Bay Area real estate prices between a simmer and a boil

More evidence this morning that home prices continue to appreciate in the Bay Area, though not at the double-digit rates of years past. Year-over-year home values were up 7.6 percent in June in the San Jose metro, 6.3 percent in the Oakland metro and 5.3 percent in the San Francisco metro.

Those numbers come from a new analysis by the CoreLogic real estate information service, which reported that national home prices in June were almost 50 percent higher than at their 2011 bottom. The nation’s housing inventory keeps tightening; second-quarter levels were the lowest in more than 30 years.

Consequently, competition keeps driving prices up.

Yet “the growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory,” said Frank Nothaft, chief economist for CoreLogic.

Frank Martell, president and CEO of CoreLogic, added, “Home prices are marching ever higher, up almost 50 percent since the trough in March 2011. With no end to the escalation in sight, affordability is rapidly deteriorating nationally and especially in some key markets such as Denver, Houston, Miami and Washington.” Of the nation’s 10 most populous metropolitan areas, those four were overvalued in June, according to the new analysis.

Martell noted that “low mortgage rates are keeping the market affordable from a monthly payment perspective.” Still, he went on, “Affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”

In much of the Bay Area, housing inventory is at historically low levels — in Santa Clara County, about 35 percent under levels of a year ago. This has created pressure-cooker conditions, with buyers fiercely competing for the scant number of homes on the market.

Sales of homes priced under $500,000 sank 17 percent in June from a year earlier.

The affordability crisis keeps deepening here. The median price of a single-family home in the region was $779,000 in June, up 9.7 percent year-over-year, CoreLogic reported. Prices in the eight counties for which June data were available have risen for 63 straight months.

Alameda and Sonoma counties set new median price records in June of $838,000 and $612,000, respectively, while Santa Clara matched its previous peak of $1,100,000. Contra Costa county’s median sale price was $597,000.

CoreLogic’s June report did not include San Mateo County due to a glitch with data collection there. But the San Mateo County median price in May was a stratospheric $1,385,000.

Photo: A home for sale in Pleasanton. (Courtesy of Redfin)


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