The housing market cools after a white hot year
- Home prices increased dramatically in 2021. From January through October, home prices rose across the Greater Bay Area regions:
- North Bay: +8% for single-family homes; +7% for condos
- East Bay: +19% for single-family homes; +11% for condos
- Silicon Valley: +19% for single-family homes; +8% for condos
- San Francisco: +19% for single-family homes; +15% for condos
- Despite historically low inventory, the increase in home sales and speed of sales reflect the high demand in the Greater Bay Area.
- Months of Supply Inventory further indicates a sellers’ market.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
Home prices hit a ceiling (mostly)
After single-family home prices appreciated significantly in the first half of the year, it makes sense that prices are declining in the third and fourth quarters. North Bay prices experienced the most substantial decrease in the second half of the year, although all regions declined. That said, the East Bay, Silicon Valley, and San Francisco showed remarkably consistent price appreciation for the year, up 19% across those regions.
Condo prices declined less significantly in the second half, except for the North Bay condos, which rose to a record high. Although the price appreciation wasn’t as pronounced for condos as it was for single-family homes, we expect price appreciation to slow going into the winter months, a seasonal norm.
Home supply peaked at a low level
Despite the increase in single-family home inventory in 2021, we’re still at a historic low. The summer months typically have the highest inventory. In 2021, total inventory didn’t come close to last year’s level and was even further away from pre-pandemic levels. Even though we’re seeing some price correction after the first half of the year, the sustained low inventory will lift prices. Sales in the Greater Bay Area have been incredibly high, again highlighting demand in the area.
Homes are selling fast — really fast
Homes are selling faster than at any point in the past 15 years. The Days on Market reflects the high demand for homes in the Greater Bay Area. Buyers must put in competitive offers above the list price of the home.
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes for sale on the market to sell at the current rate of sales. The average MSI is 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). MSI in the Greater Bay Area is historically low for single-family homes and condos, indicating a sellers’ market.
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.