Bay Area Housing Market Forecast 2024

The Bay Area housing market is distinguished by its competitiveness in each city. With some markets moving quicker than others, it remains a topic of speculation. Insightful analysis can bring clarity to this uncertainty for every seller, investor, and homeowner who is doubting whether to sell or not.

In this comprehensive forecast, we will delve into the anticipated trends and emerging data that are shaping the future of the California housing market, recognized for its technology-driven growth, cultural richness, and distinctive geography.

Current Bay Area Housing Market Trends in 2023

Speaking in general terms, the Bay Area housing market is shifting from a seller’s, competitive market towards a more balanced one. Key trends as of the last trimester of 2023 include:

    • Home Prices: The median home price in San Francisco, Oakland and Hayward remains over $1 million, despite the downward trend of October, when there was a 4.7% decrease in median home prices in this area.
    • Inventory Levels: There has been tight inventory, contributing to high prices.
    • Buyer Demand: The market has shown weakening in buyer demand in recent months, but it remains relatively strong.
    • Interest Rates: Rising interest rates are making home purchases more expensive.
  • Average Days on the Market: 17 days.
  • Median Sale Price: $1,090,000
  • Sales Price to List Ratio: 100.01% as of November 2023, indicating that homes are selling for just slightly above their listed price.
  • Closed Escrow Sales: Month-to-month decrease of 15.4%, showing a 6.2% decrease year-to-year.

Bay Area Housing Market Forecast for 2024

The 2024 Market Forecast

The 2024 outlook for the Bay Area real estate scene, as forecasted by Zillow, anticipates a significant -4.8% change. This housing market projection is key information for both buyers and sellers indicating a decline in home values, meaning a shift towards a potentially more buyer-friendly market. Sellers may need to adjust their expectations in response to this changing dynamics. 

Economic and Interest Rate Impact

Stakeholders in the Bay Area housing market are eagerly anticipating a decline in interest rates. Hopefully for them, this is expected to occur in 2024 as inflation cools and market growth slows. Projections suggest that it is set for a recovery with mortgage rates forecasted to decrease. This decline in mortgage interest rates, expected to average around 6% in 2024, down from the projected 6.7% in 2023, will play a crucial role in shaping the housing market dynamics, making borrowing more affordable and attractive, particularly for first-time homebuyers. 

https://www.noradarealestate.com/blog/will-the-california-housing-market-crash-in-2024/

https://www.car.org/en/aboutus/mediacenter/newsreleases/2023-News-Releases/2024housingforecast

Insurance changes

Insurance changes are predicted to play a complex role in the Bay Area housing market for 2024, with potential impacts on both affordability and demand. Here’s a breakdown of the key points:

  • Rising wildfire premiums: Increased wildfire risk, particularly in rural areas and fire-prone zones, could lead to significant premium hikes for homeowners’ insurance. 
  • Flood insurance changes: The National Flood Insurance Program (NFIP) is undergoing potential reforms, which could raise rates for high-risk coastal areas in the Bay Area. 
  • Insurance guidelines: Certain updated insurance policies have started excluding many homes; for instance, refusing coverage to houses with knob and tube wiring, commonly found in homes built before 1940.

https://www.sfgate.com/realestate/article/bay-area-housing-market-2024-predictions-18523070.php

https://www.insurance.ca.gov/

https://www.fema.gov/node/404917

Financing options

While interest rates increase and qualification criteria might tighten, uncommon financing options may become more popular amongst potential buyers in the Bay Area housing market. Here are some alternatives:

  • Government-backed loans.
  • Adjustable-rate mortgages (ARMs).
  • Seller concessions.
  • Bridge loans.

Inventory and Listings

The Bay Area housing market may witness a subtle shift in 2024. Data suggests a potential 14% increase in available homes compared to 2023, translating to over 7,500 additional properties listed for sale. 

Sale Metrics

Median Sale to List Ratio: Potential dip to 98-100% in some submarkets, particularly those that experienced larger price drops in 2023.

Median Sale Price: Possible stabilization or slight decrease (1-3%) in areas like San Francisco, with variations across submarkets depending on demand and inventory levels.

Median List Price: Relatively stable, possibly with minor adjustments (0-2%) depending on property types and submarket dynamics.

https://www.sfgate.com/realestate/article/bay-area-housing-market-2024-predictions-18523070.php

Sales Trends

Percentage of Sales Over List Price

A decrease of 45-55% compared to 2023’s highs is expected, driven by several factors:

  • Stabilizing mortgage rates.
  • Increased inventory.
  • Submarket variations.

Percent of Sales Under List Price:

Probably there will be a modest increase by 18-25% compared to 2023, nuanced by various factors:

  • Price sensitivity.
  • Negotiation leverage.
  • Market uncertainty.

Are Home Prices Dropping?

Recent trends and forecasts show a downward shift in the Bay Area housing market, with a 1.2% decrease in home values over the past year. That data combined with Zillow’s one-year market forecast predicting a -4.8% decrease, projects a potential continuation of this downward trend. 

Is it a Good Time to Sell a House in the Bay Area?

Deciding whether 2024 is a good time to sell a house in the Bay Area depends on personal financial goals, market trends, and the unique characteristics of your property. Here are some key considerations:

  • Market Conditions. Prices are still high despite the decline in home values. 
  • Competitive Advantage.
  • Interest Rate Environment. With interest rates potentially decreasing, selling now allows you to take advantage of the current stable rates and avoid the uncertainties of a changing market.
  • Inventory Levels. This shortage creates more demand for your property.
  • Negotiation Leverage. The current sale-to-list price ratio provided sellers with solid negotiation ground.

To sum up, with the current high home values, competitive nature of the market, and favorable sale conditions, 2024 presents itself as a strategic opportunity for sellers in the Bay Area.

Conclusion

In conclusion, for investors and homeowners in the Bay Area, staying informed about current housing market trends is crucial for making well-timed and profitable decisions. Given the market’s projected shift towards a more balanced state, with potential decreases in home values and changing interest rates, We Buy Houses presents a strategic option for those seeking to sell their properties efficiently. We offer a quick, straightforward, and hassle-free selling experience, providing certainty in a fluctuating market.


Interesting Related Article: “5 Effective Tips for Selling a House in an Expensive Market