San Francisco, San Jose, and Sacramento were among the nation’s top-performing housing markets in January, according to an analysis by realtor.com®.

The same analysis by realtor.com® revealed that homes were selling 4 percent faster nationwide than they did a year earlier, but housing supply hit new lows. Prices, meanwhile, remained at record highs. While nearly 360,000 new listings entered the market in January, inventory was down by 11 percent from a year ago, reports realtor.com®.

“We saw evidence of a stronger-than-normal off-season starting last September and October due to pent-up demand and surging interest from first-time buyers,” says Chief Economist Jonathan Smoke of realtor.com®. “The downside to this strong off-season is that we have started 2017 with a new low volume of available homes for sale and a new high for prices.”

Low inventory has been a challenging factor in parts of Northern California, particularly the San Francisco Bay Area. In fact, even though realtor.com® highlighted several markets in the region as top-performing in January, the California Association of REALTORS® cited the scarce housing supply as a key reason for the decline in the Bay Area’s pending home sales in December.

While pending home sales were on the rise throughout most of California in December, pending home sales in the San Francisco Bay Area as a whole fell 14.2 percent compared to December 2015 and 32.5 percent from November 2015.

San Mateo County posted the steepest decline in December at 35.3 percent, followed by San Francisco County at 23.3 percent. Meanwhile, Santa Clara County experienced an 18.6 percent decline in pending home sales.

Projections of mortgage rate increases in upcoming months are creating a sense of urgency among buyers, according to housing experts, which means that buyers will be scrambling to see new listings.

Despite the fact that fewer homes were available for sale, realtor.com® identified the following 20 top-performing markets in January, based on where buyers were checking out the most listings and homes were selling briskly:

1. San Francisco, Calif.
2. San Jose, Calif.
3. Vallejo, Calif.
4. Dallas, Texas
5. San Diego, Calif.
6. Sacramento, Calif.
7. Yuba City, Calif.
8. Denver, Colo.
9. Stockton, Calif.
10. Fresno, Calif.
11. Oxnard, Calif.
12. Columbus, Ohio
13. Colorado Springs, Colo.
14. Nashville, Tenn.
15. Detroit, Mich.
16. Modesto, Calif.
17. Los Angeles, Calif.
18. Tampa, Fla.
19. Santa Rosa, Calif.
20. Fort Wayne, Ind.

Here’s what was happening in our local Northern California offices during the last two weeks of January:

East Bay – There has not been a significant spike in listing inventory in the East Bay. The lack of inventory has led to multiple offer situations in some parts of the region.  A property in Oakland attracted 36 offers, while another listing received 26 offers, reports the Oakland office manager. Buyers are still flooding open houses, added the Oakland manager, and the Danville manager shared that it seems like buyers “are at the starting line waiting for the shot of inventory.” Meanwhile, there was strong and consistent growth in the area’s housing market in 2016 in comparison to 2015, according to the Berkeley manager. Median selling prices for properties increased year-over-year by double-digit percentages in several communities. Alameda’s single-family median home price jumped from $865,000 to $950,000, representing a nearly 10 percent increase, while the median condo price increased 11 percent from $600,000 to $667,500. Oakland’s single-family median home price jumped approximately 10 percent from $615,000 to $675,000, and the median condo price increased 15 percent from $482,000 to $555,000. Emeryville also saw a significant year-over-year increase in its median home price, going from $455,000 to $500,000, which represents an almost 10 percent increase. The median sales price for single-family homes in Berkeley grew approximately 8 percent from $1,025,000 to $1,105,000, while the median condo price leaped 14.5 percent from $585,000 to $670,000.  Albany’s single-family median home price increased from $875,000 to $925,000 and the condo median selling price inched up from $447,500 to $455,000. El Cerrito saw a smaller increase overall from $745,000 to $788,000. The condo sample size was only 23 sales in all of 2016, with a slight reduction in value from $518,000 to $500,000. Finally, Richmond’s single-family median home price rose from $400,000 to $440,000 and the median condo price increased from $355,000 to $397,000.

Monterey County – January started out a little slow in the region with the weather affecting listing activity. Rain delayed outdoor photo shoots for listings, and when the rain finally subsided the new listings started emerging. In January, the Monterey Peninsula offices saw several days with five to eight new listings coming online. Buyers are at a standstill if the property seems to be overpriced; they are not submitting any offers until there is a price adjustment, explained the manager of the Monterey Peninsula offices. The region is looking forward to the AT&T Pebble Beach Pro Am, which kicks off February 6, and the exposure that it brings to the Monterey Peninsula.

North Bay – Overall, the North Bay region is dealing with a lack of listing inventory, which is leading to multiple offer situations. Marin County had 40 properties under $1 million listed for sale and 140 listings priced above $1 million. The Greenbrae office manager reports that most of the new listings in the office in the last two weeks received multiple offers included one property listed at $699,000 that drew 16 offers, and a fixer-upper priced at $1,195,000 that received seven offers. Buyers are having to pay substantially over the list price in the low inventory market, the Greenbrae office manager shared. In a similar fashion, the Novato office manager said a property in Bel Marin Keys garnered 16 offers, and he said some listings are expected to hit the market this month and in March. The supply of inventory averaged about two months in 2016, according to the Santa Rosa Bicentennial office manager. “We anticipate more new homes coming on the market this year, but not enough to make a sizable change in inventory,” he said. The Sebastopol market currently has 25 properties for sale, and the heavy rainfall delayed work to get properties ready for sale, according to the Sebastopol manager.  The Santa Rosa Mission office manager said inventory was down about 16 percent for the time period October 2016 – December 2016 compared to 2015, and closed units are down 11 percent for the same period. The Southern Marin office has three listings priced over $5 million that have not been posted on the MLS, but all three properties are already getting qualified showings, and two of the three homes have attracted offers.

Placer County – As in other regions, Placer County is in need of listings as sales activity is on the rise. Homes priced in the low $400,00s or less are receiving multiple offers within a couple of days of being on the market, explained the Auburn office manager. Appraisals are taking time, and there are still properties that are being appraised for less than that contract price, she said. “We are still having a higher number than usual of cancellations,” noted the Auburn manager.

Sacramento County – The region is dealing with a low number of listings and is facing strong buyer demand for properties priced under $350,000. The Elk Grove/South County market had 1.2 months of inventory, down 27 percent for the same period a year ago, according to the Elk Grove/West Sacramento office manager. The average sales price in that area climbed to more than $400,000, due in part to two $2 million-plus property sales. The average listing price is growing, making it more challenging for buyers to find properties priced under $300,000 and thus creating strong competition for homes priced in the $275,000 to $350,000 price range. Many properties in that price range are generating multiple offers. Sales prices have increased more than 7 percent over the last 12 months. The region is also seeing new home developments. West Sacramento is experiencing similar market trends, with a decline in inventory and few homes available under the $300,000 price range. Prices have increased more than 8 percent year-over-year and price per square foot has increased to its highest level in a decade, the Elk Grove/West Sacramento office manager pointed out.

San Francisco – Demand for homes in the San Francisco market remained strong but inventory is not keeping up, leading to buyer competition and multiple offers. The San Francisco Lakeside office manager notes, “There is virtually nothing available to buy,” while the Lombard office manager said inventory is growing but not at the rate expected.  Entry-level and fixer uppers are drawing a lot of buyer traffic, multiple offers, and offers above asking price, according to the Lombard office manager, but the condo market is cooling as evidenced by the price reductions, the growing supply and days on market.

SF Peninsula – Some areas in the region are seeing an uptick in sales activity. The Burlingame, Burlingame North and Half Moon Bay offices reported an increase in sales activity during the last two weeks, with the Burlingame offices noting an increase in listing inventory as well. There were 10 properties under contract in the Burlingame office, seven in Burlingame North, and eight in Half Moon Bay. The Palo Alto Downtown office reported a drop in sales activity and inventory, and had three properties under contract.

Santa Cruz County – Sales activity is picking up in the Santa Cruz market. There have been approximately three new single-family homes listed per day, but brisk sales activity is absorbing the inventory. There are fewer than 200 active listings, according to the manager of the Santa Cruz offices. A number of high-end properties received offers over the last two weeks, and pending sales in the luxury market are on the rise.

Silicon Valley – More listings are emerging in the region, but Santa Clara County is still facing a shortage of available homes and strong buyer demand, which in some cases is leading to bidding wars. Open houses drew “hundreds of visitors” in the last two weeks, reports the Cupertino office manager. All offers ratified over the past two weeks have been multiple offers and all deals have contingencies in place, according to the San Jose Almaden office manager. Prices were up in several communities in January compared to the same month in 2016, he noted. Almaden’s average sales price was $1,329,000 in January, which was up 12 percent from January 2016 and down 3 percent from December.  Blossom Valley’s average sales price followed a similar trend. The average sales price in that community was $708,000 in January, which is up 10.5 percent from January 2016 and down 9 percent from the prior month.  In contrast, Cambrian’s average sales price declined 10.5 percent from a year ago to $916,000 and was down 6 percent from December.  Santa Teresa’s average sales price rose 11 percent year-over-year to $759,000 in January and was also 2 percent higher than the average sales price recorded in December. Most homes are going into contract after just one weekend on the market and in some areas homes are selling well over 10 percent of asking list price, says the San Jose Willow Glen office manager. Despite the strong demand and brisk activity, “Sellers still need to be careful not to overprice as we see homes that are priced above market sit idle as more competitively priced homes are seeing all the action,” explained the San Jose Main office manager.

South County — The real estate market in Santa Clara’s South County continues to be very slow, challenged by low inventory. Presently in the entire city of Morgan Hill, there are only 35 active listings.  The city of Gilroy has about 60 homes available. Both buyers and sales associates are finding this to be “frustrating and somewhat alarming,” shares the Gilroy and Morgan Hill office manager. Sellers are in an advantageous position to list their homes in coming weeks.  

Market Watch is a bi-weekly column exploring the Northern California housing market. Click here to view past issues.