Will the Bay Area Still Be a Seller’s Real Estate Market in 2022?

As we wrote in a previous blog post, the San Francisco Bay Area is a strong seller’s market in 2021. Low supply (homes for sale) and strong demand has put sellers into the driver seat, in terms of price negotiations.

But what about next year? Will the San Francisco Bay Area still be a real estate seller’s market in 2022, as it is now? Based on current housing conditions, that seems like a likely scenario.

Bay Area Could Still Be a Seller’s Market in 2022

A seller’s market is one that favors sellers over buyers, when it comes to pricing and negotiations. This usually occurs when housing inventory levels within the local area drop significantly. In a seller’s market like the Bay Area, there typically aren’t enough properties listed for sale to meet the demand from buyers.

That’s the situation we are in right now, as of summer 2021.

Looking forward, the Bay Area could still be a real estate seller’s market in 2022. Housing supply has risen a bit, and sales actually dipped slightly last month. But there is still a lopsided supply and demand situation that tends to favor sellers over buyers.

According to a June 2021 report from the California Association of Realtors (CAR) home sales across the San Francisco Bay Area dropped by -5.2% from April to May of this year. That marked a turning point for the local real estate market, since sales were up over previous months. This could be a blip on the radar, or the start of a general cooling trend within the Bay Area housing market. It’s too soon to say.

The June CAR report also showed a slight increase in housing inventory, at least when measured monthly. But inventory is still much lower today than it was a year ago.

If sales continue to slow through the rest of this year and into 2022, home buyers could have an easier time finding a property next year. There might be a bit less competition within the local housing market.

But the Bay Area will likely remain a seller’s market in 2022 (or at least for the foreseeable future). That’s largely because of the inventory shortage mentioned earlier.

The bottom line is that there do appear to be more homes coming onto the market. But it probably won’t be enough to change the current dynamic within the real estate scene. The San Francisco Bay Area will likely remain a seller’s market for some time.

Meanwhile, House Prices Continue to Climb

It’s also common to see steadily rising home prices within a seller’s real estate market. And that’s another trend we’ve seen a lot of over the past year.

According to the real estate data company Zillow, the median home price for the San Francisco-Oakland-Hayward metro area rose by 11.6% over the past year. (This was reported in July 2021.) Looking forward, the company expects to see double-digit price gains through the summer of 2022 as well.

This provides further evidence that the San Francisco Bay Area could still be a seller’s market in 2022. Low supply and strong demand have increased competition within the local real estate scene, while boosting home prices at a steady pace.

Tips for Buying a Home in a Competitive Market

So, what’s a home buyer to do? How can you increase your chance for success when buying a house in a seller’s market like the Bay Area?

For one thing, you might have to be flexible and open-minded when it comes to the features and location you are seeking from home. In a tight real estate market, it’s rare to get everything single thing you have on your wishlist. You have to be willing to compromise and prioritize the features you need from a home.

It’s also wise to make a strong and competitive offer when you find the right house. Many home buyers in the area are currently making offers above the seller’s asking price, due to the high level of competition. Depending on when and where you buy, that might not be necessary. But you can bet there will be other buyers out there, competing with you for the same property.

In such a market, it’s best to make a strong offer based on current conditions and sales trends. This is where your real estate agent will prove useful. An experienced agent can tell you whether your proposed offer will be competitive or not, based on current market trends.

In conclusion, it’s probably safe to say that the San Francisco Bay Area will remain a seller’s market through this year and into 2022.

Things might cool down a bit over the coming months, especially if inventory continues to rise. But we probably won’t see anything resembling a true “buyer’s market” for several years.

With that being said, buyers can still succeed in the current Bay Area real estate market. They just need to be well-prepared and aggressive when it comes to making an offer. Patience goes a long way, as well!