If you keep up with real estate news and trends, you probably already know that…
For many months now, we’ve been reporting on the tight supply conditions within the San Francisco Bay Area housing market. But a new report issued this month showed that the Bay Area real estate scene is starting to experience some inventory growth.
This is a positive development for frustrated home buyers, especially if supply conditions continue to improve throughout 2022.
Bay Area Housing Market Up by 32%
On June 2, the Realtor.com research team published an updated housing market report with data for the nation’s 50 largest metro areas. At the national level, they reported some much-needed inventory growth within the housing market.
To quote the June 2022 Realtor.com report:
New data suggests the U.S. housing market hit a turning point in its supply struggle in May, as active inventory recorded the first year-over-year increase since June 2019…
Here in the San Francisco metro area, real estate market inventory has increased quite a bit over the past year. According to the above-mentioned report, the total number of active property listings within the San Francisco-Oakland-Hayward metropolitan area rose 32.5% from May 2021 to May 2022.
In addition to a sizable increase in the number of total listings, new real estate listings also increased over the past year. New listings (i.e., homes listed for sale in recent days) increased by more than 2% according to Realtor.com.
But it’s the 32% year-over-year increase in total real estate listings that could make a difference for Bay Area home buyers.
If supply conditions continue to improve throughout 2022, home buyers in the region could have an easier time finding a property to purchase. That would be a huge improvement, when you consider the record-low inventory conditions that have challenged buyers over the past couple of years.
Home Prices Are Rising More Slowly As Well
Home prices within the San Francisco Bay Area housing market have risen substantially over the past couple of years. According to Zillow, the median price point for our region reached $1,489,000 last month. That marked a 20% increase from just a year earlier.
Now, as we approach the summer of 2022, home-price growth in the Bay Area appears to be slowing down a bit.
The real estate market inventory growth mentioned above likely plays a role here, as well. With all other things being equal, a housing market with more inventory tends to experience slower price growth, compared to a market with tighter supply conditions.
According to the June Realtor.com report, the median real estate list price for the Bay Area rose by only 3.5% over the past year or so. That’s a significant slowdown, when compared to the double-digit annual gains recorded earlier this year (and throughout 2021).
The bottom line here is that home prices appear to be cooling off a bit in the San Francisco Bay Area, and housing market inventory growth probably has a lot to do with that trend.
Price Reductions Becoming (Slightly) More Common
Interestingly, we are also starting to see some price reductions among sellers in the Bay Area real estate market. For many months, price reductions were virtually nonexistent due to fierce competition among buyers. But the recent Realtor.com report showed some changes on this front as well.
During the month of May, roughly 9% of Bay Area property listings on the Realtor.com website experienced a price reduction. Last year, that number was closer to zero. If housing market inventory in the area continues to grow through the second half of 2022, we could see even more price reductions among sellers.
This is another sign that the local real estate market might be inching toward something resembling normalcy.
Houses Are Still Selling Quickly In 2022
While the Bay Area real estate scene is starting to become more buyer-friendly, it remains highly competitive.
No matter how you measure it, we are still experiencing a seller’s market across the San Francisco-Oakland-Hayward metropolitan area. And homes are still selling fairly quickly due to steady demand.
In May 2022, for example, homes listed for sale within the Bay Area spent a median of 23 days on the market. That’s six days less than a year ago, which means home-buyer demand remains strong in our region.
Here’s the takeaway from all of these data points: While the local real estate market remains “lopsided” from a supply-and-demand standpoint, things are gradually improving. There were significantly more homes listed for sale last month when compared to a year earlier. And that bodes well for home buyers.