During June 2021 in the Greater Bay Area, the median single-family home price rose to another all-time high. Year-over-year, Greater Bay Area prices increased considerably, up 35%.
The median prices in all four regions of the Greater Bay Area rose to all-time highs in May. The sustained price appreciation emphasizes the demand in the area.
As you can see in the graphs below, median condo prices were largely positive across regions and counties. Counties in the North Bay and Silicon Valley saw the largest gains.
Single-family home inventory began to climb over the last five months, which is expected in the spring/summer season when more sellers typically come to market. To fully understand the current market, we must look at it in the context of last year. In 2020, fewer people wanted to leave the Greater Bay Area, and more people wanted to move here. This trend drove inventory down to record low levels. New listings, therefore, improve the current market conditions. In June 2021, the total inventory in the Greater Bay Area had fewer homes for sale than it did in June 2020, so the higher number of new listings is a positive development for the housing market. The sustained low inventory will likely cause prices to appreciate throughout 2021.
Both single-family homes and condos are selling quickly. As we will see, the pace of sales has contributed to the low Months of Supply Inventory (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, which indicates a balanced market. An MSI lower than three means that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI means there are more sellers than buyers (meaning it’s a buyers’ market). In May 2021, the MSI remained below two months of supply for single-family homes, indicating that the market favors sellers.
In summary, the high demand and low supply present in the Greater Bay Area have driven home prices up. Inventory will likely remain low this year with the sustained high demand in the area. Overall, the housing market has shown its value 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 expect that the number of new listings will continue to increase in the remaining summer months. The current market conditions, however, can withstand a high number of new listings coming to market, and more sellers may also enter the market to capitalize on the high buyer demand. As we navigate the summer season, we expect the high demand to continue, and new houses on the market to sell 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.