February 29th: Real Estate Trends In The SF Bay Area

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Executive Summary

Despite inventory levels rising (active, pending, and sold) and the FED waiting longer to lower rates, SF Bay Area real estate trends show home prices are still going up. Why?

There is still a large volume of buyers from 2023 and 2022 who are jumping back in the market, along with 2024 buyers. Many buyers are looking to find a good deal THEN potentially refinance, once the rates begin to drop. Most believe mortgage rates will lower as inflation gets more under control.

Looking at the data, we are clearly in a strong seller's market. Price per square foot increased month over month at low, middle, and high end of the market and days on market contracted.

This next month we anticipate mortgage rates to stay stable. Demand will remain strong as the tech labor market is stabilizing after 10 years of growing, especially during the COVID pandemic.

KEY TAKE AWAYS....

• SALES VOLUME INCREASING (but still low) - February saw a 3% uptick in sales levels to 1,308 units. This is still off 65% from the 10 year moving average of 2,000 units in a typical February but it is improving.

• 30 year mortgage rates increased month-over-month to 7.14%.

• What sold the most over asking? Single family homes under $800K throughout the Bay sold 3-12% over asking, while on the Peninsula, homes from $1.3M to $2.3M sold 9% over asking.

• What is taking the longest to sell? San Mateo condos and Mid-Peninsula condos are taking between 41-86 days. Despite this, sellers are getting their asking prices.

• What is happening to sales prices? Through the holidays, prices were intermittently above 2019 and 2020 levels. Now, we are clearly above 2020 levels for both single family homes and condos.

• Is now a good time to sell or buy?

  • Sellers still have very little competition and can expect multiple offers for well priced homes. Now is a great time to test the market with an "Off Market" listing before the Spring hits. This strategy keeps your Days On Market (DOM) low while you test what buyers like.

  • Buyers are starting to get back to their home searches after the holidays, heating up competition, but not yet a frenzy.

  • Investors are gobbling up fixer uppers at aggressive sales prices. This will mean the After Repair Values (ARV) will need to be strong in the near term if planning to sell.

  • Check out one of my latest blogs for more prediction on 2024 and 6 key questions to ask.

Off Market Properties:

• San Mateo (Aragon) (2630 sqft) - 3 bedrooms, 2.5 bath, 1-car garage

• San Mateo (4 PLEX) - Two 1 bedrooms, two studios

• Santa Cruz (1622 sqft) - 4 bedrooms, 5 bath, 1-car garage on oversized lot

• Belmont / Redwood Shores (1770 sqft) 3 bedroom, 2 bath townhouse

• ....

• Want the full list? Feel free to reach out directly to me (650.451.8763).

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Table of Contents:

• How Are The SF Bay Area Markets?

• What's Selling The Most RIGHT Now?

• Mortgage Rates & The Stock Market

• How We Help Our Buyers & Sellers

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How Are The SF Bay Area Real Estate Markets?

Overall, the San Francisco Bay Area real estate markets are maintaining sales prices. Inventory levels are low due to seller's "Golden Handcuffs", aka cheaper mortgages they purchased with or refinanced. This is causing a limited amount of inventory, especially at the lower price points where many investors are also competing with first time home buyers.

SF Bay Area Real Estate Trends - Month over Month (MoM)

The charts below are month-by-month heat maps of pricing in the SF Bay Area. They are grouped by county and property type (Condo, Single Family Home, Townhouse). The metrics are Price Per Square Foot, Days On Market, how many sold, and the List To Sales Price Ratio. Green highlighted cells indicate items keeping prices up in comparison to previous month's metrics. Red highlighted cells indicate the opposite, i.e downward pressure on sales price towards a Buyer's Market.

(Click on each county's data to make larger). Make county / location bigger than MoM.

SF Bay Area Real Estate Trends - Year over Year (YoY)

Here's the data to support the year over year price growth (supply versus demand) we are currently experiencing.

Inventory -

• Every year we see active and sold inventory go up then down, a predictable cadence. How high or low is dependent on the next metric, Months of Inventory or the rate of change in inventory being sold.

• We are still hovering on the verge of historically low inventory, yet Condos starting to outpace supply.

Months of Inventory -

This metric tells us how long it would take to sell all the homes on the market if no new listings were added. Five to six months is considered a balanced market, anything less is a seller's market.

• As active inventory goes up and the rate of sales goes down, this key performance indicator (KPI) will continue to tick upward. This metric is telling us that there are less buyers for condos right now.

% Over Asking vs. DOM -

Related to Months of Inventory and the rate of change are these next two KPIs - how much over asking a home sold for and how fast it was sold, i.e. Days On Market.

After the holidays and related to the strength of the local tech stocks, we are seeing a big uptick in demand as we anticipated.

Sales Price -

In general, single family home prices have doubled every 10 years in the SF Bay Area since the 1980s. Condos in general have tripled in value since 2012. Due to the local economy of the SF Bay Area, we anticipate these values to remain high, especially as inventory levels are still near historic lows.

Please reach out to schedule your free consultation to discuss your home price or home search.

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What's Selling The Most RIGHT Now?

Here are the pending details.

SF Bay Area Real Estate Trends - Pending volume by Price Range and county

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FED, Mortgage Rates & The Stock Market

• FED - THE CME Group currently predicts the FED to LOWER interest rates in June, whereas last month, the expectations were for March.

• Mortgage rates increased above the 6s to 7.15% this month due to recent inflation reports coming in higher than expected.

• Stock market in general is up. Slightly mixed results lately from Apple and Google, but the (overall) tech sector has been thriving the last 2 months.

• Layoffs spiked briefly in January but has since tapered down. Note that much of tech had been overstaffed so companies have been "right sizing". Almost 19 of 20 different sectors reported new jobs.

• When will the next Recession occur? Check out my infographics in this blog post for a brief primer. Then we can discuss the rest over our next coffee.

• At KPeterson.realty, we know not every lender is created equal and we work with lenders who's rates today are around 6.25% for 10/1 ARMS. Our lenders also may value your RSUs better than others. Reach out and tap into our network.

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How We Help Our Buyers

• We work with the best lenders who are able to beat the current interest rates (some as low as 6% on a 10/1 ARM).

• Search For Homes by customizing your financial situation before contacting a lender to determine what you can afford.

• Investing or not sure which areas to look in? Explore Markets to generate reports that analyze a city by days on market, average home price, price per square foot, average number of bedrooms / bathrooms / square feet in YOUR price point.

How We Help Our Sellers

• We have a $0 down / 0% renovation program in which you don't need to pay back for one year, giving you flexibility on when to sell. The goal is for every $1 spent on renovations to net (on average) a $2 to $4 return on investment. Every family has a unique real estate scenario based on their needs and circumstances. Feel free to schedule a consultation with me today.

• Click "What's My Home Worth" to find out the rough value of your home and automatically monitor it monthly. It also shows you various options for your equity (refi, home equity line or loan, etc).

• If you'd like a more specific valuation of your home, give me a call.

What's My Home Worth?

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