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Executive Summary
Sales prices for the five counties in the SF Bay Area cooled a bit from the early spring as inventory, the rate of change in inventory, and days on market climbed. At many of the open houses we saw fewer buyers coming through and less offer dates were set than in the Spring.
However, we anticipate this to be a small lull in the market. Why? We see a large demand for hiring tech workers in the SF Bay Area in the second half of 2024. And mortgage rates fell off a cliff this week hitting the lowest rates since April of 2023.
Stocks also took a beating in July. What happened? An overly concentrated market around Artificial Intelligence (AI), a rotation away from mega-cap growth stocks, a rate hike from the Bank of Japan and weaker-than-expected jobs data at the national level all influenced stocks and rates.
How will this affect the SF Bay Area real estate in August? Seasonally, the best time to sell, after Spring, is the Fall. People are coming back from vacation and are anxious to purchase if they weren't able to in the Spring. With the rate drop and strong labor market in the tech sector, we anticipate sales prices to go up this Fall.
KEY TAKE AWAYS...
SALES PRICES? Much of the Bay felt a price drop per square foot except for the Mid-Peninsula area. Highly desirable neighborhoods and well maintained homes continued to see record pricing.
SALES VOLUME? Sales volume peaked in April 2024 and has dropped throughout the summer.
MORTGAGE RATES? Lowest they've been since April 2023!! Pair this with relationship pricing and you can be in the low 5%.
Is now a good time to sell or buy?
For well-marketed and well-priced homes, expect multiple offers. End of summer vacations and low interest rates will enable the Fall to be our next best time to sell in 2024, prior to elections.
Check out two of my blogs for how to sell your home in a high interest rate environment and 6 key questions to ask when selling your home in 2024.
Off Market Properties:
San Mateo (San Mateo Knolls) (2,300 sqft) - 4 bed, 3 bath, 2-car garage
San Mateo (Beresford) (1,100 sqft) - 3 bed, 1 bath, 1-car garage
San Mateo (4 PLEX) - Two 1 bed, two studios
Santa Cruz (East) - (2,100 sqft) 4 bed, 5 bath, 1-car garage on oversized lot
San Francisco (Candlestick Point) - (800 sqft) 1 bed, 1 bath, condo
Stockton (Northeast) - (924 sqft) 2 bed, 1 bath, condo
....
Want the full list? Feel free to reach out directly to me (650.451.8763).
Table of Contents:
How Are The San Francisco Bay Area Real Estate Markets?
Overall, the latest SF Bay Area real estate trends show the sales prices coming down in part due to seasonality and the stock market pull back through July.
Inventory levels are still relatively low due to seller's "Golden Handcuffs", aka cheaper mortgages they purchased or refinanced in the sub 4% levels.
This is causing a limited amount of inventory, especially at the lower price points where many investors are competing with first-time home buyers. The below graphics shows all five counties' and the *Mid-Peninsula's pending sales organized by home types and price levels. The price tier under each home type that saw the highest volume of pending sales per county are highlighted in yellow.
*Mid-Peninsula = Atherton, Belmont, Burlingame, Foster City, Hillsborough, Menlo Park, Palo Alto, Portola Valley, Redwood City, Redwood Shores, San Carlos, San Mateo, and Woodside.
SF Bay Area Real Estate Trends - Month over Month (MoM)
The charts below are month-by-month heat maps of pricing in the SF Bay Area. They are grouped by county and property type (Condo, Single Family Home, Townhouse). The metrics are Price Per Square Foot, Days On Market, how many sold, and the List To Sales Price Ratio. Green highlighted cells indicate items keeping prices up in comparison to previous month's metrics. Red highlighted cells indicate the opposite, i.e downward pressure on sales price which favor Buyers more.
(Click on each county's data to make larger). Make county / location bigger to see the MoM data better.
SF Bay Area Real Estate Trends - Year over Year (YoY)
Here's the data to support the year over year price growth (supply versus demand) we are currently experiencing.
Inventory - 20 Years vs. 10 Years
Every year we see active and sold inventory go up then down, a predictable cadence. How high or low is dependent on the next metric, Months of Inventory or the rate of change in inventory being sold.
We are above historically low inventory levels; active inventory is now exceeding 2023 levels. This volume affected prices throughout the summer.
The graphs below show both a 20-year and 10-year time horizon for both single family homes and condos that are on the market (active) or sold.
Months of Inventory - 20 Years vs. 10 Years
This metric tells us how hot the markets are currently. If no new listings were added, this metric tells us how long it would take to sell all the remaining active homes. Five to six months is considered a buyer's market, three to six is a neutral market, and anything less than three is a seller's market. In the last 10 years, we have been in a Seller's Market except for condos in the year of 2020, when the COVID Pandemic hit.
Single family homes have increased to 1.7 months of inventory
Condos have been increasing to now 3.3 months of inventory
% Over Asking vs. DOM - 12 Months Look Back
How much over asking a home sold for and how fast it was sold, i.e. Days On Market are the next two Key Performance Indicators (KPIs). These show how much demand there is for SF Bay Area single family homes and condos.
Sales price to list price peaked in April for single family homes and condos while days on market bottomed in May at 16 days and have been increasing. Despite these latest trends, the average days on market are below 30 days and sales prices going over asking clearly indicate a strong seller's market.
Sales Price - 20 Years vs. 10 Years
In general, single family home prices have doubled every 10 years in the SF Bay Area since the 1980s. Due to the local economy of the SF Bay Area, we anticipate these values to remain high, especially as inventory levels are still near historic lows.
However, condos sales prices have been fairly stagnant over the last two years as most home owners are wanting townhomes or single family homes that have yards and to have work from home spaces.
Prices are hitting a seasonal lull currently but we anticipate these to go up with the low interest rates and strong SF Bay Area labor market.
Please reach out to schedule your free consultation to discuss your home price or home search.
FED, Mortgage Rates & The Stock Market
Inflation and jobs are aligning to the FED's directive to achieve maximum employment and inflation at a rate of 2 percent over the long run. As such, the CME Group now predicts a 0% chance of keeping rates while there is a 70% probability that the FED LOWERS interest rates by 25 basis points in September.
Mortgage rates fell from 6.82% to 6.4% for a 30 year fixed mortgage.
The S&P500 and most tech stocks are up year to date but July saw a pull back in stock prices.
Layoffs are relatively low compared to the last two years but continue as A.I. becomes a standard for many software engineers and other jobs.
When will the next Recession occur? Check out my infographics in this blog post for a brief primer. Then we can discuss the rest over our next coffee.
At KPeterson.realty, we know not every lender is created equal and we work with lenders who's rates today are around 5.5% for 10/6 ARMS. Our lenders also may value your RSUs better than others. Reach out and tap into our network.
How We Help Our Buyers
We work with the best lenders who are able to beat the current interest rates (some as low as 5.5% on a 10/6 ARM).
Search For Homes by customizing your financial situation before contacting a lender to determine what you can afford.
Investing or not sure which areas to look in? Explore Markets to generate reports that analyze a city by days on market, average home price, price per square foot, average number of bedrooms / bathrooms / square feet in YOUR price point.
How We Help Our Sellers
We have a $0 down / 0% renovation program in which you don't need to pay back for one year, giving you flexibility on when to sell. The goal is for every $1 spent on renovations to net (on average) a $2 to $4 return on investment. Every family has a unique real estate scenario based on their needs and circumstances. Feel free to schedule a consultation with me today.
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