A cooling market means more room to run in 2022
- Home prices increased dramatically in 2021. From January through November, single-family home prices and condos rose (with the exception of North Bay condos) across the Greater Bay Area regions:
- North Bay: +9% for single-family homes; -3% for condos
- East Bay: +16% for single-family homes; +7% for condos
- Silicon Valley: +23% for single-family homes; +11% for condos
- San Francisco: +22% for single-family homes; +20% 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 still have room to run in 2022
After single-family home prices appreciated significantly in the first half of 2021, it makes sense that prices would decline in the third and fourth quarters. North and East Bay prices experienced the most substantial decrease in the second half of the year, although all regions declined. However, as inventory continues to decline, as is typical in the winter season, prices will likely increase.
Condo prices declined less significantly in the second half, and San Francisco condos increased to a record high in November. This is the first new high we’ve seen in over a year in San Francisco. The pandemic hit demand for condos hard, but price and sales indicate that demand is back. Although the price appreciation wasn’t as pronounced for condos as it was for single-family homes, we expect price appreciation to slow as we move through the winter months, a seasonal norm.
Nearing record low inventory once again
Despite the slight increase in single-family home inventory in the first half of 2021, the sustained high demand and lack of new listings in the second half brought single-family home and condo supply to near historic lows. Once again, we are seeing that far more people want to live in the Greater Bay Area than want to leave. Sales in the Bay Area have been incredibly high, especially when accounting for available inventory, again highlighting demand. Sellers can expect multiple offers, and buyers should come with competitive offers.
Months of Supply Inventory further indicates high demand
Homes are still selling extremely quickly. 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 strong 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.