House prices in the San Francisco Bay Area drop for the first time in 7 years

According to CoreLogic, the median price of a home sold last month in the San Francisco Bay Area has declined slightly over the previous year. This is the first annual decline since the last real estate crash seven years ago.

In March, the median price was $ 830,000, down 0.1% from March 2018. The decrease was due to the contraction in price increases for several months. Prior to last month, the median selling price had risen every year for 83 consecutive months since April 2012. May and June 2018 had the highest median selling price of all time: $ 875,000.

Prices follow sales and sales are extremely low since last summer when mortgage rates skyrocketed.

"This reflects a trend that began in mid-2018 when home sales slowed and inventories increased, forcing sellers to be more competitive," said Andrew LePage, an analyst at CoreLogic. "The 12-month increase in the region's median sales price was 16.2% in March, but after that, median earnings fell steadily each month and fell between 2 and 3% in beginning of the year, then disappeared in March. "

Sales of San Francisco homes – including Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma counties – fell by nearly 15% in March compared to the previous year. It was the lowest reading of March in 11 years. Sales reached their lowest level in 11 years since December and have dropped from one year to the next in the last 10 months.

These figures are based on fences. These were probably signed transactions in January and February. The market should have improved with the drop in mortgage rates, the closure of the government and the rise of the stock market.

"These factors bode well for stronger sales than those observed in recent months, but no imminent increase in activity was evident in the March data," said LePage. "Starting last spring, in the late spring, some potential buyers got a price and others just pulled out of the market while prices were close to a peak."

Overall, buyers, especially in high-priced markets like San Francisco, are extremely sensitive to interest rates. According to Mortgage News Daily, the average 30-year fixed-market rate reached just over 5% in November, before falling again in December. In March, it had dipped to about 4%, but rose to around 4.5%.

The next two months will be critical to understanding whether all the weakness in prices and sales is due to interest rate fluctuations or whether the market has simply reached a wall of affordability. Inventories are increasing, but largely because houses are staying longer in the market and not because there is a ton of new listings.

This high-tech real estate market could also be impacted up or down by new IPOs, such as Lyft, Pinterest, Uber, Slack and Airbnb.