It’s still getting more expensive to buy a home in the San Francisco Bay Area, and those continually rising costs are depressing home sales in the area to levels not seen since the housing crisis.
According to a new report from PropertyRadar, there were 46,650 homes sold in the Bay Area during the first nine months of 2016, which represents the fewest number of homes sold during that time period since 2008.
PropertyRadar’s report showed that Bay Area home sales fell 10.3% from last year, when 52,001 homes were sold during the first nine months of the year.
Experiencing an even sharper decline was the number of distressed properties sold in the Bay Area.
According to PropertyRadar’s report, distressed property sales fell 35.7% from 2016 to 2015, to the lowest level since 2001.
Conversely, non-distressed property sales fell 7.1% on a year-over-year basis. But it should be noted that as a percentage of total sales, distressed property sales accounted for only 7.9% of total sales, compared to 11.1% in 2015 and a high of 56.3% in 2009.
“The 35.7% decline in distressed property sales drove the overall decline in Bay Area sales to its lowest level since 2001,” said Madeline Schnapp, director of Economic Research for PropertyRadar.
“For several years now, the affordability of distressed properties contributed significantly to overall sales,” Schnapp added. “Distressed property inventory has declined to the point it’s now a drag on overall sales. Bay Area sales will likely remain relatively flat until new, attractively priced, inventory arrives on the scene.”
According to PropertyRadar’s report, home sales in all six counties that make up the Bay Area (Alameda, Contra Costa, Marin, San Francisco, San Mateo, and Santa Clara) fell from 2015 to 2016, with Marin and San Francisco counties falling the most, at 15% and 13% respectively.
Broken down by sales prices, much of the decline in home sales comes from the lower priced homes, although considering the market, lower priced is a relative term.
According to PropertyRadar’s data, the number of homes sold priced from $0 to $500,000 fell by nearly 27% from 2015 to 2016. Homes priced from $500,000 to $750,000 fell by just shy of 9%.
Homes priced from $750,000 to $1 million fell by just 3.6%, while homes priced above $1 million actually rose, albeit by only 0.4%.
“The outsized decline in distressed property sales combined with the rapid increase in prices and the lack of buyers that qualify for higher priced homes is reflected in the 26.7% decline in the sales of lower priced homes,” Schnapp said. “Income growth in the Bay Area has not kept up with rapidly rising home prices shutting out a significant percentage of would-be buyers.”
PropertyRadar’s report notes that the Bay Area September median home price increased 2% from a year earlier, but several of the counties that make up the Bay Area saw increases of much more than that.
In Marin County, prices rose by 14.8% over last year, climbing from $990,000 to $1,137,000. San Francisco County rose by 9.3%, from $1,080,000 last year to $1,180,000 this year.
“The persistent trend of sluggish sales amidst rising prices has been the story for over a year now,” Schnapp said. “Restrictive zoning and burdensome building regulations that limit construction have made adding new inventory difficult. That being said, apartment and condo development in San Francisco is on the rise and new inventory is expected to arrive in 2017.”