While the pandemic’s impact on the housing market progressed rapidly in March, the April housing market data illustrates a stable market, albeit at a new normal. The graph below illustrates the available housing inventory by week rather than by month (as is typical) to illustrate how the market has changed over a shorter timeline. We can see that inventory levels declined in March, but have since begun to climb back up as more homeowners become comfortable with listing their home. Meanwhile, a significant number of sellers have remained in the market, and this so-called floor might indicate that active listings have fallen as far as they will go.
Another sign that the housing market may already be turning around is the number of listings under contract. During the week of March 30th, listings under contract hit a low. Since then, listings under contract have tripled and are approaching the levels we saw in early March. This indicates that people are forging ahead, aided by technology.
As mentioned earlier, most Greater Bay Area counties saw median home prices that were higher still compared to 2019. Although the pandemic and stay-at-home orders dampened buyer demand, the number of active listings also decreased, which buoyed prices. Appreciating prices typically signal a healthy demand for the available housing and encourage sellers to price their homes slightly above comparables.
Typically, it is best to look at yearly comparisons for housing data because it removes seasonal variations. However, during the pandemic it is important to look at changes on a month-to-month basis. By this measure, Alameda, Solano, San Francisco, and Santa Cruz counties actually saw April single family home prices rise compared to March.
The sale-to-list ratio reflects the change in the original list price of a home and the final sale price. For example, a ratio of 100% means that a home sold for the price at which it was most recently listed. In the Greater Bay Area, single-family homes almost always have higher sale-to-list ratios than condos. Sale-to-list price ratios remained strong in April. This is another indication that home prices are stable; sellers are not making any additional price concessions to sell their home.
Months supply of inventory 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 April, the inventory of single-family homes decreased but not nearly as much as the sales volume, which caused a large jump. Months supply was just 2.9 in April, still below the line for what most analysts consider normal in California.
Inventory and volume of homes sold saw a significant decrease in March and April. The year-over-year changes are particularly pronounced as sales and inventory typically have a seasonal increase in March and April, coming out of the slower Winter season.
Again it is helpful to look at sales by comparing those in April to those in March. By this measure, we see that all counties had a decrease in sales except for Napa which remained flat. Some counties’ housing markets, namely Santa Cruz where sales only dropped by 10%, were relatively insulated from the pandemic.
Looking ahead to June, we anticipate more growth. We expect buyer demand to pick back up as fears of a steep price decline lessen. Look for more agents to leverage the latest technology to give buyers the ability to tour homes in compliance with state and local laws.
As we discussed in previous newsletters, the fundamentals of the housing market were strong before the global economy stalled, which we believe will help us all navigate this difficult time with as little consequence to the market as possible.
As always, we remain committed to helping our clients achieve their current or 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.