Northern California Q1 2022 - This analysis of select Northern California real estate markets is provided by Windermere Real Estate Chief ...
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Q1 2022 Northern California This analysis of select Northern California real estate markets is provided by Windermere Real Estate Chief Economist Matthew Gardner to help you make informed real estate decisions. windermere.com
Northern California added 60,900 jobs in the first quarter of 2022, and 213,300 jobs have returned over the
past year. With total employment now at 3.02 million, the markets covered by this report have recovered all
but 24,800 of the 473,900 jobs lost during the pandemic. With solid growth in the region, the unemployment
rate fell from 3.6% at the end of 2021 to 3.1% in March of this year.
By county, the lowest jobless rate was in Santa Clara County (2.5%), and the highest rates were in Solano and
Q1 2022 Northern California Shasta counties, where 4.6% of the workforce remains unemployed.
ECONOMIC The region’s labor force grew in the quarter but remains below pre-pandemic levels. This is likely to mean that
businesses will continue to find it hard to attract new employees, which could slow the pace of growth going
OVERVIEW forward. That said, I feel confident that all the jobs lost to COVID-19 will have been recovered by the spring.
Home Sales Annual Change in Home Sales by County / Q1 2021 to Q1 2022
❱ In the first quarter of the year, 10,347 homes sold, SHASTA -5.2%
which is a drop of 12.4% compared to a year ago.
Sales were 27.2% lower than in the fourth quarter PLACER -7.1%
of 2021.
SANTA CLARA -10.7%
❱ Year over year, sales fell in all counties contained in
this report. Solano County saw a modest drop, but CONTRA COSTA -12.4%
there were fairly significant decreases across the
rest of the region. NAPA 13.7%
❱ With listing activity rising 17% compared to the ALAMEDA -14.8%
fourth quarter of 2021, the drop in sales was a
little surprising. SOLANO -15.0%
❱ Pending home sales ticked up from the final quarter SAN LUIS OBISPO -30.3%
of 2021, suggesting that we may see some growth in
sales in the second quarter of this year. -35% -30% -25% -20% -15% -10% -5% 0
Q1 2022 Northern California GARDNER REPORTHome Prices Annual Change in Home Sale Prices by County / Q1 2021 to Q1 2022
❱ Even with sales pulling back, the average home price SAN LUIS OBISPO 26.3%
in the region rose an impressive 17.2% year over year
to $1.215 million. Compared to the final quarter of SANTA CLARA 19.4%
2021, home prices rose 4%.
ALAMEDA 18.3%
❱ The most affordable county relative to average prices
continued to be Shasta. Santa Clara was again the SHASTA 16.9%
most expensive market.
PLACER 14.6%
❱ Prices rose by double digits in all counties other
than Napa compared to a year ago. Prices were also CONTRA COSTA 14.3%
higher everywhere but Napa County compared to
the fourth quarter of 2021. SOLANO 13.5%
❱ Rising prices continue to impact affordability in
NAPA 4.5%
the region and the significant jump in mortgage
rates in the first quarter will not help matters. Any 5% 10% 15% 20% 25% 30%
0
effects of rising rates on prices were not evident
in the first quarter, but the second quarter should
be more telling. Mortgage Rates
Average rates for a 30-year conforming
SHASTA 4.0% to 7.9% mortgage were 3.11% at the end of
4.75%
4.74%
4.72%
4.65%
2021, but since then have jumped over 5.0%
8.0% to 11.9%
1.5%—the largest increase since 1987.
12.0% to 15.9% The surge in rates is because the market 4.5%
is anticipating a seven- to eight-point
3.79%
16.0% to 19.9%
increase from the Federal Reserve later 4.0%
3.51%
PLACER 20.0%+ this year.
3.23%
3.5%
3.08%
Because the mortgage market has priced
3.00%
2.95%
2.88%
2.87%
NAPA this into the rates they are offering today,
2.76%
3.0%
SOLANO my forecast suggests that we are getting
CONTRA close to a ceiling in rates, and it is my Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
COSTA
belief that they will rise modestly in the 2.5% 2020 2021 2022 2023
ALAMEDA
second quarter before stabilizing for the NOTE: Our forecast excludes points and will therefore show rates that are lower than
SANTA
CLARA
balance of the year. you may be quoted.
SAN LUIS
OBISPO
Q1 2022 Northern California GARDNER REPORTDays on Market Average Days on Market by County / Q1 2022
❱ The average time it took to sell a home in the SANTA CLARA 13
Northern California counties in this report dropped
seven days compared to the first quarter of 2021. CONTRA COSTA 16
❱ The amount of time it took to sell a home dropped in ALAMEDA 17
every county other than Solano (+1 day) compared to
a year ago. Days on market fell everywhere except PLACER 19
Shasta, Placer, and San Luis Obispo compared to the
fourth quarter of 2021. SAN LUIS OBISPO 27
❱ In the first quarter, it took an average of 33 days SOLANO 32
to sell a home, which matched the fourth quarter
of 2021. NAPA 54
❱ The greatest drop in market time from a year ago SHASTA 85
was in Napa County, where it took 14 fewer days to
sell a home. 0 10 20 30 40 50 60 70 80 90
Conclusions
The jump in home prices compared overly affected thus far. Average listing
SE As Chief Economist for
ET
About Matthew Gardner
to the prior quarter may be a surprise prices in most counties are increasing, K LL
ER
to some given the rapid increase in which suggests that sellers remain AR Windermere Real Estate,
Matthew Gardner is
M
’S
mortgage rates. However, when rates confident for the time being.
’S
responsible for analyzing and
MA
rise, there is typically a lag in time ER
Although prices continue to increase interpreting economic data
RKE
BUY
before we know the impact on the
at a significant pace, the growth in and its impact on the real
market. The increase in the number of
T
listing activity combined with lower estate market on both a local
homes for sale means there is more and national level.
sales may suggest that the market may
choice for buyers which, combined Matthew has
be starting to slow from the frenetic
with higher financing costs, should over 30 years
pace of the past few years. With all the This speedometer reflects the state of the region’s real estate
start to taper the pace of price market using housing inventory, price gains, home sales,
of professional
data here, I have moved the needle a interest rates, and larger economic factors.
appreciation as we move into the experience
little towards home buyers, although it
spring buying season. both in the
clearly remains a seller’s market.
U.S. and U.K.
Affordability continues to be a concern,
but the market does not appear to be
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