I am pleased to share with you our latest Market Report for the San Francisco Bay Area. The report begins with economic and real estate commentary presented in partnership with the Rosen Consulting Group (RCG). For the statistical report of the regional housing market, we look at the ten counties associated with the SF Bay Area, focusing primarily on detached single-family homes, with added coverage of the significant condominium market in San Francisco. Enjoy the information and insight provided in the report and I look forward to discussing the market with you.
SIGNS OF PROGRESS
The SF Bay Area housing market continued to gain steam even as modest headwinds persisted. Mortgage rates remained high to start 2024 and the pace of economic expansion in the SF Bay Area slowed. Tech-related hiring slowed somewhat, though not in AI-related positions. The SF Bay Area added 18,000 jobs year-to-date, a slower pace than last year. Hiring was stronger in the South Bay and East Bay suburbs, while San Francisco had minor losses. Despite this, the local labor market remained positive and the unemployment rate stayed in the low-4% range.
In the last year, fewer households departed the SF Bay Area, which helped to maintain the large pent-up demand for housing. While new listings increased in April, signs point to continued pricing gains.
MORE HOMES FOR SALE
The tight inventory of the last 18 months eased further in April, giving buyers more options. The inventory available for sale increased by 30% since last month to 5,700 homes, the highest level since late 2022. The large increase brings inventory closer to the historical average, highlighting the limited options buyers faced during the last two years. Listings increased in all counties and most rapidly in Alameda, Contra Costa, San Mateo and Sonoma counties.
SALES ACTIVITY HELPED BY INVENTORY GAINS
The greater number of purchase options brought additional buyers to the market, helping to boost sales activity. There were more than 3,700 home sales across the SF Bay Area in April, nearly 25% higher than in March and the highest level since roughly a year ago. Sales activity was especially robust in the Peninsula and South Bay counties. Home sales in San Francisco reached the highest level in nearly two years. Meanwhile in the East Bay, Contra Costa County sales increased by more than 40% and it overtook Alameda County for the most sales in April.
Higher-priced homes, particularly those in prime neighborhoods in San Francisco, San Mateo and Santa Clara counties, sold particularly well in April. Sales of homes priced above $2.5 million increased by two-thirds since last April. San Francisco, San Mateo and Santa Clara counties accounted for nearly 70% of these upper-price tier sales. Furthermore, the number of homes sold for $5.0 million or more nearly doubled compared with last year in these three counties.
HOMES SELLING QUICKLY
Even with the uptick in new listings, for-sale homes continued to move quickly. The average number of days spent on the market tightened for the third-consecutive month to slightly more than three weeks. This was three days less than in March and five days less than the same time last year. At the county level, average days on market also tightened to less than three weeks in most SF Bay Area counties. The average time on market in Napa County dropped substantially to the lowest point in six months. While homes remained on the market for the least amount of time in Santa Clara County, Alameda County closed the gap quickly in April.
LOOKING AHEAD
The spring buying season got off to a strong start and the market should continue to improve during the next few months. Buyers have adjusted to a higher mortgage rate environment, with many buyers realizing that the potential for lower rates in the future may lead to refinancing opportunities. Continued economic growth will attract more households to the region despite the high cost of living. For many households in the area, increased wages and growing wealth, primarily from stock market gains, are leading to entry into the ownership market or trade-up activity. The recent price gains may also entice current homeowners to list their homes, helping to bring a better balance to the supply side of the equation. Overall, continued demand for homes should persist, providing a boost to sales and pricing.
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