Should You Sell Your SF Bay Area Home in 2024? 6 Critical Questions Answered.

With interest rates coming down, and inventory levels bouncing back from 20 year lows, is now a good time to sell?

If you are considering selling this year, here are 6 frequently asked questions we are getting right now which can help your decision making process.

1. What's Happening to Interest Rates in 2024?

2. What’s Happening in the Markets Today?

3. What is Selling Right Now?

4. How are Sellers Preparing Their Properties for Sale?

5. What is the Ideal Timeline to Selling Your SF Bay Area Home in 2024?

6. When Should You Start to Talk to a Realtor?

KEY TAKEAWAYS:

• Rates are expected to drop a minimum of 3x in 2024.

• Due to the historic low inventory of 2023, 1 in every 3 buyers are still shopping for a home.

• Inventory in the last 6 months have been mostly in original condition. So homes with strategic and aesthetically appealing hitting the market now may have an advantage to excite buyers.

• There has been a 100% increase in listings with due dates set in last 30 days.

What’s Happening to Interest Rates in 2024?

In December 2023, the FED set the table for at least three rate cuts (e.g. 75 bps) in 2024 due to inflation rates easing and the economy holding steady.  That’s less than what the market had been pricing, but more aggressive than what officials had previously indicated. The committee’s “dot plot” of individual members’ expectations indicates another four cuts in 2025, or a full percentage point. 

This is where mortgage rates currently stand based on this data.

What’s Happening in the SF Bay Area Real Estate Markets Today?

Many are anticipating with the Spring markets, real estate in the SF Bay Area will be a hot seller's market again. Besides interest rates coming down, what else could impact the SF Bay Area real estate prices?

Pent up demand

As experienced realtors, we’ve come to realize that when people want to buy or sell a home, they don’t change their minds as much as they change their timeline. So when we take a step back and look at how many homes have sold on average across the SF Bay Area (San Francisco, San Mateo, Santa Clara, Alameda, Contra Costa) over the last 10 years, we see an average of 41,600 homes sold every year. 

• In 2022 we saw only 34,400 homes sold or 18% below the average.

• In 2023, we saw only 26,580. That means there is approximately 36% of buyers from last year (+ some from 2022 and earlier) wanting to buy this year on top of the buyers who will be entering the market in 2024. 

Limited inventory

As can be seen in the above graph, less sold inventory is resulting from less active inventory (red area below). Will there be more inventory?

With the reduction in mortgage rates, we anticipate more sellers hitting the market come spring and summer.

The result of pent up demand and limited inventory - As of this writing, the majority of homes that closed, i.e. sold in January went into contract in December. 

The number of listings that now have offer dates set:

1. Last 30 days = 293

2. 31 to 60 days ago = 148

What is Selling Right Now?

In the SF Bay Area, how much does it cost to buy a 3+ bedroom / 2+ bathroom with 1,600 sqft to 2,400 sqft home?

The average selling prices right now are between $1.2M and $1.8M

On the mid-peninsula (from Burlingame to Menlo Park), for a home that size, the average selling price in 2023 was between $2M and $2.6M.

How are Sellers Preparing Their Properties for Sale?

There are three levels by which a house typically hits the market.

1. Dated (i.e. early 2000, 1990's, or earlier decor) and sold-as - This is typically Trust Sales of people who are older and have either passed or need to move closer to family or elder care. This has been the majority of homes that hit the market in the last 6 months due to the high interest rate environment. Those that go at or above asking are typically staged.

2. Slightly dated to updated- Small repairs are made along with deep cleanings and staging. As we move into a lower interest rate environment, making strategic updates to your home can enable higher sale prices for buyers' convenience. Buyers will be able to afford more, more excited to see better inventory and more willing to bid more.

3. Recently renovated - Those going for the highest prices right now are updated kitchens and baths with nice flooring and paint throughout.  (At KPeterson.realty, we can help cover these costs until closing so you don’t lose focus on what is important to you.)

What is the Ideal Timeline to Selling Your SF Bay Area Home in 2024?

With inventory levels still at 20 year lows, we think hitting the market anytime between now and summer will be a great time. Once September and October hit, the 2024 election cycle will be putting lots of fear, uncertainty, and doubt into the markets and difficult to predict what will happen then.

How fast can you hit the market? 

Homes can go on the market within 24 hours of signing a listing agreement. However, to get your house properly prepared with a deep clean, staging, photography, videos, and a proper marketing strategy, we recommend 1-4 weeks at minimum.

When Should You Start to Talk to a Realtor?

It depends on your home's condition and your goals. If your home needs refreshing (i.e. new kitchen or bath) and you’d like to get a 200-400% return on your investment for a cosmetic rehab, we recommend talking with us today. We can give you cost estimates and timelines from our vetted contractors who will bid competitively on your project(s). Our goal will be to hit the Spring market.

Whether you are buying or selling (or both), I’d highly recommend reading this short article I recently wrote called “The Ultimate Guide on How to Win Bidding Wars in The SF Bay Area”. I’d be happy to send you a copy if you are interested.