Redfin: 2017 Closes with 7% Home Price Growth

Redfin, Seattle, said its home price report saw 2017 home sales increased by nearly 2 percent from 2016, while home prices rose by nearly 7 percent and inventory declined by nearly 15 percent.

Redfin reported the median sale price rose to $287,000 across markets it serves. The typical home that sold in December found a buyer after 49 days on the market, five days fewer than 2016.

“Like last year, low inventory will be the biggest driver of the 2018 real estate market,” said Redfin chief economist Nela Richardson. “Major housing market dynamics don’t shift dramatically when the clock strikes midnight on Jan. 1. We anticipate a continuation of the same trends we’ve been seeing for the past few years. Price growth will remain strong as many homeowners will remain deterred from selling due to the low mortgage rates they’ve locked in and the high price of their would-be move-up home.”

The number of homes newly listed for sale in December decreased 3.0 percent. With just 2.6 months of supply in December, Redfin said the market was far below the six months of supply that represents balance between buyers and sellers.

San Jose had only 0.5 months of supply in December, the lowest monthly supply Redfin has recorded in any metro area–one reason why home prices in San Jose jumped by nearly 32 percent in 2017. This means that if the pace of home sales continued and no new homes were listed, it would only take about two weeks for all the homes currently for sale to find buyers. Seattle and Oakland also faced extremely tight markets with just 0.6 months of supply in December.

San Jose was also the fastest and most competitive market in December, with the typical home finding a buyer in a median of 12 days, followed by Seattle and Oakland at 15 and 16 days respectively. More than three-quarters (76.2%) of San Jose homes sold above the list price. Of all the metro areas Redfin tracks, San Jose has had the steepest year-over-year price growth and inventory declines for three months in a row.

Interestingly, Redfin San Jose agent Kalena Masching noted despite the high prices (her market had a median sale price of $1.1 million in December) San Jose remains more affordable than San Francisco. “Even highly-paid tech workers are priced out of San Francisco and moving to San Jose,” she said. “This demand, coupled with low inventory and job growth at the tech campuses in the South Bay, has caused prices to soar.”

San Jose was again the most competitive market, with 76.2% of homes selling above list price, followed by 68.8% in San Francisco, 62.1% in Oakland, 40.2% in Seattle and 38.8% in Los Angeles. San Jose had the nation’s highest price growth for the third month in a row, rising 31.9% since last year to $1.108 million. San Jose also saw the largest decrease in overall inventory for the third straight month, falling 51.5%.