From the Golden Gate Sotheby’s Bay Area Market Report…

A REBOUNDING MARKET

The SF Bay Area housing market rebounded during the second quarter, with sales accelerating each month within the quarter and pricing recovering in most neighborhoods. The regional economy also continued to expand, with a net increase in employment and higher wages despite tech industry layoffs. In the first half of the year, roughly 100,000 jobs were created throughout the SF Bay Area and the unemployment rate remained in the low-3% range. The tight labor market continued to drive income growth, helping to improve housing affordability even as mortgage rates rise. While migration out of the region continues, job prospects attracted new residents to take their place and some households that left the SF Bay Area in recent years returned.

MORE HOMES SELLING

Sales volume in the second quarter increased to roughly 10,700 homes sold, an increase of 57% from the first quarter, underscoring that buyer demand persists despite higher mortgage rates. While aggregate sales were lower than one year ago, part of this can be attributed to the lack of inventory constraining buyer options. The number of closed sales increased from the first quarter in every county in the SF Bay Area, led by Marin County where sales more than doubled. Though the smallest increases were in Napa and Solano counties, sales in these areas still increased by roughly one-third from the previous quarter.

VARYING SALES ACCELER ATION AT DIFFERENT PRICE POINTS

Sales activity accelerated in all price categories during the second quarter. In recent months, higher priced sales increased much more than the broader market. The number of sales increased by roughly 85% for homes priced between $1.25 and $2.5 million. Sales of homes priced above $2.5 million more than doubled from the first quarter. In particular, total sales in the $2.5 million to $3.5 million range increased by nearly 115%. However, over the past year, sales in the lower-price tiers have recovered slightly better than higher-priced homes. Sales of homes priced less than $1 million were only roughly 15% lower than one year ago, while all other categories were more than 30% off the pace.

LOOKING AHEAD

Despite economic headwinds, moderating inflation and still-strong labor market should continue to support accelerating sales activity. With limited inventory expected through the remainder of the year, pricing should stabilize. Buyer competition may increase further, with a growing share of homes sold above the list price through the summer buying season.

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