After the market roared to unforeseen average sales price heights in the spring and sales volume rebounded dramatically from a slow winter, August displayed patterns of a more tempered variety. A general trend of the seasonal slowdown in both average sales prices and sales volume emerged. While the slight sales volume drop is certainly representative of the ongoing inventory shortage, it’s also a causal reaction to the massive amount of properties that moved from March through July. Decreased average sales prices were a result of the Bay Area’s most affluent properties being absorbed during those months, as opposed to any real market value loss.
Major indicators that demand is as high as ever could be seen in the fact that average days on market before a sale (DOM) were down year-over-year in five of the seven home markets we represent. This included the average Napa County home moving 20 percent faster than during the previous month and 21 percent faster year-over-year. Additionally, San Francisco condominiums averaged just 24 DOM—a 25 percent faster turnaround time than in August 2014. The market’s strength can also be measured in five of the seven counties posting year-over-year average home sales price gains.
While the East Bay, Mid-Peninsula, and Sonoma County showed very steady figures both in terms of pricing and volume, a few counties acted more erratically. The average San Francisco home sale dropped beneath the $1.5 million mark for the first time since January. Marin County homes, on the other hand, shattered previous records by selling at an average of $1.773 million (thanks in large part to a $47.5 million sale in Belvedere). Marin County also saw its sales volume drop by 31 percent year-over-year. However, Napa County saw its average home sale drop by 19 percent year-over-year.
When one balances the erratic behavior of the three aforementioned counties and factors in the steady pace of the other four, it can be said that Bay Area market activity was fairly typical for this time of year. Inventory remains short, demand remains high, and luxury properties are selling at a premium. With an onslaught of luxury homes bound to hit the market in September and October, both average sales prices and home sales volume should be on the rise throughout the Bay Area.
Average home sale prices are finally dropping in the wake of the astronomical $1.8 million-plus average that was posted from March through June. August’s more-modest $1.496 million average sale was down 10 percent from July and was the lowest monthly average since January. While this certainly gave buyers room to find slightly more affordable options, the market swing can simply be chalked up to seasonal patterns. The $1.496 million was, after all, the strongest August average on record, and a 10 percent gain from August 2014. The average 28 DOM remained consistent with a market that is highly in-demand even during vacation and non-peak months. The 185 homes sold was down 6 percent year-over-year—a byproduct of both how stellar sales were this spring and how low inventory has been driven in the city. Russian Hill was a particularly hot neighborhood in August.
With condominiums still desperately in demand among the city’s growing tech sector, there was little movement in average sales price from the previous month. August’s average unit sold for $1.183 million, up 4 percent year-over-year. This sector also provided a strong example of how downward pricing is simply a seasonal trend spurred by the area’s most luxurious units leaving the market in peak months. Case in point: The average 24 DOM was 11 percent faster than in July and 25 percent faster than during August 2014. This figure—coupled with the 177 August condominium sales being down 15 percent year-over-year—serve as indicators of both the low inventory and high demand throughout the city.
The East Bay remained impressive, with the average Contra Costa County home sale of $718,890 marking the fifth consecutive month the county average has topped $700,000. This figure represented very little change both month-over-month and year-over-year. The selling pace remained ferocious in this luxury-price-tag alternative, with homes moving in just an average of 24 DOM—second only to neighboring Alameda County in terms of turnaround speed. The 974 homes sold also made this the only county to see year-over-year sales volume growth—a welcome sign for both market health and buyer confidence.
Alameda County also showed some market stability with its $812,022 average home sale up 5 percent year-over-year, and only a minor deviation from this year’s previous peak months. The average 20 DOM was the fastest turnaround time among all seven counties we represent. The 925 home sales were right in line with what we saw in August 2014. On a granular level, Fremont saw some notable sales with its average home sales price up 12 percent year-over-year.
At first glance, those who withheld Napa County properties this spring in favor of a fall sale might be worried— Napa County’s average home sale dropped 24 percent from the previous month and 19 percent year-over-year. However, this can be explained by several harmless factors. The first being due to its small sample size as Napa County tends to see much wilder average-price fluctuation than any of the other six-figure counties. A distinct correlation can also be drawn between the record-breaking $925,752 average sale in July and the $706,821 average sale in August. There were simply very few high-priced homes left on the market after the July windfall. The market’s still-growing demand can also be sized up in how the average home sold in just 57 DOM on average, which was 20 percent faster than in July and 21 percent faster than in August 2014. Sellers should expect average home sales prices to climb steadily throughout September and October.
Sonoma County showed its appeal in an average sales price that climbed 16 percent year-over-year, as a popular and affordable alternative to higher-priced areas like San Francisco. The $651,904 average sale marked the fifth straight month the market bested $650,000-plus. This strong activity also occurred in a relatively rapid pace at an average of 57 DOM. While the 363 homes sold were down 15 percent year-over-year, this number should grow as sellers reenter the market this fall.
Marin County’s August data looked positively Herculean, in the same way that Napa County’s numbers showed an artificially deflated picture of the market’s strength. The average home sale of $1.77 million was both the highest in any county this month and also the highest in Marin County history by nearly $200,000. The flipside in this 40 percent year-over-year gain is that these numbers were inflated by several massive sales, including one of the Bay Area’s biggest of the year: a $47.5 million closing in Belvedere. The average 57 DOM was normal for the area while the 149 homes sold were down a sharp 31 percent from the previous August. Perhaps the most accurate barometer of Marin County’s strength this month would be in the buyer confidence exhibited in massive sales like the one in Belvedere.
The Mid-Peninsula showed that investors and beneficiaries of the tech boom are not hesitating at all to invest in the Bay Area’s most affluent homes. The average home sale of $1.592 million was up 15 percent from August 2015 and marked the county’s sixth consecutive month above a $1.5 million average. Average DOM also quickened as buyers wasted no time scooping up what inventory was left from a busy spring and early summer. The 410 homes sold were in line with recent figures.