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August 20, 2018

Diablo Valley & Lamorinda Real Estate

August 20, 2018

Diablo Valley & Lamorinda Real Estate

We are pleased to announce that Paragon Real Estate has joined forces with Compass in order to deliver a new level of support and service for our clients. Founded in 2012, Compass is a real estate technology company now operating in 30 regions with over 90 offices across the United States, including New York City, San Francisco, Los Angeles, Chicago, Boston, Seattle, Washington D.C., Dallas and Miami. With the merger, the Compass Bay Area team consists of more than 500 agents closing more than $4.5 billion in annual sales volume.

While we wait for the autumn selling season to begin in earnest, this report will take a look at area, county and Bay Area market trends from a variety of angles, starting with home prices.

Bay Area Housing Affordability
The California Association of Realtors just released its Q2 report on housing affordability, which we have illustrated in the 3 charts below. If Diablo Valley and Lamorinda was a county, it would probably most resemble Marin, much more than the rest of Contra Costa, in its demographics and home prices.

The Luxury Home Market
Spring 2018 was a very strong market for Diablo Valley & Lamorinda luxury homes, though as is typically the case, it was not as hot as the market for more affordable homes. These dynamics were consistent across the Bay Area.

Active Luxury Listings on Market
by Month
Listings Accepting Offers
by Month
Luxury home listings going into contract hit a new high in May 2018

Sales & No-Sale Listings
Sales volume hit a new high in Q2 2018, however the number of listings that expire or are withdrawn from the market without selling is also high. The reason for no-sale listings is typically overpricing: Even a gorgeous home has a fair market value and asking for too much risks buyers simply turning away to other options.

Trends in General Market Dynamics

Average Days on Market

As the market get hotter, listings sell faster.

Sales Price to List Price Percentage

As the market get hotter, overbidding increases.
Seasonality also plays a significant role in demand.

Months Supply of Inventory (MSI)
The stronger the buyer demand as compared to the supply of listings available to purchase, the lower the MSI. Generally speaking, MSI figures around the Bay Area have been flirting with historic lows in 2018.

Active Listings on Market

Listings gradually increase through mid-year,
then gradually decline until plunging in mid-winter.

Price Reductions
Just as listing inventory peaks in mid-year, the number of price reductions also peaks: Sellers of unsold spring listings re-strategize pricing in order to sell their homes before the mid-winter market doldrums set in.

Mortgage Interest Rates
Short-Term and Long-Term Trends
Two of the factors that have worried market analysts have been the big changes in federal tax law limiting the deductibility of state and local taxes, and interest rate expenses – changes that affect more affluent, higher home cost areas like ours most dramatically – and increasing interest rates. So far in 2018, buyers appear to have shrugged off any such concerns.

Interest rates play a big role in housing affordability, and their plunge after the 2008 crash played a vital part in the market recovery of the past 6 years. It has typically been very difficult to predict interest rate changes with any accuracy, though most economists believe they are headed higher. The questions being: If so, how high? And how will buyers react?


It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

© 2018 Compass