Big rebound in market activity continues;  median house sales price hits new quarterly high. Despite the ongoing health and economic crisis precipitated by COVID-19, the real estate market made a dramatic recovery from the steep declines in March and April. The median house sales price hit a new high in Q2, and around the Bay Area, high-end homes, in particular, have seen very strong demand.

The first chart below illustrates the big rebound in buyer demand, as the number of listings accepting offers in June 2020 rose back up to normal on a year-over-year basis. Of course, closed-sales volume – a lagging indicator – was hammered in Q2 by shelter in place.

The large increase in sales activity in higher price segments is reflected in these next two charts.

2020 began with low levels of inventory, and, though increasing significantly since the April drop, remains a bit lower on a year-over-year basis.

Area house values, as measured by both median sales price and average dollar per square foot value, hit new highs in Q2.

Median house sales price trends by city: Remember that median sales price is not a perfect indicator of changes in fair market value, as it can be affected by a number of factors. Fluctuations are especially common in markets with relatively low sales volumes across a wide range of sales prices, such as in Piedmont and Kensington.

Depending on the statistic, these charts will reflect trends in the Inner East Bay or for Alameda County. The Inner East Bay is comprised of the cities of Oakland, Piedmont, city of Alameda, Berkeley, Albany, Kensington, El Cerrito and Richmond.

Generally speaking, market activity – as measured by the number of listings going into contract – continued to pick up rapidly in May, bouncing back from the steep plunge following the first shelter in place orders. However, activity in May, which is typically among the busiest selling months of the year, remains well below May 2019. Still, with the easing of shelter in place, as well as the market learning to adjust to new circumstances, it is expected the recovery will continue to surge closer to normal. In fact, based on the strength of buyer demand, some analysts believe the coming months may be busier than in 2019, as sales activity that would have occurred in spring gets pushed into the summer instead.

Interest rates hit another historic low at the end of May.

Some of the more rural and suburban counties have been rebounding more quickly than counties with large urban areas (Oakland, SF, San Jose), which were most impacted by COVID-19. There may be a number of factors at work, which are discussed in a chart within this report. But it is still too soon to reach definitive conclusions about any major demographic shifts: County trends may well merge together again as the recovery continues.

Note: Any statistics derived from closed sales – such as median sales prices, sales volume and days on market – reflect the state of the market 3-6 weeks ago when the offers were negotiated and accepted. They are lagging indicators, and May closed-sales data to a large degree reflects the much softer market in April.

There is a lot going on in the world right now and we won’t pretend to know how things will turn out or affect the local real estate market over the next few months. In the meantime, this report will look at the most recent data available, though the impact of the wild volatility in the financial markets and the unfolding situation with the coronavirus has yet to show up in reliable statistics. Typically, the spring selling season is the most active of the year.

One positive for real estate is that mortgage interest rates hit a historic low in early March, as illustrated below, and rates play a huge role in housing affordability.

Long-Term Median Home Price Trends

Generally speaking, very similar appreciation trends in the communities of this region, going back to 1996. It is true that less affluent markets experienced larger bubbles and larger crashes in 2002-2011 due to their greater exposure to subprime lending practices. However, all these cities have seen very dramatic recoveries since 2012.

We broke out Piedmont on this separate chart below because otherwise its much higher median sales price would flatten out the lines in the chart above.

Mortgage Interest Rates Hit Historic Low

Home Sales Breakdown

Home Values & Statistics by City
& Selected Neighborhoods

Selected Market Indicators

The first 2 of the next 4 charts illustrate both general market trends in demand, and the large role of seasonality on market activity.

Regarding the next 2 graphs: Since mid-2018, the Inner East Bay has generally outperformed the overall performance of the counties in which they are located, Alameda and Contra Costa. However, these are still good illustrations of general market trends over the last 10 years.