Dive Brief:
- For the first time in four years, median home prices in San Francisco have decreased, with a slight 1.8% dip between March 2015 to March 2016, Redfin reported. This drop was in stark contrast to the median sales price nationwide, which increased 4.7% in the same period.
- Sales in the Bay Area also plunged a startling 22.1%, largely due to an extreme lack of available inventory, which Redfin said has resulted in major bidding wars. San Francisco’s numbers contrasted overall sales growth in the U.S., which saw an uptick in year-over-year sales of 1%.
- Persistent low inventory has driven up home prices around the country, but Redfin reported that March’s 4.7% year-over-year median sales price growth was below the 12-month average of 6.1% increases. Redfin said that if hot markets like San Francisco don’t start adding inventory, sales could grind to a halt.
Dive Insight:
Other cities in the U.S., such as Portland, OR, Seattle and Minneapolis, are also experiencing low inventory — more than 30% in some areas — and bidding wars, and those areas are also starting to see the resulting dips in sales, according to Redfin.
"Last year sales grew 7% nationally, but there simply aren’t enough homes for sale to maintain such a torrid pace again this year," Redfin Chief Economist Nela Richardson said in the report. "No matter how high homebuyer demand is, it takes two to tango, and many sellers are sitting this year out."
As for San Francisco, Richardson added that the number of Redfin offers encountering competition in that market have decreased 17% from March 2015, a metric which she interprets as being more reflective of "buyers fed up with high Bay Area prices and crazy competition" rather than low inventory.
The San Francisco Chronicle reported earlier this month that the building "boom" in the area is not easing price appreciation or demand because most of the units being built are in the high-end, luxury side of the market. And Beacon Economics released a report last month that found 625,000 net California residents left the state between 2007 and 2014, largely due to the rising costs of housing.
