After many months of frenzied home-buying activity, the Bay Area real estate market seems to…
The San Francisco Bay Area real estate market remains highly competitive as we approach the fall of 2021. But there are also signs that the local housing market is beginning to shift slightly.
Going forward, we could see more inventory coming on to the market, along with a slower pace of sales. Some of these trends could benefit Bay Area home buyers later this year and in 2022.
Outlook for the Bay Area Housing Market in 2022
Here are three noteworthy trends that could shape the San Francisco Bay Area real estate market in 2022:
1. Home buyers might have more properties to choose from.
In September, researchers from Realtor.com published a housing market report with data for the nation’s 50 largest metro areas. According to their reports, new real estate listings nationwide rose by 4.3% in August compared to July.
In the San Francisco-Oakland-Hayward metropolitan area, new listings actually declined slightly from July to August. But previous reports from Realtor.com have shown a significant increase in the number of new real estate listings hitting the market.
The bottom line is that there has been a net increase in Bay Area housing market inventory in recent months. And that’s good news for anyone planning to buy a home in the near future.
If this trend continues, it could have a major impact on the Bay Area real estate market in 2022.
- On the buying side, inventory growth would give home buyers more properties to choose from, thereby easing competition.
- On the selling side, this trend could give homeowners a reason to be a bit more flexible when it comes to pricing and negotiations.
Overall, however, the Bay Area housing market inventory situation remains tight. So we probably won’t see anything resembling a buyer’s market anytime soon. Still, the local real estate scene could be a bit more balanced in 2022, especially if the recent rise in listings continues.
2. House values could rise more slowly next year, compared to now.
Recent forecast have predicted that home prices across the Bay Area real estate market will rise more slowly in 2022 compared to this year. This goes hand-in-hand with the inventory growth trend mentioned above.
Ongoing inventory gains, combine with a general sense of weariness among buyers, could alter the supply-and-demand dynamic in 2022. Among other things, this could bring slower price growth compared to what we are seeing right now.
Earlier this month, Zillow reported that the median home price for the San Francisco-Oakland-Hayward metro area was around $1.3 million. House values in the area rose by nearly 18% over the past year, according to Zillow. Looking forward, they expect a slower rate of growth between now and late summer 2022.
According to a September 2021 statement on the company’s website:
San Francisco-Oakland-Hayward Metro home values have gone up 17.9% over the past year and Zillow predicts they will rise 7.1% in the next year.
3. The real estate market could slow down a bit in 2022.
The Bay Area real estate market has gotten a lot more expensive over the past year. This trend has reduced the number of home buyers in the market. After all, not everyone can afford the $1.3 million price tag for a median-priced homes in the area.
Because of this, we could see a general slowdown in the Bay Area real estate market during 2022.
In fact, we’re getting some early indicators of a cooling trend already. On September 16, the California Association of Realtors (CAR) reported that home sales statewide declined by -3.3% from July to August of this year. Year over year, sales were down by -10.9%.
Even in the red-hot Bay Area real estate market, home sales declined a bit in August 2021. Our region posted a -2.6% decline in property sales, month over month.
This trend could create opportunities for Bay Area home buyers later in 2021 and into 2022. Among other things, it could reduce the level of competition while making it easier to find a suitable property.
According to CAR President Dave Walsh:
The normalizing market and modestly improving housing inventory in the past few months have created an opportunity for homebuyers who sat out the highly competitive housing market seen over much of the past year.
In 2022, the Bay Area housing market could move at a slower pace compared to what we’ve seen in the past months. There might be more properties on the market as well, which would likely lead to a slower rate of home-price growth.
Even so, the inventory situation could continue to present problems for some Bay Area buyers. The local real estate market will probably continue to favor sellers into 2022. But it could also become a bit more “buyer-friendly.”
Disclaimer: This report contains predictions from third-party sources not associated with our company. Housing-related forecasts and predictions are the equivalent of an educated guess and should be treated as such.