Home sales in the Bay Area started out the new year with a bang, hitting their highest level in three years for the month of January, according to a new report by CoreLogic, the Irvine-based real estate information firm.

A total of 4,845 new and existing houses and condos sold in the nine-county region last month, up 7.1 percent from a year ago. However, sales were off 38 percent from December’s level. A significant drop from December to January is typical as many homebuyers try to close on the sale before year-end.

Sonoma, San Francisco and Alameda counties led the way in January with double-digit sales increases year-over-year. Sonoma County was up 19.6 percent, San Francisco up 16.2 percent, and Alameda up 14 percent. Napa County saw an 11.3 percent increase, San Mateo 7.8 percent, Marin 5.4 percent, Solano 3.7 percent, Santa Clara 1.8 percent, and Contra Costa 0.7 percent.

The inventory shortage we have been grappling with pushed home prices up sharply once again last month with the median sale price surging 15.4 percent in January from a year ago to reach $625,500. The biggest increase was in San Francisco, where the median sale price spiked 32.3 percent to $1,166,750. Alameda County followed with a 21 percent increase in the median price to reach $635,250.

Andrew LePage, research analyst with CoreLogic, said volatility in the financial markets could provide some headwinds to the market in the short term, particularly in the luxury segment of the market.

“History suggests that high-end home sales could be affected by the recent stock market downturn, reversing the so-called ‘wealthy effect,’ which would undermine the demand for luxury homes if the stock market continues to weaken,” he said.

But for now, the Bay Area housing market – including the Previews luxury segment – still appears to be very much a seller’s market with plenty of buyers competing for far too few listings. We’ll see what happens in the weeks ahead as (hopefully) more supply finally comes online.

Below is a market-by-market report from our local San Francisco Bay Area offices:

North Bay – Inventory is up 50% from last week, reports our Greenbrae manager, but only 10 single family residences are currently active for $700,000 or less in all of Marin.  Approximately 75% of the single-family residences in all of Marin are over $1 million.   Agents are frustrated with the lack of inventory and not being able to find any kind of property for their buyers.  The ‘off market’ listings continue to intrigue frustrated buyers, and present challenges for agents trying to be on top of these ‘secret’ properties. The listing inventory appears to be at a record low, reports our San Rafael manager.  The open house activity continues to be brisk and he expects the listing and sales market will be increasing soon.  Now is the time for seller’s to get their home on the market.  There is a lot of buyer demand for new inventory. The Sonoma County market is still low on inventory, says our Santa Rosa manager. A recent open home had 80 groups through in the first 2 hours and 100 groups total. Buyer activity has picked up again without a corresponding increase in inventory. Structuring contingent offers is still the challenge in the market. Previews buyers are still holding out for the property they really want, which means a more balanced market. The Southern Marin market is gaining momentum driven by listing inventory, and most quality properties listed under $1,500,000 are receiving multiple offers. The luxury market is gaining some momentum, which is created by new quality luxury listings. For example, a $13.5 million new “sexy contemporary” listing came on the market last week and sold in 1 day.

San Francisco – The San Francisco market is choppy, reports our Lakeside office manager.  There are a significant number of transactions that are falling out of escrow, but the properties are being put back into escrow quickly (sometimes multiple times).  Marginal properties or marginal locations are sitting on the market longer than our expected two to four weeks creating a good deal of discomfort for sellers. Our Lombard office manager says that while the inventory has grown from an extremely low count during January, a post-Super Bowl surge has not materialized. Lots of talk about price fatigue and a slowing market, but it remains very much a seller’s market, and any well-priced property is bringing lots of interest and healthy buyer traffic. The song remains the same, reports our Market Street office manager.  The anticipated bump in inventory following the Super Bowl has yet to materialize.  The few homes on the market are being treated to open houses clogged with eager buyers, and multiple offers (from 2 to 22 during this period).    One agent wrote an all-cash offer for $1M over the list price of a Noe Valley home, and still did not prevail.  The only properties that sold without multiple offers were done off-market, or were new construction condos. The buyers are ready. Where are the sellers?

SF Peninsula The Burlingame housing market is picking up, according to our local manager. Open houses are very active in the Half Moon Bay area, and inventory remains very low. Menlo Park area buyers are still out in big numbers but more reticent to open their checkbooks, says our local manager.  Agents still see multiple offers on $1.5 million and under – $1.5 to $3 million is still strong for GOOD houses.  Houses on the ‘fringes’ are starting to sit a bit longer. Equity markets are rattling people.  High-end over $6 million is quieter. Even though listing inventory and sales activity is steady it is still very slow, according to our Redwood City-San Carlos manager. The lack of inventory continues to be a major force. The one thing that has changed drastically is that there are not nearly as many multiple offers. A couple of our listings actually sold a little below list price with a single offer. The San Mateo market is heating up. The high end in the Woodside-Portola Valley seems stagnant again, our local manager says.  Buyers are out there but reluctant to jump in now.

East Bay – Sixteen properties came onto the market in the last two weeks for a total of 26 available homes in Berkeley. Inventory is still low and the consensus is buyers are the most aggressive on price at the beginning of the year. A house with 3-4 offers will reach the same sales price as a house that received 15 offers. Interest rates are still low, which allows buyers to stretch their money out a little more. All cash, non-contingent offers are usually the winning offers but offers with a loan but no contingencies is competitive. It’s still slow going in the Oakland-Piedmont area trying to get buyers into contract with the lack of inventory. Listings are coming in but it appears that not much is coming on before mid-March. Buyers are poised and ready to buy in all price points and are writing offers in hopes of getting in to contract, but if not they’re willing to wait for the spring and hopefully an increase in inventory. Open houses are still packed on the weekend. Inventory is increasing slightly in the Walnut Creek area, but not enough to meet demand. Competitively priced homes still regularly command multiple offers.

Silicon Valley – It feels like things are about to start happening, says our Cupertino manager. Open houses were crazy busy, in some cases 100-200 visitors, even without newspaper advertising. Los Altos inventory is still down compared to previous years. Homes under $2.6M are the hottest segment, most selling within one week, and virtually all in less than 1 month. Each home under $2.6M is receiving multiple offers, and although the final sales price is over the list, these prices are off their highs of last year, at least so far. In the condo market there is nothing under $1.2M, and so our current inventory is less than 1 month. The market is still hot with a plethora of buyers for all homes priced under $4M. Los Altos Hills inventory is average compared to previous years; however, very few high-end homes (over $4.2M) are selling. Homes under $4M are not selling at the frenzy pace of Los Altos and Mountain View and negotiations are more traditional. Buyers are seeking properties that are in move in condition (or at least livable) at the $3M range. The market for homes above $5M is slow with very few buyers. Sunnyvale inventory is down, with a very fast market time of 1 week for both homes and condo/townhouses, and they are selling with multiple offers. Mountain View inventory has been consistently low and down from previous years. Los Gatos area buyers are excited as more inventory begins to hit the market. Listings and sales are certainly increasing in the San Jose Almaden area while prices are a little bit up and down compared to last year in February as well as last month.  Almaden has had an average sales price of $1,279,000, which is down 18% from last year in February but up 9% from last month.  Blossom Valley has an average sales price of $658,000, which is up 7% from last year in February and up 4% from last month.  Cambrian has an average sales price of $912,000 for the month of February, which is up 14% from last year in February but down 11% from last month. As always buyers need to focus on what area and neighborhood they want to live in and when the right house comes up for sale they need to act quickly, our San Jose Main office manager notes.  Inventory remains very low, as buyers are keeping pace as new homes come to market.  Interest rates remain aggressive, so that is keeping buyers in the buying mindset.  The economy is doing great and that is stimulating buyers as well. The local Willow Glen market has come back to life post Super Bowl week. The anticipated new active listing inventory is coming. Our office had 9 new active listings for the week, bringing them up to 37 units, just shy of where they were at this time last year. Open houses are packed with strong buyer demand. Most homes are going into contract after just one open house weekend then the following week offers are reviewed.

South County – In the free enterprise system, market values are determined by supply and demand.  The South County real estate market is currently experiencing an incredibly low number of homes being offered for sale, reports our local manager.  At the present time there just isn’t the supply to meet the ever-increasing demand for homes.  These facts are pushing home prices to record high levels.  The low inventory is true for homes in every price range and in every neighborhood.   A recently listed  $1.1 million home in Gilroy received six offers and sold for thousands of dollars over the asking price.  A Morgan Hill Agent just listed a 600 square foot condo (one bedroom, one bath) for just under $400,000.  He is anticipating multiple offers even before it goes on the MLS.   This phenomenon has buyers and their agents very frustrated—but sellers are happy to receive top dollar for their homes.

Santa Cruz County – The number of sales in Santa Cruz County is almost exactly the same as 2015 even given the inventory being down approximately 30%. Our associates are looking to generate inventory and off market sales due to the high demand and extremely low supply. The Previews market is following the same trend as the overall market in terms of number of sales being on par with 2015 and inventory being approximately 25% down. Almost 50% of homes on the market in Santa Cruz have an asking price over $1 million.

Monterey Peninsula – Agents survived the AT&T Pebble Beach Pro Am with record attendance and incredible weather to showcase some of their golf properties to the world. January inventory on the Monterey Peninsula is at a multi-year low with 332 active properties available down from 376 in December. Pending and contingent sales are up over November and December 2015 average at 90 for January. Average median sale price for the last two months is $1,038,500, which is a 21% increase over last year. The Monterey Peninsula continues to be a desirable location for retirees and multiple vacation homeowners to purchase.

Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area president Mike James.  Click here to view past issues.