Bay Area home prices are dropping, but the market is cooling off, report says (2024)
SAN FRANCISCO (KRON) — Home prices across the Bay Area may be dropping, but sales are still slowing, according real-estate company Redfin.
Real estate company Redfin says Zoom towns and tech hot spots saw huge price increases as remote work was normalized during the pandemic. Now, those areas are seeing some of the steepest declines in home prices.
In a recent housing report from real estate experts at RE/MAX, the Bay Area is seeing the second largest drop in home sale prices since 2022. San Francisco home prices are down 12.7% over the past year; this brings the median sales price of a home in San Francisco to $960,000.
Bozeman, Montana, saw a huge increase in home sales and skyrocketing prices after remote workers sought more space during the beginning of the pandemic. The median sales price for a home in Bozeman has now dipped by nearly $100,000 compared to last year.
Though lower prices would typically signal an increase in potential buyers, the technology industry’s struggles have impacted the Bay Area in particular. Redfin listed several reasons why housing markets in tech hubs are cooling off:
Topsy-turvy tech stocks — With tech stocks falling more than 30% in 2022, many tech workers who use their stock proceeds for down payments have been out of luck
Tech layoffs — Layoffs have impacted thousands of workers across the Bay Area, and many people have bowed out of their home search altogether due to losing their job
Low inventory — Due to high interest rates and a tumultuous market, many people aren’t willing to put their home up for sale due to uncertainty they’ll be able to buy a new one
Unsustainable pandemic home prices — housing prices rose quickly during the pandemic, but now even those who could afford those prices are being pushed out of the market
High mortgage rates — Mortgage rates are currently around 6.4%, and that’s more than double the the rates seen in 2020. This interest rate hike can translate to a monthly payment that’s hundreds, if not thousands, of dollars higher than it would have been in 2020.
Home prices are still high — Though home prices are coming down, many are still to expensive for prospective buyers, especially with the raised interest rates. This is especially true in the Bay Area.
San Jose-based Redfin manager Kimberly Douglas says that the scarcity of properties available on the market is heavily impacting home sales. Part of that is also being driven by high interest rates.
“Sellers are locked in because they can’t justify giving up a 2.9% mortgage rate to buy a new home with a 6.5% rate. Everything coming on the market between $1 million and $2 million is getting multiple offers and selling quickly. I have one listing coming up in a desirable neighborhood with highly rated schools, and my only fear is that it’s going to sell too fast, leaving the owners no time to find something new.” — Kimberly Douglas, Redfin Manager
After the collapse of Silicon Valley Bank, the Federal Reserve System raised the interest rate by a quarter-percentage point, a much smaller increase compared to previous hikes. Some hope this slowed increase will signal an end to the rate hikes for the foreseeable future.
Bay Area home prices are dropping, but the market is cooling off, report says. SAN FRANCISCO (KRON
KRON
KRON-TV (channel 4) is a television station licensed to San Francisco, California, United States, serving the San Francisco Bay Area as an affiliate of MyNetworkTV.
Every corner of California is experiencing a real estate market cool down. The number of home sales in nearly every county in the state declined during the last week of March compared with the previous year, according to new data from Redfin.
With inventory rising but still tight, the median sales price for a home in March 2023 in the San Francisco-Oakland-Hayward MSA fell nearly 13% from its peak in April 2022 and 7.9% year-over-year to a still-stratospheric $1.45 million. Huang says that some condo owners are actually selling at a loss these days.
Is the Housing Market Cooling Off? The housing market has been on an upward trajectory in recent years. However, rising interest rates, slowing sales, and slower home price rises indicate a cooling market.
Out of 24 of the 50 most populous U.S. metro areas where median sales prices fell, San Jose was tops of the list with a -17.2% YoY decline. Coming in at number three was San Francisco with an -11% YoY decline. Oakland was fourth with -10.9 YoY decline.
Although home prices are expected to improve in the second half of the year, the California median home price is projected to decrease by 5.6 percent to $776,600 in 2023, down from the median price of $822,300 recorded in 2022.
They see existing single-family home sales to fall 18.2% to 279,900 units this year vas 342,000 homes sold in 2022. They expect home prices to improve in Q3 & Q4 this year, over in 2023 they expect the medium home will delince 5.6% compared to 2022, to $776,600 in 2023 ($822,300 in 2022).
Statewide, prices are also expected to fall in 2023. The California Association of Realtors estimated that the state's median home price will fall 8.1% to $755,600 in 2023.
And basic economics tells us that when demand is higher than supply, there is more competition for less stuff, and thus prices increase. And thus, the reason for the high prices on the Peninsula is that there are a lot more people looking for homes and apartments than places that are available to buy or rent.
“The Bay Area has among the strongest economies in the world, which attracts talent and infuses an abundance of money in the region,” Lurie writes in an email. With that, comes high salaries — according to Bloomberg, the average tech worker makes $165,000 a year — which results in "high housing costs," explains Lurie.
Sellers may take the house off the market temporarily because active MLS listings must be available for showings. When a home isn't available for showings, the listing agent will change its status in their local MLS to “Temporarily Off Market.”
Seattle, San Jose, Austin and Phoenix are among the metros with the fastest-slowing housing markets as high mortgage rates, tech turmoil and the lack of homes for sale deter buyers.
The housing market correction is an ongoing process that starts when a significant decrease in demand causes prices to fall. It will continue until demand increases or the supply of homes increases.
Leading the nation with the largest drop from the 2022 peak is San Francisco, where home prices have fallen nearly 17%. Other cities with double-digit home-price declines from last year's peaks include Seattle, San Jose, and Phoenix.
The Bay Area's population has shrunk every year since the pandemic began. The biggest drop came in 2020. From April 1, 2020, to Jan. 1, 2021, the number of residents contracted by nearly 93,000 people, a 1.2% decline.
With mortgage rates declining faster than expected, home prices are likely to remain mostly flat throughout 2024. This will be good news for buyers who have been waiting on the sidelines for a good time to enter the market.
Homebuyer.com data analysis indicates that, for first-time home buyers, June 2023 is a good time to buy a house relative to later in the year. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.
Most experts do not expect a housing market crash in 2023 since many homeowners have built up significant equity in their homes. The issue is primarily an affordability crisis.
It's always a good time to buy a house in California, according to the Oldhams. California homes have steadily appreciated over time. Historical data shows the average rate of appreciation in California came in at 6.77% annually over a 39-year period.
Median home values adjusted for inflation nearly quadrupled over the 60-year period since the first housing census in 1940. The median value of single-family homes in the United States rose from $30,600 in 1940 to $119,600 in 2000, after adjusting for inflation (see graph).
Home prices have dipped some 20% year over year in San Francisco, a data point that has caused sellers consternation alongside broader worries about the city's economic health. But the numbers today are compared with the “frenzied, absurd, peak” the market experienced in 2022, according to Carlisle.
Housing in California is expensive due to high demand and low supply. With strong demand from millennials and retirees drawn to California's warm climate, the limited supply of housing has driven up property values.
To be “wealthy” in San Francisco, one needs to have an average net worth of $5.1 million, according to Charles Schwab 2022 Modern Wealth Survey conducted in February. Out of all the major cities in the country surveyed, San Francisco's net worth was by far the largest.
27, 2022 2:48 p.m. The small Bay Area enclave of Atherton was rated as the most expensive U.S. ZIP code for home sales. Atherton held its title as the most expensive ZIP code in the country with a median home sale price of $7.9 million — about 20 times the national median.
It pretty much goes without saying that San Francisco is one of the most desired places to live in America. With a booming economy, great weather, a world class food scene, and endless options for getting outdoors and staying active, the Bay Area leaves little to be desired in a city, other than affordable real estate.
New Bay Area rent numbers are out and they are higher than the region has seen in a long time. Local rent tracker Zumper released the average one-bedroom monthly rent for the Bay Area showing the Peninsula has shot to the top. Mountain View's average one-bedroom rent is now $3,200 a month.
Sometimes home sellers try to sell their home themselves as a FSBO. Many times these stay on the market for months, simply because home sellers can't make time to show the home because they're at work. A realtor may have taken over the listing when the FSBO gave up on selling the home.
After about 90 days on the market, a property is considered “stale.” When it does finally sell, it's likely to bring a lower price than listed because when buyers notice that a home has been sitting on the market a long time, they assume something is wrong with it.
This is one of those terms where the definition is exactly what it implies ... homes for sale back on the market are homes that were once available for sale, then they were not available (off the market), but for some reason are now available again (back on the market). Here is a typical example.
While a housing price correction is expected, we aren't in a housing bubble. Demand for homes remains high, and there are fewer home sellers than there were in 2022. And while the market is cooling, experts don't expect an actual housing crash or a housing bubble burst in 2023.
If you need to be occupying your home by a certain date to save on rent, it's a much better deal to close at the end of the previous month (for example, January 30) instead of the beginning of the current month (February 1).
Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point. Figures are the predicted quarterly average rates for the 30-year fixed-rate mortgage.
Those cities were: San Francisco, San Jose, Sacramento, San Diego, Los Angeles and Riverside. San Francisco and San Jose experienced the greatest price decline, falling 13% and 12.7%, respectively. Sacramento, San Diego, Los Angeles and Riverside all experienced price declines between 8% and 12%.
The two biggest reasons why are high housing costs and the acceleration of remote work. As working from home became an option for more people, those people moved to places where homes cost less. Get a weekly recap of the latest San Francisco Bay Area housing news.
In the past five years, Bay Area residents have fled to plenty of hot spots, with Austin, Texas; Mexico; Miami; Nashville, Tennessee; and Montana all experiencing a big influx of them. While some local officials are actively working to attract the Bay Area defectors, others have been less welcoming.
Most people who leave the state move due to family, cost of living and job factors. The Public Policy institute reported many people cite housing costs as their reason for moving, although conservatives are more likely to consider leaving California than liberals.
After falling in 2023 and 2024, home prices are predicted to plateau in 2025 before rising again at just above the rate of inflation. However, due to the spike in home values from 2020 through 2022 due to record-low mortgage rates, median sales prices will take at least until 2027 to regain the highs of mid-2022.
Despite what some may think, 2023 is still a good year to invest in real estate, thanks to advantages like long-term appreciation, steady rental income, and the opportunity to hedge against inflation. Mortgage rates are expected to decline, but the housing market is likely to remain competitive due to low supply.
At the end of 2022, the Florida Business Observer reported that home sales had fallen by nearly 40% in the publication's home state. At a glance, that puts Florida on par with the rapidly cooling real estate market in the country as a whole.
A higher debt-to-income ratio can make a buyer ineligible for the mortgage loan they thought would be approved. The pending sale will go back to active if the loan is rejected due to a buyer's impulse financing. It's also possible that buyers might not have knowledge of liens or judgments filed against them.
Reports on Ohio's housing supply also showed that there were 28,238 homes for sale in this state, which is 12.4% down year over year compared to last year's figures. Additionally, 11,945 homes were listed in March. It's a 20.7% drop compared to reports released in March 2022.
'Homeowners are quiet quitting' as low inventory and high mortgage rates keep a key group out of the housing market. New home listings are down more than 20% from a year ago amid tight inventory and high mortgage rates.
How long a home is listed as pending depends on the buyer and the seller, and there are no hard and fast rules. But on average, homes are listed as pending for 30 – 60 days. If the buyer is paying in cash, they may close on the house much sooner.
The DOM gives you an idea of how other buyers are reacting to the property and whether it's priced high or low. Properties with a high DOM are commonly referred to as stale listings, meaning the house has been languishing on the market for a long time.
The total number of sales for the YTD period in 2023 is 14,907, compared to 18,378 in 2022. The YTD average home price for 2023 is $237,219, which represents a 1.86% increase compared to the same period in 2022 when the average home price was $232,889.
National appreciation values average around 3.5 to 3.8 percent per year. Ownerly explains that the average home appreciation per year is based on local housing market trends as well as the economy, and this makes for a great deal of fluctuation.
Introduction: My name is Clemencia Bogisich Ret, I am a super, outstanding, graceful, friendly, vast, comfortable, agreeable person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
