Reports Show Bay Area Housing Market Inventory Declining in 2023

Housing market inventory across the San Francisco Bay Area has followed a roller coaster path for the past few years. Supply levels plummeted during the pandemic, due to a sharp increase in home-buying activity. Then, in 2022, inventory began to rise again giving buyers more options.

But now, as of late spring 2023, Bay Area real estate market inventory levels appear to be declining again. This is based on two reports published over the past three weeks, from Realtor.com and RE/MAX.

Bay Area Housing Market Inventory Drops in 2023

The San Francisco Bay Area housing market frequently experiences low inventory levels. This occurs when there aren’t enough homes listed for sale to satisfy the demand from local buyers. And that was certainly the case through the second half of 2020 and all throughout 2021.

In 2022, more and more homes began to come onto the market, easing the supply crunch somewhat. But now the trend appears to be reversing once again.

Two reports published over the past month showed that the number of active real estate listings within the Bay Area have declined since the start of 2023. So let’s examine these reports one at a time, to see what’s happening.

Realtor.com: Active Listings Down by -20%

On June 1, Realtor.com published its latest housing update with data for the nation’s 50 largest metro areas, extending through May 2023. Among other things, this report showed changes in the active number of real estate listings, both nationwide and for all major metros.

According to this report, the total number of active listings within the San Francisco-Oakley-Berkeley metropolitan area declined by -20% over the past year or so.

Our region also experienced a sharp decline in the number of new listings. In this latest report, new listings in the Bay Area real estate market were down by -24%. This means that overall supply levels have declined, along with the pace of new homes coming onto the market.

Both of those trends could make things more challenging for home buyers, underscoring the importance of research and preparation.

The Realtor.com report also revealed that the median list price for Bay Area homes rose 4.8% over the past year, landing at $1,178,000 (as of May 2023).

RE/MAX: New Listings Down by -35%

A similar housing report, published by RE/MAX in May, also showed a decline in supply levels across the Bay Area real estate market. In fact, out of the 49 metropolitan areas analyzed by the researchers, our region had one of the biggest year-over-year inventory declines.

To quote the May 2023 RE/MAX report (with emphasis added):

“Of the 49 metro areas surveyed in April 2023, the number of newly listed homes is up 5.6% compared to March 2023, and down 22.1% compared to April 2022. The markets with the biggest decrease in year-over-year new listings percentage were Seattle, WA at -39.2%, Phoenix, AZ at -36.2%, and San Francisco, CA at -35.5%.”

Related: Bay Area market might rebound in summer

Tips and Strategies for Home Buyers

Buying a home in a tight real estate market with limited inventory can be challenging. But with the right approach and preparation, you can increase your chances of finding a suitable property within budget.

Here are some tips for buying a home in the Bay Area real estate market:

1. Define your priorities.

What do you absolutely need in a home, and what things could you do without? Distinguishing between “must-haves” and “nice-to-haves” can help you make quick decisions when the right property comes along. This kind of forethought can help any home buyer, but especially those within the Bay Area where inventory levels often run low.

2. Get pre-approved for a mortgage.

If you need to use a mortgage loan to facilitate your purchase, you’ll benefit from getting pre-approved before you start house hunting. This financial pre-screening process offers several benefits. It will help you determine a price range for your housing search. It also shows sellers that you’re a serious buyer, which could increase the chance of offer acceptance.

3. Be careful when using contingencies.

Contract contingencies give home buyers a way to back out of a transaction without sacrificing their deposit money. But in a competitive housing market with low inventory (like the Bay Area), too many contingencies could make your offer less appealing to sellers. Keep your contingencies reasonable and be prepared to move forward with the purchase.

4. Work with a local real estate agent.

An experienced real estate agent who specializes in your target area can be invaluable in a tight market. They often have access to off-market listings and can keep you informed about new properties as soon as they become available. And when you consider that the seller typically pays the agent commissions, it becomes even more appealing.

5. Act swiftly.

In a competitive real estate market like ours, home buyers have to be ready to act quickly. To do this, stay updated on new listings and be prepared to schedule showings promptly. If you find a home you like, be prepared to make a strong offer in a timely fashion.

6. Stay patient and persistent.

It can take time to find the right home in a tight market. But don’t get discouraged. Stay persistent, keep an eye out for new listings, and be ready to act when the right opportunity arises. Even if your home search takes longer than expected, the end result is well worth it.