The Bay Area housing market is as hot as it’s ever been for sellers, but the real heat is on buyers to get a home as throngs enter the market. It’s no longer race to get a home, it’s a marathon.
Frustrated buyers are using low interest rates which have empowered them to bid higher in multiple offer situations. The result, prices are rapidly rising.
Take San Mateo County for example. We compared May of 2020 to this year and across the board, the numbers show high demand and higher prices.
Reports of low inventory creating the feverish market are simply misreported. Low inventory implies there are no homes for sale, but looking at the numbers, one can easily see that the number of New Listings are up 14.2% over last year, while inventory of available homes to purchase is down 36%. There are scant homes to choose between, because more homes are selling and faster than before, not because fewer homes are coming to market.
The Months of Inventory in the last column says it all. Months of inventory represents the time it would take to sell the current inventory of homes at the current sales pace. That’s down from 2.4 months of inventory last year to less than one month of inventory in 2021 (the national average is typically six months of inventory).
The YOY median home sale price increase of a staggering 26% YOY illustrates the effect of demand outstripping supply, as buyers outbid one another to secure a home before interest rates rise, and their buying power is reduced, or their mortgage payment goes up.
In our town of Belmont, we see a similar pattern, but since it’s a smaller sample size, some of the numbers are more pronounced.
Take the number of new listings for sale—up 53% over 2020, yet the available homes to sell are down 35%. This is clearly due to the 122% increase in closed sales.
It’s understandable to question why then did the median home prices rise half of what they did in the overall San Mateo County stats? Simply put, Belmont started with a higher median home price, and has less elasticity in the price threshold to increase at the same rate as less expensive areas included in the San Mateo County Statistics.
What could cool this superheated housing climate? Any number of things, but higher interest rates could be the first to show on the horizon.
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.
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The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.