Despite robust home sales in the past months, statewide pending sales in June declined for the sixth straight month. Realtors are becoming increasingly concerned over limited housing inventory and challenging housing affordability as they see home prices continue to escalate.
According to the California Association of Realtors, year-over-year statewide pending home sales fell 0.9 percent from 119 in June 2016 to 117.9 in June 2017. California pending home sales dropped 0.6 percent from the May index of 118.7.
Pending home sales in the San Francisco Bay Area declined 0.6 percent on an annual basis. San Mateo and Santa Clara counties posted pending sales decreases of 10.1 percent and 0.4 percent, respectively. Inventories in these counties remained extremely low as median prices exceeded $1 million.
"Housing is still very much in demand, and with job growth and low interest rates the conditions seem ideal for buyers. Unfortunately, the tight inventory is raising prices to levels a typical buyer cannot afford, diminishing chances of homeownership for many," said Denise Welsh, president of the Silicon Valley Association of Realtors.
The state Realtor group projects the elevated pace of home sales will likely persist through the fall.There continues to be a strong demand for homes as companies expand their offices and workforce in Silicon Valley, according to Welsh.
"Some housing is included in development plans, but it's not enough to keep up with demand. Home prices are outpacing wages, and affordability will only get more challenging as interest rates rise," said Welsh.
Realtors responding to the state Realtor association's June Market Pulse Survey indicated the share of homes selling above asking price rose from 35 percent a year ago to 39 percent in June. The premium paid over asking price fell from 11 percent in June 2016 to 7 percent in June 2017, the lowest since February 2014.
The share of properties selling below asking price fell from 28 percent to 25 percent. The remaining 36 percent sold at asking price, down from 37 percent in June 2016.
Nearly three-quarters (74 percent) of properties sold in June received multiple offers, up from 72 percent in June last year, and the number of offers received inched up from three offers in June 2016 to 3.5 offers this June. The share of properties receiving three or more offers was 55 percent, compared to 47 percent a year ago.
Homes priced under $200,000, $400,000-$499,000, and $2 million and higher had the greatest gains in receiving three or more offers compared with last year, up from 23 percent to 39 percent, from 46 percent to 61 percent, and from 29 percent to 83 percent, respectively.
At the top of the list of concerns for Realtors was the lack of inventory, with 38 percent indicating it is their biggest concern. Declining housing affordability/high interest rates concerned 29 percent of Realtors, while inflated home prices/housing bubble was cited by 23 percent of Realtors. A slowdown in economic growth, lending and financing, and policy and regulations were other Realtor concerns.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.