The San Francisco Bay Area real estate market has seen some crazy gyrations over the last few years. Homes are finally becoming more affordable, although the regional cost of living remains expensive 1.
There are some surprising trends at play, too, that we certainly wouldn’t have anticipated even one year ago!
Here are a few of them.
The estimated area population has dropped from 8.45 million in 2020 to 8.28 million in 2021 due to pandemic-related job losses, high rents, and migration. San Francisco County had the largest one-year decrease at 6.3% 1.
That’s a huge deal. For generations, people have been flocking to the Bay Area for its beautiful climate and lucrative tech jobs. The declining population is a big surprise. Remote work is probably partly to blame, as the Bay Area’s highly-paid coders decamp to places like Austin, Texas or cheaper places within the State.
Massive Mortgage Rates
Just a few years ago, mortgage rates for some Bay Area buyers were as low as 1%! People likely thought that would continue indefinitely.
Boy, were they in for a surprise!
30-year mortgage rates are at generational highs, making homeownership more expensive 1. Rates in the Bay Area can now be 7% or higher, which is shocking compared to where they were even as of 2022.
For many buyers who were already stretched thin financially, these higher rates are making owning a home in the Bay Area even less affordable than it was before. That’s especially true for the region’s entrepreneurs and startup founders, who can struggle to get conventional mortgages.
Not All Places Are Impacted the Same
The housing market in the Bay Area experienced a notable decline in April 2023 compared to the previous month and the same period last year. Existing, single-family home sales have decreased, and the median sold prices have also shown significant changes 2.
In April 2023, the median sold price of existing single-family homes in the San Francisco Bay Area was $1,250,000, showing a slight increase from the previous month’s price of $1,228,000. However, it marked a significant 16.7 percent decrease compared to April 2022 2.
When looking at specific counties within the San Francisco Bay Area, it’s evident that each county has its own unique sales and price trends, though. While some counties experienced modest price changes and fluctuations in sales, others saw more significant shifts 2.
For instance, Marin County witnessed a substantial increase in median sold price and sales, while Napa County faced notable declines in both categories 2.
Why? Even within the Bay Area, substantial migration is happening. With remote work, people are moving away from expensive, commuter-friendly places like downtown SF and Silicon Valley, and heading to more remote counties like Marin and parts of Contra Costa.
That means that while home prices are declining overall in the Bay Area, in some places they’re still way up!
In conclusion, the Bay Area real estate market is going through a transitional phase with decreasing population and higher mortgage rates being some of the factors impacting it. It’s a strange time for Bay Area homeowners!