San Francisco's real estate market remains difficult to navigate. The good news is that we are here to provide you with expert insights for buyers and sellers.
Did you know that the median home price in San Francisco is more than $1.4 million? Housing affordability is at record-low levels. Buyers are dealing with high mortgage rates and low inventory in the Bay Area.
Residential real estate in San Francisco is also impacted by migration in and out of the city. Read on to learn about real estate trends in the San Francisco Bay Area.
Inventory Is Low
Housing inventory is down in the San Francisco Bay Area. There have been ups and downs over the past five years.
Currently, there are just north of 3,000 active listings also including Oakland and Hayward. At its lowest point last January, inventory dropped to 2,030. In stronger markets, it is not uncommon for active listings to exceed 6,000.
Higher Mortgage Rates
Both buyers and sellers alike are dealing with mortgage rates in the 6-7% range. Many existing homeowners have mortgage rates in the 3-4% range. A real estate transaction involving a mortgage would significantly increase their monthly financing expenses.
This is keeping many buyers on the sidelines. It is affecting inventory, as sellers are sitting on their favorable rates.
The good news is that economists expect the U.S. Federal Reserve to slash rates several times in 2025. Inflation appears to be under control and the time is right to start lowering them.
Population Trends
The population exodus out of California is a national news topic. Many people relocated to other states in the wake of the Covid-19 pandemic. They wanted to move to less densely populated areas and ones with fewer Covid-related restrictions.
The exodus appears to be bottoming out in San Francisco. From July 2022 to July 2023, San Francisco's population increased by nearly 5,000 residents.
Home Prices
Perhaps no factor carries as much weight in San Francisco as home prices. Many buyers remain on the sidelines because they cannot afford the down payment or monthly mortgage payments associated with home ownership.
Unfortunately, waiting for home prices to come down is not an effective strategy. If the U.S. Federal Reserve cuts interest rates, many consumers will return to the fold. The pent-up demand will only push home prices even higher.
Real estate investors and residential buyers should consider buying now before prices increase. You can always refinance the rate on your residential or commercial real estate purchase when rates come back down.
Your Guide to San Francisco Real Estate Trends
You now have a general understanding of the factors driving the San Francisco real estate market. Buyers and sellers are considering mortgage rates, inventory, and the population future of California. Home prices are also on their radar.
The good news is that the worst with inflation and population exodus is behind us. PMI San Francisco has the experience to help you navigate this challenging market. If you want to learn more about San Francisco real estate trends, contact us today at PMI San Francisco to speak with an expert.
