Will 2022 Be a Good Year to Buy a House in the S.F. Bay Area?

This article is the latest in a series that speculates on future housing market conditions within the Bay Area. We’ve been analyzing current market trends and data to form an educated guess as to what things might be like in 2022.

Today, we will address a common question among local home buyers. Will 2022 be a good year to buy a house in the San Francisco Bay Area?

2022: A ‘Good Year’ to Buy a House in the Bay Area?

As a home buyer, only you can determine if it’s a good time to buy a house. The first step is to analyze your current financial situation and long-term plans, to see if homeownership aligns well. After that, you can look outward to analyze current real estate market conditions and trends in the area.

Through a combination of “inward” and “outward” analysis, you can determine if it’s a good time to buy.

So, will 2022 be a good year to buy a home in the Bay Area? There are some possible pros and cons to consider here. (Emphasis on the word “possible,” since nobody can predict future real estate trends with certainty.)

On the upside, buyers who wait until next year to make a purchase in the Bay Area might have more inventory to choose from. Recent reports have shown a slight uptick in the number of homes for sale. Competition could ease a bit next year as well. Both of these trends could potentially benefit those who buy a Bay Area home in 2022.

But there is a major downside to consider as well. If prices continue to climb as they have over the past year, those who buy a house in the Bay Area in 2022 could encounter higher costs.

There’s a downside for every upside, it seems. Isn’t that always the way? The key here is to do what makes the most sense for you, given your financial situation and long-term plans.

Home Buying Still a Smart Investment

When you buy a house in the Bay Area, you’re establishing a home for yourself as well as an investment. And like any investment, you want to know that the house will appreciate in value over time.

Again, no one can predict future real estate trends with complete accuracy. But current conditions suggest that Bay Area home values will continue to climb for the foreseeable future, as they almost always seem to do.

So from an investment standpoint, 2022 could be a good year to buy a house in the Bay Area. (Though the same could be said for 2021.)

Our real estate market is generally considered to be a solid investment. Housing inventory remains tight across the region, while demand is high. Such trends tend to produce steady home-price growth over time. As a result, those who buy a house in 2022 could very well see their equity rise steadily over future years.

Higher Prices and Mortgage Rates Ahead?

In many respects, 2022 could be another good year to buy a home in the San Francisco Bay Area. Inventory growth might give buyers more options next year, compared to 2021. But there are some important cost considerations as well.

As mentioned earlier, home prices in most Bay Area cities continue to climb steadily and significantly. This upward trend is expected to continue for the foreseeable future.

Earlier in July, Zillow reported that the median home value for the San Francisco-Oakland-Hayward metropolitan area had risen by more than 11% over the previous 12 months. They predicted that prices would rise even more than that between now and the summer of 2022. See related chart below.

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A recent report from the California Association of Realtors also showed significant home-price growth within the San Francisco Bay Area real estate market.

To quote their June 2021 report:

Three out of five major regions reached new record high median prices in May, with each region growing more than 20 percent from a year ago. The San Francisco Bay Area had the highest year-over-year gain of 38.9 percent, followed by Southern California (33.1 percent), the Central Coast (32.6 percent), the Central Valley (27.1 percent), and the Far North (22.1 percent).

Note: The above statistics pertain to the median sale price for existing single-family homes. That’s a more specific metric than the overall median house value reported by Zillow, hence the different numbers.

Mortgage rates are also expected to climb gradually between now and 2022. Forecasters from both the Mortgage Bankers Association and Freddie Mac expect average mortgage loan rates to climb later this year and into 2022.

So maybe the question to ask isn’t: “Will 2022 be a good year to buy a house in the Bay Area?” A better question might be: “How might waiting until next year affect my home-buying budget and affordability?”

What Are Your Long-Term Plans?

Unless you plan to “flip” a property, it’s generally best to think of homeownership as a long-term strategy and investment.

Most importantly, you want to make sure that homeownership will improve your quality of life — rather than take away from it. Again, this is something that only you can determine. But it’s an important consideration nonetheless.

Worrying about the short-term ups and downs of the real estate market is enough to drive you crazy. It’s the long game that matters most, from a homeownership perspective. And as we’ve already discussed, Bay Area real estate tends to be a good investment over time.

Disclaimer: This article includes forecasts and speculation relating to the housing market in 2022. Such predictions are the equivalent of an educated guess and should be treated as such.