Greater Bay Area Housing Market Update 2024
The Big Story Median home price hits record high for the second month Quick Take: Since January 2024, prices have climbed 13.6%, reaching an all-time high in May and another in June 2024. Similarly, the monthly cost of financing has hit a record high, meaning that home affordability is at a record low. In June, the average 30-year mortgage rate declined to 6.86%, dropping 0.17% from the 2024 high reached in April. The Fed may cut rates as early as September, but the magnitude of the cut will be small, likely 0.25% this year. Currently, we expect rates to remain between 6% and 8% for the rest of 2024. Sales fell 0.7% month over month, while inventory rose 6.7%. The combination of rising prices and high interest rates has kept sales historically low. Since January 2023, sales have trended more horizontally, although we expect sales to decline until spring 2025. Note: You can find the charts & graphs for the Big Story at the end of the following section. Surprisingly unsurprising: high rates, high prices, high inventory In June, prices rose for the fifth month in a row, peaking at an all-time high in June 2024. This also marks the 12th consecutive month of year-over-year price growth. According to typical seasonality, the median price peaks in June, so we expect prices to decline starting in July. Over time, prices generally move much higher in the first half of the year than they decline in the second half; you can think of it as two steps forward and one step back, year after year. Last year, for example, prices rose 13.7% from January 2023 to June 2023, then fell 7.7% from June 2024 to January 2024, which was still a year-over-year gain of 4.9%. This year will likely look similar, although we don’t think that prices will decline as much in the second half of 2024 as they did in 2023, especially if the Fed cuts rates in the fall. Even a minor rate cut, like the expected 0.25%, could significantly affect mortgage rates, as it would signal the beginning of more and more cuts. For the moment though, we are starting summer with a combination of elevated mortgage rates and record high prices, which have brought affordability to an all-time low. Low affordability has resulted in fewer sales and growing inventory. Demand is still high relative to supply, even though inventory is building. We know that demand is still high because buyers are still buying at peak prices. From a historical context, we should’ve expected this to happen. We took a look at data from the 1980s to see how much home prices appreciated during a decade-long period of the highest mortgage rates in history. From January 1, 1980, to January 1, 1990, the 30-year mortgage rate ranged from 9.03% to 18.63%, with an average rate of 12.71%. Although home prices didn’t increase dramatically like they have in the recent past, inflation-adjusted home prices still increased about 8% during that decade. Today, with the strong U.S. economy, it was never very likely for home prices to stagnate or decline due to higher mortgage rates. However, high rates have slowed sales volume considerably, which has caused inventory to grow. Overall, inventory growth is great news for the undersupplied U.S. housing market. According to data from the National Association of REALTORS® (NAR), inventory reached its highest level since August 2022. The market is still broadly undersupplied, but the increasing inventory level should cause rising home prices to slow. In the pre-pandemic seasonal trends, sales, new listings, inventory, and price would roughly all rise in the first half of the year and decline in the second half of the year. Sales and new listings have been far lower than usual since mortgage rates started climbing, which is to be expected. Because we don’t anticipate sales to pick up until the spring of 2025, inventory could continue to grow in the second half of the year. Different regions and individual houses vary from the broad national trends, so we’ve included a Local Lowdown below to provide you with in-depth coverage for your area. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home. Big Story Data The Local Lowdown Quick Take: The median single-family home price in Santa Cruz reached a record high in June. As more new listings come to market, we expect prices to continue rising and to reach new highs during the summer months. Active listings, sales, and new listings fell across most of the Bay Area month over month, which is normal this time of year. We expect inventory growth to slow in the second half of the year. Months of Supply Inventory has remained below three months of supply for single-family homes, indicating a sellers’ market. For condos, MSI has risen and now shows more balanced markets in the Bay Area. Note: You can find the charts/graphs for the Local Lowdown at the end of this section. Median single-family home price hit a record high in Santa Cruz In the Greater Bay Area, low inventory and high demand have more than offset the downward price pressure from higher mortgage rates, and prices generally haven’t experienced larger drops due to higher mortgage rates. In May, median single-family home prices reached record highs in San Mateo, Santa Clara, and Sonoma, and prices in the rest of the Bay Area were only slightly below their all-time highs. In June, Santa Cruz was the only county with single-family home prices at peak level. Even Marin and San Francisco prices, which were extremely far below their previous peaks, have risen dramatically in 2024. Condo prices have been less volatile than those of single-family homes, moving more horizontally over the past two years. We expect prices in the Bay Area to remain near all-time highs until the mid-summer, before contracting in the second half of the year. Additionally, inventory is so low that it will create price support as supply declines in the second half of the year. High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates above 6%. Now that rates are near 7% again, sales are slowing during the time of the year when sales tend to be at their highest. This phenomenon isn’t great for the market, but it isn’t terrible, either, as it may allow inventory to build in a massively undersupplied market. Inventory, sales and new listings declined in June Since the start of 2023, single-family home inventory has followed fairly typical seasonal trends, but at significantly depressed levels. Low inventory and fewer new listings have slowed the market considerably. Typically, inventory peaks in July or August and declines through December or January, but the lack of new listings prevented meaningful inventory growth. New listings were exceptionally low, so the little inventory growth in 2023 was driven by softening demand. In December 2023, inventory and sales dropped. However, more new listings have come to the market in 2024, which has driven the significant increase in sales so far this year. With the exception of San Francisco, which fell to record low inventory, the Bay Area markets are looking much healthier from an inventory perspective. The high level of growth seen in inventory and new listings in the first five months of the year are both positive and normal. With the current inventory levels, far more new listings could come to the market, but we aren’t anticipating a higher level of new listings than usual. Months of Supply Inventory indicated a sellers’ market in most of the Bay Area Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The Bay Area markets tend to favor sellers, which is reflected in their low MSIs. San Francisco MSI is notable for its variability over the past year, oscillating from buyers’ to sellers’ markets twice over the course of 12 months. Currently, MSI is below three months of supply (a sellers’ market) in every Bay Area county, except for single-family homes in Napa, which favor buyers, and condos in the North Bay, East Bay, and San Francisco, which are now balanced. Local Lowdown Data
Why Potrero Hill District of San Francisco is One of the Best Neighborhoods to Move to
Potrero Hill, a charming neighborhood nestled in San Francisco, Potrero Hill offers an appealing blend of urban convenience and suburban tranquility. Here are several reasons why Potrero Hill is one of the best neighborhoods to consider moving to: ✔ Stunning Views and Serene Environment ✔ Community Spirit and Events ✔ Access to Parks and Recreation ✔ Vibrant Dining and Shopping Scene ✔ Educational Institutions and Family-Friendly Amenities ✔ Convenient Transportation and Accessibility ✔ Ongoing Development and Growth 1. Stunning Views and Serene Environment Perched atop a hill, Potrero Hill boasts some of the most breathtaking views in San Francisco. From various vantage points, residents can enjoy panoramic vistas of the downtown skyline, the Bay Bridge, and the San Francisco Bay. The neighborhood's elevated position also means it enjoys more sunshine and less fog than other parts of the city, contributing to its serene and pleasant environment. 2. Community Spirit and Events Potrero Hill has a strong sense of community, exemplified by its annual events such as the Potrero Hill Festival and History Night. These events unite neighbors to celebrate the area's rich history and foster a tight-knit community spirit. The neighborhood's residents are known for being friendly and welcoming, making it an ideal place for families and individuals seeking a supportive community atmosphere (KALW). 3. Access to Parks and Recreation The neighborhood is home to several parks and recreational areas, such as McKinley Square and Potrero Hill Recreation Center. These green spaces provide ample opportunities for outdoor activities, including playgrounds for children, sports facilities, and scenic spots for picnics and relaxation. The proximity to these parks makes it easy for residents to lead an active and healthy lifestyle. 4. Vibrant Dining and Shopping Scene Potrero Hill offers a diverse array of dining and shopping options. From cozy cafes and bakeries to gourmet restaurants and trendy boutiques, the neighborhood caters to a wide range of tastes and preferences. The local eateries often feature fresh, locally-sourced ingredients, reflecting the area's commitment to quality and sustainability. 5. Educational Institutions and Family-Friendly Amenities For families, Potrero Hill provides access to reputable schools and child-friendly amenities. Potrero Hill is home to several well-regarded public and private schools, making it a convenient choice for parents seeking quality education for their children. 6. Convenient Transportation and Accessibility Despite its peaceful ambiance, Potrero Hill is well-connected to the rest of San Francisco. The neighborhood's strategic location provides easy access to major highways, public transportation, and downtown San Francisco. This convenience makes commuting to work, school, or other parts of the city a breeze, adding to the neighborhood's attractiveness for professionals and families. 7. Ongoing Development and Growth Potrero Hill continues to experience growth and development, with new residential projects and community improvements enhancing its appeal. For instance, the proposed residential building at 146 Missouri Street exemplifies the ongoing efforts to modernize the neighborhood while maintaining its unique character (San Francisco YIMBY). This balance of progress and tradition makes Potrero Hill an exciting place to live, with opportunities for investment and community involvement. View from Potrero Hill 1908. Photo: https://opensfhistory.org/Display/wnp37.10055.jpg Potrero Hill Event: Potrero Hill STEAM Festival 2024📅 Date: Saturday, July 20🕒 Time: 11:00 AM - 4:00 PM PDT📍 Location: Potrero Hill District, San Francisco Day filled with fun and learning at the Potrero Hill STEAM Festival 2024! This family-friendly event will feature exciting activities in Science, Technology, Engineering, Arts, and Mathematics (STEAM). It's a fantastic opportunity to explore, discover, and get inspired. Highlights: Interactive STEAM exhibits Hands-on workshops Live demonstrations Art installations Food trucks and vendors 🎟️ Get your tickets now: Eventbrite - Potrero Hill STEAM Festival 2024 Viral TikTok Dance Class Series in Potrero HillViral TikTok Dance Class Series in the vibrant Potrero Hill District of San Francisco. Learn the latest dance moves that are trending on TikTok and get a chance to show off your skills in person at a local club!📍 Location: Potrero Hill District, San Francisco📅 Date & Time: Check out the event details on AllEventsConclusionPotrero Hill stands out as one of San Francisco's best neighborhoods to move to, offering a balanced blend of scenic beauty, community spirit, convenient amenities, and ongoing growth. Whether you're seeking a family-friendly environment, vibrant local culture, or simply a place with stunning views and a peaceful atmosphere, Potrero Hill has something to offer everyone.
June 2024 Santa Clara, Santa Cruz, San Mateo Real Estate Analysis: What You Need to Know
The Big Story Record high median home prices once again Quick Take: Since January 2024, prices have climbed 10.6%, reaching an all-time high in May 2024. Similarly, the median list price per square foot hit an all-time high in April and again in May 2024. Affordability for homes has reached a record low. In May, the average 30-year mortgage rate fell to 7.03%, dropping 0.19% from the 2024 high reached in April. The Fed has expressed hesitation around lowering rates due to higher-than-desired inflation. Currently, we expect rates to remain between 6% and 8% for the rest of 2024. Sales fell 1.9% month over month, while inventory rose 9.0%. The combination of rising prices and high interest rates has continued to price more buyers out of the market, slowing sales. Note: You can find the charts & graphs for the Big Story at the end of the following section. Another market slowdown According to the National Association of Realtors® (NAR), the median sales price for existing homes grew 5.6% to $418,900 between May 2023 and the present — the eleventh consecutive month of year-over-year price growth, and the highest median price ever reached. Typically, the median price peaks in June each year, so we will likely see prices climb even higher when the data comes in for this month. In addition to NAR, the Case-Shiller 20-City Composite Home Price Index, which measures the aggregate price level of homes in the largest 20 metropolitan statistical areas, has reached a new high for the eighth month in a row. The combination of elevated mortgage rates and rising prices has brought affordability to an all-time low, which translates to fewer sales and growing inventory. However, at the same time, homes are spending less and less time on the market. Demand is still high relative to supply, even though inventory is building. The buyers that haven’t been priced out of the market are moving quickly on homes that suit them. Despite the high demand and quick market, there are simply fewer buyers in the market. Higher mortgage rates can only lead to fewer market participants. On the bright side, inventory growth is great news for the wildly undersupplied U.S. housing market. According to data from realtor.com, inventory reached its highest level since August 2020. The market is still broadly undersupplied, but the increasing inventory level should cause rising home prices to slow. Decreasing home prices mid-year is also normal on a seasonal basis. In the pre-pandemic seasonal trends, sales, new listings, inventory, and price would roughly all rise in the first half of the year and decline slightly in the second half of the year. Sales and new listings have been far lower than usual since mortgage rates started climbing, which is to be expected. The average 30-year mortgage rate began the year at 6.62% and landed at 7.03% at the end of May, marking the third year mortgage rates have been elevated. At the start of the year, rate expectations were far different from those today. In January, inflation still appeared to be trending lower, and economists were predicting rate cuts as early as March. However, in hindsight, inflation stopped trending lower in June 2023 and has held fairly steady around 3.3% since then. The Fed targets an inflation rate of 2%, so we aren’t expecting rate cuts anytime soon. In fact, the safest bet may be to not expect any rate cuts in 2024. The Fed’s dual mandate aims for stable prices (inflation ~2%) and low unemployment, so it’s all about inflation, especially because the job market is still strong. During the Fed’s May meeting, the Federal Reserve Board unanimously voted to hold policy rates steady for the sixth consecutive time, leaving the federal funds target rate unchanged at 5.25% to 5.50%. Although this letter was written before the June 11-12 Fed meeting, we are confident the Fed will hold rates steady. If there’s a silver lining, it’s that even though rate cuts are extremely unlikely, rate hikes are even less probable. Different regions and individual houses vary from the broad national trends, so we’ve included a Local Lowdown below to provide you with in-depth coverage for your area. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home. Big Story Data The Local Lowdown Quick Take: The median single-family home prices in San Mateo and Santa Clara reached record highs in May. As more new listings come to market, we expect prices to continue rising and to reach new highs during the summer months. Active listings, sales, and new listings rose in Silicon Valley month over month, which are all beneficial for the housing market. We expect inventory to increase into the summer and return to a more normal market after the slowdown experienced over the past year and a half. Months of Supply Inventory indicates a strong sellers’ market in Silicon Valley, although more new listings have alleviated some of the excess demand in the area. Note: You can find the charts/graphs for the Local Lowdown at the end of this section. Single-family home prices in San Mateo and Santa Cruz reached all-time highs in May In Silicon Valley, low inventory and high demand have more than offset the downward price pressure from higher mortgage rates. Home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from May 2022 to January 2023. In 2023, prices trended horizontally, but in 2024, prices have begun to rise meaningfully. Month over month, in May, the median single-family home price rose 12% in San Mateo and 5% in Santa Clara, but fell 5% in Santa Cruz. Conversely, condo prices fell slightly month over month across Silicon Valley. We expect prices in Silicon Valley to remain at or near peak until the early summer. Low, but rising inventory is buoying prices as buyers are better able to find the best match. High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates above 6%. Now that rates are above 7%, sales could slow once again during the time of the year when sales tend to be at their highest. Inventory, sales, and new listings rose for the fourth month in a row Since the start of 2023, single-family home inventory has followed fairly typical seasonal trends, but at significantly depressed levels. Low inventory and fewer new listings have slowed the market considerably. Typically, inventory peaks in July or August and declines through December or January, but the lack of new listings prevented meaningful inventory growth. Last year, new listings and sales peaked in May, while inventory peaked in September. New listings have been exceptionally low, so the little inventory growth in 2023 was driven by softening demand. In December 2023, inventory and sales dropped, but more new listings have come to the market in 2024, which has driven the significant increase in sales so far this year. The market is already looking healthier, and we expect more new listings and sales in the summer months. With the current inventory levels, the number of new listings coming to market is a significant predictor of sales. New listings rose 5% month over month, and sales followed suit, increasing 9%. Year over year, inventory is up 19%, and sales are up 10%. Demand is clearly high in Silicon Valley, and more homes for sale have equated to more homes sold. Months of Supply Inventory indicated a strong sellers’ market in May Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The Silicon Valley market tends to favor sellers, which is reflected in its low MSI. MSI trended higher in the second half of 2023, but never climbed above three months of supply. From January to April 2024, single-family home and condo MSI fell significantly, indicating the housing market strongly favors sellers. Local Lowdown Data
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