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Tri-Valley Real Estate
Heading into the 2019 Market
February 2019 Report
As of early February, the government shutdown is over - at least for a couple more weeks - the stock market has recovered dramatically from its late 2018 plunge, and interest rates are well down from November highs. A good number of large, local, high-tech "unicorns" continue to plan IPOs in 2019. All these are positive economic indicators for the Bay Area real estate market - though indicators have proven to be quite volatile over the past 5 months.
As detailed in previous reports, there was considerable cooling in Bay Area markets in the second half of 2018, following a very hot spring 2018. The month of January typically has the fewest sales of the year, sales which mostly reflect activity during the December market doldrums: So, we don't consider its data to be a reliable indicator of conditions or trends. But activity is picking up, and the beginning of the spring sales season - which in the Bay Area can start as early as February - will soon provide more direction as to where the market is heading.
Median House Sales Prices since 2000
Appreciation trends have been very similar across the Tri-Valley cities.
Average Dollar per Square Foot Appreciation
Home Sales by Property Type & Bedroom Count
By far the greatest number of home sales in the Tri-Valley region is of 3-bedroom and 4-bedroom houses, with median sales prices of $815,000 and $1,075,000 respectively. As an interesting point of context, in San Francisco, it's a 2-bedroom condo at a median sales price of $1,375,000.
Home Sales by Square Footage
since 2012 -
2018 saw new highs in sales volume in every price segment of Alameda County luxury homes sales. This was a common dynamic in the county's different regions.
Median Home Prices & Sizes by City
In the next two charts, for greater context, a number of cities north of what we typically call the Tri-Valley region are included. Many factors go into median home values, including location, of course. But home size too is one of the fundamental aspects of home prices.
The median house size in Tri-Valley cities is usually smaller than in cities further north, and sometimes dramatically so. This plays a major role in comparative affordability.
Average Days on Market
Generally speaking, the lower the average days on market, the stronger the demand, and this next chart compares Tri-Valley and San Francisco statistics over the past 3 years. By this measure, buyers have been jumping on new listings more quickly here than there. This statistic often fluctuates by season, with Q2 - the spring selling season - typically seeing the hottest, most competitive markets around the Bay Area. We shall soon see what spring 2019 has in store for buyers and sellers.
Months Supply of Inventory (MSI)
It is quite common that higher-priced home segments have softer supply and demand dynamics than more affordable homes, and this is illustrated in the chart below regarding months supply of inventory. MSI is a measure of how long it would take to sell the current inventory of listings at existing rates of market activity: The lower the MSI, the hotter the demand as compared to the supply of listings on the market.
A Very Multi-Cultural Place
Bay Area Demographics
Before looking at the charts below, here is today's demographics quiz question: What 4 nationalities account for the origin of the highest numbers of Bay Area residents?
Stock Prices & Interest Rates
As seen in the first chart below, the changes in the S&P 500 Index have been very dramatic since the 2016 election, seeing an enormous jump to its most recent peak in September 2018 before entering a period of substantial volatility. Ups and downs and major volatility in financial markets - and their effects on household wealth - can play a large role in local real estate markets.
As illustrated in the following graph, the movements in the S&P 500 look distinctly modest when compared to the stock price changes of some of our local high-tech giants. It has been has been a wild, queasy ride for investors and stock-owning employees - and for many home buyers.
If the big, Bay Area unicorn IPOs go forward as expected, and the market greets them enthusiastically, that could certainly affect housing demand as thousands of employees suddenly feel considerably more affluent. However, it is true that many of these possible IPOs are centered within San Francisco itself.
Interest rates are a major factor in housing costs and the ability to qualify for home loans. After hitting its most recent high in November, rates have dropped off considerably. Such declines sometimes spark renewed buyer motivation to move forward quickly with home purchase plans.
Compass is a licensed real estate broker (01991628) in the State of California and abides
by Equal Housing Opportunity laws. All material presented herein is intended for informational
purposes only. Information is compiled from sources deemed reliable but is subject to errors,
omissions, changes in price, condition, sale, or withdraw without notice. No statement is made
as to accuracy of any description. All measurements and square footages are approximate. Exact
dimensions can be obtained by retaining the services of an architect or engineer. This is not
intended to solicit property already listed