January 2024 Market Report with Marin County Insights

January 2024 Market Report with Marin County Insights

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.

 

 

LOOKING UP

The new year brought a renewed sense of optimism for the SF Bay Area housing market. A modest drop in mortgage rates spurred a growing number of buyers and sellers to enter the market in January. Additionally, the SF Bay Area economy expanded, with companies hiring at a modest pace of 1.5% in 2023, which translated to 64,000 new jobs. Though employment trends improved slightly at year-end, many tech firms continued to trim workforces, resulting in ongoing weakness in some higher-wage segments. Despite some headwinds in the tech sector, the regional housing market remained resilient.

 

MORE HOMES ON THE MARKET

The inventory of homes for sale increased by 15% in January 2024, to approximately 3,300, from the seasonal lull in December, when the market traditionally cools amid holiday spending and travel. While still early in the year, this increase in for-sale inventory was the largest month-over-month increase since May 2022.

At the county level, the number of active listings increased most rapidly in the inner SF Bay Area near large job centers, particularly in Alameda, San Francisco and Santa Clara counties. Despite these recent increases, total for-sale inventory in the SF Bay Area was still 12% less than during the same time in 2023, highlighting ongoing tight supply conditions.

 

SALES LIMITED BY INVENTORY 

The limited inventory continued to hold back home sales, especially during what is typically a slower part of the year. Across the SF Bay Area, the number of closed sales in January decreased by 24% from the previous month to roughly 1,800 homes. Sales activity decelerated in all SF Bay Area counties between January and December, with the largest slowdown in San Mateo and Alameda counties.

However, in yet another sign that this year may provide a rebound in activity, sales increased year-over-year by 4% across the SF Bay Area — the first year-over-year increase since late 2021. Compared with one year ago, the number of closed sales increased in five of the ten SF Bay Area counties, and was largely flat in three more. Sales declined in Alameda and San Mateo counties, although sales in prime neighborhoods and closer to job centers held up better.

 

HIGHER-END HOME SALES INCREASE

By price category, the pace of sales activity rebounded in the higher price ranges. For homes priced greater than $3.5 million, sales increased by 10% in January from the previous month. The increase in activity in this range indicates that trade-up buyers and all-cash buyers are becoming more active in some neighborhoods. Also, international buyer activity has slowly begun to recover.

The increase in sales in the higher-priced segment was particularly robust in San Mateo and Santa Clara counties. While transactions were more limited, the number of sales in this price range also accelerated in San Francisco and Napa counties. Conversely, fewer homes sold in the $1.3 to $3.5 million range in January. Sales velocity also decelerated for homes sold for $1.3 million or less.

 

PRICES HIGHER THAN A YEAR AGO

The SF Bay Area median sales price decreased by 6% to start the year, but was still 12% greater than the price from a year ago. However, the recent decline was largely the result of a shift in where sales occurred. Within the inner Bay Area, the median sales price increased at a strong clip in San Mateo and San Francisco counties in January, bolstered by the larger number of sales in higher-priced segments. Meanwhile, the price was stable in Santa Clara County, and decreased slightly in Alameda, Contra Costa and Marin counties. However, prices remained higher than one year ago in all counties.

 

LOOKING AHEAD 

The SF Bay Area housing market is poised for a more active year in 2024. While inventory remained tight in January, the tide may be turning for listings amid a more favorable mortgage rate environment and stronger price appreciation during the last year. Notably, mortgage rates should stabilize in coming months, and potential buyers have adjusted expectations accordingly. On the demand side, the run-up in the stock market as well as the increasing pressure for workers to commute to the office may also spur more buyers to enter the market from the sidelines. While the regional economy may remain stable this year, pent-up housing demand in the SF Bay Area, both from local buyers and an increasing number of international buyers, should continue to bolster sales activity in the coming months.

 

CLICK HERE TO VIEW THE FULL SAN FRANCISCO BAY AREA MARKET REPORT

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