January 2021 Newsletter – Housing Market Updates for the Greater Bay Area
The median single-family home price remained at its all-time high for the second month in a row. Year-over-year, single-family home prices increased considerably, up 19% in the Bay Area. Inventory has continued to decline, as fewer homes have come to market and sales have remained high, contributing to the price increases.
In this newsletter, we break down the Bay Area into four regions, as follows:
- North Bay: includes Marin, Napa, Solano, and Sonoma
- East Bay: includes Alameda and Contra Costa
- Silicon Valley: includes San Mateo, Santa Clara, and Santa Cruz
- San Francisco city/county
As you can see in the graphs below, median condo prices were up in every Bay county. San Francisco condos rose month-over-month despite continued oversupply. We will continue watching the San Francisco condo market, but expect prices to decline into the winter months.
Total inventory remained lower than last year with the exception of San Francisco. Like the rest of the country, demand is outpacing new supply, which buoys Greater Bay Area home prices.
Since May, sales have increased and are still near their highest levels this year for single-family homes. Usually, we expect sales to decline in the autumn and winter months, but this year’s summer selling season was delayed and seems to be spilling well into autumn. Single-family home inventory is noticeably lower than last year across regions (except for San Francisco, which has started to trend lower), and is likely to decline as we make our way into the winter months.
In November, sales outpaced new listings in every region. We expect sales to remain higher than usual during the winter months, as fewer listings come to market and the demand in the area remains high.
Days on Market (DOM) declined nearly 50% over the last 12 months. As inventory continues to decline, we expect the DOM to drop further. Listings are likely to have multiple offers and buyers will need to act quickly to secure the home they want. As we will see, the pace of sales affects Months of Supply Inventory (MSI) and 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 of supply), which indicates a balanced market. An MSI lower than three means that buyers dominate the market and there are relatively few sellers (i.e., it is a sellers’ market), while a higher MSI means there are more sellers than buyers (i.e., it is a buyers’ market). The MSI remained below two for single-family homes, which favors sellers. The MSI for condos tends to be more balanced in the Bay Area.
In summary, the high demand in the Greater Bay Area has sustained home prices. Inventory for single-family homes and condos will likely decline further into the new year, and fewer sellers will likely come to market, potentially lifting prices higher. Overall, the housing market has shown its resilience through the pandemic and remains one of the safest asset classes. The data show that housing has remained consistently strong through this period.
The autumn/winter season tends to see a slowdown in activity, although we did see a new trend toward the end of 2020 with higher-than-normal sales.
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.