Leave a Message

Thank you for your message. We will be in touch with you shortly.

May 2023 Newsletter - Bay Area Local Lowdown

May 2023 Newsletter - Bay Area Local Lowdown
Quick Take:
  • Active listings in the North Bay and Silicon Valley continued to rise in April for single-family homes, showing signs that inventory will follow normal seasonal trends, albeit at depressed levels. Inventory in the East Bay and San Francisco failed to grow substantially this year.
  • Home prices were up year to date through April 2023 across the Bay Area regions, showing that inventory and new listings can drive prices higher whether more or fewer are coming to market.
  • Months of Supply Inventory has declined significantly in 2023, and sellers are receiving a greater percentage of asking price, both of which highlight an increasingly competitive environment for buyers.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
 

Home prices are rising rapidly across the Bay Area

 
The Bay Area is in an interesting situation. Prices in areas like the North Bay and Silicon Valley have increased considerably because more listings are coming to market, so buyers are better able to find the right home for them — but, prices are also increasing in the East Bay and San Francisco, because fewer homes are coming to market and the supply is tight. However, it’s clear that the North Bay and Silicon Valley are showing signs of healthier markets, evidenced by an increase in inventory, new listings, sales, and price.
 
Last year, single-family home prices peaked in the beginning of the year as buyers rushed to lock in a lower mortgage rate. The Fed announced rate hikes at the end of 2021 that would swiftly affect rates in 2022. The average 30-year mortgage rate rose 2% in the first four months of 2022, crossing 5% for the first time since 2011. That 2% jump caused the monthly cost of financing to increase 27%, so buyers rightly rushed to the market. As rates rose higher, the market cooled and home prices fell in large part to accommodate the higher cost of a mortgage. Both supply and demand were lower than normal in the second half of 2022.
 
In 2023, demand started to rise again despite elevated mortgage rates, which was met by a high number of new listings in the North Bay and Silicon Valley and fewer new listings in the East Bay and San Francisco. Prices increased much higher in markets that saw more new listings. Across the Bay Area, inventory is still historically low and far more new homes could come to the market.
 

Inventory grew as new listings came to the market 

Overall inventory has increased in the Bay Area, just not as high as we would prefer. The number of home sales is, in part, a function of the number of active listings. The North Bay and Silicon Valley proved this year that more new listings would drive up sales, but overall sales will be significantly lower relative to last year. New listings fell 39% compared to last year, so it’s not surprising that sales declined year over year as well. Even with higher interest rates, which only reduces the number of potential homebuyers, seasonal demand far outpaced available inventory. Over the past three months, sales in the Bay Area jumped 73% while new listings increased 48%. In a typical year, the percentage change in new listings would be the same or exceed the change in sales.
 
Buyer competition is ramping up with fewer listings coming to the market, and sellers are gaining negotiating power. In April 2023, the average seller received 3-5% more of list price as compared to January. Inventory will almost certainly remain historically low for the year and will likely only get more competitive in the summer months.

 

Months of Supply Inventory remains low, indicating a firm sellers’ market

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The Bay Area markets tend to favor sellers, and the drop in MSI this year for both single-family homes and condos further emphasizes sellers’ increasing negotiating power.
 

Local Lowdown Data

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.
 
In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we put together this monthly analysis breaking down specifics about the market.
 
As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Recent Blog Posts

Stay up to date on the latest real estate trends.

Silicon Valley Market Update | October 2024
Bay Area Market Update | October 2024
Real Estate Market Update | October 2024
Scare Away Pests This Halloween: Simple Clean-Up Tips
How to Clean Your Oven from Inside Out
Santa Clara Market Update | September 2024
View All

Let's Talk

You’ve got questions and we can’t wait to answer them.

Contact Us

Follow Us on Instagram

Follow Us on Instagram
Get in Touch
Contact Details

Haylen Group

(408) 400-2988

[email protected]

 

1900 Camden Ave. 
San Jose, CA 95124