As Demand Cools Down, Housing Inventory Shoots Up in the Bay Area
There is an interesting insight into the homes on the market in the South Bay area. For the Santa Clara County, between the years 2014 and 2018, 90 out of 100 homes on the market in April and first half of May got sold. Compare this to 2019, when for the same period, only 33 out of 100 homes on the market sold. We are talking a drop of some 63%. No mean stat! Just goes on to prove that buyers have become choosy. They are not averse to waiting and while it is not a buyer’s market yet, the scales are turning ever so imperceptibly towards the homebuyers’ fraternity.
What is true for South Bay holds good for the entire Bay Area to some extent. We have pored over housing shortage and consequent real estate crisis but suddenly, there is a good amount of inventory lying around the Bay area. Take the San Jose metro area for example. Homes on the market (Jan-March) have skyrocketed to 55% higher than the same time last year (a Trulia study). In the San Fransisco area, the inventory has shot up by 28%.
That the buyers are looking to take a breath was evident even back in December when the Bay Area year-to-year transactions came down by 22%. The total activity of 2018 only just about held (a 1% increase) compared to 2017.
While we are convinced that the ongoing summer will see a lot of houses being sold, the markets on the coast certainly give an impression of cooling down. Another Trulia study which captures the effect says that “days on market” have come up from 40 to 57 in the San Jose area. While it is still way below the national average of 82, San Jose has been customarily seeing homes snapped up faster than this year.
It is still glad tidings for the good school districts and the “middle market” real estate. The demand for these areas shows no sign of ebbing. The East Bay location continues to entice the middle market players as employees find commuting to offices in the East Bay area convenient.
Buyers are intelligent folks. They are jumpy over the broader economic picture. Recent stock market volatility has not helped their cause. Even with falling mortgage rates in their favor, they seem to be in no hurry.
Amidst all this uncertainty, they are likely to err on the side of caution. To counter the trend, sellers are bringing down asking prices. Already, by December, the number of price reductions from the sellers’ side has doubled compared to the same time last year.
Certainly a level playing field now!