Q3 2021 Northern California Real Estate Market Update

The following analysis of the Northern California real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

 

Regional Economic Overview

The job recovery in Northern California appears to have stalled out, which is likely because of rising COVID-19 cases. That said, total employment has grown by 144,100 jobs compared to a year ago, and 292,500 of the jobs that were lost during the height of the pandemic have now been recovered. Even with slower growth in employment, the region’s unemployment rate was 5.9% in August (the most recent data available). This is lower than in June and July, but still up from the May level of 5.5%. By county, the lowest jobless rate was in Santa Clara County (4.8%), and the highest rate was in Solano County, where 7.3% of the workforce remains unemployed. There tends to be a lag between decreases in COVID-19 infection rates and potential increases in employment. Given that new cases started to slow in late August—coupled with the expiration of enhanced unemployment benefits—I am optimistic that job recovery will pick back up as we move into the winter months.

northern california Home Sales

❱ In the third quarter of 2021, 16,579 homes sold, a modest increase of 1.6% year over year, but down .2% from the second quarter of 2021. I’m not surprised to see sales rising only negligibly when compared to last year’s pandemic-induced surge of demand, but I am a little concerned that they didn’t increase between second and third quarter.

❱ Year-over-year, sales rose in Santa Clara and Alameda counties, but pulled back in the rest of the region. Compared to the second quarter, sales rose in Placer and Solano counties but were lower everywhere else.

❱ Listing activity rose more than 5.1% relative to the second quarter of this year, which made the contraction in sales all the more surprising.

❱ Pending home sales were also modestly lower, suggesting that the market may not see significant improvement in sales this winter.

northern california Home Prices

A map showing the real estate market percentage changes in various counties in Northern California during the third quarter of 2021.

❱ The average home price in the Northern California counties contained in this report rose 20.7% year over year to $1.194 million.

❱ The most affordable counties relative to average sale prices continue to be Shasta and Solano. Santa Clara held its position as the most expensive market.

❱ Average prices in all counties rose by double digits compared to a year ago, but fell in Alameda, Contra Costa, Placer, and San Luis Obispo counties compared to the second quarter of this year.

❱ In terms of price growth, the regional housing market continues to cool and greater inventory levels will add to this slowing. Affordability is also a significant limiter when it comes to rising prices.

A bar graph showing the annual change in home sale prices for various counties in Northern California during the third quarter of 2021.

Days on Market

❱ The average time it took to sell a home in the Northern California counties in this report dropped 16 days compared to the third quarter of 2020.

❱ The amount of time it took to sell a home dropped in every county compared to last year. Market time was also lower in all counties other than Santa Clara (+1 day) and Shasta (+4 days) compared to the second quarter of this year.

❱ In the third quarter, it took an average of 29 days to sell a home, which was 1 day longer than it took during the prior quarter.

❱ The greatest drop in market time was in San Luis Obispo County, where it took 29 fewer days to sell a home than in the third quarter of 2020.

A bar graph showing the average days on market for homes in various counties in Northern California during the third quarter of 2021.

Conclusions

A speedometer graph indicating a seller's market in Northern California during the third quarter of 2021.

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Inventory levels are rising, sales are slowing, and prices are pulling back. All of these factors, combined with low mortgage rates, should favor home buyers, but it’s a little premature to suggest the market is shifting in their favor. If COVID rates continue to drop, it will be interesting to see if more buyers resume their search for a new home. Given the factors above, I have moved the needle a little more towards buyers. That said, it remains a seller’s market.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q3 2021 Northern California Real Estate Market Update appeared first on Windermere Real Estate.

Q2 2021 Northern California Real Estate Market Update

The following analysis of the Northern California real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

 

Regional Economic Overview

Regionwide, total employment rose 156,300 from a year ago. Northern California has recovered 258,000 of the jobs that were lost due to COVID-19, but there is still a ways to go. The pace of the job recovery has slowed, with a meager 1,600 jobs added in the second quarter. With the number of jobs recovered essentially stalling, the region’s unemployment rate rose from 6% in March to 6.1% in June. I should note that the current level is significantly lower than the 14% rate in April of last year as the pandemic was taking hold of the nation. The lowest jobless rate was in Santa Clara County (5.1%), and the highest rate was in Solano County, where 7.8% of the workforce remains unemployed. Rising COVID-19 infections appear to be having a significant impact on the job recovery in Northern California. Until we see the rate start to drop, a return to full employment will likely take quite some time.

northern california Home Sales

❱ In the second quarter, 16,607 homes sold, an increase of 79.8% compared to the same period a year ago. Although this sounds like a remarkable number, the pandemic slowed sales significantly a year ago. It was pleasing to see sales were also 52.7% higher than in the first quarter of the year.

❱ Year-over-year, home sales rose by double digits in all counties contained in this report. Sales rose the most in Santa Clara County (+67%) from the first quarter, but there were significant gains across the entire region.

❱ The number of homes for sale rose more than 45% from the first quarter of this year, which is sure to have contributed to the solid rise in sales in the quarter.

❱ Pending home sales were up 27.4% from the first quarter, demonstrating that demand remains solid. I expect to see further growth in the number of sales in the third quarter.

northern california Home Prices

A map showing the real estate market percentage in various counties in Northern California.

❱ The average home price in the Northern Californian counties contained in this report rose 29.4% year over year to $1.257 million.

❱ The most affordable counties—relative to average sale prices—continue to be Shasta and Solano. The most expensive county was Santa Clara. In addition to Santa Clara, average sale prices were above $1 million in Alameda, Contra Costa, and Napa counties.

❱ Average prices rose in all the counties contained in this report. Even more impressive is that all markets saw prices rise more than 10%.

❱ Although supply levels have improved, price growth continues to rise at very impressive rates. This is likely due to low mortgage rates and increasing demand.

A bar graph showing the annual change in home sale prices for various counties in Northern California.

Days on Market

❱ The average time it took to sell a home in the Northern Californian counties covered by this report dropped 15 days compared to the second quarter of 2020.

❱ The amount of time it took to sell a home dropped in every county compared to a year ago. Market time was also lower across the board compared to the first quarter of this year.

❱ In the second quarter, it took an average of 28 days to sell a home, with homes selling fastest in Alameda County and slowest in Shasta County.

❱ The greatest drop in market time was in San Luis Obispo County, where it took 29 fewer days to sell a home than in the second quarter of 2020.

A bar graph showing the average days on market for homes in various counties in Northern California.

Conclusions

A speedometer graph indicating a seller's market in Northern California.

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

There is a dichotomy in the region as the housing market continues to flourish despite the stalled economic recovery. Although supply levels are increasing, home prices and market time suggest that demand remains remarkably robust.

As such, I believe that the market still favors home sellers, and I have moved the needle a little more in their favor.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q2 2021 Northern California Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2021 Northern California Real Estate Market Update

The following analysis of the Northern California real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

 

Regional Economic Overview

New COVID-19 cases remain elevated across most of California, which continues to temper job recovery. The region has recovered 258,000 of the jobs that were lost, but there is still a ways to go. Although the number of jobs returning has slowed, the region’s unemployment rate continues to tick lower and now stands at 6.1%, down from the pandemically induced peak of 14%. By county, the lowest jobless rate was in Santa Clara County (5.1%), and highest in Solano County, where 7.8% of the workforce remains unemployed. The bottom line is that an economic recovery is in place, but persistently high COVID-19 infection rates continue to act as a headwind.

northern california Home Sales

❱ In the first quarter of 2021, 10,876 homes sold, an increase of 30.4% over to the same period a year ago. Sales were 24.2% lower than in the fourth quarter of 2020.

❱ The quarterly decline in sales can mostly be attributed to very low levels of inventory. Listing activity was down 21.5% compared to the fourth quarter of 2020. This lack of homes for sale will continue to slow sales.

❱ Year-over-year, sales rose in all counties contained in this report, with double-digit growth in all areas other than Solano County.

❱ Pending home sales eked out a .2% increase compared to the previous quarter, which tells me that closings in the second quarter of 2021 may only show a little improvement.

northern california Home Prices

A map showing the real estate market percentage changes in various Northern California counties.

❱ The average home price in Northern California rose 19.9% year over year to $1.070 million.

❱ The most affordable counties relative to average sale prices were Shasta and Solano. The most expensive was Santa Clara. It was interesting that, irrespective of how expensive Santa Clara is, prices there still rose by more than 12%.

❱ Average prices rose in all the counties contained in this report. Even more impressive is that all markets saw prices rise more than 10%.

❱ Home-price growth is a function of supply and demand. Without enough supply, prices will keep appreciating at above-average rates. As mortgage rates continue to rise—albeit modestly—we may start to see a bit of a slowdown in price growth, which would be good news for home buyers.

A bar graph showing the annual change in home sale prices for various Northern California counties.

Days on Market

❱ The average time it took to sell a home in the Northern Californian counties covered by this report dropped 13 days compared to the first quarter of 2020.

❱ The amount of time it took to sell a home dropped in every county other than Shasta, where it took eight more days to sell a home than it did a year ago.

❱ In the first quarter, it took an average of 40 days to sell a home, with homes selling fastest in Alameda County, and slowest in Shasta County.

❱ The greatest drop in market time was in San Luis Obispo County, where it took 31 fewer days to sell a home that in the first quarter of 2020.

A bar graph showing the average days on market for homes in various Northern California counties.

Conclusions

A speedometer graph indicating a seller's market in Northern California.

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Even with a slowdown in the job recovery, there is clearly demand for housing, as demonstrated by reduced market time and rising home prices. The number of homes for sale remains well below where I would like to see it, but I still have hope that there will be some improvement heading into the summer— especially if COVID-19 infection rates start to drop as more people get vaccinated.

The current market continues to significantly favor sellers and, given the factors shown above, I have moved the needle a little more in their favor.

 

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q1 2021 Northern California Real Estate Market Update appeared first on Windermere Real Estate.

Q4 2020 Northern California Real Estate Market Update

The following analysis of the Northern California real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere agent.

 

Regional Economic Overview

New COVID-19 cases across California have been increasing, which has started to temper a job recovery that was performing rather admirably. That said, the Northern California region has recovered 265,000 of the 434,000 jobs that were lost. With jobs returning, the region’s unemployment rate continues to drop from a peak of 13.4% in April to 6.1% in November (the most recent data available). By county, the lowest jobless rate was in Santa Clara and Placer counties, where the rates were 5.1% and 5.2%, respectively. The highest rate was in Solano County where 7.5% of the workforce is still unemployed. The economic revival is still in place but rising COVID-19 infection rates are acting as a drag on the recovery.

northern california Home Sales

❱ In the final quarter of 2020, 14,341 homes sold, an increase of 26.3% compared to the same period a year ago. Sales were 3.1% lower than in the third quarter, which is not surprising as sales tend to slow in the winter months.

❱ Sales were positive year-over-year in all counties other than San Luis Obispo, with double-digit growth seen in all other markets.

❱ Listing activity was down 20.9% compared to the fourth quarter of 2019 and 17.5% lower than in the third quarter of 2020.

❱ Pending home sales pulled back 16.3% from the third quarter, which tells me that closings in the first quarter of 2021 may be relatively modest.

northern california Home Prices

A map showing the real estate market percentage changes in various Northern California counties.

❱ The average home price in the Northern California counties contained in this report rose 14.8% year-over-year to $1.05 million.

❱ The most affordable counties—relative to average sale prices—were Shasta and Solano. Price growth in these markets was very solid, but there were significant price increases in the more expensive counties as well.

❱ Average prices rose in all of the counties contained in this report. Even more impressive is that all markets saw prices rise by more than 10%.

❱ Home-price growth is a function of supply and demand. Supply levels are well below demand. With more buyers than sellers, prices are still rising at significant rates.

A bar graph showing the annual change in home sale prices for various counties in Northern California.

Days on Market

❱ The average time it took to sell a home in the Northern California counties covered by this report dropped 12 days compared to the final quarter of 2019.

❱ The amount of time it took to sell a home dropped in every county other than Shasta, where it increased 24 days year-over-year.

❱ In the fourth quarter, it took an average of 38 days to sell a home, with homes selling fastest in Alameda County and slowest in Shasta County.

❱ The greatest declines in market time were in Napa and Placer counties, where it took 24 fewer days to sell a home than in the fourth quarter of 2019.

A bar graph showing the average days on market for homes in various Northern California counties.

Conclusions

A speedometer graph indicating a seller's market in Northern California.

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Jobs continue to return, and buyers are out in good numbers. Unfortunately, home supply is still well below normalized levels, but I expect to see more new listings— and sales—as households who are able to continue working from home move to less expensive markets.

With concerns regarding wildfires fading, economic activity improving, and very low levels of available housing, the market clearly still favors sellers. As such, I have moved the needle a little more in their favor.

 

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q4 2020 Northern California Real Estate Market Update appeared first on Windermere Real Estate.