The San Francisco Condo Market Takes a Breather

Executive Summary:

• San Francisco condominium sales are currently 8 percent lower year to date compared with the same time period last year, although August sales are on par with 2015 numbers. The annual decline follows some of the strongest historic years for condominium sales in the city.
• While sales in most price segments have slowed this year, the weakness is most notable among units priced between $2 and $3 million. That is a small share of the market — about 6 percent.
• Other market indicators — including price growth, the share of homes selling over the asking price, premium over asking price, and time on market — all suggest normalizing market conditions.
• Combined citywide new construction and resale prices are up 4 percent, however The Mark Company’s August Condominium Pricing Index for San Francisco was down 5 percent from July and 11 percent from August of last year. Increased inventories of similar new condominiums, along with concerns over volatility in the financial and technology markets in part explain changes in the Index.
• Despite the recent spike in new construction inventory, future inventory will be constrained and remain well below the historical peak reach in 2007.
• Short term, slower price growth and more inventory to choose from, along with continued favorable interest rates, put buyers in a better position to shop around.

On the heels of some of the strongest years in history for San Francisco’s housing market, much of the discussion since the beginning of the year has been about slowing conditions. Slowing, however, is relative when compared with the frenzied and unsustainable market that we have seen over the last several years.

Similar to single-family home sales, there have been fewer condominium sales in 2016 in San Francisco when compared with the same time period last year. For the first eight months of this year, total sales are 8 percent lower than for the same period last year. Nevertheless, there is more to the story. Figure 1 displays monthly sales of condominium units in San Francisco, with the red brackets comparing January through August of 2015 with the same period for 2016. While this year started off on par with 2015, spring and summer months suggested that the market is taking a breather. August sales, however, are in line with August 2015 sales, indicating that we may still see some improvement in the remainder of the year.

Editor’s Note: The following analysis uses data from the San Francisco MLS, which historically includes about 15 percent of newly constructed condominiums.

Figure 1: Monthly number of condominium sales in San FranciscoSource: Terradatum, Inc., from data provided by local MLS

A look at longer-term trends helps put the current market into perspective. Figure 2 illustrates historical monthly sales of condominiums in San Francisco. While the total 1,042 sales in the first two quarters of 2016 have fallen from the 2013 cyclical peak of about 1,265 for the same period, this year’s sales are still above the historical average of 1,021. Certainly, they are at least 30 percent higher than averages seen during the 1990s or the housing market collapse between 2008 and 2010.

Additionally, the buildup to the sales peak reached in 2013 followed the 2008-2009 housing collapse and resulting sizable inventories of homes for sale and historically high affordability in San Francisco. In 2012, San Francisco reached the highest affordably point for all types of homes since the California Association of Realtors started tracking the data in 1991, at 29 percent. The only other time when homes were relatively more affordable in San Francisco was at the beginning of the 1990s, when affordability hovered in the mid-20-percentile range. Since peaking in 2012, affordability has dropped to 10 percent today.

Figure 2: Historical monthly sales of condominiums in San Francisco

Source: California Association of Realtors

Returning to current trends, Figure 3 illustrates that while overall condominium sales in San Francisco are 8 percent lower year to date, the largest decrease in transactions was for units priced between $2 and $3 million, with volume falling by 28 percent from the same period last year. Sales at the lowest price segment — less than $1 million — were 10 percent lower, but the decrease was largely driven by price appreciation that pushed part of the inventory into a higher price range. Sales of units priced between $1 and $2 million were down only 3 percent, which translates to 25 fewer units. The highest-priced segment, $3 million and higher, saw a 4 percent increase in activity, with two more units sold year to date. Overall, about 152 fewer units were sold so far in 2016 when compared with 2015.

Figure 3: Year-to-date change in sales by price range

Source: Terradatum, Inc. from data provided by local MLS.

Nevertheless, when reconciling the changes in sales activity by different price categories, it is critical to understand how the distribution of price ranges compare with one another. Though impacted the most, homes priced above $2 million comprise less than 10 percent of overall sales. Figure 4 depicts the distribution of sales by price range and highlights that sales over $2 million passed 10 percent only during the first two quarters of 2015. Prior to 2014, they accounted for a much smaller share of the market. What is also interesting to note is the dwindling share of the lowest-priced condominiums, less than $1 million. Their share of the market fell from 68 percent in 2013 to 42 percent of sales currently. The dominant category is condominiums priced between $1 and $2 million, which has grown notably from 30 percent three years ago to 50 percent today.

Figure 4: Distribution of sales by price ranges

Source: Terradatum, Inc. from data provided by local MLS

Though rapidly rising prices are in part due to the falling share of the most affordable condominiums, Figure 5 takes a longer look at the distribution of sales among price ranges for newly constructed condominiums. Until 2013, the majority of newly constructed condominiums were in fact priced below $1 million. The turning point began in 2013, when affordable condominiums fell from accounting for eight in 10 new sales to only one in 10 sales today. Again, the majority of the new inventory today consists of condominiums priced between $1 million and $2 million. In addition, higher-end condos, priced at $2 million to $3 million, now comprise 10 percent of the market, which is historically the highest share they have ever reached. Unfortunately, (see Figure 3 above), that appears to be the segment of the market that has been hit the hardest this year. Nevertheless, Figure 5 clearly highlights how the change in price distribution for newly built condominiums has adversely impacted affordability in the city.

Figure 5: Distribution of sales of newly constructed condominiums

Source: The Mark Company

Other indicators also confirm that the homebuying frenzy that characterized the market over the last few years is normalizing. Figures 6 and 7 compare market conditions among the various price ranges between August of this year and August 2015. And although homes are selling slower at all but the highest price range, the relative increase in the number of days on the market was the highest for condominiums priced between $2 and $3 million. For all condominiums, the median days on market is now 38 days, which is consistent with historical average dating back to 2002 according to CAR data.

Also, there was a notable drop in the share of listings selling above list price at all price ranges (Figure 7). The segment priced between $2 and $3 million fell from 36 percent of units sold for a premium to 15 percent. Lower-priced segments also experienced notable drops. Still, at least half of sales priced below $2 million continue to sell for more than asking price. Among the most expensive condos, none sold above their asking prices. Again, the most expensive price point represents a very small share of the market, so caution should be used when evaluating the numbers.

Furthermore, diminished competition among buyers is leading to smaller premiums. Within each price segment, the premium fell to about half of what it was last year. The premium over asking price averaged 8 percent this August, down from 13 percent last August.

Figure 6: Median days on market                                                     Figure 7: Share of sales selling above the list price

Source: Terradatum, Inc. from data provided by local MLS

Finally, annual price growth cooled this summer after several years of double-digit-percent appreciation. The slowdown began abruptly in February, when annual appreciation dropped from 18 percent year over year to flat. Since February, appreciation rates have picked up — albeit inconsistently — and August prices were 4 percent higher than last August, with the median price at $1,085,000.

Again, it’s important to keep in mind that lower annual price appreciation comes on the coattails of highly aggressive market conditions and home price growth that was unsustainable.  According to The Mark Company’s August Trend Sheet, the Condominium Pricing Index for San Francisco declined by 5 percent from July and 11 percent from August of last year. The Condominium Pricing Index is The Mark Company’s tool for tracking the value of a new construction condominium without the volatility of inventory changes. The Index uses a proprietary quantitative method to model the price per square foot of a new 10th floor, 1,000 SF condominium.

The decline in the Index can be attributed in part to three major factors. First, while new construction inventory is still low by historical trends and well below the peak of over 3,000 units reached in 2007, new construction inventory nearly doubled between the end of 2015 and August 2016. The sharp increase from 569 units to 1,101 units will impact pricing. Second, newly constructed condominium projects, particularly at the higher end, have been impacted by concerns over volatility in the financial and tech industries. And lastly, sales in the South of Market neighborhood have been somewhat affected by recent news surrounding Millennium Tower.  Notably, the majority of the product type reflected in the Index is located in the city’s South of Market neighborhood, which also explains the drop compared to citywide numbers, which are more diverse.

Still, despite the cooling of last summer’s frenzy, demand for condominiums in the city remains consistently strong, as evidenced by minimal changes in the absorption rates. Across all price ranges, and even for newly constructed inventory tracked by The Mark Company, absorption rates in August were generally on par with last August.  Approximately 315 new construction units were put into contract since the spring of 2016.

Figure 8: Year-over-year price changes of condominiums in San Francisco

Source: California Association of Realtors

What should we expect from the San Francisco condo market going forward? After a long period of very tight inventory, recent trends suggest that some relief is in sight. Also, with new construction ramping up over the last year across the city, newly constructed condominiums will supplement existing inventory. Figure 9 tracks the unsold inventory index across price ranges for homes listed on the MLS. And while it appears that inventories of existing condominiums are rising across the price spectrum, at about a 2 to 2.5 months’ supply of inventory, there is still a long way to go before San Francisco reaches its historic average of a 3.9-month supply. Inventory of new units remains historically low, and there are just 1,101 new units available for sale today, compared with approximately 3,000 units available in 2007.

Looking forward, only 672 new units are expected to enter the market by the end of 2017. This marks a 48 percent decrease from the number of units that have entered or are expected to enter the market in 2016 and a 7 percent decrease from the number that entered in 2015. During the previous cycle, 1,519 units began selling in 2006, and an additional 1,591 were added in 2007. In addition, future inventory in upcoming developments consists of predominantly small, neighborhood projects where the average size of developments is less than 100 units. Currently, 450 units are under construction and not yet selling in the South of Market neighborhood.

What does this mean for condominium buyers in San Francisco?  More predictable prices, normalization of market conditions, historically favorable mortgage rates, and more housing options for buyers to choose from. That comes as a welcome break in a city where the housing-affordability crisis has become nearly synonymous with its name.

Figure 9: Unsold Inventory Index by price range

Source: Terradatum, Inc. from data provided by local MLS.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

The Mark Company is one of the nation’s premier urban residential marketing and sales firms. We provide a full range of core consulting services including analytics, design, marketing and sales for urban high-rises and suburban attached properties throughout the Western United States. The Mark Company has represented more than 10,000 residences and generated over $5 billion in sales for some of the nation’s most notable and successful new construction developments. The Mark Company is a subsidiary of Pacific Union International, one of the San Francisco Bay Area’s top-performing resale brokerages.  For more information about our services and to download our latest Trend Sheets, please visit www.themarkcompany.com.

Article and images sourced from http://blog.pacificunion.com/the-san-francisco-condo-market-takes-a-breather-though-august-sales-are-on-par-with-last-year/

Real Estate Roundup: The Impact of Presidential Elections on California’s Housing Market

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

ELECTION YEARS HAVE MINIMAL IMPACT ON GOLDEN STATE HOUSING
Although the upcoming U.S. presidential election has caused some economic uncertainty in recent months, it shouldn’t have a huge effect on California’s surging housing market if past years are any indication.

In a recent analysis, the California Association of Realtors examined home sales volume and price growth in election years compared with nonelection years since 1990. In election years, home sales are either slightly higher or lower each month than they are in other years. If anything, presidential races boost California home sales, with transactions 7.1 percent higher in election years than in nonelection years.

The same basic trend holds up when it comes to statewide home price appreciation. During the past five presidential election years, price growth has slightly exceeded the long-term average of 5.6 percent.

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MANY OF THE MOST DESIRABLE U.S. COMPANIES LOCATED IN BAY AREA
Most of the highest-paying companies in America call the Bay Area home, so it’s not too surprising to find that many local businesses are among the best at attracting and retaining workers.

Although Apple didn’t make Glassdoor’s 2016 list of the 25 highest-paying companies in the country, it topped LinkedIn’s rankings of Top Attractors — companies where many, many people aspire to work. Apple recently began issuing stock to the majority of its employees, including the 30 percent who work in its retail stores. Consequently, Apple Stores have an enviable 81 percent retention rate. And of course, there’s simply the cool factor of working at a company known for its consistently innovative products.

Twelve Bay Area companies made the 40 Top Attractors list, with Salesforce.com, Facebook, Google, and Uber cracking the top 10. Despite being a big-name Bay Area tech company in its own right, LinkedIn played it objective and didn’t include itself in the rankings.

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FINALLY: BAY AREA WAGE GROWTH OUTPACING HOME PRICE GROWTH 
Over the past months, there have been many headlines — including a few on this very blog — beamoaning the Bay Area’s lack of housing affordability. But now there’s a spot of good news, as wages in about half of our local counties are growing faster than home prices.

According to RealtyTrac’s Q2 2016 Home Affordability Index, 18 percent of U.S. housing markets are currently less affordable than their historic normal levels, including most Bay Area counties, of course. The exceptions were Napa, Sonoma, and Solano counties, which are still as or more affordable than in the long term.Marin and San Francisco, on the other hand, were among the nation’s five least-affordable counties.

Annual wage growth outpaced year-over-year home price gains in the second quarter in San Francisco, Santa Clara, Napa, and Sonoma counties. Slowing price appreciation is particularly evident in San Francisco; in the second quarter of 2015, home prices there increased by 21 percent year over year compared with 2 percent in the second quarter of 2016. Wage growth in the city inched up from 5 percent last year to 6 percent this year.

“Affordability constraints are beginning to rein in home price appreciation even while wage growth is gaining speed in an increasing number of markets,” RealtyTrac Senior Vice President Daren Blomquist said in a statement accompanying the report.

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COST OF LIVING, TRAFFIC AMONG FACTORS DRIVING CALIFORNIANS OUT
Gorgeous weather and plentiful employment may make California a highly desirable place to live, but an increasing number of state residents are finding the downsides of the Golden State are too much to handle, causing them to jump ship.

Citing data from the state Finance Department, the San Jose Mercury News reports that for the year ending June 30, 61,100 more people will move from California to another state than will migrate here. That’s the most since 2011, when 63,300 more people left the Golden State than arrived from elsewhere in the U.S.

The article points to several factors driving this trend, including the high cost of living, gridlock on the freeways, and big tax bills. Here in the Bay Area, a recent surveyfound that roughly one-third of residents want to leave the nine-county region soon, with cost of living, housing, and traffic the top three concerns.

(Photo: Flickr/joelip)

Article and image sourced from http://blog.pacificunion.com/real-estate-roundup-the-impact-of-presidential-elections-on-californias-housing-market/

To Panic or Not to Panic: Think the Bay Area’s Real Estate Market Has the Jitters?

Executive Summary

• The 2018 Pacific Union Real Estate Economic Forecast called for market “normalization,” with cumulative home price growth of 10 percent over the next three years. The market is still on track for this appreciation.
• Stock-market volatility is primarily driven by oversupply of oil in the global markets. Volatility will persist a little longer until markets adjust.
• China is doing just fine — still growing at over 6 percent, with jobs and incomes increasing steadily.
• U.S. economic fundamentals are still strong, with exceptional job growth.
• Consumers are happy, but businesses are concerned about the strong dollar.
• In the San Francisco Bay Area, Pacific Union’s business is off to a good start, with prices 13 percent higher than last January and units sold up 16 percent
• We are seeing higher activity in lower price ranges helped by low mortgage rates and job growth. Higher price segments may see some impact later this year if the stock market remains at today’s levels.

What Happened Since Pacific Union’s 2018 Real Estate Economic Forecast Last November

• At the 2018 Pacific Union Real Estate Economic Forecast in November of last year, we talked about what’s to come in the next couple of years for Bay Area housing markets. One main theme that emerged was “normalization” of the technology growth in the Bay Area and its potential impact on home sales and price appreciation. The conclusion suggested that housing markets are expected to normalize, with home prices and sales continuing to grow at a steady but slower pace. Home prices are expected to grow about 10 percent cumulatively over the next three years.
• Since the forecast in November 2015, financial-market volatility has sent shivers down our spines, leading to many questions about what’s to come.

What Is Causing the Stock-Market Volatility?

• Most of the volatility in the financial markets is coming from falling oil prices. During the first three weeks of January, oil-futures prices declined 27 percent. Over the last two years, the price of a barrel fell from over $100 to $27. That’s pretty staggering! The main reason for the drop in oil prices is the oversupply of oil in the global market, as well as an oil-production boom in the U.S. In the chart below, the U.S. (the blue line) is now the largest producer of oil globally. Production of oil has increased to an all-time high, growing by over 1 million barrels of oil between July 2014 and July 2015.

• At the same time, the other oil-producing countries have not scaled down their production as a result of the oversupply, which is how they usually control prices. OPEC is in the process of vigorous negotiations over limiting production in an effort to stop oil prices from continuing to stumble. However, competition for influence and market share has grown fierce for OPEC countries, which is keeping their oil production elevated. Hence, the oversupply is expected to continue over the next few years, and markets will have to go through a period of adjustment.
• However, there is something to be said about fast money and technological advancement, which have allowed investors to move monies instantaneously on any spook. For example, anticipation over higher Federal Reserve rates led those looking for a quick return to move their monies into banks in anticipation of higher rates. However, since the rates have not budged and have actually fallen, the money moved as quickly out of the banks. This is another cause of volatility.
• As a result of this volatility and fears over poor economic results in emerging markets, demand for U.S. currency denomination (for example, treasuries) keeps growing, causing the dollar to strengthen. A strong dollar is bad for our trading partners and it further perpetuates slower growth abroad, which can in turn have a bad impact on the U.S. economy. The good news is that the U.S. dollar has begun to weaken slightly, which may help dispel some fears.

What’s Going on in China?

• Some have argued that oil oversupply is due to a slowdown in demand for oil from China. However, Chinese consumption has been on a solid upward trend for several decades. And though the pace of annual increases has slowed in last couple of years, China continues to consume increasing amounts of oil. Keep in mind that China was going through a major industrialization process over that period, and it is natural that consumption would eventually slow as industrialization reaches a certain point. China is still growing strong though, at a staggering rate of 6 to 7 percent. Also, the main reason for the slowing of consumption of oil is that the Chinese economy is moving from mainly relying on construction and industrial growth to relying on service-industries growth. Chinese people are richer than they were before, and their consumer spending is showing positive signs, hence supporting the service-industries growth. Income and job growth are solidly moving upward.

Should We Be Worried?

• Despite volatility, recent U.S. economic data points to continued growth ahead. Most importantly, job growth remains strong. The last jobs report showed the unemployment rate falling below 5 percent (considered full employment) and more people participating in the labor force. Also, people are working longer hours and are more likely to quit a job in pursuit of something better. This means that the pressure on wages that John Burns discussed at the November forecast is coming to fruition.
• California continues to grow employment at one of the fastest paces in the country. With 60,400 jobs added in December, job growth in 2015 reached an amazing 459,400 net new positions. This marks the fourth year in a row that California has added more than 400,000 jobs and also marks the largest job gain of any state. The chart below shows the year-over-year changes in the tech sector, which is still growing at a healthy 5.2 percent.

• Business and consumers have different perspectives on the state of the economy, though. Consumer spending, which accounts for 70 percent of GDP, showed impressive numbers in January. Lower oil prices and lack of inflation are helping with retail sales growth and not just with the purchase of new automobiles. There are also signs of income growth, and mortgage rates continue to remain incredibly low. This is all good news for U.S. consumers.
• Businesses, on the other hand, have been more concerned about the future. A strong dollar has not been helpful for U.S. businesses selling abroad. With less demand coming from overseas and volatility in the market, businesses are showing less confidence and anticipate slowing of job formation. However, it’s hard to draw any conclusions about the entire year ahead based on data that comes in January, and particularly if the winter was harsh in some parts of the country. Generally, many economic indicators are reported at the national level, yet indicators that have been disaggregated by regions of the country have shown the West outperforming other regions for several years now.
• Housing is still a really bright spot in the economy, both locally and nationally.

Where Do We Stand in February 2016?

• In the Bay Area, we continue to see some strong numbers for January. The California Association of Realtors’ January report showed single-family home prices for the region continuing to soar at double-digit rates year over year. Pacific Union real estate professionals report similar price increases, with average prices 13 percent higher among properties sold by our firm when compared with the same time last year. Sales of single-family homes have also shown advances, growing by almost 7 percent from last year, according to CAR. Pacific Union professionals have had a better year with sales and sold 15 percent more homes this January than last one. Also, many clients are facing delays related to new Consumer Financial Protection Board regulations, with sales being pushed to spring months.
• Still, we cannot generalize across all price segments. Preliminary data shows that homes priced below $1.5 million are seeing much more activity than homes priced between $2 million and $5 million. Affordability remains the main concern in the Bay Area, and homes in the lower price range are being buoyed by very favorable mortgage interest rates.
• In fact, what’s still giving everyone a headache is the lack of inventory. Pacific Union listings are down 9 percent for the first 50 days of this year. We are in the third year of extremely low inventory in the Bay Area, with markets like Santa Rosa showing less than half a month of supply. Pacific Union professionals, however, suggest that spring may open some doors, with more listings in sight. Data on single-family permitting also suggests that we may be seeing more homes available for sale in the East Bay and San Francisco, with both areas showing more than a 23 percent increase in permits in December from last year. New permits in San Jose are much slower to catch up and have only increased 5 percent during the same time.

What Are the Concerns?

• At the 2015 forecast event, we also talked about “normalization” of IPO valuations and uncertainty of what will happen to increasingly unsubstantiated valuations. It is still very hard to predict where these “unicorns” are going to land. In other words, how much appetite will investors continue to have for “unicorns”?
• We do know that the stock market is down about 10 percent from last year. While the volatility in the stock market will probably persist a little longer, making it very hard to predict where it will stabilize, some correction has been anticipated for a while. The problem for the Bay Area stems from the fact that the housing market is relatively more sensitive to the stock-market-wealth effects than in other area of the country (previous academic research by Richard Green from University of Southern California has confirmed this).
• That means that if the stock market stabilizes at a lower level than last year, we may see some softness later this year. The softness will not be uniform across all price tiers, however, and will primarily impact sales in the range between $2 million and $5 million. Lower price ranges will continue to benefit from strong job growth, advantageous mortgage rates, and high demand among younger buyers in search for more affordable housing. Sales of homes priced above $5 million will also see a lesser impact, as the wealth among those buyers is more diversified and less reliant on the stock market’s movements.

All in all, we are off to a solid start for the housing market in the Bay Area. Stock-market volatility will persist for a little while longer, but economic fundamentals remain strong for the region. Barring some unexpected market surprises, we anticipate to remain on track for 10 percent cumulative appreciation over the next three years, which certainly aligns with the idea of “normalization” when compared to the past several years.

Selma Hepp is Pacific Union’s Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors and economist, and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

Article and images sourced from http://blog.pacificunion.com/to-panic-or-not-to-panic-think-the-bay-areas-real-estate-markets-got-the-jitters/

Economy Drives Explosive Home Sales Growth in the Bay Area in March

Home sales in the Bay Area shot up by almost 60 percent from February to March while prices increased in all nine counties, thanks in large part to our region’s vigorous economy.

The California Association of Realtors’ March home sales and price report says that single-family home sales increased by 56 percent across the Bay Area from February, with six local counties posting monthly gains in excess of 50 percent. Month-over-month sales volume upticks ranged from 90.6 percent in Alameda County to 28.9 percent in Solano County. Across the region, home sales were up 9.9 percent from March 2014.

Statewide, home sales increased 6.3 percent month over month and 7.3 percent from one year ago. According to CAR President Chris Kutzkey, California’s strong economy and job growth are helping fuel demand for real estate.

“The housing market is picking up momentum and continuing its upward trend as economic conditions improved throughout the state,” Kutzkey said in a statement accompanying the report.

In the Bay Area, March’s median sales price rose to $809,200, up 9.3 percent from February and nearly identical to the gain observed statewide. All nine counties reported month-over-month price growth in March, ranging from 10.4 percent in San Francisco County to 1.9 percent in Santa Clara County. Home prices were up year over year in all local counties except for Napa.

As in February, CAR says that Bay Area counties had the five highest median sales prices in California, with San Mateo County in the No. 1 position at $1,300,000. San Francisco was the state’s second most expensive county, at $1,275,000, followed by Marin County ($1,085,230), Santa Clara County ($932,100), and Contra Costa County ($784,950).

According to CAR, the Bay Area is the only metro region in the state where the average buyer paid a premium to secure a home in March – 105.9 percent of original price. The main reason: tight supply conditions, which worsened across the region from February, with the months’ supply of inventory (MSI) dropping to 2.4.

Four Bay Area counties had the lowest MSI in the state, and all but one had a smaller supply than the 3.8 recoded statewide. San Mateo and San Francisco counties tied for slimmest supply at 1.6, followed by Santa Clara County at 1.9 and Alameda at 2.0. Perhaps not surprisingly, three of those counties saw the quickest sales pace in California, with the average home selling in 17.7 days in Santa Clara, 17.9 days in San Mateo, and 20.7 days in San Francisco.

(Photo: Flickr/Woodleywonderworks)