Will the Bay Area Become a Buyer’s Market Anytime Soon?

It’s no secret that the San Francisco Bay Area has been a seller’s real estate market for some time now. Tight inventory conditions and steady demand from buyers have intensified competition within the housing market, while boosting home prices at the same time.

What a lot of people are wondering is: Will the San Francisco Bay Area become a buyer’s market anytime soon? In other words, will the local real estate scene ever reach a point where it starts to favor buyers or sellers?

But don’t despair! You can still succeed when buying a home in this market. People do it every day, as evidenced by sales statistics. It just requires patience, planning and persistence.

Is a Bay Area Buyer’s Market on the Horizon?

As mentioned above, the Bay Area is definitely not a buyer’s market in 2021. Current real estate conditions (and especially the tight inventory situation) tend to favor sellers. For now, anyway.

Before moving on, let’s clarify the terminology being used here.

• Buyer’s market: In this real estate scenario, there are more properties listed for sale than there are buyers seeking to make a purchase. In other words, it’s when housing supply exceeds demand. In a classic buyer’s market, sellers tend to be more flexible when it comes to price negotiations. Buyers have the upper hand in this kind of real estate scene.
• Balanced market: In this scenario, there are just enough homes on the market to meet buyer demand. But there is not an excess of inventory. In a balanced or “normal” real estate market, there are no extremes on either the supply or demand side.
• Seller’s market: In this scenario, there aren’t enough homes for sale to satisfy demand from local buyers. In other words, it’s when housing demand exceeds the available supply. In a classic seller’s market, homes tend to sell quickly and often for more than the list price. It’s a hyper-competitive real estate scene. Home prices tend to rise steadily in this kind of scenario.

So which of these labels applies to the San Francisco Bay Area real estate market? In 2021, we are in a pretty strong seller’s market. That’s because the demand for homes exceeds the available supply — and by a pretty wide margin.

But things are beginning to shift a bit, especially on the inventory side of things. While we probably won’t see a Bay Area buyer’s market anytime soon, the real estate scene could become a bit more “buyer-friendly” over the coming months.

Related: Will it still be a seller’s market in 2022?

Inventory Growth Could Tilt the Scale

According to a July 2021 report from the real estate data company Zillow, housing market inventory has increased in most cities across the U.S. This applies to the Bay Area as well.

If this trend continues, we could eventually move toward a more balanced housing market situation. This would be good news for home buyers, since they would have more properties to choose from with less competition. But it probably won’t be enough to create a Bay Area buyer’s market — at least not for a while.

The San Francisco Chronicle spoke to Zillow data analyst and spokesperson Matt Kreamer about Bay Area inventory conditions. He said the company has seen four consecutive month-over-month inventory gains within the San Francisco Bay Area housing market. Kreamer added that this could be a sign the market is “on the road toward rebalancing.”

But again, we have a ways to go before we reach anything resembling a balanced real estate market in the Bay Area. And it will take even longer to enter buyer’s market territory.

Still, there is plenty of good news coming out from a home buyer perspective. The Zillow report mentioned above is one of several that suggests there is some relief on the horizon for house hunters. With more homes coming onto the market, Bay Area buyers could have an easier time finding a property later in 2021 or in 2022.

Need a mortgage loan? Having your financing squared away ahead of time can improve your chance for home-buying success. And we can help. Bridgepoint Funding offers a broad range of mortgage products, including FHA, VA and conventional loans. Please contact us if you need mortgage financing in the Bay Area!