The San Francisco Bay Area is one of the most expensive real estate markets in…
Are you planning to buy your first home in the San Francisco Bay Area during 2022? Wondering what the local housing market will be like next year?
You’ve come to the right place. The Bridgepoint Funding team has created a real estate market insight report for those who are planning to buy a first home in the Bay Area in 2022. This report will bring you up to speed on current market conditions and help you make a well-informed purchasing decision.
Buying Your First Home in the Bay Area, 2022
If you’re going to buy your first home in the Bay Area sometime during 2022, you have to understand current market conditions. Being well-informed will increase your chance for success (which, in this context, means having your offer accepted and closing the deal).
With that in mind, here are three trends you should know about when buying a first home in the San Francisco
Part 1: Home Prices and Affordability
Let’s start with a quick review of home prices. This is a relevant and important topic for all Bay Area first-time home buyers in 2022 — especially those who need mortgage financing.
House prices in the region rose significantly during 2021. This was largely due to a surge in home-buying demand, along with record-low inventory levels. This lopsided supply-and-demand situation sent prices surging in most part of the Bay Area.
According to Zillow, the median home value for the San Francisco-Oakland-Hayward metro area rose by more than 17% over the past year. (This was reported in November of 2021.) The median price was just above $1.3 million dollars, as of mid-November.
Prices are expected to continue climbing into 2022, though possibly at a slower pace.
Higher housing costs could present a challenge for some folks who plan on buying a first home in the Bay Area in 2022. Overall, housing affordability in our region has declined over the past year. That’s because house prices have risen much faster than incomes, on average.
The good news, from a first-time home buyer’s perspective, is that some Bay Area cities offer more affordable housing options. For instance, Solano County currently has a much lower median price when compared to the broader Bay Area.
We recently published a report entitled “How to Afford a House in the Bay.” If you’re planning to buy your first home in this area in 2022 — and you feel that affordability might be an issue for you — be sure to review that article.
Part 2: The Inventory Situation
The inventory situation within the Bay Area housing market remains tight. This is another area of concern that could affect some first-time buyers in 2022. And it’s been going on for some time now.
According to a report from Realtor.com, the total number of active listings for the San Francisco-Oakland-Hayward metro area declined by 25% from October 2020 to October 2021. That means we are heading into 2022 with less housing market inventory (based on Realtor.com listing data, anyway).
But there might be a light on the horizon, in terms of inventory. According to one notable economist, we could see more homes hitting the market over the coming months. In a November 2021 report, National Association of REALTORS® chief economist Lawrence Yun said:
I expect more homes to hit the market as early as next year, and that additional inventory, combined with higher mortgage rates, should markedly reduce the speed of price increases.
If Yun’s prediction turns out to be true, home buyers could soon get some relief in the form of much-needed inventory growth. For now, however, tight supply conditions will remain a factor for those buying a first home in the Bay Area in early 2022.
This is an important trend that could influence the housing market next year, as it has in recent months. It’s also an area that warrants some additional research from home buyers. The more you know about local real estate conditions, the better prepared you’ll be to enter the market.
Part 3: The Competition Factor
“Competitive.” That was one of the most common adjectives used to describe the Bay Area housing market in 2021. And it will probably be an accurate descriptor in 2022, as well.
Even if inventory start to tick upward over the coming months, the Bay Area real estate scene will remain highly competitive. We’ve covered the number-one reason for this already. There just aren’t enough homes for sale to meet the demand from buyers.
Despite these tight conditions, thousands of buyers achieved their home-buying goals during 2021. They might have had to work a little harder during the house-hunting stage. But they were able to make it happen.
The bottom line: Even in a tight real estate market, a well-informed buyer can succeed!
Rising prices, tight inventory conditions, and high competition. Those are three important trends that could affect you when buying a first home in the Bay Area during 2022.