It’s Taking Longer to Sell a Home in the Bay Area, in 2022

Over the past few weeks, many reports have shown that the Bay Area real estate market is changing in a way that might actually benefit buyers for a change. And last week, there was more of the same. A new report from Realtor.com revealed that it’s taking longer to sell a home in the Bay Area, on average.

As a result, home buyers might find that they have more negotiating leverage during the latter part of 2022, and also in 2023. So let’s explore these latest trends.

Report: Bay Area Homes Taking Longer to Sell

On August 1st, researchers from Realtor.com published a report that showed an increase in the median number of “days on market” nationwide. The short version is that homes are taking longer to sell now, in late summer 2022, compared to a year ago.

To quote the August 2022 Realtor.com report:

The U.S. housing market offered buyers more breathing room to make decisions in August, with the first year-over-year increase in time on market (+5 days) since June 2020…

The San Francisco Bay Area had an even bigger increase in the number of days on market (or the typical selling time). Within the San Francisco-Oakland-Hayward metropolitan area, the typical number of days on market rose to 35 in August. That was an increase of 7 days compared to a year earlier.

This shows that it’s taking longer to sell a home in the Bay Area, on average. And it goes hand-in-hand with some of the other real estate market trends we’ve been reporting lately. For example, we recently wrote that some sellers have been reducing their prices to attract offers, and even chipping in with closing cost contributions.

Inventory plays a role in all of this. Last month, there were 40% more real estate listings in the Bay Area compared to a year earlier. Overall, supply conditions remain tight from a historical standpoint, but it’s getting better. And sellers have taken note.

According to George Ratiu, manager of economic research, Realtor.com: “as more homeowners have been listing their properties, rising inventory is motivating more of them to resort to price cuts in order to successfully close transactions.”

How Buyers Could Benefit from a Changing Market

The bottom line is that the Bay Area real estate market has cooled down, following a two-year stretch of overheated activity. Buyers who purchase a home during the latter part of 2022, or in 2023, could benefit from these trends.

When it takes longer to sell a home, buyers tend to gain some negotiating leverage. They can add certain contingencies to their offers — like an inspection or appraisal contingency — without getting turned down. They can ask for (and sometimes receive) a concession from the seller to put toward their closing costs.

During the second half of 2020 and throughout 2021, buyers had much less negotiating leverage in the real estate market. They found themselves competing fiercely for limited inventory, waiving their contract contingencies, and often making offers above the asking price.

The takeaway here is that the Bay Area real estate market has changed a lot in a relatively short period of time. The differences between late 2022 and late 2021 are becoming profound, as outlined above. Challenges remain for those who are planning to buy a home in the Bay Area, but the market has clearly shifted in a more friendly direction.

Challenges Remain for House Hunters

This latest report shows that the housing market is being a bit more “gentle” on buyers, compared to the frenzied conditions we’ve seen in the past two years. Even so, house hunters in the Bay Area will still want to bring their ‘A’ game when shopping and negotiating.

One way to increase your chance for home-buying success is to team up with an experienced real estate agent. Agents handle purchase offers and negotiations on a regular basis. They understand the current housing market “dynamic” in the Bay Area, and they know how sellers are treating offers. That’s valuable insight to have.

You’ll also want to give yourself sufficient time for the house-hunting process. The inventory of homes for sale in our region has improved over the past year or so. We’ve gone from roughly a 1-month supply at the end of 2021, up to nearly a 2.5-month supply as of August 2022. That’s a big step in the right direction.

But there’s still a shortage of properties on the market, relative to the number of buyers seeking them. So your house-hunting process might take longer than expected. As the saying goes: hope for the best, but prepare for the worst.