California home sales fell for the fourth consecutive month in September, hampered by a tight supply of homes on the market and high interest rates. According to the California Association of Realtors, statewide sales of single-family homes were down 21% from a year ago. Meanwhile, the statewide median price rose 3.2% to $843,340, recording its largest year-over-year gain in more than a year.
At the regional level, home prices also increased from a year ago: The San Francisco Bay Area’s median price saw the biggest annual gain (6.6%).
In San Mateo County, according to the California Association of Realtors, sales were down 14.1% from a year ago, yet the county’s September median home price of $1.955 million was up 5.1% from September 2022 and 0.3% higher than August’s median home price of $1.95 million. In Santa Clara County, home sales were down 23.4% from the previous year and down 12% from August. The county’s September median home price of $1.85 million was 9% higher than the $1.7 million median price recorded during the same time last year.
The rise in home prices does not appear to be stopping buyers, at least not in Silicon Valley, according to local Realtors.
“We’re still seeing multiple offers and homes selling above list price,” Jim Hamilton, president of the Silicon Valley Association of Realtors, said.
Dave Walsh, 2021 California Association of Realtors president and broker manager of the Compass office in Los Altos, made the same observations.
Speaking recently to members of the local trade association, Walsh said, “Silicon Valley is like no other marketplace in the nation. There is no place like home.”
The 30-year, fixed-mortgage interest rate averaged 7.2% in September based on Freddie Mac’s weekly mortgage survey data. Having tracked interest rates through the years, Walsh noted that a 7% mortgage interest rate is more the norm by historical standards. He compared Silicon Valley’s current market performance at the higher interest rate with the 3.6% rate prior to the pandemic and found buyer demand, price-to-list ratios and days on market were even stronger today. The numbers show more buyers are paying over list price even with today’s high interest rate, and cumulative days on market also are shorter, he said.
“Buyers are accepting it. It’s not stopping our housing market,” Walsh said.
Inventory is the region’s biggest challenge, Walsh said. Silicon Valley’s population has grown, and so have jobs despite the layoffs. Incomes have risen and equity in homes has grown in leaps and bounds.
Through his 45 years of selling properties, Walsh has experienced the ebbs and flows of Silicon Valley’s housing market. There is no merit to the doom and gloom expectation that there will be an increase in foreclosures, Walsh said. Many buyers are sitting on a lot of equity and are able to make their mortgage payments, which are fixed at record-low rates. California ranks as the 47th lowest state for mortgage delinquencies.
California needs a minimum of 180,000 units of housing annually through 2025 to keep up with population growth. “We’re clearly not going to build our way out of the problem we have, so there will continue to be an upward trend on pricing through next year,” Walsh said.
Walsh indicated younger buyers understand the numbers and the realities of the market, and they are ready to buy. Once rates come down to a comfortable percentage, he expects move-up buyers also will be ready to sell their homes.
The California Association of Realtors expects prices to experience monthly declines in the next couple of months, following the traditional seasonal pattern, although positive year-over-year price growth is expected to persist through the remainder of the year as housing supply is expected to remain tight.
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.
There's more ...
Looking for more real estate stories? Read Embarcadero Media's latest Real Estate headlines.