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Bay Area Home Sales Declined in 2022, and Buyers Can Benefit

According to a recent report from the California Association of Realtors, the Bay Area real estate market is less competitive in 2022. We knew that already, but this latest report sheds new light on the subject. Specifically, it showed that home sales within the region declined by 26% in September 2022, compared to a year earlier.

This means the San Francisco Bay Area housing market is less competitive for home buyers, compared to the frenzied conditions we saw last year. Buyers can now benefit from reduced competition within the real estate market, while gaining some bargaining power. These conditions will likely extend through the rest of this year and into 2023.

Home Sales Down in the Bay Area

On October 18, the California Association of Realtors (C.A.R.) shared some data relating to home sales across the state. It showed a decline in sales last month, compared to the same month a year ago.

To quote the October 2022 C.A.R. report:

“September’s sales pace was down 2.5 percent on a monthly basis from 313,540 in August and down 30.2 percent from a year ago, when 438,190 homes were sold on an annualized basis.”

While this trend might make things harder for sellers, it could actually benefit Bay Area home buyers. It could give them more bargaining power and take some of the stress out of the house hunting process. Here’s how home buyers in the Bay Area can benefit from a decline in sales and a less competitive market:

1. An easier time finding a house to buy.

As of late 2022, housing market inventory within the San Francisco Bay Area remains low. But it has improved a bit compared to the record-low supply levels of 2021. Additionally, there are fewer home sales these days compared to the past 18 months or so.

These trends could make it easier for Bay Area home buyers to find a house to buy, through the end of 2022 and into 2023. For the past two years or so, we’ve heard story after story of frustrated buyers unable to find a suitable property within budget. But these recent reports suggest that it might be getting easier for Bay Area buyers to locate and purchase a house.

So in this regard, the decline in home sales mentioned above offers a silver lining for house hunters.

2. More negotiating leverage when it comes to price and terms.

With fewer sales and more properties on the market, home buyers in the Bay Area will likely enjoy more negotiating leverage over the coming months. This is another big change compared to where we were just a year ago.

Throughout 2021, home buyers in the San Francisco Bay Area had very little bargaining power. Sellers were receiving multiple offers, giving them the luxury to cherry-pick the best one. Buyers often had to offer more than the asking price, and possibly waive their contract contingencies, just to get their offers accepted.

But a lot has changed since then. In the current Bay Area real estate market, it’s taking longer for sellers to attract offers from buyers. The recent report of declining home sales, along with other trends, could give house hunters more leverage than they’ve had in a while. Buyers could find themselves in a better position to negotiate the price and other terms of the deal.

3. Less pressure and more time to evaluate each house.

Buying a home is a major investment, especially in a pricey real estate market like the Bay Area. Because of this, home buyers want to carefully consider the merits of each individual property, before making an offer.

But that wasn’t always possible in the past. During the second half of 2020, and all throughout 2021, the Bay Area real estate market moved at a breakneck pace. Buyers had to scramble just to find a property and submit their offers. There wasn’t time for careful evaluation, home inspections, price research and the like. It was the real estate equivalent of a foot race.

This is another area where the market is changing. These days, buyers can take a bit more time to evaluate and consider individual properties. We expect these conditions to continue into 2023 as well.

The bottom line to all of this is that the San Francisco Bay Area housing market is starting to favor buyers for a change. It was a strong seller’s market through most of 2020 and 2021. But now, as we approach the end of 2022, things are looking up for house hunters. This latest C.A.R. report offers more evidence to support that notion.

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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