One of the U.S.’s most scrutinized home markets showed positive numbers in August following a year of falling prices, according to a report Sunday from Compass.
The Bay Area’s median house sales price rose 5% year over year in August, reversing a 12-month trend of annual home price declines—with prices down as much as 19% earlier this year.
For the overall Bay Area, the median house sales price in August was $1.26 million, up from $1.2 million a year ago.
San Mateo ranked No. 1 in the Bay Area with a median price of $1.987 million.
Within the nine-county region that was analyzed, there were varying appreciation rates— — with some up, some still down on a year-over-year basis— — but all are moving in a distinctly positive direction. It’s likely that all Bay Area counties will see prices up annually within the next few months, the report said.
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“The significant improvement in market dynamics in the Bay Area is a strong riposte to the many recent articles suggesting it has entered a so-called socioeconomic ‘doom loop,’” said Patrick Carlisle, Compass’s chief market analyst for the Bay Area.
Bay Area real estate was hit harder by the mid-2022 market correction—which ended the surging price growth seen throughout the pandemic—than most areas of the country, according to Carlisle, but “with buyer demand rebounding and inventory levels low, prices are once again climbing on a year-over-year basis,” he said.
Current prices are still well below historic peaks seen in spring 2022, at the end of the tech industry and pandemic-led housing booms.Nevertheless, buyer demand has rebounded in 2023 from the deep low point of late 2022; combined with a substantial decline in new listings, this has created an imbalance in supply and demand, leading to faster sales, more multiple offers and more sales over asking price. The recovery in prices, along with high interest rates, has led to a further reduction in housing affordability for those purchasing with home loans. Perhaps as a consequence, according to the National Association of Realtors, the percentage of buyers purchasing all-cash has generally been running at an eight-year high nationally.
When analyzing the comparative three-month-rolling median house sales prices by county, reflecting June-August sales, the top four counties—San Mateo, Santa Clara, Marin and San Francisco—all came in between $1.5 million-$2 million, which ranks among the highest median home prices in the country.
The highest end of the market has been particularly strong, as the number of homes selling for $5 million and above hit 86 last month, a record high for August and jumping 39% year over year..
Of those $5 million-plus sales, 80% sold below their original asking price, and 14% sold for over original asking price. The median sale closed at a price 7% below original asking price, and the average discount off original median list price was $395,000.
“With interest rates over 7%, housing affordability remains a huge regional issue, but not enough to outweigh motivated buyers competing for an inadequate supply of listings,” Carlisle said.
