From Golden Gate Sotheby's Bay Area Market Report…
look up
The new year brought renewed optimism to the San Francisco Bay Area housing market. A moderate decline in mortgage rates led to an increase in the number of buyers and sellers entering the housing market in January. Additionally, the San Francisco Bay Area economy expanded, with companies expanding employment at a moderate pace of 1.5% in 2023, creating 64,000 new jobs. Employment trends improved slightly at the end of the year, but weakness persisted in some higher-wage sectors as many technology companies continued to cut jobs. Despite headwinds in the technology sector, the region's housing market remains strong.
More homes on the market
In January 2024, the inventory of homes for sale increased 15% from the seasonal dip in December when holiday spending and travel typically cool the market, to approximately 3,300 homes. Though it is still early in the year, this increase in for-sale inventory marks the largest month-over-month increase since May 2022. At the county level, the number of active listings grew most rapidly in the central San Francisco Bay Area, particularly near the large employment centers in Alameda, San Francisco, and Santa Clara Counties. Despite these recent increases, total for-sale inventory in the San Francisco Bay Area is still 12% lower compared to the same period in 2023, highlighting the continued tight supply situation.
Sales are limited due to inventory
Limited inventory continued to hold back home sales, especially during what is typically a slow time of the year. Across the San Francisco Bay Area, sales fell 24% month-over-month to about 1,800 in January. Sales activity slowed in all San Francisco Bay Area counties from January to December, with the slowest in San Mateo and Alameda counties. But in another sign that activity may pick up this year, sales increased 4% year-over-year across the San Francisco Bay Area. This marks the first year-over-year increase since the second half of 2021. Compared to a year ago, sales increased in five of the 10 San Francisco Bay Area counties, and stayed roughly flat in three more. Sales declined in Alameda and San Mateo counties, but sales in prime locations and areas close to work centers held up.
Luxury home sales on the rise
At the higher price levels, the pace of sales activity picked up. For homes priced above $3.5 million, sales increased 10% month-over-month in January. The increase in activity in this price range indicates that upgraders and all-cash buyers are becoming more active in some areas. We are also seeing a gradual recovery in international buyer activity. The increase in sales at the higher price levels was especially evident in San Mateo and Santa Clara counties. Sales volume in this price range also accelerated in San Francisco and Napa counties, although transactions were more limited. Conversely, sales of homes in the $1.3 to $3.5 million range decreased in January. Sales velocity of homes under $1.3 million also slowed.
Future outlook
The San Francisco Bay Area housing market is on track to have another active year in 2024. While inventory remained tight in January, a more favorable mortgage rate environment and strengthening price growth from last year may be changing the landscape for properties for sale. Notably, mortgage rates are expected to stabilize in the coming months, with potential buyers adjusting their expectations accordingly. On the demand side, a rising stock market and increased commuting pressures for workers may also encourage more buyers to enter the market. While the regional economy is likely to remain stable this year, pent-up housing demand from both local and increasing international buyers in the San Francisco Bay Area should continue to fuel sales activity in the coming months.
Click here to read the full report.