People who relocate into the San Francisco Bay Area often spend a lot of time…
San Francisco Bay Area Still a Seller’s Market in 2021
Is the San Francisco Bay area more of a buyer’s market or a seller’s market in 2021? Which way does the real estate market “lean,” and who benefits from it the most?
These are common questions among Bay Area home buyers and sellers alike. Everyone wants to know what conditions they might face, when entering the real estate scene. Today, we will take an updated look at current market conditions to answer this common question.
The short answer: Due to strong demand and limited inventory, the San Francisco Bay area is almost always a seller’s market. But it became even more of one during 2020, due to a surprising increase in buyer demand. In 2021, we are seeing a bit more inventory come onto the market. But the San Francisco Bay Area will probably remain a seller’s market throughout 2021.
San Francisco Bay Area Is a Sellers Market in 2021
The title of this section says it all. Yes, the Bay Area housing scene is currently more of a seller’s than a buyer’s market. The reason for this has to do with housing supply and demand — as usual.
For the past few years, the San Francisco Bay area real estate market has experienced a shortage of supply relative to buyer demand. In 2020, things got even more lopsided. Last year, the Bay Area was a strong seller’s market due to a severe shortage of homes for sale. There were plenty of buyers in the market looking for a house to purchase, but not nearly enough properties to meet that demand.
In a February 2021 housing market update, the California Association of Realtors (C.A.R.) said that “buyer demand continues to outstrip supply” across the state of California. This has been the trend for several years now, and it became more pronounced during 2020
Despite the coronavirus pandemic and economic slowdown, the California real estate market was bustling throughout most of 2020. Inventory levels plummeted due to strong home sales and fewer listings coming onto the market. Those trends essentially tilted the scales in favor of sellers, forcing buyers to compete for limited inventory.
While we have seen a slight increase in housing supply (see below), the supply and demand situation is still very lopsided as of February 2021. So the Bay Area is still a seller’s market in early 2021, a situation that will likely persist through most or even all of this year.
Definition:Â A real estate “seller’s market” occurs when there are a lot more buyers than there are homes for sale. In other words, it is when demand greatly exceeds supply. In such times, home prices tend to rise due to competing offers from buyers. Bidding wars, multiple-offer scenarios, and offers above the listing price are other hallmarks of a classic seller’s market.
Some Relief on the Horizon for Home Buyers?
So yes, 2021 is still considered a seller’s market in the San Francisco Bay Area, due to a significant imbalance between housing supply and demand. Home sales have grown over the past year, while inventory has fallen. This puts sellers into the driver’s seat, in terms of price negotiations and overall market leverage.
But there’s a bit of good news for Bay Area home buyers in 2021. According to a recent report, the total number of real estate listings actually rose quite a bit over the past year. This follows several years of inventory decline. In other words, there are more homes available to purchase today than there were a year ago – at least in the San Francisco Bay Area.
According to a February 2021 report from Realtor.com, the total number of active property listings declined in most of the country’s major metro areas. Of the nation’s 50 largest metro areas, only three experienced a year-over-year increase in total listings. The three metros where housing inventory grew were:
- San Jose, California
- Denver, Colorado
- San Francisco, California
From January 2020 to January 2021, active real estate listings in the San Francisco Bay Area rose by more than 18%. Most other metros across the U.S. experienced a decline in listings, some by more than 50%.
Our region also saw an increase in the number of newly (or recently) listed homes. To quote the Realtor.com report:
“Of the 50 largest metros, two Northern California markets — San Jose and San Francisco — and Denver saw an increase in the number of newly listed homes at 24.8%,14.4%, and 1.8%, respectively.”
Clearly, this is good news for Bay Area home buyers in 2021. It means they’ll have more properties to choose from during the house-hunting stage. It also increases the chance that buyers can find a suitable property that falls within their budget.
But it’s not enough to shift the Bay Area toward a buyer’s market. Despite this recent uptick in overall supply, the local real estate scene still tends to favor sellers.
