisor, MBA
Compass
DRE#: 01351519
578 University Ave., Palo Alto, CA 94301