In February 2021, the median single-family home price rose to an all-time high in the Greater Bay Area. Year-over-year, Greater Bay Area prices increased considerably, up 27%.
Prices in every region and county were up in February. The sustained price appreciation emphasizes the demand in the area.
As you can see in the graphs below, median condo prices were mixed across regions and counties. San Francisco experienced the largest month-over-month price increase after a long period of falling prices.
Single-family home inventory remained lower through 2020 relative to 2019 with the exception of San Francisco, which speaks to the desirability of the Bay Area. During the pandemic, fewer people wanted to leave, and more people wanted to move to the area. New listings throughout the year were lower than normal, while sales were much higher. By the end of 2020, sales remained steady as new listings declined. In January 2021, inventory continued to decline in every region of the Greater Bay Area and is now beginning to slightly increase as we move out of the winter months. Sales remain high across markets, and with such a consistent level of demand, prices will likely continue to appreciate throughout 2021.
Single-family home Days on Market (DOM) fell to 10 days in February 2021, which is extremely fast. As we will see, the pace of sales has contributed to the low MSI over the past several months.
We can use MSI as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California (far lower than the national average of six months), which indicates a balanced market. An MSI lower than three means that there are more buyers than sellers on the market (that is, it is a sellers’ market), while a higher MSI means there are more sellers than buyers (that is, it is a buyers’ market). In February 2021, the MSI of 2.1 months of supply for single-family homes indicates that the market favors sellers.
In summary, the high demand and low supply present in the Greater Bay Area have driven home price appreciation. Inventory will likely remain low this year with fewer sellers coming to market, potentially lifting prices higher. Overall, the housing market has shown its resilience through the pandemic and remains one of the most valuable asset classes. The data show that housing has remained consistently strong throughout this period.
We anticipate new listings to slow until sometime in April 2021. As we enter the spring season, we expect demand to remain high and new supply to be absorbed quickly.
As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.
Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones. 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.