5 Trends Bay Area Home Buyers Should Know for Fall and Winter 2023

Are you thinking about buying a home in the San Francisco Bay Area in the fall or winter of 2023? If so, you’ll want to keep reading below. In this article, we identify five important trends Bay Area home buyers should know about, as we enter the fall of 2023.

Here’s the short version: After declining through the second half of 2022, home prices across the Bay Area now appear to be rising steadily again. Inventory levels have declined over the past few months, erasing the supply gains made last year. Additionally, homes are currently selling faster than a year ago, with fewer price reductions among sellers.

Bay Area Housing Market Update: Fall & Winter 2023

The San Francisco Bay Area real estate market has experienced some significant ups and downs over the past few years. You probably know most of this story already. The market intensified during the pandemic years, cooled down in 2022, and now appears to be heating back up again due to limited inventory.

That’s the high-level view. Now, let’s take a closer look at the Bay Area housing market trends that could affect home buyers into the fall and winter months of 2023.

1. Home prices appear to be rising again

Home prices in the Bay Area skyrocketed during the COVID pandemic, as part of a nationwide surge in home-buying activity. During the summer of last year, the median home value for the San Francisco-Oakland-Hayward metropolitan area hit an all-time high just north of $1.2 million.

After hitting that peak, prices dropped due to a real estate cooling trend brought on by higher mortgage rates. but now, as of early September 2023, the post-pandemic downturn in prices seems to be at an end.

As we wrote in a previous blog post, many real estate markets across California have passed the so-called “bottom” in terms of home prices. Across much of the state, house values are now beginning to rise again, but at a more moderate pace compared to the pandemic price surge.

According to Zillow, the median home value for the San Francisco Bay Area has risen for the past four months in a row. The median price bottomed out at around $1,098,000 back in April and has since risen to around $1,170,000 (as of late August 2023).

That same trend has also been occurring statewide. According to an August 2023 report from the California Association of Realtors:

California home prices continued to stabilize in July as the statewide median price improved on an annual basis for the first time since October 2022, despite interest rates remaining on the rise…

So that’s the first thing to know about buying a home in the Bay Area during the fall or winter of 2023. If prices continue to climb – even at a moderate pace – it could create a newfound sense of urgency among home buyers in the region.

2. Overall housing market inventory has declined

According to a Realtor.com report published yesterday, housing market inventory levels across the Bay Area have declined over the past year. This could create challenges for some home buyers, especially when you consider that the market was already tight a year ago.

By Realtor.com’s estimate, the total number of active real estate listings in the San Francisco-Oakland metro area declined by -31.4% over the past 12 months or so.

(Note: This is based on the property listings found on the Realtor.com website, in particular. But because they have one of the largest property listing websites in America, it’s a pretty good indicator of overall market conditions in the Bay Area.)

The bottom line here is that there are fewer homes for sale today than there were a year ago. So home buyers should be prepared for stiffer competition and multiple-offer scenarios.

3. A slight acceleration in the pace of home sales

According to that August 2023 Realtor.com report mentioned above, the Bay Area real estate market has accelerated a bit over the past year.

As of last month, homes listed for sale in the region spent a median of 33 days on the market before going under contract. That was three days fewer than a year earlier, indicating a slightly faster pace of sales.

This goes hand-in-hand with the inventory-related trends mentioned previously. With all other things being equal, real estate markets tend to accelerate when inventory levels decline. That’s because buyers are competing for fewer properties, which in turn leads to faster home sales.

4. Fewer price reductions made by sellers

By looking at the percentage of price reductions within a real estate market, and how it changes over time, we can get a sense of which way the market leans. In this context, a price reduction occurs when a seller comes onto the market at one price, but eventually lowers it due to a lack of offers.

A higher percentage of price reductions suggests that the market is slowing down, and that sellers are getting fewer offers from buyers. Fewer price reductions, on the other hand, suggest that the market favors sellers more than buyers, typically due to tight inventory conditions.

Within the Bay Area, the August 2023 Realtor.com report showed a decline in price reductions over the past year. In August only about 10.7% of homes listed for sale in the San Francisco-Oakland metro area had a price reduction. That was about seven percentage points lower than a year earlier.

This trend shows that sellers might be more confident with their asking prices these days, possibly due to the inventory declines mentioned above.

What Does All of This Mean for Home Buyers?

There seems to be a shift happening here, as we approach the fall and winter of 2023. After slowing down during 2022, the San Francisco Bay Area real estate market has since accelerated. Tighter inventory conditions have increased the level of competition among buyers.

But despite these changing conditions, Bay Area home buyers can still succeed. Here are some tips and strategies to help you navigate the market and achieve your goal of homeownership:

Make a strong initial offer. If you end up in a situation where there are multiple buyers competing for the same house, you probably won’t have a second chance to present your offer to the seller. So make sure your offer is as strong as possible the first time around.

Expand your search box. Home prices, supply levels, competition, and other real estate market factors can vary from one city to the next – even within the same metro area. This is true for the San Francisco Bay Area as well. You might be able to increase your chance for home-buying success by expanding your search area as much as possible.

Get pre-approved by a lender. Mortgage pre-approval helps you focus your housing search on a specific price range, based on the amount of money you’re able to borrow. This can expedite your search and prevent you from wasting time looking at homes that exceed your budget. A pre-approval letter could also make sellers more inclined to accept your offer.

Ready to get pre-approved? Bridgepoint Funding has been meeting the mortgage needs of Bay Area home buyers for nearly 20 years. We have a strong reputation for helping our clients succeed. Please contact us with any mortgage-related questions you have or to get pre-approved for a home loan!