As we continue to spend more time in our homes, the importance on living where we want and how we want remains at the forefront. Both state and local housing markets remain resilient, partly because of healthy home sales in an undersupplied market, which is a phenomenon also seen nationwide. On June 29th, the National Association of Realtors (NAR) reported that pending home sales mounted a record comeback in May, rising 44% and chronicling the highest month-over-month gain since the index’s inception in 2001.
As low inventory continues into June, single-family home prices rose in both counties with Contra Costa rising to its highest level on record at $750,500. Prices increased by 9% since May 2020 and prices moved out of the red to finish 7.5% higher from June of 2019. Record single family home prices indicate that there are not many bargains on the market.
Similar to San Francisco and neighboring counties throughout the bay, condo prices struggled. June saw condo markets decline nearest the economic centers of San Francisco and Silicon Valley. While the condo markets of Alameda and Contra Costa had lighter falls, they were both down.
Buyers have been more aggressive as prolonged record-low inventory coincided with the huge millennial generation reaching home buying age. Much of these hopeful and credit-worthy home buyers built up the savings to meet tight lending standards. These home buyers still want access to homeownership.
The East Bay’s homes under contract have surpassed pre-pandemic levels, and continue trending upward. Since the last week of March, Alameda homes under contract have only experienced one down week. Together, fewer listings and higher sales moved inventory levels back down. Measured weekly, we can see the levels for single-family homes trended lower every week in June. This is more pronounced in Contra Costa, where housing inventory is falling back towards levels we saw in April. In Contra Costa, single family home inventory supply levels are down 20% compared to last year.
Trending in the opposite direction is condos, which saw high supply levels in June. When compared to 2019, supply in both markets was up; Alameda was almost up by half.
As reported by the San Francisco Chronicle, rents for a one-bedroom apartment dropped most in the cities near high-paying tech jobs. However, in the East Bay rents are headed in the opposite direction as the area may become even more attractive post-pandemic among Silicon Valley employees who want to stay in the Bay Area but don’t feel the need to live close to their corporate campuses. And while rents have rallied in Oakland, the average one-bedroom in that city — $2,350 a month — is still a bargain compared to Menlo Park, where the average unit is $2,980, and Palo Alto, where the average is $2,810.
The fundamentals of the housing market were strong before the global economy stalled, and they have continued to show stability. Looking ahead to August, we anticipate the undersupply in housing to continue. The COVID-19 spike in California and across the country has created economic and personal unease. Sellers tend to be more timid during this time while buyers are more aggressive, feeding into the undersupply and lifting home prices. As more supply becomes available, there could be a correction in the market, but we do not believe that is likely through the summer months.
At Arrive Real Estate Group, 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 have 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.
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