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  • Writer's pictureKevin Peterson

May 31st: Real Estate Trends In The SF Bay Area

Updated: Jun 30


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Executive Summary

Inventory is starting to rebound from our 20 year record lows and interest rates decreased throughout May. Because of the demand, home prices went up again as single family homes sold 108% over asking (109% in April) in less time (16 days versus 17 in April) here in the SF Bay Area. Condos sold in 31 days (33 in April) and over asking by 101%.


Rates fell by around 40 basis points in May, cancelling out the 50 basis points it rose in April. As such, we saw some homes receive as high as 30 offers, while most received around 3-5 offers.


Tech layoffs eased up a bit as their stocks performed well again with 12% up year to date in the markets.


KEY TAKE AWAYS....

  • SALES PRICES? Both condos and single family home sales prices are up, month-over-month.

  • SALES VOLUME? Increasing, as expected, as we head into summer.

  • MORTGAGE RATES? Up and down throughout the month, but netted out 40 basis points below April. Some buyers and sellers benefited from the quick fluctuations.

  • What sold over asking?

    • 75% of single family homes. 36% of single family homes sold over 110%, SAME volume over 110% as April.

    • 74% of townhouses (down 5% from April).

    • 85% of condos (up a whopping 36% from April).



  • What took the longest to sell? San Francisco condos below $800K or between $2.3M to $2.8M took over 56 days to sell.

  • Is now a good time to sell or buy?


Off Market Properties:

  • San Mateo (Beresford) (2300 sqft) - 3 bedrooms, 1.5 bath, 2-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

  • ....

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

 

Table of Contents:


 

How Are The San Francisco Bay Area Real Estate Markets?


Overall, the latest SF Bay Area real estate trends show the sales prices increasing. Inventory levels are still 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. The below graphic shows all pending home types and the price levels that sold the most per county highlighted in yellow.


San Francisco Bay Area May 2023 real estate trends by sales price per square foot, days on market, and number of pending


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 which favor Buyers more.


(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 - 20 Years vs. 10 Years

  • 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 starting to increase above historically low inventory levels and Condos active inventory is starting to build up in supply. This volume could affect the rate of price increases as we head into summer.

  • The graphs below show both a 20 year and 10 year time horizon.



Months of Inventory - 20 Years vs. 10 Years

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.

  • Despite the rising inventory, we are clearly in a seller's market for both single family and condos.




% 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.


The strength of the tech industry is impacting the demand, as we anticipated earlier this year.




Sales Price - 20 Years vs. 10 Years

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.


Month over month, we are seeing sales prices continue to go up due to the above key metrics.



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


 

What's Selling The Most RIGHT Now?


Here are the pending details.


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

 

FED, Mortgage Rates & The Stock Market

  • Inflation and jobs are still not where the FED wants, resulting in the delay of rate cuts. The CME Group now predicts the FED to LOWER interest rates possibly starting in July but more likely in September 2024.

  • Mortgage rates went down by 40 basis points and now sit around 7.07% for a 30 year fixed mortgage.

  • Despite some recent dips in the stock market, the S&P500 and tech stocks are up year over year, enabling tech buyers to withstand interest rate fluctuations.

  • Layoffs spiked briefly in January and April, but has since tapered. Note that much of tech had been overstaffed so companies have been "right sizing". Almost 19 of 20 different sectors reported new jobs. Unemployment ticked up from 4.0% to 4.5% in January data which aligns with our January and February sales.

  • 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% for 10/6 ARMS. Our lenders also may value your RSUs better than others. Reach out and tap into our network.


SF Bay Area Real Estate Trends - Tech Layoffs by employee count and company count since 2022
SF Bay Area Real Estate Trends - Unemployment
 

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 10/6 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.




SF Bay Area real estate trends - days on market versus sale price to list price ratio - single family homesSF Bay Area real estate trends - KPeterson.realty

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