Bay Area Housing Market Might Start to Rebound in Summer 2023

According to a recent report from the San Francisco Chronicle, the Bay Area real estate market is starting to show signs of a rebound. This comes after a long period of home price declines, a trend that affected many cities across the U.S.

According to the April 2023 Chronicle report, two Bay Area counties and quite a few cities experienced an increase in home prices from February to March.

This is significant because, as you probably know, prices across much of the Bay Area have been dropping over the past six months or so. That brief downturn was part of a “market correction,” following the overheated price growth of 2021 and the first part of 2022.

Bay Area Housing Market Rebounding in 2023?

Last month, the San Francisco Chronicle published an article entitled: “Home prices are rising again in two Bay Area counties. Is it a sign of wider rebound?” According to that report, home prices rose over the past couple of months in two Bay Area counties, and also within two cities outside of those counties.

This is significant for two reasons:

1. For one thing, home values in each of the Bay Area’s nine counties declined for eight months in a row. So this latest report could signal the beginning of a rebound.
2. This report also provides more evidence that the Bay Area real estate market could heat up this summer, with increased competition among home buyers.

To quote the Chronicle’s April 2023 report:

“After eight consecutive months of declining home values in each of the Bay Area’s nine counties, data shows that decreases are beginning to soften, and two counties even saw growth in March — indicating that the region’s real estate market might heat back up through the spring, experts said.”

Home Prices Rise in Sonoma, Napa Counties

Home values in both Sonoma and Napa counties increased between February 28 and March 31 of this year. Sonoma posted a 0.2% increase in prices during that one-month period, while house values in Napa crept upward by 0.1%.

At first glance, those numbers might not seem very significant. But when you consider the fact that prices have been falling for several months in a row, those month-to-month increases become more significant. They could signal a turning point for the broader Bay Area real estate market, going into the summer of 2023.

But the recent home-price turnaround wasn’t limited to wine country. Walnut Creek in Contra Costa County and San Bruno in San Mateo County also experienced a small uptick in home prices during the month of March 2023.

And even in those parts of the Bay Area where prices didn’t rise, they’re still showing more strength than in previous months. For example, San Francisco and Solano Counties only experienced a slight price decline of 0.1% in March of this year.

That’s a significant improvement over San Francisco’s 1.6% average monthly decrease over the previous eight months. Solano County averaged a 0.7% decline per month over that same period. So the mere 0.1% drop in March can be seen as an improvement — and possibly the start of a rebound period.

Inventory has something to do with this. There aren’t as many new homes coming onto the market these days, compared to a year ago. A recent report from Realtor.com, for example, showed that the number of “new listings” within the San Francisco-Oakland metro area declined by 33% over the past year. This makes the market more competitive and puts upward pressure on prices.

A Heads-Up for Home Buyers

Home buyers in the San Francisco Bay Area should pay close attention to these latest real estate market trends. They suggest that prices could begin to rise across much of the region, as we leave spring behind and move into the summer months.

So a sense of urgency might be warranted here, especially for those who are “on the fence” about buying a house in the Bay Area. If home values start to climb again over the coming months, buyers who postpone their purchases until later this year might end up paying more.

According to the San Francisco Chronicle article mentioned above:

“The [rising prices] trend appears likely to continue in the coming months. Experts said that the spring and early summer months of April, May and June are the busiest in terms of home sales, which means that the real estate market might be starting to heat back up.”

The bottom line here is that the Bay Area real estate market is once more in a kind of transitional phase. It shifted into overdrive during COVID, decelerated during 2022, and now appears to be revving up once again.

During 2022, the local housing market slowed down and actually began to favor buyers for a change. Home buyers across the region suddenly had more negotiating leverage than they have had for quite some time. But that could change in the months ahead, if the market begins the heat back up (as it’s expected to do).

Jeff Tucker, the senior economist for Zillow, put it more bluntly:

“If a home shopper goes out there and is expecting the conditions they heard about on the news last winter or if they’re really focused on year-over-year price changes, and they think every seller will be happy to see them,” he said, “they’re in for a rude awakening.”