Will the Bay Area Housing Inventory Shortage Begin to Ease in 2021?

Over the past couple of years, we’ve heard a lot about the housing market inventory shortage in the San Francisco Bay Area. The message for home buyers has been the same: Good luck finding a house.

And there is definitely some truth to this. Bay Area housing market inventory is currently hovering near record-low levels. It can be hard to find a house to buy in this market, regardless of your budget.

But there might be some relief for home buyers on the horizon, at least from a supply standpoint. A recent report showed a significant increase in the number of newly listed homes for sale. This could be the start of a trend that leads to further housing market inventory increases in the Bay Area, later in 2021 and into 2022.

Below, we will review two reports that offer a ray of light for frustrated home buyers.

Bay Area Housing Market Inventory Increases in 2021

At the end of April, the research team from Realtor.com published a housing market report with data for 50 of the nation’s largest metro areas. Among other things, their report showed how the total number of real estate listings has changed over the past year.

According to that report, the San Francisco Bay Area experienced a significant increase in the number of “new listings” from April 2020 to April 2021. Within the San Francisco-Oakland-Hayward metro area housing market, new listings rose by around +107% year-over-year. That was one of the biggest gains among the nation’s 50 largest metro areas.

Total active real estate listings was down slightly, year-over-year. According to Realtor.com, the total number of active listings within the Bay Area housing market dropped by -6.2% in April 2021 compared to the previous year. But most metro areas across the U.S. experienced a much bigger decline in the number of active listings. Most of the 50 metro areas contained within this report experienced inventory declines of 50% or more.

When you combine this statistic with the 107% increase in new real estate listings mentioned above, you can see a pattern emerging. We could be witnessing the start of a sustained trend that would bring more housing market inventory into the Bay Area, in late 2021 and early 2022.

Real Estate Listings Actually Rose in San Francisco

The Realtor.com report mentioned above pertains to the San Francisco-Oakland-Hayward metropolitan area. (Or what we commonly refer to as the Bay Area.) But when you drill down to the individual county level, San Francisco has actually experienced a significant increase in real estate listings.

According to an April 2021 report from the California Association of Realtors:

“San Francisco (95.3 percent) and Sonoma (8.7 percent) were the only counties in California with an increase in active listings from the prior year.”

More Existing Homes Coming onto the Market

One of the reasons for this rise in new real estate listings within the Bay Area has to do with homeowners and sellers. Throughout much of 2020, a lot of Bay Area homeowners were reluctant to list their homes for sale. That’s only natural, given all of the uncertainty we experienced last year.

But recent surveys and data show that homeowners nationwide are becoming more and more willing to list their homes. People are starting to show a bit more confidence, when it comes to the economy and the housing market. We’ve also seen job growth and vaccine development, all of which makes homeowners more comfortable selling their houses.

An increase in the number of existing homes for sale would be a boon for home buyers, who have been grappling with tight inventory conditions for a long time.

It’s Still a Highly Competitive Market

While Bay Area housing market inventory could go up during the second half of 2021, we will still be in a seller’s market. Home buyers might get some much-needed relief later this year or early 2022, in terms of supply growth. But it’s still a highly competitive real estate scene that tends to favor sellers.

For evidence of this, we can refer back to the California Association of Realtors report mentioned above. According to that report, the median number of “days on market” within the Bay Area declined by -13 days from April 2020 to April 2021.

In other words, the real estate market has accelerated over the past 12 months or so. Homes are selling faster today, as of spring 2021, compared to a year ago.

Key Highlights From This Report

We’ve covered a lot of information, data and trends in this report. Here’s a recap of some of the key points.

• Bay Area housing market inventory has been chronically low for the past two years.
• But we could see more inventory come onto the market later in 2021 and into 2022.
• A recent report showed a significant increase in the number of new listings.
• Homeowners appear more willing to list their homes for sale today than a year ago.
• Despite any inventory gains, the local real estate market remains highly competitive.
• The Bay Area real estate scene still favors sellers over buyers, due to a supply shortage.