Buying a House in the Bay Area Now Versus 2022: Pros and Cons

The San Francisco Bay Area real estate market remains highly competitive in 2021 due to limited inventory and other factors. As a result of these conditions, some buyers might wonder if it would be better to buy a home in the Bay Area now, or wait until 2022. This article examines the possible pros and cons associated with both options.

Buy a Home in the Bay Area Now, or Wait until 2022?

It can be hard to make an informed decision based on future speculations. After all, we don’t know exactly what the Bay Area real estate market will be like in 2022, compared to now. But recent forecasts and reports do give us some sense of what the market might be like next year.

So, does it make sense to buy a home in the Bay Area now, in 2021? Or would buyers be better off to postpone their purchases until 2022?

Some analysts expect more properties to come onto the market through the second half of 2021 and into early 2022. This could reduce competition among buyers and make it easier to buy a house in the Bay Area. But there are cost considerations as well. Home prices continue to climb in most cities across the region, so there is some urgency in that regard.

Let’s take a closer look at where we are right now, and where we might be headed in the future.

Where We Are Now: Current Market Conditions

Understanding current housing market conditions can help you decide whether it’s better to buy a home in the Bay Area now or wait until 2022. Here are some of the most important factors home buyers should be considering in 2021:

Low inventory, high competition. This is the big story for the San Francisco Bay Area housing market in 2021. Record-low inventory levels have made things challenging for home buyers across the region. It’s still possible to find a home to purchase, but it takes time, patience and persistence. In 2021, Bay Area home buyers are competing fiercely for limited supply. Some are waiving their contract contingencies and offering more than the list price, to edge out competitors.

Few starter homes. As we explained in a previous blog post, inventory is particularly tight at the lower end of the pricing spectrum. In the San Francisco Bay area (and in most of the country), entry-level starter homes are in very short supply. This is an important consideration for those planning to buy a relatively lower-priced in the Bay Area.

Rising prices. According to a May 2021 report from the California Association of Realtors, the median selling price for single-family homes in the Bay Area rose by 35.6% over the past year. Prices dipped slightly in San Francisco, largely due to an increase in available inventory. But for most other cities across the Bay Area, prices continue to climb at a steady pace. This is a big consideration for those thinking of buying in 2022 versus 2021.

What Things Might Be like in 2022

Real estate forecasts can be difficult in the best of times. When you add in the uncertainties related to the coronavirus pandemic, vaccine rollout, and economic reopening, the future can be even hazier.

But that doesn’t stop economists and housing analysts from making predictions about the future. Here’s a look at what the Bay Area might be like in 2022, and how it relates to buying a home.

More inventory coming? Recent surveys suggest that more and more homeowners might be willing to sell their homes later this year. Additionally, the C.A.R. report mentioned above showed a 7.4% increase in the number of homes for sale from March to April of this year. And a recent report from Zillow said: “signs are emerging that the nation’s ongoing inventory squeeze may be starting to ease somewhat.” In 2022, Bay Area home buyers could have more properties to choose from, compared to now.

A market cooldown? If more homes come onto the market over the coming months, it could have a general cooling effect on the San Francisco Bay Area housing market. Rising home prices could contribute to this effect, by gradually reducing buyer demand. The consensus among many industry analysts and forecasters is that the real estate market will experience a bit of a cooldown in 2022. If that happens, those who buy a house in the Bay Area in 2022 might have a little less competition to contend with.

Higher prices likely. As we mentioned earlier, home prices in most California cities are still climbing at a steady pace. Here in the Bay Area region, the median selling price rose by double digits over the past year or so. This trend could continue for the foreseeable future. The bottom line is that housing costs continue to rise. And that’s an important consideration for home buyers who are on the fence. Waiting until later could cost you — literally.

So, is it better to buy a home in the Bay Area now, or wait until 2022? The answer to this question will vary from one person to the next, based on a number of factors. Hopefully this article will help you make an informed decision, one way or the other.