From the Golden Gate Sotheby’s Market Report…

MARKET STAYS STRONG AMID RISING INFECTIONS

Despite the lifting of most business restrictions in July, the increase in the rate of COVID-19 infections hampered a greater economic improvement in the SF Bay Area even as the housing market remained strong. Many companies delayed plans for workers to return to the office in late July and August, while some consumers have curtailed activities.

The regional unemployment rate improved slightly to 5.8% in June, the latest month available, on par with the long-term average of the last twenty years. Through the first half of the year, 183,000 jobs were created, or in some cases workers were rehired, in the SF Bay Area. The availability of qualified workers remains an impediment to greater hiring volume, with many workers in a range of industries unwilling or unable to work as a result of COVID-19 concerns or lack of access to childcare.

With a resurgence of infections, employees able to work remotely may continue to do so, particularly in downtown San Francisco. The ability for a larger share of the regional population to work remotely for a longer period should continue to support buyer demand for larger homes in suburban neighborhoods.

While the regional economy continued to battle headwinds to the recovery, the housing market remained strong even as pricing broke records and some buyers have been priced out of the market. Following the record-setting sales pace in June, the number of closed sales decreased in July to 5,974 homes. This was a decrease of roughly 8% from last month, yet was the third-highest monthly total in the last five years, underscoring
the strong demand for homes.

Additionally, closed sales were 20% higher than July of 2018 and 2019. Home sales slowed in all counties with the exception of Solano County, where sales increased modestly by 3%. The sharpest declines in monthly sales were in Marin, Napa and San Francisco counties, where sales slowed by more than 20%. Sales volume remained hampered by limited inventory in many neighborhoods as well as few options for starter home buyers. In some of the most competitive neighborhoods, a measure of buyer fatigue is entering the market as some potential buyers grow weary of getting outbid with each offer.

DIFFERENT SEGMENTS, DIFFERENT STORIES

While closed sales slowed throughout all price ranges, the greatest declines were in the upper price segments. The number of sales of homes priced less than $750,000 fell by only 1.4%, a minor amount. Conversely, sales of homes priced between $2.5 and $3.5 million fell by 17% from the previous month and sales of homes greater than $5 million declined by 23%. The $3.5 to $5 million price range slowed the most, with 29% fewer sales in July. Within the higher-priced home segments, buyers are faced with a limited number of options in many neighborhoods. A growing number of high-income households are looking to exit rather than relocate within the SF Bay Area.

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