Q3 2022 Northern California Real Estate Market Update

The following analysis of select counties 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

Over the past year, the Northern California markets covered by this report added 159,000 jobs. Given these solid job gains, it was no surprise that the unemployment rate fell from 5.6% to 2.9%. By county, the lowest jobless rate was in Santa Clara County (2.3%) and the highest rate was in Shasta County at 4.3%. The labor force continues to expand, which is a positive signal of the relative strength of the economy in Northern California. The region is only 17,000 jobs short of its pre-pandemic peak employment.

Northern California Home Sales

In the third quarter of this year, 11,454 homes sold, which is down 32.5% from a year ago and down 19.5% from the second quarter.

Year over year, sales fell across the board. Though the largest drop was in Santa Clara County, there were significant declines throughout the region.

The number of homes for sale continues to grow, with total average listings in the quarter up 29.2% from a year ago. There were 25.5% more homes for sale than in the second quarter.

Pending home sales fell 16.6% from the second quarter, suggesting that the market softened during the late summer months.

Northern California Home Prices

The significant increase in mortgage rates has started to impact home prices. The average home sale price dropped .5% from a year ago and 12.6% from the second quarter of 2022.

Median listing prices rose 1.6% from the second quarter, but the increase was not widespread. Although asking prices jumped 18.8% in San Luis Obispo County and rose modestly in Napa and Shasta counties, this was offset by lower asking prices in the balance of the markets.

Prices rose in five of the counties contained in this report, while they fell in three. Compared to the second quarter of 2022, prices fell across the board, with double-digit drops in Alameda, Contra Costa, and Napa counties.

Financing costs are negatively impacting home prices, which I anticipate will continue through the balance of the year and into 2023.

A map showing the real estate home prices percentage changes for various counties in Northern California. Different colors correspond to different tiers of percentage change. Shasta, Contra Costa, and Alameda County are in the -1.5% to -0.9% range. Napa, Solano, and Santa Clara County have a percentage change in the 1% to 3.4% range, Placer is in the 3.5% to 5.9% range, and San Luis Obispo is in the 8.5%+ range.

A bar graph showing the annual change in home sale prices for various counties in Northern California from Q3 2021 to Q3 2022. San Luis Obispo County tops the list at 9.9%, followed by Placer at 3.9%, Napa at 2.7%, Santa Clara at 1.3%, Solano at 1%, Shasta at -0.4%, Alameda at -1%, and Contra Costa at -1.3%.

Mortgage Rates

This remains an uncertain period for mortgage rates. When the Federal Reserve slowed bond purchases in 2013, investors were accused of having a “taper tantrum,” and we are seeing a similar reaction today. The Fed appears to be content to watch the housing market go through a period of pain as they throw all their tools at reducing inflation.

As a result, mortgage rates are out of sync with treasury yields, which not only continues to push rates much higher, but also creates violent swings in both directions. My current forecast calls for rates to peak in the fourth quarter of this year before starting to slowly pull back. That said, they will remain in the 6% range until the end of 2023.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q4 2023. After the 5.62% figure in Q3 2022, he forecasts mortgage rates continuing to climb to 6.7% in Q4 2022, 6.55% in Q1 2023, 6.35% in Q2 2023, 6.15% in Q3 2023, and 5.60% in Q4 2023.

Northern California Days on Market

The average time it took to sell a home in the Northern California counties in this report was seven days higher than it was in the third quarter of 2021.

The length of time it took to sell a home fell in Napa County but rose across the rest of the region. Compared to the second quarter of 2022, market time rose across all counties except Placer, where it fell four days.

During the third quarter, it took an average of 35 days to sell a home, which was 9 more days than in the second quarter of this year.

The combination of more choice and very cautious buyers has led market time to increase.

A bar graph showing the average days on market for homes in various counties in Northern California for Q3 2022. Alameda County has the lowest DOM at 23, followed by Santa Clara and Contra Costa at 24, San Luis Obispo at 26, Placer at 28, Solano at 36, Napa at 46, and Shasta at 79.

Conclusions

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.

Far higher financing costs in concert with very low affordability levels are now impacting the region’s housing market. Although there may be some pain as the market continues to revert to a normal pace of price growth and sales activity, I am not overly concerned about the long-term outlook. Home values are correcting, but the adjustment will not be severe, and certainly nothing like the plummet we saw following the bursting of the housing bubble.

A speedometer graph indicating a balanced market, slightly headed toward a seller's market in Northern California in Q3 2022.

I think there are more buyers than most people might expect who are waiting for prices to correct and, more importantly, for mortgage rates to stabilize. While the market is firmly in a period of transition, it still is not a traditional buyer’s market. That said, it’s also not one that gives sellers all the control. As such, I am moving the needle more in favor of buyers, but not so far as to suggest that the tide has completely turned.

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 2022 Northern California Real Estate Market Update appeared first on Windermere Real Estate.

Q2 2022 Northern California Real Estate Market Update

The following analysis of select counties 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

Over the past 12 months, the Northern California markets covered in this report added 184,600 jobs. With decent job growth, the unemployment rate fell to 2.4%, which is a significant drop from the 5.8% rate we saw a year ago. The lowest jobless rate was in Santa Clara County (1.8%), and the highest rate was in Solano County, where 3.5% of the workforce remains unemployed.

Northern California Home Sales

In the second quarter of 2022, 14,235 homes sold, which is a drop of 21.1% compared to a year ago. Sales rose an impressive 37.6% compared to the first quarter of this year.

Year over year, sales fell across the board. The largest drop was in San Luis Obispo County. Solano and Shasta counties had fairly modest declines.

The number of homes for sale jumped more than 67% compared to the first quarter of the year. This growth in inventory has caused an impressive rise in sales.

Pending home sales ticked up from the first quarter of 2022, suggesting that we may see some growth in closings in the third quarter of this year.

Northern California Home Prices

The average home price in the region rose 10.6% from this time last year to $1.35 million. Compared to the final quarter of 2021, prices rose by 11%.

I have started watching list prices, as they will be a leading indicator of whether the market is starting to feel the impacts of declining affordability due to rising financing costs. In the second quarter, the median list price in the region rose an average of 13%. We did see a small drop in Placer County, but I am not overly concerned as it is a fairly small area that can experience unusual swings in both list and sale prices.

Sale prices rose by double digits in all counties other than Shasta compared to a year ago; they were also higher across the region compared to the first quarter of the year.

Even with rising inventory levels and higher financing costs, the market appears to still be buoyant. However, the pace of price growth has slowed, which will likely continue as the area starts to move toward a more balanced market.

A map showing the real estate home prices percentage changes for various counties in Northern California. Different colors correspond to different tiers of percentage change. Shasta County is the the only county with a percentage change in the 5% to 8.9% range, while Placer, Solano, Contra Costa, Alameda, and Santa Clara are in the 9% to 12.9% change range. San Luis Obispo is in the 17% to 20.9% change range, and Napa County is the only county in the 21% + change range.

A bar graph showing the annual change in home sale prices for various counties in Northern California from Q2 2021 to Q2 2022. Napa County tops the list at 24.2%, followed by San Luis Obispo at 17.6%, Alameda at 12.8%, Solano at 11.2%, Santa Clara and Placer at 11%, Contra Costa at 10.1%, and Shasta at 5.8%.

Mortgage Rates

Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs.

That said, there are some signs that inflation is starting to soften and if this starts to show in upcoming Consumer Price Index numbers then rates will likely find a ceiling. I am hopeful this will be the case at some point in the third quarter, which is reflected in my forecast.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2023. He forecasts mortgage rates continuing to climb to 5.9% in Q4 2022, then tapering off to 5.58% in Q1 2023 and 5.53% in Q2 2023.

Northern California Days on Market

The average time it took to sell a home in the Northern California counties in this report dropped two days compared to the second quarter of 2021.

The amount of time it took to sell a home fell in Napa, Santa Clara, San Luis Obispo, and Shasta counties, remained static in Alameda and Solano, and rose modestly in Contra Costa and Placer counties. Average market time fell in all counties other than Solano and Shasta compared to the first quarter of 2022.

In the second quarter, it took an average of 26 days to sell a home, which was seven fewer days than in the first quarter of this year.

The greatest drop in market time from a year ago was in Shasta County, where it took seven fewer days to sell a home.

A bar graph showing the average days on market for homes in various counties in Northern California for Q2 2022. Santa Clara County has the lowest DOM at 11, followed by Alameda at 12, Contra Costa at 13, Placer at 14, San Luis Obispo at 21, Solano at 23, Napa at 44, and Shasta at 71.

Conclusions

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.

Positive job growth and a growing economy continue to stimulate the housing market, which has led home sales and prices to rise even as mortgage rates and supply levels jumped. Although affordability continues to be a significant issue, there are no indications that a major correction is imminent. However, we are seeing the speed that homes sell starting to slow, as is the pace of price growth. This suggests to me that the market is starting to cool. That said, with average list prices in most counties continuing to rise, sellers remain confident.

A speedometer graph indicating a medium seller's market in Northern California for Q2 2022.

All things considered, I have left the needle in the same position as in the first quarter of the year. The market still favors home sellers, but rising inventory levels and slowing price growth suggest they are not in a better position now than they were at the start of the year.

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 2022 Northern California Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2022 Northern California Real Estate Market Update

The following analysis of select counties 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

Northern California added 60,900 jobs in the first quarter of 2022, and 213,300 jobs have returned over the past year. With total employment now at 3.02 million, the markets covered by this report have recovered all but 24,800 of the 473,900 jobs lost during the pandemic. With solid growth in the region, the unemployment rate fell from 3.6% at the end of 2021 to 3.1% in March of this year. By county, the lowest jobless rate was in Santa Clara County (2.5%), and the highest rates were in Solano and Shasta counties, where 4.6% of the workforce remains unemployed. The region’s labor force grew in the quarter but remains below pre-pandemic levels. This is likely to mean that businesses will continue to find it hard to attract new employees, which could slow the pace of growth going forward. That said, I feel confident that all the jobs lost to COVID-19 will have been recovered by the spring.

Northern California Home Sales

In the first quarter of the year, 10,347 homes sold, which is a drop of 12.4% compared to a year ago. Sales were 27.2% lower than in the fourth quarter of 2021.

Year over year, sales fell in all counties contained in this report. Solano County saw a modest drop, but there were fairly significant decreases across the rest of the region.

With listing activity rising 17% compared to the fourth quarter of 2021, the drop in sales was a little surprising.

Pending home sales ticked up from the final quarter of 2021, suggesting that we may see some growth in sales in the second quarter of this year.

Northern California Home Prices

Even with sales pulling back, the average home price in the region rose an impressive 17.2% year over year to $1.215 million. Compared to the final quarter of 2021, home prices rose 4%.

The most affordable county relative to average prices continued to be Shasta. Santa Clara was again the most expensive market.

Prices rose by double digits in all counties other than Napa compared to a year ago. Prices were also higher everywhere but Napa County compared to the fourth quarter of 2021.

Rising prices continue to impact affordability in the region and the significant jump in mortgage rates in the first quarter will not help matters. Any effects of rising rates on prices were not evident in the first quarter, but the second quarter should be more telling.

A map showing the year-over-year real estate market percentage changes in various counties in Northern California for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Northern California from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Northern California Days on Market

The average time it took to sell a home in the Northern California counties in this report dropped seven days compared to the first quarter of 2021.

The amount of time it took to sell a home dropped in every county other than Solano (+1 day) compared to a year ago. Days on market fell everywhere except Shasta, Placer, and San Luis Obispo compared to the fourth quarter of 2021.

In the first quarter, it took an average of 33 days to sell a home, which matched the fourth quarter of 2021.

The greatest drop in market time from a year ago was in Napa County, where it took 14 fewer days to sell a home.

A bar graph showing the average days on market for homes in various counties in Northern California during Q1 2022.

Conclusions

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.

The jump in home prices compared to the prior quarter may be a surprise to some given the rapid increase in mortgage rates. However, when rates rise, there is typically a lag in time before we know the impact on the market. The increase in the number of homes for sale means there is more choice for buyers which, combined with higher financing costs, should start to taper the pace of price appreciation as we move into the spring buying season. Affordability continues to be a concern, but the market does not appear to be overly affected thus far. Average listing prices in most counties are increasing, which suggests that sellers remain confident for the time being.

A speedometer graph indicating a seller's market in Northern California during Q1 2022.

Although prices continue to increase at a significant pace, the growth in listing activity combined with lower sales may suggest that the market may be starting to slow from the frenetic pace of the past few years. With all the data here, I have moved the needle a little towards home buyers, although it clearly 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 Q1 2022 Northern California Real Estate Market Update appeared first on Windermere Real Estate.

Q4 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 picked up its pace last fall, which was good news given the lackluster job growth last summer. Total employment has now risen to 2.94 million, and the markets covered by this report have recovered all but 106,000 of the 474,900 jobs that were lost during the pandemic. Year over year, total employment rose 125,800, causing the unemployment rate to drop from 6.5% to 4%—a far cry from the pandemic peak of 14%. By county, the lowest jobless rate was in Santa Clara County (3.2%), and the highest was in Solano County, where 5.4% of the workforce remains unemployed. The latest data does not cover the period when the Omicron variant of COVID-19 came to light, so we will not see any of its impacts until the January data becomes available. It is also worth noting that the region’s labor force has not been increasing at the expected pace, which can actually slow the job recovery as businesses have a hard time finding workers. Of note is that there are currently more than 78,000 fewer working-age people in the workforce than before the pandemic started.

northern california Home Sales

❱ In the final quarter of 2021, 14,218 homes sold—a drop of 10.6% compared to a year ago and 14.2% lower than in the third quarter. Seasonality is at least partially responsible for the quarter-over-quarter drop, but it’s also because inventory constraints are limiting sales.

❱ Year-over-year, sales fell in all the counties contained in this report, with a modest drop in Solano County and fairly significant decreases across the rest of the region.

❱ Listing activity fell 32% compared to the same period a year ago, which certainly played a part in the lower sales numbers.

❱ Pending home sales were also lower, suggesting that sales in the first quarter of 2022 may slow further.

northern california Home Prices

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

❱ The average home price in the counties contained in this report rose 16.2% year over year to $1.168 million. Of note is that prices fell 2.1% from the third quarter but this may simply be due to seasonality.

❱ The most affordable county relative to average sale prices was Shasta. Santa Clara remains the most expensive market.

❱ Average prices in all counties rose double digits compared to a year ago, but fell in all counties other than Alameda, Santa Clara, and San Luis Obispo compared to the third quarter of the year.

❱ Affordability continues to be an issue in all areas, but the pace of price growth has been slowing as mortgage rates rose .3% in the quarter. I anticipate that rates will continue to trend higher as we move through the year, which is also likely to act as somewhat of a headwind to price appreciation.

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

Days on Market

❱ The average time it took to sell a home dropped five days compared to the final quarter of 2020.

❱ The amount of time it took to sell a home dropped in every county compared to the previous year, but the average days on market rose across the board compared to the third quarter of 2021.

❱ In the fourth quarter, it took an average of 33 days to sell a home, which was 4 more days than it took during the third quarter.

❱ The greatest drop in market time was in San Luis Obispo County, where it took 19 fewer days to sell a home than it did the prior year.

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

Conclusions

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

While the pace of price growth slowed in the fourth quarter, appreciation remains very strong. Those wondering what it will take to cause the market to slow down must consider two factors: supply and financing costs. It’s unlikely that there will be any significant increase in inventory in the coming year, but mortgage rates are on the rise. Even though I do not expect them to breach 4% until 2023, higher rates are likely to take some of the heat out of the market.

I have decided to leave the needle in the same position as in the third quarter. As rising mortgage rates are offset by low housing supply, 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 Q4 2021 Northern California Real Estate Market Update appeared first on Windermere Real Estate.

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.