From Golden Gate Sotheby's Bay Area Market Report…
Signs of progress
The San Francisco Bay Area housing market continues to gain momentum despite modest headwinds. Mortgage rates remain high through early 2024, slowing the pace of economic expansion in the San Francisco Bay Area. Technology employment has slowed slightly, but not in AI-related occupations. The San Francisco Bay Area has added 18,000 jobs so far this year, but at a slower pace than last year. Hiring has been strong in the South Bay and East Bay suburbs, but there has been a slight decline in San Francisco. Nevertheless, the local labor market has remained strong, with the unemployment rate remaining in the low 4% range. Few households relocated from the San Francisco Bay Area last year, helping to maintain a large pent-up demand for housing. New listings increased in April, but there are signs that price increases will continue.
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The inventory shortage of the past 18 months further eased in April, giving buyers more options. Available inventory increased 30% from last month to 5,700 homes, the highest level since late 2022. This significant increase brought inventory closer to the historical average and highlighted the limited choices buyers have faced over the past two years. Listings increased in all counties, but the fastest increases occurred in Alameda, Contra Costa, San Mateo and Sonoma counties.
Increased inventory leads to strong sales
The increased number of purchasing options has brought more buyers to the market, stimulating sales activity. More than 3,700 homes sold across the San Francisco Bay Area in April, up nearly 25% from March and the highest level since nearly a year ago. Sales activity was particularly strong in Peninsula and South Bay counties.
San Francisco home sales reached their highest level in nearly two years. Meanwhile, in the East Bay, sales in Contra Costa County increased by more than 40 percent, surpassing Alameda County to have the most sales in April. Sales of higher-priced homes, especially in upscale neighborhoods in San Francisco, San Mateo and Santa Clara counties, were particularly strong in April. Sales of homes priced over $2.5 million are up by two-thirds since last April.
San Francisco, San Mateo and Santa Clara counties accounted for approximately 70% of sales in this higher price range, and these three counties have seen the number of home sales priced above $5 million nearly double compared to last year.
Homes are selling fast
Despite the increase in new listings, homes for sale continue to move quickly. The average number of days on market decreased for the third consecutive month to just over three weeks, three days fewer than in March and five days fewer than the same time last year.
Future outlook
The spring homebuying season is off to a strong start and the market should continue to improve over the coming months. Buyers are adapting to an environment of rising mortgage rates, with many realizing that the possibility of lower interest rates in the future could lead to refinancing opportunities. Continued economic growth will attract more households to the region, despite the high cost of living. For many households in the region, rising wages and increasing wealth, primarily due to a rising stock market, are leading to more entry into the housing market and trade-up activity. Recent price increases may also encourage current homeowners to put their homes up for sale, helping to improve the balance on the supply side of the equation. Overall, continued demand for housing should persist and drive sales and prices.
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