Will 2024 Be a Good Time to Sell a Home in the Bay Area?

The San Francisco Bay Area real estate market has changed in many ways over the past couple of years, and this has affected buyers and sellers in equal measure.

We’ve covered the real estate market from a buyer’s perspective many times in the past. Today, we examine how recent housing market trends could affect sellers in 2024. The big question here is: Will 2024 be a good time to sell a home in the Bay Area?

Three Possible Upsides to Selling in the Bay Area

Bay Area sellers currently have several things working in their favor, along with a few headwinds that might work against them. Let’s start with the upsides. Here are some of the ways the current housing market could benefit sellers through the rest of this year and into 2024.

1. Many homes are selling for more than the list price.

As of October 2023, roughly half of all homes sold within the San Francisco Bay Area ended up selling for more than the original list price. This is based on MLS data and other sources.

This shows that the real estate market still tends to favor sellers over buyers, as we approach the last two months of 2023. And the main reason for this has to do with inventory levels.

The Bay Area real estate market has experienced a supply shortage for many years, and things have gotten even tighter over the past 12 months. This increases competition among buyers and often creates multiple-offer scenarios that drive up the sale price, which benefits Bay Area sellers.

Barring any unexpected change in the inventory situation, this imbalance will follow us into 2024 as well. As a result, 2024 could be a good time to sell a home in the San Francisco Bay Area, from a negotiating standpoint.

2. Homes are currently selling faster than a year ago.

During the fall of this year, about 40% of homes sold across the San Francisco Bay area were off the market within two weeks. Homes are also selling faster than they were a year ago, on average.

This is another trend that could benefit Bay Area sellers through this year and into 2024. After all, selling a home can be stressful. Anyone who has been through the process in the past knows that the faster you can sell, the better.

Current market conditions could help sellers offload their properties in a fairly short period of time, when compared to other real estate markets across the U.S.

3. Prices have risen and are expected to continue climbing.

When measured over the past 12 to 18 months, home prices within the San Francisco Bay Area have declined. But more recent data suggest that the “bottom” of the market is behind us, with a strong possibility for steady price growth ahead.

According to Zillow, the median home value for the San Francisco-Oakland-Hayward metropolitan area rose for the past five months in a row. The median price point bottomed out at around $1,092,000 back in April, following a post-pandemic price correction that affected the entire country.

As of October 2023, however, the median price was around $1,121,000 and rising.

Zillow recently predicted that prices would rise by around 2.1% from September 2023 to September 2024. So those homeowners who sell their Bay Area homes in 2024 could enjoy higher profits.

Higher Mortgage Rates Present a Downside for Sellers

While the Bay Area real estate market could benefit sellers in 2024, some challenges do remain. And higher mortgage rates are right at the top of that list.

Last week, researchers from Freddie Mac reported that the average rate for a 30-year fixed mortgage loan was 7.63%. Two years ago, that average was closer to 3%.

Because of this, many homeowners in the San Francisco Bay Area currently have significantly lower mortgage rates than today’s average. So if they were to sell and purchase another home, they would likely take on a higher rate.

This trend has made some Bay Area homeowners reluctant to list their properties. Economists often refer to this as the mortgage rate lock-in effect. In essence, homeowners feel “locked in” by their current low rates and don’t want to give them up.

But It Won’t Deter All Homeowners

Of course, this doesn’t apply to all homeowners. Here are some scenarios where a Bay Area seller might be less affected, or less deterred, by the rate lock-in effect:

• The seller is relocating for a job or other reason and does not plan to buy another home immediately. In this case, they wouldn’t be concerned about having to take out a new mortgage at a higher rate.
• The seller has a significant amount of equity in their home. This means that they can afford to make a larger down payment on their next home, which would lower their loan amount and the total interest paid over time.
• The seller is downsizing to a less expensive home. In this case, the seller may be able to afford a higher mortgage rate due to a smaller price tag.
• The seller is in a hot housing market where homes are selling quickly. In this case, the seller may be able to list their home at a high enough price to offset the higher cost of a new mortgage.

Some analysts believe mortgage rates will drop a bit in 2024. In their housing market forecast published last month, the California Association of Realtors (C.A.R.) wrote the following:

“Slower economic growth and cooling inflation will bring down mortgage interest rates in 2024 and create a more favorable market environment to spur California home sales next year.”