Bay Area Real Estate Market Facts to Understand Before Selling
The Bay Area real estate market is on fire, with the median price topping $1 million for the fifth month in a row. As competitive buyers returned to fight for properties near tech centers, Bay Area home sales remained on a path of record prices and rising sales. Demand outstripped supply in July 2021, resulting in homes selling at an exceptionally quick rate.
Lack of inventory. Housing market inventory shortage. Low interest rates. Intense demand. Dearth of homes. These are words and expressions one hears every day as one wanders through the Bay Area real estate market. “You have to get really clear on what it is you want out of a home,” says Realtor® Hans Struzyna. “Simply put, it is not the time to just casually shop.”
Lack of Inventory Remains a Concern in Bay Area Real Estate Market
Struzyna is not alone. Realtors® say homes in the Bay Area are going fast, and for a high ticket price, due to low-interest rates, a lack of inventory, and intense demand. In May 2021, for example, a sample Zillow search showed no more than three-dozen homes for sale in Walnut Creek. Indeed, a report released by the National Association of Realtors® in June of this year calls the state of the country’s housing stock “dire,” “with a severe lack of new construction and prolonged underinvestment leading to an acute shortage of available housing” and “an ever-worsening affordability crisis,” it reads.
The gap between the demand and supply of homes is between 5.5 million and 6.8 million units because of a dramatic slowdown in new construction, according to the report.
So what should sellers know? Nail your presentation. “We’re in an Instagram three-second world,” Struzyna said. “You have to grab people’s attention when they scroll through. If you do that and you price it effectively you will get attention and you will get offers.” Strzyna and others argue that if you have the twenty percent for the down payment, this may well be your moment to buy in the Bay Area. If not, their view declares, you may want to wait.
How then do you even purchase a home in the Bay Area right now when houses are selling so fast?
“Do your homework. Be ready. Be very aggressive when it comes to searching, willing to drop what you are doing. Go out and look at the home. Look at the neighborhood. Contact your professional if you are using one,” says broker Mark Ross “Be ready to go at a moment’s notice.”
But in spite of the record low-levels of real estate inventory, there might be some relief for home buyers on the horizon, at least from a supply standpoint. A recent report showed a significant increase in the number of newly listed homes for sale. This could be the start of a trend that leads to further housing market inventory increases in the Bay Area, later in 2021 and into 2022.
At the end of April, the research team from Realtor®.com published a housing market report with data for 50 of the nation’s largest metro areas. Among other things, their report showed how the total number of real estate listings has changed over the past year.
Bay Area Real Estate Market Actually Had An Increase Over Other Markets
According to that report, the San Francisco Bay Area experienced a significant increase in the number of “new listings” from April 2020 to April 2021. Within the San Francisco-Oakland-Hayward metro area housing market, new listings rose by around +107% year-over-year. That was one of the biggest gains among the nation’s 50 largest metro areas.
Total active real estate listings were down slightly, year-over-year. According to Realtor®.com, the total number of active listings within the Bay Area housing market dropped by -6.2% in April 2021 compared to the previous year. But most metro areas across the U.S. experienced a much bigger decline in the number of active listings. Most of the 50 metro areas contained within this report experienced inventory declines of 50% or more.
The pattern should continue . . .
When one combines this statistic with the aforementioned 107% increase in new real estate listings, you can see a pattern emerging. We could be witnessing the start of a sustained trend that would bring more housing market inventory into the Bay Area, in late 2021 and early 2022.
San Francisco Specific Details. . .
The Realtor®.com report mentioned above pertains to the San Francisco-Oakland-Hayward metropolitan area. But when you drill down to the individual county level, San Francisco has actually experienced a significant increase in real estate listings.
According to an April 2021 report from the California Association of Realtors®:
“San Francisco (95.3 percent) and Sonoma (8.7 percent) were the only counties in California with an increase in active listings from the prior year.”
And here is a fun fact for everyone: In August 2021, San Francisco home prices were up 2.2% compared to last year, selling for a median price of $1.5M.
On average, homes in San Francisco sell after 22 days on the market compared to 27 days last year. There were 598 homes sold in August this year, up from 468 last year. Even with new math algorithms, that is an increase.
Final Analysis of the Bay Area Real Estate Market
And while Norada anticipates plenty of competition from buyers, according to current trends, housing prices in the majority of Bay Area communities will continue to climb until 2022. A significant number of purchasers led home prices to increase over the previous year in July.
And a new report from the California Association of Realtors® suggests that the region’s housing market may be leveling off after months of record-breaking prices, bidding wars, and growing fear of unaffordability. The median sales price of this region, which includes all nine counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma, was $1,300,750 ($729 per Sq Ft). According to C.A.R., this is almost a 24% increase over last July.
In the final analysis, the Bay Area market may be dictated by pre-existing economic patterns, but those patterns are just as subject to disruption as is the greater economy surrounding it. Your best bet in considering selling in San Francisco and the Bay is to develop a strong working relationship with your professional Realtor®.