No doubt about it, the third quarter was red hot with home prices skyrocketing to never before seen levels. Not only that but volume was strong; homes sold quickly with many going above list price.
If that wasn’t good enough, the Federal Reserve said that it was going to keep interest rates at the historic lows for the foreseeable future. And all this is happening in the midst of a pandemic.
Sure looks like 2020 is going to be a record breaker for home prices. The average home price for the coast now stands at $1,550,000 (median price is $1,400,000), up 15 percent from the comparable period last year and up 16 percent from full year 2019. Sales prices range from $405,000 for a cottage in La Honda to $5.9 million for a 28-acre oceanfront home in Half Moon Bay.
The strong sales volume in the third quarter have made up for the weak previous quarters this year that were affected by the shutdown. In all, 197 homes sold this year compared to 202 homes in 2019, 210 in 2018, 233 homes in 2013, 96 homes in 2009 (our worst recent year), and 305 in 1999, our best year. Volume is down 2 percent from 2019 and down 35 percent from 1999.
Inventory has been rising from 2006 through 2010 but has been dropping from then on, especially over the past several years. As of Sept. 30, there were 91 total listings of which 50 were available, up 1 percent from last year.
All of the above has caused the number days on market for homes to decline. Average selling time has fallen to 27 days compared to 47 days in 2019, 33 days in 2018, 122 days in 2009 and 51 days in 2005. Sixty-four percent of all sales occurred in less than 30 days. Another interesting statistic that indicates how things are changing is the percent of homes selling over list price. Forty-three percent of all sales in 2005 went over list price compared to 8 percent in 2009, 29 percent in 2014, 44 percent in 2018 and now 37 percent. There were no distressed sales this year.
This chart shows average home prices by quarter from 2007 to present. As you can see, prices this quarter are through the roof!
Based on what’s sold and sale-pending, the fourth quarter should also be very strong in terms of home prices with volume being close to last year. And the Fed’s policy of keeping rates down is good for almost everyone.
Steven Hyman is the broker and owner of Century 21 Sunset Properties. He can be reached at 726-6346 or at century21sunset.com.