While real estate sales volume in Santa Clara County closed 2018 as a banner year for sellers, 2019 is already showing signs of the market softening, says MLS data. December 2018 ended a year of high sales volume with more options for buyers, but January 2019 is revealing some downward trends.
Here is some of the latest data for Santa Clara County single family home sales:
- The median home price is currently $1,163,000, representing a 7 percent drop from last month.
- Homes are staying on the market longer, averaging 34 days, which is an increase of 13 percent.
- Days of inventory is currently at 37, which represents a drop of 15.8 percent.
- The number of homes sold over the past month was 548, which is a 23.8 percent drop from the previous month.
- Active properties for sale is also lower at 682, representing a 38 percent drop from the previous month.
- And the number of pending properties is lower, at 528, which is 26.3 percent lower than the previous month.
March was the peak for real estate sales in 2018, with single family home prices in Santa Clara County hitting an average high of $1,745,230. However, the year ended at an average of $1,437,380, representing a drop of 18 percent.
Furthermore, the sale price to list price ratio has also declined. This ratio represents the amount that buyers actually paid divided by what sellers were asking. Currently, buyers are paying just 0.1 percent over the asking price, while from February through April of last year, they paid 12.4 percent over the asking price.
Condominium Sales Also Softening
As with single family home sales, condominium sales are also softening. The median sale price for condominiums peaked in March of 2018 at $950,000. But the year ended with a median price of $795,250, representing a 16 percent price drop. This is the first drop in median sale prices for condos since June 2011.
With condo sales, buyers are now paying below the list price by 0.1 percent, which has not occurred since March of 2012.
Reasons for softening in the market can be attributed to a few factors. For once, according to the California Association of Realtors (CAR), as we wrote about in our post about 2019 real estate trends, interest rates may go up in 2019, which is causing some buyers to wait things out before getting into the market. It’s expected that the 30-year, fixed mortgage rate could rise to 5.2 percent or higher, up from 4.7 percent in 2018.
In addition, there are trends that show people are migrating away from the Bay Area because, despite the softening in the market, real estate prices are still high here compared to other parts of the country.
Another factor, some experts say, is that the Silicon Valley real estate market is simply getting back to normal after a period of surging growth.
Trends definitely show that the market is moving closer to a buyer’s market, but CAR says the softening in the market will be relatively mild.