Roundup of Bay Area Housing Market Trends, Based on C.A.R. Report

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December 18, 2020
Mike Trejo
Housing Markets

A recent report from the California Association of Realtors (C.A.R.) offered a roundup of Bay Area housing market trends as we approach 2021.

Here’s the short version: Despite a slight slowdown resulting from the current coronavirus uptick, the Bay Area housing market remains hot due to surprisingly strong demand from buyers. It’s expected to remain competitive in 2021 as well, especially in certain real estate markets.

Bay Area Housing Market Trends: December 2020

On December 17, the California Association of Realtors published a housing market update with trends and statistics from across the state. It also drilled down to the county level, showing home prices and sales trends over the past year or so.

We went through this report and pulled out all of the Bay Area housing market trends. Anyone planning to buy or sell a home in the Bay Area during the first part of 2021 should be up to speed on these housing trends.

Here are some key highlights from the C.A.R. report:

In most major regions of California, home sales rose by double digits in November 2020 (compared to a year earlier). The San Francisco Bay Area posted the biggest year-over-year increase, with a 34.4% increase in home values from November 2019 to November 2020.
Out of the nine counties that make up the Bay Area, Contra Costa County recorded the biggest increase in home sales over the past year or so. Sales in the county rose by nearly 50% during the 12-month reporting period mentioned above. That was nearly double the statewide increase for that same timeframe, and one of the highest among California’s 58 counties.
As for home prices, the Bay Area housing market stood out once again. The C.A.R. report showed that the median home price for the region remained at a record high of $1.1 million in November. That marked an increase of 18.9% from a year earlier, the largest gain of any of California’s major regions.
Home prices in five of the nine Bay Area counties rose by double digits, year over year. Alameda, Contra Costa, Marin, Napa and Sonoma counties. The other four counties posted more modest year-over-year gains, but still climbed.
Of the nine counties that make up the San Francisco Bay Area housing market, Contra Costa County posted the biggest year-over-year price increase. The median home value for Contra Costa rose by a whopping 26.6% from November 2019 to November 2020.
The Bay Area also experienced a decline in housing inventory during this 12-month reporting period. In November of last year, the region’s “unsold inventory index” stood at 1.6 months. In November of 2020, that index dropped slightly to 1.3 months. In other words, it’s still a tight market on the supply side.

These Bay Area housing market trends will carry into 2021 as well. Next year, the real estate market is expected to remain highly active due to strong demand from buyers and low supply.

Strong Demand Among Home Buyers

According to next year’s C.A.R. president Dave Walsh, home-buying demand in the Bay Area and statewide remains high.

“Home-buying interest is at levels that we have not seen for years, setting the stage for a stronger-than-expected comeback that fully recovered all the sales that the market lost in the first half of the year due to the pandemic,” Walsh said.

That might seem counterintuitive, given the ongoing pandemic and economic restrictions we’ve endured. But there’s no denying the trends and statistics. The Bay Area real estate market is still highly competitive, with buyers outmaneuvering each other for limited supply.

Walsh added that housing supply shortages in the area will remain an issue going into 2021, and that “will put upward pressure on prices and dampen affordability…”

We are currently dealing with a significant supply-and-demand imbalance across the Bay Area. There is strong demand, due to record-low mortgage rates and a renewed interest in homeownership. But there’s not enough inventory to satisfy it. This is the central factor driving all Bay Area housing market trends, as we near 2021.

Looking Ahead to 2021: More of the Same?

What will the real estate market look like in 2021? What can home buyers and sellers expect next year? Given that the new year is only weeks away, we can probably expect more of the same in terms of home sales and price growth.

In a previous blog post, we outlined five big predictions for the San Francisco Bay Area housing market in 2021. Here’s a recap of the key points from that article: