Market News August 4, 2022

Q2 2022 Northern California Real Estate Market Update

The following analysis of select counties of the Northern California real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.


Regional Economic Overview

Over the past 12 months, the Northern California markets covered in this report added 184,600 jobs. With decent job growth, the unemployment rate fell to 2.4%, which is a significant drop from the 5.8% rate we saw a year ago. The lowest jobless rate was in Santa Clara County (1.8%), and the highest rate was in Solano County, where 3.5% of the workforce remains unemployed.

Northern California Home Sales

In the second quarter of 2022, 14,235 homes sold, which is a drop of 21.1% compared to a year ago. Sales rose an impressive 37.6% compared to the first quarter of this year.

Year over year, sales fell across the board. The largest drop was in San Luis Obispo County. Solano and Shasta counties had fairly modest declines.

The number of homes for sale jumped more than 67% compared to the first quarter of the year. This growth in inventory has caused an impressive rise in sales.

Pending home sales ticked up from the first quarter of 2022, suggesting that we may see some growth in closings in the third quarter of this year.

A bar graph showing the annual change in home sales for various counties in Northern California from Q2 2021 to Q2 2022. All counties listed showed a negative year-over-year percentage change. Solano County had a -11.6%% change, followed by Shasta at -12%, Placer at -18.8%, Alameda at -19.5%, Napa at -20.8%, Santa Clara at -23.5%, Contra Costa at -24.1%, and San Luis Obispo at -24.5%.

Northern California Home Prices

The average home price in the region rose 10.6% from this time last year to $1.35 million. Compared to the final quarter of 2021, prices rose by 11%.

I have started watching list prices, as they will be a leading indicator of whether the market is starting to feel the impacts of declining affordability due to rising financing costs. In the second quarter, the median list price in the region rose an average of 13%. We did see a small drop in Placer County, but I am not overly concerned as it is a fairly small area that can experience unusual swings in both list and sale prices.

Sale prices rose by double digits in all counties other than Shasta compared to a year ago; they were also higher across the region compared to the first quarter of the year.

Even with rising inventory levels and higher financing costs, the market appears to still be buoyant. However, the pace of price growth has slowed, which will likely continue as the area starts to move toward a more balanced market.

A map showing the real estate home prices percentage changes for various counties in Northern California. Different colors correspond to different tiers of percentage change. Shasta County is the the only county with a percentage change in the 5% to 8.9% range, while Placer, Solano, Contra Costa, Alameda, and Santa Clara are in the 9% to 12.9% change range. San Luis Obispo is in the 17% to 20.9% change range, and Napa County is the only county in the 21% + change range.

A bar graph showing the annual change in home sale prices for various counties in Northern California from Q2 2021 to Q2 2022. Napa County tops the list at 24.2%, followed by San Luis Obispo at 17.6%, Alameda at 12.8%, Solano at 11.2%, Santa Clara and Placer at 11%, Contra Costa at 10.1%, and Shasta at 5.8%.

Mortgage Rates

Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs.

That said, there are some signs that inflation is starting to soften and if this starts to show in upcoming Consumer Price Index numbers then rates will likely find a ceiling. I am hopeful this will be the case at some point in the third quarter, which is reflected in my forecast.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2023. He forecasts mortgage rates continuing to climb to 5.9% in Q4 2022, then tapering off to 5.58% in Q1 2023 and 5.53% in Q2 2023.

Northern California Days on Market

The average time it took to sell a home in the Northern California counties in this report dropped two days compared to the second quarter of 2021.

The amount of time it took to sell a home fell in Napa, Santa Clara, San Luis Obispo, and Shasta counties, remained static in Alameda and Solano, and rose modestly in Contra Costa and Placer counties. Average market time fell in all counties other than Solano and Shasta compared to the first quarter of 2022.

In the second quarter, it took an average of 26 days to sell a home, which was seven fewer days than in the first quarter of this year.

The greatest drop in market time from a year ago was in Shasta County, where it took seven fewer days to sell a home.

A bar graph showing the average days on market for homes in various counties in Northern California for Q2 2022. Santa Clara County has the lowest DOM at 11, followed by Alameda at 12, Contra Costa at 13, Placer at 14, San Luis Obispo at 21, Solano at 23, Napa at 44, and Shasta at 71.


This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Positive job growth and a growing economy continue to stimulate the housing market, which has led home sales and prices to rise even as mortgage rates and supply levels jumped. Although affordability continues to be a significant issue, there are no indications that a major correction is imminent. However, we are seeing the speed that homes sell starting to slow, as is the pace of price growth. This suggests to me that the market is starting to cool. That said, with average list prices in most counties continuing to rise, sellers remain confident.

A speedometer graph indicating a medium seller's market in Northern California for Q2 2022.

All things considered, I have left the needle in the same position as in the first quarter of the year. The market still favors home sellers, but rising inventory levels and slowing price growth suggest they are not in a better position now than they were at the start of the year.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.