Will it Crash in 2024?

The Bay Area housing market has been cooling off since the spring of last year, with prices trending downwards. However, inventory remains tight, which is keeping prices elevated and benefits sellers.  There are several factors contributing to the cooling Bay Area housing market.

First, rising interest rates are making it more expensive to borrow money to buy a home. Second, the stock market has been volatile in recent months, which has eroded some people’s wealth and made them less likely to buy a home. Third, the Bay Area has experienced a population decline in recent years, which is reducing demand for housing.

Despite the cooling market, home prices in the Bay Area remain very high. The median home price in the San Francisco-Oakland-Hayward MSA is still over $1 million, and homes in some desirable neighborhoods are selling for much more.

Here are some key trends in the Bay Area housing market as of December 2023:

• Home prices: Home prices are trending downwards, but they remain very high. The median home price in the San Francisco-Oakland-Hayward MSA is over $1 million.
• Inventory: Inventory remains tight, which is keeping prices elevated.
• Buyer demand: Buyer demand has weakened in recent months, but it is still relatively strong.
• Interest rates: Interest rates are rising, which is making it more expensive to borrow money to buy a home.

Current Bay Area Housing Market Trends 2023 

How is the Bay Area housing market doing currently?

According to the California Association of Realtors, in November 2023, closed escrow sales of existing, single-family detached homes in California reached a seasonally adjusted annualized rate of 223,940. This figure represents the projected total number of homes sold during the entire year if the November sales pace is maintained, with adjustments made for seasonal factors that typically influence home sales.

Median Sold Prices and Sales Changes in the Bay Area

Zooming in on the specifics of the San Francisco Bay Area, the median sold price for existing single-family homes in November 2023 was $1,250,000. This figure represented a slight month-to-month (MTM) decrease of 1.5%. However, when compared to the same month in the previous year, there was a noteworthy year-over-year (YTY) increase of 4.4%.

The price dynamics are indicative of a resilient market, demonstrating stability and growth over the year. Despite the MTM dip, the YTY increase suggests a positive trajectory in property values, offering potential benefits for homeowners in the long term.

However, the sales data tells a different story. November 2023 witnessed a substantial MTM decrease of 15.4% in the number of closed escrow sales. This decline, when viewed in the context of year-over-year figures, amounted to a 6.2% decrease. The dip in sales activity may be attributed to various factors, including seasonality, economic conditions, or local market dynamics.

The MTM price decrease may be a result of seasonal adjustments or short-term…