Welcome to our September newsletter, where we’ll discuss residential real estate trends in the East Bay and across the nation. This month, we’ll examine the state of the U.S. housing market now that more supply has come to the market and explore the impact of iBuyers and fin-tech companies’ influences on the housing market.
Key Topics and Trends in September
From 2012 through 2019, the seasonality of the housing market was incredibly stable. For seven years, we consistently saw fewer sales in the winter months and higher sales in the spring and summer months. In 2020, however, we saw a shift. The usual seasonality gave way to super-high demand that remained consistent throughout the year. Then, in winter 2020 and early spring 2021, inventory decreased to historically low levels. Now we are beginning to see pre-2020 seasonal trends return.
As demand has remained high, the number of all-cash purchases is at the highest level we’ve seen in the last 10 years. The National Association of Realtors (NAR) reports that cash sales rose from 16% to 23% year-over-year in July. Still in its infancy, we are also seeing fin-tech iBuyers (algorithmic instant cash buyers) targeting first-time buyers as a means to stay competitive by making them all-cash buyers. This dynamic could drive demand even higher if fewer buyers are priced out of the market.
September Housing Market Updates for the East Bay
During July 2021, in the East Bay area, the median single-family home price remained the same month-over-month in Alameda County, but declined in Contra Costa County. Year-over-year, both Alameda and Contra Costa continue to show large price increases. Those price gains, however, seem to be decelerating, which is not surprising considering the magnitude of the price increases over the last year.
Currently, new listings are barely outpacing demand. In July 2021, the East Bay had nearly 650 fewer homes for sale than it did in July 2020, which reflects a 13% decline. Furthermore, when we compare the current inventory to the pre-pandemic levels of July 2019, the number of homes for sale has declined by 30%. Although the seasonal trends seem to be returning, the sustained low inventory will likely cause prices to appreciate throughout 2021.
People are spending more time at home, and the Federal Reserve is expected to keep mortgage rates near historic lows for the rest of the year. Low-rate financing incentivizes buying, which has been one reason for the high demand over the last 18 months. With such low supply and high demand for homes, we could see the market become even more competitive if fewer buyers are priced out of the market.
We expect the number of new listings will continue to increase in the fall months. The current market conditions, however, can withstand a high number of new listings, and more sellers may also enter the market to capitalize on the high buyer demand. As we navigate the fall season, we expect the high demand to continue, and new houses on the market to sell quickly.
Overall, the housing market has shown its value through the pandemic and remains one of the most valuable asset classes. The data show that housing has remained consistently strong throughout this period. As always, at Arrive Real Estate, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are 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.