Lack of inventory is the culprit. With 663 active listings on the market, we have only 43 days of inventory. In a normal market we would see around 180 days.
One would expect with the surge in appreciation over the past eighteen months, there would be more sellers on the market. Not!
Let’s run down the reasons for the lack of inventory, and why it will continue for the foreseeable future.
First, it’s the economy! The local economy is booming. So much so, that company’s and their employees have been moving into San Francisco over the past two years, where prices reached an all-time high last year.
Second, taxes! Property taxes are based on the sales price and can only be adjusted upward each year by 2% or the rate of inflation, whichever is lower. Only when the home is sold can it be re-assessed to the sales price. Home owners are staying put.
Then there’s capital gains taxes when the property is sold. With all the appreciation in the area, that could be substantial, regardless of the $500K exclusion for married couples.
Third, where are sellers going to move to? Moving up in the local market incurs a hefty increase in property taxes, not to mention the higher price of the new home.
Finally, why move when the home is appreciating so much and fueling the home owners net worth?
January Market Stats
- Median home prices increased by 12.1% year-over-year to $740,000 from $660,000.
- The average home sales price rose by 17.4% year-over-year to $969,341 from $825,759.
- Home sales fell by 14.5% year-over-year to 467 from 546.
- Active listings rose 1.7% year-over-year to 662 from 651.
- Sales price vs. list price ratio rose by 0.5% year-over-year to 102.5% from 102.0%.
- The average days on market fell by 3.6% year-over-year to 39 from 40.
Compared To Last Month
- Median home prices slipped by 4.9% to $740,000 from $778,000.
- The average home sales price fell by 2.1% to $969,341 from $990,361.
- Home sales Down by 30.1% to 467 from 668.
- Active listings increased 11.3% to 662 from 595.
- Sales price vs. list price ratio dropped by 0.1% to 102.5% from 102.5%.
- The average days on market increased by 19.6% to 39 from 33.