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.
SF BAY AREA MARKET SHOWS INCREASING STRENGTH
The housing market in the SF Bay Area strengthened during the second quarter and pricing approached record levels. The relatively strong economy continued to support demand for homes even as prices rose. The regional economy added almost 18,000 jobs year-to-date through mid-2024. Most of these new jobs were in outer SF Bay Area counties, particularly Solano and Sonoma counties. The unemployment rate remained in the low-4% range, which supported wage gains across the SF Bay Area.
The influx of international migrants into the SF Bay Area also backfilled some of the households that left the region in recent years and employers became increasingly adamant about return-to-office policies, both of which bolstered housing demand.
LOW INVENTORY TEMPERS SALES
The inventory of homes available remains a constraint on sales activity as potential buyers continue to face limited options in prime neighborhoods. Listings decreased slightly in June, a period in which they are typically stable yet active listings still stood at 6,400 homes at the end of the second quarter. This was 10% less than the recent peak in mid-2022 but significantly higher than last year. Active listings increased most rapidly in the East Bay counties while inventory in San Francisco tightened by more than 10%, the only county where this was the case.
Highlighting the resilience of local housing demand, sales volume surged during the second quarter and would have increased even further if sufficient inventory were available. More than 11,500 homes were sold in the second quarter, an increase of 64% from the previous quarter. This was the highest quarterly total in nearly two years.
The number of sales increased in every SF Bay Area county this quarter compared to last quarter, led by Marin County.
Neighborhoods near major jobs centers in San Francisco, San Mateo and Santa Clara counties saw the largest increases in home buying. Conversely, sales volume decreased in Solano County.
UPPER PRICE TIERS LEAD THE WAY
Sales within all price categories increased during the second quarter, with the largest increases in upper price tiers. The number of homes sold for $2.5 million or more doubled since last quarter to roughly 2,000 homes, the second-highest quarterly total on record. San Mateo and Santa Clara counties were the primary contributors to this increase, but a 170% increase in of the number of homes sold for $2.5 million or more in Contra Costa County also bolstered this figure. Comparing to a year ago, sales greater than $2.5 million increased by 37%. By comparison, fewer homes sold for $1.25 million or less across the SF Bay Area when compared with last year. In Contra Costa and Sonoma counties where the bulk of these sales occurred, the number of sales below the $1.25 million threshold increased year-over-year.
MOST HOMES SELL OVER ASKING
Further highlighting the strength of demand across the region and price levels, as well as the limited number of homes available, nearly two-thirds of homes sold for more than the list price during the second quarter. This was four percentage points greater than last year, and nearly ten percentage points greater than the recent historical average. Highlighting the strong demand for homes closer to job centers, more than two-thirds of sales closed over the asking price in Alameda, San Francisco, San Mateo, and Santa Clara counties.
The SF Bay Area median existing home price increased to $1.437 million in the second quarter. While prices increased across all SF Bay Area counties, price appreciation was strongest in Contra Costa, Napa, and Santa Cruz counties. Within the second quarter, pricing set new records in San Mateo, Santa Clara and Sonoma counties.
DAYS ON MARKET FIGURE CONTINUES TO FALL
Higher home prices and strong competition did not deter buyers as homes continued to sell quickly. The average number of days homes spent on the market neared three weeks across the SF Bay Area, ten days less than last quarter and a week less than the historical average. Homes spent less time on the market on average compared with last quarter in all SF Bay Area counties.
The number of days on market decreased to less than three weeks in Alameda, Contra Costa, San Mateo and Santa Clara counties. While generally higher than the wider region, homes in Napa, Sonoma and Solano counties also spent less time on the market compared with the recent average.
LOOKING AHEAD
The SF Bay Area housing market closed the spring buying season with strong momentum. Activity should remain elevated through the summer, though pricing may come off record highs in the coming months as seasonal patterns take hold. Overall, robust price growth and resilient buyer demand during the first half of the year put the market on strong footing for the second half of the year. Pent-up demand and strength of the SF Bay Area economy should drive household formation and home buying activity. Recent macroeconomic developments point to the possibility of interest rate relief later this year, which could spur more buyers into the market if mortgage rates decrease.
If you want to buy or sell a home or have questions about the Tiburon real estate market, contact Phillipa Criswell today.
