Should I Wait for 2022 to Buy a House in the San Francisco Bay Area?

We are more than halfway through 2021, and a lot of Bay Area buyers are now wondering the same thing. Would it be better to buy a house now, or wait until 2022 to buy a home in the San Francisco Bay Area?

While no one can predict future real estate conditions with complete accuracy, we can make a couple of educated guesses based on current trends. Those who wait until 2022 to buy a home in the Bay Area might have more properties to choose from. But there’s a good chance they’ll encounter higher housing costs as well.

Buying a House in the Bay Area in 2022

Should you wait until 2022 to buy a home in the Bay Area?

Ultimately, this is a question only you can answer. Every home buyer must review their financial situation and long-term plans to determine whether it’s a good time to buy a house.

But we can help with the market-related considerations. Here’s a look at current trends within the San Francisco Bay Area housing market, and how they might affect you if you buy a house in 2022.

1. There might be more housing inventory available in 2022.

According to a June 16 report from Zillow, the total for-sale inventory of homes across the U.S. rose by 3.9% from April to May 2021. That was the first monthly increase since July of 2020. Inventory rose in 43 of the largest housing markets across America, including the San Francisco Bay Area.

Similarly, a June 2021 report from the California Association of Realtors (C.A.R.) showed that housing market inventory in the Bay Area rose slightly from April to May of this year.

These trends suggest that if you wait until 2022 to buy a house in the Bay Area, you might have more homes to choose from. This is an important consideration, given the chronic and ongoing shortage of supply within our housing market.

Real estate analysts and economists expect more properties to come onto the market through the rest of this year, partly due to the vaccine rollout and economic reopening.

2. There might be less of a home-buying “frenzy” in 2022.

The coronavirus pandemic accelerated the real estate market in the Bay Area, and also across the country. Record-low mortgage rates, along with a new appreciation for space and home offices, increased sales considerably over the past year or so. Suddenly, everyone wanted to get in on the red-hot real estate market.

All of this increased competition among home buyers. We saw an increase in the number of multiple-offer scenarios, bidding wars, and offers above the asking price.

But the “frenzy” is starting to cool a bit. We’re starting to see some evidence of this already, in the form of sales activity. According to the California Association of Realtors, home sales across the San Francisco Bay Area dropped by -5.2% from April to May of 2021.

According to Dave Walsh, current C.A.R. president:

“The overheated housing market is showing signs of a much-needed cooling and could be a sign of waning buyer interest as the torrid pace of home price increases and buyer fatigue adversely affected demand.”

So if you wait until 2022 to buy a house in the San Francisco Bay Area, you might have less competitive frenzy to deal with. This could make the house-hunting process less stressful and more fruitful.

But again, this is a combination of speculation and data analysis. There’s no doubt that the real estate market has cooled a bit in recent months — and that could continue going forward. But we don’t know for certain what the Bay Area real estate market will be like in 2022.

3. House prices could be considerably higher in 2022.

Above, we’ve outlined some of the potential benefits of buying a house in the Bay Area in 2022, versus now. (Emphasis on the word “potential.”)

But there’s also a significant downside to postponing a home purchase until 2022. House values across the San Francisco Bay Area have risen steadily and sharply over the past year or so. Several forecasters expect them to continue climbing through the end of this year and into 2022.

According to the research team at Zillow, the median home value for the San Francisco-Oakland-Hayward metropolitan area rose by 11.6% over the past year. (This was reported in June 2021.) Looking forward, the company’s analysts expect prices to rise by double digits over the next 12 months as well.

This is arguably the most important consideration for those trying to decide whether to buy a home in the Bay Area now versus 2022. On the upside, you could have more properties to choose from, and possibly a bit less competition from other buyers. But if home prices continue to rise as expected, you could pay a steep price for waiting.

Bottom line: As you can see, this is not an easy question to answer. That’s partly because there is a lot of speculation and forecasting involved, and less certainty. One thing that seems almost certain is that buyers who wait until 2022 to buy a house in the Bay Area will likely pay higher prices. So there could be some urgency on that front.