Bay Area Median Home Prices Rise, But Year-To-Year Monthly Sales Fall Again

SAN FRANCISCO, CA - Data released Wednesday shows June sales of homes in the San Francisco Bay area dropped 6.5 percent from the same time period one year ago, the third monthly year-over-year drop.

At the same time, the Bay Area median home sale price continued to rise, setting yet another record.

According to data firm CoreLogic, the median sale price in June was $712,000, the third straight month a new high was set. That price was up 1 percent from the $705,000 median price last month, and up 7.9 percent from the $660,000 Bay Area median price reported in June 2015.

CoreLogic says prior to this spring, the peak median price of a home in the Bay Area was $665,000 in June and July of 2007.

Here's the full release from CoreLogic:

San Francisco Bay Area's Median Home Sale Price Sets Another Record

Home Sales Fall Year Over Year for the Third Straight Month

New data released today by CoreLogic® shows a total of 8,679 new and resale houses and condominiums sold in Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma counties in June 2016, up 8.0 percent month over month from 8,035 sales in May 2016* and down 6.5 percent year over year from 9,282 sales in June 2015. It's normal for sales to increase between May and June in the San Francisco Bay Area, and the average change between those two months since 1988 is a gain of 4.1 percent. However, sales have fallen on a year-over-year basis for the past three consecutive months. June sales have ranged from a low of 7,118 in 1993 to a high of 15,735 in 2004, and June 2016 sales were 11.7 percent below the June average of 9,825 sales since 1988 when data for this report begins (data start dates vary by county). In June 2016, sales of newly built homes – detached houses and condos combined – were nearly 34 percent below the month's average. Resales in June 2016 were 9.2 percent below the June average, but ignoring the 2003-2006 housing boom that was fueled by risky home loans, last month's resales were 3.5 percent below the month's long-term average.
The median price paid for all homes sold in the San Francisco Bay Area in June 2016 was a record $712,000, marking the third straight month to set a new high. Prior to this spring, the peak median was $665,000 in June and July of 2007. The June 2016 median price was up 1.0 percent month over month from $705,000 in May 2016* and up 7.9 percent year over year from $660,000 in June 2015. The average change between May and June since 1988 is a gain of 1.7 percent. The median sale price has risen year over year for 51 consecutive months.
"As the San Francisco Bay Area's median sale price continues to set records this year, it's important to consider the context," said Andrew LePage, research analyst with CoreLogic. "It's been almost nine years since the median last peaked and, adjusting for inflation, the region's median sale price last month remained more than 10 percent below it's prior-cycle peak. When adjusting for inflation, three of the most expensive counties in and around the Silicon Valley – San Mateo, Santa Clara and San Francisco – did log record median sale prices in recent months, while the medians in the region's six other counties remain 7 percent to 38 percent below their peaks.
"Prices in today's market and during the last housing boom were fueled in part by job growth, consumer confidence and tight supply. While the current cycle has received a boost from historically low mortgage rates – about 3.6 percent recently compared with the 6-percent range in the last cycle – the last cycle benefitted from loose underwriting and high-risk 'subprime' home loans that allowed borrowers to stretch to their financial max, if not well beyond. Today's post-bust lending standards remain moderately tight and the share of financed purchases with a down payment of 3 percent or less is less than half of what it was when prices last peaked. Ultra-low mortgage rates mean many homebuyers today using safe and sane financing face monthly mortgage payments that are substantially lower than what they would have been when home prices were at the same level in the last cycle."
Home sales of $500,000 or more accounted for 71.3 percent of all sales in June 2016, up slightly from 71.1 percent in May 2016 and up from 67 percent in June 2015. The June 2016 $500,000-plus share was the highest since August 2007 when it was 72.1 percent.
Additional San Francisco Bay Area Highlights for June 2016:

• The typical mortgage payment that San Francisco Bay Area homebuyers committed to in June 2016 was $2,580, up from $2,515 in June 2015. Adjusted for inflation, the June 2016 typical mortgage payment was 37 percent below the all-time high of $4,096 in June 2006, when the median sale price was $648,000 and mortgage rates averaged more than 6.5 percent. Last month's typical payment was 10 percent below the prior cycle's peak of $2,867 in April 1989, when mortgage rates averaged more than 11 percent. The typical mortgage payment is not an average or a median; rather, it is a mortgage payment (excluding taxes and insurance) based on the monthly median sale price, and assumes a 20 percent down payment, a 30-year fixed-rate loan and Freddie Mac's corresponding average monthly mortgage rate. When adjusted for inflation, the typical mortgage payment provides a rough approximation of the ups and downs of the mortgage payments that homebuyers commit to over time. Today's typical payment for the overall region is lower than during some periods over the last two decades because mortgage interest rates are lower and because of the inflation adjustment. However, in the San Francisco Bay Area's more expensive counties, today's typical payment is closer to its all-time high. For example, San Francisco's typical payment of $4,240 in June 2016 was 15.8 percent lower than the peak of $5,036 in June 2007 and 6.0 percent higher than the previous cycle's peak payment of $4,000 in April 1989.
• Absentee buyers, mostly investors, bought 15.9 percent of all homes sold in June 2016. This was down slightly from 16.1 percent in May 2016* and down from 17.6 percent in June 2015. The June 2016 absentee share was the lowest for any month since May 2010 when it was 14.8 percent. The absentee buyer share peaked at 28.4 percent in February 2013, and the monthly average since 1988 is approximately 15 percent.
• Cash buyers accounted for 18.2 percent of June 2016 home sales, down from 20 percent in May 2016 and down from 19.9 percent in June 2015. The cash sales share peaked in February 2013 at 32.9 percent, and the monthly average since 1988 is about 15 percent.
• Jumbo mortgages accounted for 35.1 percent of the total number of home purchase loans used in the San Francisco Bay Area in June 2016, down slightly from 35.7 percent in May 2016 and up from 29.8 percent in June 2015. Jumbo mortgages also represented 56.8 percent of the total dollar volume of all home purchase originations in June 2016, down from 57.5 percent in May 2016 and up from 51.5 percent in June 2015. Jumbo mortgages are loans that exceed the "conforming loan limit" which is set by regulation and varies by county. Nationally, the base conforming loan limit for single-family homes is $417,000, but high-cost areas, including most of the San Francisco Bay Area, have higher limits of up to $625,500. A rise in the jumbo mortgage share of home purchase loans can be related to higher home prices, an increase in the share of sales occurring in the market's higher end or the greater availability of funding for jumbo loans.
• Government-insured Federal Housing Administration (FHA) loans accounted for 10.7 percent of home purchase loans in the San Francisco Bay Area in June 2016, up from 10 percent in May 2016 and down from 12.9 percent in June 2015. However, in some of the more affordable stretches of the San Francisco Bay Area, low-down-payment FHA loans accounted for a substantially higher share of home purchase loans. Solano County had the highest FHA share in June at 25.4 percent, followed by Contra Costa County at 20 percent and Napa County at 19 percent.
• Distressed sales, which include both short sales and real estate-owned (REO) sales, represented 3.3 percent of total home sales in June 2016, the lowest level for any month since May 2007 when it was 3.2 percent. The June 2016 distressed sales share was down slightly from 3.4 percent in May 2016* and down from 4.3 percent in June 2015. Distressed sales peaked in January 2009 at 60 percent. Short sales are homes that are sold for less than what is owed on the property, and REOs are homes that lenders took back through foreclosure and then sold on the open market.

*When necessary May 2016 data was revised. Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.

Year-Over-Year Change-
Total Homes Sold/Median Price for Select San Francisco Bay Area Counties
(Reflects total home sales)

County - Homes Sold June 2015 - Homes Sold June 2016 - Percent Change - Median Sale Price June 2015 -
Median Sale Price June 2016 - Percent Change

Alameda - 1,925 - 1,737 - (-9.8%) - $655,000 - $705,000 - 7.6%
Contra Costa - 1,934 - 1,816 - (-6.1%) - $500,000 - $541,000 - 8.2%
Marin - 386 - 360 (-6.7%) - $930,000 - $960,000 - 3.2%
Napa - 142 - 165 - 16.2% - $540,000 - $535,000 - (-0.9%)
Santa Clara - 2,129 - 1,975 - (-7.2%) - $823,000 - $860,000 - 4.5%
San Francisco - 561 - 574 - 2.3% - $1,140,000 - $1,170,000 - 2.6%
San Mateo - 740 - 712 - (-3.8%) - $945,000 - $1,070,000 - 13.2%
Solano - 748 - 733 - (-2.0%) - $349,000 - $375,000 - 7.4%
Sonoma - 717 - 607 -(-15.3%) - $485,000 - $529,250 - 9.1%
Bay Area Total - 9,282 - 8,679 -(-6.5%) - $660,000 - $712,000 - 7.9%

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Month-Over-Month Change
Total Homes Sold/Median Price for Select San Francisco Bay Area Counties
(Reflects total home sales)

County Homes Sold May 2016 - Homes Sold June 2016 - Percent Change - Median Sale Price May 2016 -
Median Sale Price June 2016 -Percent Change

Alameda - 1,584 - 1,737 - 9.7% - $710,000 - $705,000 - (-0.7%)
Contra Costa - 1,634 - 1,816 - 11.1% - $540,000 - $541,000 - 0.2%
Marin - 338 - 360 - 6.5% - $969,500 - $960,000 - (-1.0%)
Napa - 142 - 165 - 16.2% - $575,000 - $535,000 - (-7.0%)
Santa Clara - 1,880 - 1,975 - 5.1% - $875,000 - $860,000 - (-1.7%)
San Francisco - 510 - 574 - 12.5% - $1,137,500 - $1,170,00 - 2.9%
San Mateo - 675 - 712 - 5.5% - $1,025,000 - $1,070,000 - 4.4%
Solano - 658 - 733 - 11.4% - $370,250 - $375,000 - 1.3%
Sonoma - 614 - 607 - (-1.1%) - $530,000 - $529,250 - (-0.1%)
Bay Area Total - 8,035 - 8,679 - 8.0% - $705,000 - $712,000 - 1.0%

-image via J. Triepke/Flickr