Welcome to our November Market Report for the San Francisco Bay Area, presented in partnership with the Rosen Consulting Group (RCG). For our statistical report of the regional housing market, we take a close look at the ten counties associated with the SF Bay Area. This report focuses primarily on detached single family homes, with added coverage of the significant condominium market in San Francisco. We also examine the regional luxury market. All data is sourced from local Multiple Listing Service (MLS) organizations.
CHARTING A STEADY COURSE
As we approach the end of the year, the housing market remained on course. Home values remained resilient despite media headlines to the contrary. The combination of higher mortgage rates and limited inventory continued to constrain sales, and seasonal trends contributed to a slowdown in recent months. Yet, demand for housing throughout the SF Bay Area persists.
The regional unemployment rate ticked higher, reaching 3.8%, underscoring a relatively strong labor market heading into the holiday hiring season. Income gains will continue to improve affordability for many households, a positive factor for the housing market.
SEASONAL SALES SLOWDOWN
The number of closed sales in November decreased to roughly 2,700 homes, a drop of 17% from the prior month. While a large drop, the slowdown in activity was expected. Though interest rates fell in recent months, some buyers are still acclimating to the new rate environment and the higher monthly costs driven by mortgage rates in the 7% range has deterred some sales.
Potential buyers continued to face a shortage of homes for sale in many prime neighborhoods, which also constrained sales. Finally, seasonal patterns where activity slows towards the end of a year typically causes a 5% to 10% drop in November sales.
Sales activity slowed throughout all price tiers and counties in the SF Bay Area. The drop in sales during November was most pronounced in the $2.5 to $5 million range, where sales declined by 25%. Some of the largest declines in sales occurred in the North Bay, with roughly 30% drops in sales in Marin, Napa and Sonoma counties. The largest decrease in sales from the prior month was in Santa Cruz County. While sales slowed throughout the region, the relatively smaller declines in the inner SF Bay Area continued to highlight the shift by many buyers to neighborhoods closer to work and urban amenities.
As 2023 comes to a close, the housing market should continue on its current trajectory. Seasonal patterns typically dictate a slower December and January before purchase activity begins to rebound. Into early next year, pent-up demand should help sales volume recover as well as support pricing. The recent decrease in mortgage rates should also bring some potential buyers off of the sidelines in the coming months. Overall, while a slower end to the year is expected, prospects for a stronger housing market in 2024 are bright.