The Bay Area home price plunge has gone from slippery to steep amid a rising tide of mortgage rates.
An up to 7-percent drop in Bay Area home prices from spring to summer plunged to 17.5 percent this fall, the San Francisco Business Times reported.
The median price of closed sales fell from $2 million in the second quarter to $1.65 million in the third quarter, according to September data from Compass. The decline was 9 percent year-over-year.
The median sales price for condominiums fell from $1.3 million to $1,147,500, an 11.7 percent decline during the same period.
At the same time, the statewide median single-family home price fell to $821,680 in September, a decline from August of 2.1 percent, and a drop of 8.7 percent from the $900,000 high set in May.
Brokers blamed the steep drop on higher interest rates and declines in stock markets and consumer confidence.
Economic volatility generally makes buyers more cautious, Compass Chief Market Analyst Patrick Carlisle told the Business Times, and changes in the market are best seen as a correction. Overbidding continues to decline while days on the market increase.
“Low interest rates effectively subsidized increasing home prices for years, and increasing interest rates have delivered hammer blows to affordability since spring,” Carlisle said. “Soaring stock market values made households feel wealthier, a major factor in home markets, and now the reverse is occurring.”
Not all Bay Area counties posted declines: Napa County had a 13 percent increase in its median home sales price.
Sotheby’s International Realty agent Stacey Caen said San Francisco is undergoing a 10 to 15 percent market correction. Historically, once the market finds its footing, there will be a stretch of price stability before the next up-cycle begins, she said.
She recommends buyers be judicious in their purchases and make deals while sellers are more receptive to negotiating than they’ve been over the past decade. She said brokers with experience in detailed valuations are vital for buyers and sellers looking to trade with confidence.
“AAA properties are still attracting premium value,” Caen said. “Custom packaged luxury properties in top locations are still commanding top dollar.”
Prices across the Bay Area fell faster than the national average from May to August, with values in Silicon Valley plunging up to 7 percent, according to a Zillow analysis. Typical home values dropped 3 percent in Greater San Francisco, including Alameda, Contra Costa, San Francisco, San Mateo and Marin counties.
But the fall was greatest in metro San Jose, including Santa Clara and San Benito counties, with typical home values plunging 6 percent. Nationwide home values declined 2 percent during the same period.
— Dana Bartholomew
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