CALIFORNIA, AUGUST 11, 2016 – In the first half of 2016 (January through June), San Francisco Bay Area single-family home and condominium sales fell 10.3 percent relative to the same period in 2015. Sales were the lowest since 2008.

Despite the slowdown in sales, median home prices continued to rise upwards to what might be described as new levels of unaffordability. Within the six Bay Area counties included in this study, San Francisco, Marin, Alameda, Contra Costa, San Mateo and Santa Clara, the increase in median home prices from June 2015 to June 2016 ranged from a low 6.5 percent (San Francisco) to a high of 14.3 percent (Marin).

“The slowdown in Bay Area sales has given rise to the concern that we are in the midst of another real estate bubble getting ready to pop,” said Schnapp. “This time around, the factors that contributed to the 2006 real estate bubble are largely absent. Factors such as large numbers of poor quality borrowers, easy availability of high-risk adjustable rate mortgages with 100 percent financing and a Federal Reserve that was raising interest rates, are not in play today.”

“The biggest hurdle to the Bay Area housing market has nothing to do with the economy,” said Schnapp. “Blame restrictive zoning and burdensome building regulations that limit building and add to the cost of construction. Until those issues are addressed, we expect sluggish sales to continue well into 2017.”

“In our view, Bay Area real estate is a tough market that is largely unaffordable,” said Schnapp. “That being said, we don’t see the current trend of sluggish sales and high prices leading to a repeat of 2008.”

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