As the overall economy cycles down through summer, real estate markets on the West Coast have materially weakened.
A new report from CoreLogic, and also reported by The Mercury News, shows Bay Area home prices for May have experienced their most significant drop in nearly seven years.
The median price of a home in the Bay Area is about $860,000, sustained a 1.7% decline in May on a YoY basis. Momentum in sales is also fading, down 2.7% YoY, another sign the top could be in.
"So far this year, the annual change in the Bay Area's median sale price has been close to flat, whereas early last year the median experienced double-digit annual growth," CoreLogic analyst Andrew LePage said.
"This change reflects the erosion of buyer affordability after years of rising home prices and last year's run-up in mortgage rates. The combination caused would-be buyers' mortgage payments to far outpace income growth, pricing out some and causing others to back out of the market."
The Bay Area has experienced seven years of increasing prices, but as of March, sale prices YoY started to flatline. The last time this happened was in January 2012, according to CoreLogic.
In the Bay Area's nine counties including Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma, overall existing home sales dipped by 1%.
Sales in tech-heavy and ultra-expensive San Mateo and Santa Clara counties plunged by 10% and 6%, respectively.
Bay Area, real estate agents, have become more cautious of a deteriorating housing market since last year's top when the median sale price hit a record of $928,000 in May 2018 but has since reversed.
Median sale prices for existing homes dropped 5.9% to $1.27 million in Santa Clara, declined 3.2% to $912,500 in Alameda and slid 1.5% to $1.53 million in San Francisco YoY in May.
The recent softening in the Bay Area market has "created a window of opportunity for a lot of first-time buyers," said Phil Kerr, CEO of multifamily developer City View.
Ramesh Rao, an agent with Coldwell Banker in Cupertino, said sales have slowed in tech-heavy neighborhoods.
And it was only in April when we first suggested that the Bay Area housing market experienced a 'blow-off top,' which would likely result in declining home prices for the quarters to come.