We know homeowners have questions about home values and the equity they have built up these past few years. Potential buyers want to understand changing market conditions and how to negotiate the best offer for themselves. With that in mind, an overview of the numbers indicate the East Bay housing market is looking quite strong.
East Bay home prices rose in April compared to March. Typically, it is best to look at yearly comparisons for housing data because it removes seasonal variations. However, during the pandemic it is important to look at changes on a month-to-month basis. By this measure, Alameda’s single family home and condo prices actually saw significant gains. Contra Costa’s single family home prices remained unchanged while condos had a small dip. Measured on a yearly basis, both Alameda and Contra Costa’s home prices finished higher than at this point last year. Appreciating prices typically signal a healthy demand for the available housing and encourage sellers to price their homes slightly above comparables.
Another sign that the housing market may already be turning around is the number of listings under contract. During the week of April 4th, listings under contract hit a low. Since then, listings under contract have almost tripled and are approaching the levels we saw in early March. This indicates that people are forging ahead. The sale-to-list ratio reflects the change in the original list price of a home and the final sale price. For example, a ratio of 100% means that a home sold for the price at which it was most recently listed. Sale-to-list price ratios remained strong in April with buyers making offers at just above list price to put a listing under contract. This is another indication that home prices are stable; sellers are not making any additional price concessions to sell.
The fundamentals of the housing economy continue to remain strong. In April, despite the fact that forecasters downgraded the U.S. economic outlook due to the effects of the pandemic, mortgage-finance giant Fannie Mae said that it expects the 2020 national median existing-home prices to rise from $272,000 to $275,000. Demand and supply have not moved in lock step and demand still outpaces supply. But even before the pandemic, the housing market was undersupplied for years. Lawrence Yun, National Association of Realtor’s chief economist, emphasized the persistent supply issue when he said in April, “You would have to see continuing job losses for a prolonged period leading to foreclosures, and even then we may not have oversupply.”
The Wall Street Journal reported that both real estate agents and homebuilders confirmed that active buyers are more serious than ever before and mortgage applications are being approved and funded at a much higher rate than normal. The low interest rate environment and a need for a home during a pandemic has created a sense of urgency for homebuyers.
Looking ahead to June, we anticipate more growth. We expect buyer demand to pick back up as fears of a steep price decline lessen. As we discussed in previous newsletters, the fundamentals of the housing market were strong before the global economy stalled, which we believe will help us all navigate this difficult time with as little consequence to the market as possible.
As always, Arrive Real Estate Group remains committed to helping our clients achieve their current or future real estate goals. Our team of experienced professionals would be happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home. We’re in this together!