The Bay Area housing market has experienced notable changes in 2023, with several significant trends emerging. In general, the market has seen a decline in April 2023 compared to the previous month and the same period last year, with both existing single-family home sales and median sold prices undergoing significant changes1.
Sales Decline and Price Changes
In April 2023, single-family home sales in California totaled 267,880 on a seasonally adjusted annualized rate, reflecting a 4.7% decrease from March and a substantial 36.1% decrease from April 2022. This decline in sales was observed across all regions, with the San Francisco Bay Area experiencing a decrease of 38.5%1.
The median sold price of existing single-family homes in the San Francisco Bay Area was $1,250,000 in April 2023, showing a slight increase from the previous month’s price of $1,228,000. However, this marked a significant 16.7% decrease compared to April 2022, indicating a challenging market for sellers, as prices have experienced a decline on a year-over-year basis1.
County-specific Sales and Price Trends
Each county within the San Francisco Bay Area has demonstrated its unique sales and price trends. While some counties experienced modest price changes and fluctuations in sales, others saw more significant shifts1. The specific trends for several key counties are as follows:
- Alameda County: The median sold price was $1,230,000 in April 2023, showing a slight month-to-month increase of 0.4% compared to March 2023. However, it experienced a significant year-over-year decrease of 18.0% compared to April 2022. Sales also declined, with a substantial year-over-year decrease of 37.3%1.
- Contra Costa County: The median sold price was $900,000 in April 2023, seeing a positive month-to-month change of 5.6% from March 2023, but a year-over-year decrease of 14.3% compared to April 2022. Sales also declined, with a year-over-year decrease of 35.0%1.
- Marin County: The median sold price was $1,790,000 in April 2023, experiencing a significant month-to-month increase of 11.9% compared to March 2023, but a year-over-year decline of 15.8% compared to April 2022. Sales showed a notable month-to-month increase of 40.0%, but still saw a year-over-year decrease of 30.3%1.
- Napa County: The median sold price was $815,000 in April 2023, witnessing a month-to-month decrease of 8.4% from March 2023, and a year-over-year decline of 16.4% compared to April 2022. Sales also declined, with a substantial year-over-year decrease of 51.2%1.
- San Francisco County: The median sold price was $1,587,500 in April 2023, experiencing a month-to-month decrease of 6.6% compared to March 2023 and a significant year-over-year decline of 22.8% compared to April 2022. However, sales showed a positive month-to-month change of 13.9%, although they still saw a year-over-year decrease of 32.3%
State of the Rental Market
As of June 2023, the median rent for all property types in the Bay Area is $4,295, which shows a month-over-month increase of $405, and a slight year-over-year decrease of $200. The range of rental prices for all bedrooms and property types spans from $2,150 to $10,000+1.
Drilling down to the city level, San Francisco presents a median rent of $3,600 for houses, a minimal $20 increase compared to the previous year. The average rent price for a 3-bedroom apartment in the city is a bit higher, at $4,995 per month23.
For those seeking more affordable options, cities like Richmond, Vallejo, and Antioch offer the lowest monthly rents in the San Francisco Bay Area, with Vallejo at $1,550, Antioch at $1,790, and Richmond at $1,8204.
Factors Affecting the Market
Several factors are influencing the Bay Area real estate market in 2023. Among them are inflation, a decreasing population, rising mortgage rates, and higher rents. Inflation can tighten buyers’ budgets and, in turn, affect the demand on the lower ends of the market.
Meanwhile, the area’s population has declined from 8.45 million in 2020 to 8.28 million in 2021, largely due to pandemic-related job losses, high rents, and migration.
Higher rents, which are 1% to 3% below pre-pandemic rates but expected to increase in 2023, can potentially encourage people to buy a property, but they may also make it more difficult to save for a down payment5.
Impact of the Pandemic
The COVID-19 pandemic has had a significant impact on the Bay Area’s rental market. The closure of offices and the rise of remote work culture led by the tech sector resulted in a mass exodus of companies and residents.
This mass relocation became apparent in San Francisco’s multifamily market, as average asking rents fell by more than 25% from November 2019 to November 2020, the largest drop recorded in any large city across the U.S. The most significant decline in rents was registered in areas where tech workers used to live6.
Signs of Recovery
Nearly two years after the coronavirus outbreak, the Bay Area’s urban centers are beginning to come back to life, as major tech employers, such as Google and Facebook, reignite offices through in-person and hybrid work schedules. This return of office workers to the urban centers is acting as a catalyst for the region’s housing market.
San Francisco’s multifamily vacancy rate stood at 6.3% at the end of the first quarter, the lowest vacancy rate recorded since early 2020. San Jose also recorded strong gains in the first quarter of 2022 as tech workers returned to the city. Every submarket in the metro experienced vacancy contractions over the past four quarters, with every submarket entering April with a vacancy rate below 4%6.
Rent Growth Trends
Despite notable growth across the Bay Area, San Jose and San Francisco are the only markets with rent growth still lagging behind pre-pandemic highs. Rents in San Jose were 6.2% behind pre-COVID-19 rates, while in San Francisco, rates remained 10.2% below pre-pandemic highs. However, both cities posted significant year-over-year growth.
Conclusions
It’s still a tough time for Bay Area housing prices. But the bad news for homeowners is good news for renters, with rent prices still lower than before the pandemic–but inching up!
