A recently updated forecast for the San Francisco Bay Area housing market suggests that home prices will likely continue rising for the foreseeable future, outpacing the national average. And that’s not surprising, when you look at the current supply-and-demand situation across the state.
Bay Area Housing Forecast Into Spring 2019
The real estate information company Zillow recently updated its long-range forecast for the Bay Area housing market. This outlook applies to the entire San Francisco metropolitan area. In it, they predicted that the median home value would rise by 7.1% over the next 12 months. This particular forecast was issued in June 2018 and extends into spring of 2019.
That’s a bolder outlook than the one they issued for the nation as a whole. And that’s not surprising, given the tight inventory conditions in housing markets across the Bay Area. Limited supply and steady demand have been lifting home prices for quite some time now. So a forecast for additional gains would seem logical, given the current situation.
Home Prices Keep Setting Records
Toward the end of May, the real estate research firm CoreLogic released a report that showed home prices in the Bay Area set another record.
In April 2018, the median home price for the region rose to $850,000. That was an increase of 2.4% from the previous month, and a gain of 13.3% from April of 2017. It was also the ninth straight month of double-digit annual gains.
These trends are partly due to an increase in sales at the upper end of the price spectrum. According to Andrew LePage, an analyst with CoreLogic, there was a “higher share of sales are occurring in the mid- to high-priced areas. That’s in part because of the especially thin inventory of homes for sale in the more affordable areas, frustrating many first-time buyers.”
Supply Remains Tight Within the Real Estate Market
This “thin” inventory mentioned above has become an issue for some Bay Area home buyers, especially those searching in the lower price range. Currently, inventory appears to be tightest at the lower end of the price spectrum. This means buyers have to search harder — and be a bit more flexible — in order to find a suitable property.
A healthy and “balanced” real estate market has around a five- to six-month supply of homes for sale at any given time, according to housing experts. But most (if not all) of the markets across the Bay Area currently have far less inventory than that. Some cities had less than a two-month supply of homes for sale, as of May 2018. This is partly why most of the housing forecasts for the Bay Area point to rising prices over the coming months.
Tight inventory is also leading to quick home sales in cities across the Bay Area. A recent report by Trulia showed that San Francisco was one of the “fastest” real estate markets in the country, when measured by the time between the initial home listing and the sale. San Francisco tied with San Jose and Seattle for that distinction.
Disclaimer: This article contains data, trends and forecasts for the Bay Area real estate market stretching into spring of 2019. That information was provided by third-party sources not associated with our company. We have presented them here as an educational service to our readers.