Over the last three months, the housing market has changed so rapidly that we began to look at the data on a weekly basis rather than a month monthly basis (as is typical) to illustrate how significantly the market has changed over a shorter timeline.
In the month of May, the weekly Greater Bay Area housing data for single-family homes supported the survey data from CAR. First, housing inventory is again in decline as sellers continue to hesitate and withdraw listings from the market.
The decline in inventory is also due to an increase in buyer demand; homes under contract have increased steadily since the phased reopening of the economy began. They have risen well past pre-pandemic levels in early March.
The sale-to-list ratio reflects the change in the original list price and the final sale price of a home. For example, a ratio of 100% means that a home sold for the price at which it was most recently listed. In the Bay, sale-to-list prices have been consistent; buyers and sellers are negotiating the final sale price in line with the list price. Napa saw the biggest discounting from sellers.
We also look at months supply of inventory, which measures how many months it would take for all current listings on the market (including listings under contract) to sell at the current rate of sales. In May, the months supply for single-family homes rose. This may seem counterintuitive to the weekly data above (which shows less inventory and more homes under contract), but remember that months supply compares inventory to sales. Low sales volumes recorded in May are the result of the low volume of homes under contract in late March and early April; said another way, homes under contract turn into sales around 30 days later. Expect recorded sales volume to increase in June and months supply to decrease.
In May, sales volume was down 6.7% from the previous year and rebounded from April lows. This shows the speed to which the Greater Bay Area real estate market is recovering from the pandemic.
As we discussed in previous newsletters, the fundamentals of the housing market were strong before the global economy stalled, and they have continued to show stability during the months of quarantine.
Looking ahead to July, we anticipate housing market activity to increase as pent-up demand turns into participation from both sides. We will closely monitor the evolving state of the market to make sure that our clients are pricing and negotiating to get the most value out of their transactions.
As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals would be happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.