Strong Outlook for Bay Area Home Prices Stretching into 2022

A recent forecast for Bay Area home prices extending into 2022 predicted that house values will continue to climb steadily for the foreseeable future. And that’s not surprising, when you consider the imbalanced supply-and-demand situation across the region.

Here’s a look at current trends within the Bay Area housing market, along with a home-price forecast into early 2022.

Bay Area Home Prices Break Records in 2021

On May 17, the California Association of Realtors (C.A.R.) published a housing market update with data for the entire state as well as individual counties and metros. According to that report, Bay Area home prices have risen substantially over the past year or so. In April 2021, the median sale price for existing single-family homes in the Bay Area rose by 35.6% compared to a year earlier.

As of April, the median home price in the area had risen to $1.3 million. That’s a record.

Here’s a relevant quote from the C.A.R. report:

“New record median prices were set in all major regions in April, with each region growing more than 20 percent from last year. The Central Coast region continued to have the highest year-over-year gain of 40.8 percent, followed by the San Francisco Bay Area (35.6 percent), Southern California (28.6 percent), the Central Valley (25.5 percent) and the Far North (22.8 percent).”

Of the nine counties that make up California’s Bay Area region, Contra Costa County experienced the biggest increase in its median sale price for April. The median selling price for existing single-family homes in Contra Costa County rose by a whopping 39.4% from April 2020 and to April 2021.

A Strong Forecast Extending into 2022

As you can see from these reports, Bay Area home prices have risen significantly in 2021. But what might the future hold? What’s the outlook for Bay Area home prices stretching into 2022?

According to one notable prediction, house values in the area will likely continue to climb through the second half of 2021 and into 2022. And that’s a fairly safe assumption, given the way things are going right now.

In May, the real estate research team from Zillow predicted that home prices within the San Francisco-Oakland-Hayward metropolitan area would rise by double digits over the next year or so. According to a statement on the company’s website:

“San Francisco-Oakland-Hayward Metro home values have gone up 7.4% over the past year and Zillow predicts they will rise 14.1% in the next year.”

This particular forecast was issued in May 2021 and extends into the same month of 2022. Zillow’s forecast and summary relates to the median home value for this region. That’s a slightly different measurement from the median sale price mentioned in the C.A.R. report, hence the difference in numbers.

But no matter how you measure it, Bay Area home prices have risen substantially. They could continue climbing well into 2022, as well.

Additional Insights: Low Inventory and Quick Home Sales

The California Association of Realtors report mentioned above offered some additional insight into the Bay Area real estate market. And it can be summed up with one word. Competitive.

In April 2021, Bay Area homes listed for sale spent a median of just eight days on the market. That’s a very low number compared to the national average, and it indicates a fast-moving and highly competitive real estate scene.

In April of last year, homes listed for sale in the area spent a median of 11 days on market. And even that was fast by national standards. So we have a situation where a fast-moving real estate market has accelerated even more over the past year.

Out of the nine Bay Area counties, Contra Costa and Alameda had the lowest median number of “days on market.” In April, homes listed for sale within those two counties spent a median of just seven days on market. As we’ve written in the past, the East Bay housing market remains hyper-competitive in 2021.

Inventory plays a major role in these trends. Or rather, a lack of inventory.

According to the May 2021 CAR report, the Bay Area real estate market currently has a very low level of supply. The “unsold inventory Index” for our region was down to 1.3 months as of April 2021. A year earlier, that particular index was sitting at 2.9 months. These numbers reinforce something we already knew — housing market inventory is still very low.

Related: When will the supply shortage ease?

The San Francisco ‘Anomaly’

Given these real estate market dynamics, it’s no surprise to see a strong Bay Area home-price forecast into early 2022. Strong demand from buyers, combined with depleted inventory, will continue to boost home values for the foreseeable future.

The one possible exception to this is San Francisco itself. Within the city of San Francisco, housing inventory piled up during the pandemic. Many homeowners moved out of the city for other parts of the region and state. As a result, home prices have leveled off in the city, while they continue to rise elsewhere in the area.

But from a broader regional standpoint, Bay Area house values will likely continue to climb well into 2022.

Disclaimer: This article includes home-price forecasts for the San Francisco Bay Area, with predictions extending into 2022. Those projections were issued by third parties not associated with our company. Price forecasts are the equivalent of an educated guess and are therefore subject to inaccuracy.