SAN FRANCISCO (KRON) — Bidding wars in the San Francisco real estate market were down in March compared to one year ago, according to a new report that suggests that homebuyer demand in the Bay Area and elsewhere is starting to cool. Bidding wars in SF had an average of 7.8 offers in March of this year, down from 10 in March of 2021, said the report from technology-powered real estate company, Redfin.
Bay Area city is most competitive housing market in US
San Jose remains the most competitive housing market in the US with a bidding war rate of 79.8%, putting it just above Boston, in second place with 79%. Rounding out the top five were Providence, RI at 78.3%, Worcester, MA at 78.2% and San Diego at 78.1%.
While the competition rate remains high in the pricey coastal markets, according to the report, there are signs that homebuyer demand in some of these areas is starting to ease. In San Francisco, as in other top markets like Los Angeles, Washington D.C., Boston and Seattle, Redfin agents have seen fewer buyers request service in the early part of this year.
“March was the first month in two years that I had a weekend with zero house tours. People are getting priced out,” said Maria Giron, a Redfin real estate agent in the Bay Area. “Some buyers are in shock and dropping out altogether. Others are looking at more affordable options like smaller homes or neighborhoods that are farther out.”
San Francisco, LA see drop in competition
In San Francisco and Los Angeles, the share of Redfin offers that faced competition was down month-over-month and year-over-year in March. San Jose, which tops US metro areas in competition, saw an increase month-over-month and year-over-year.
Nationwide, 65% of home offers written by Redfin agents faced competition on a seasonally adjusted basis in March, down from a revised rate of 66.7% in February, representing the first month-over-month decline since September. The report indicated that could be a sign that demand is starting to cool as soaring mortgage rates and housing prices prompted some buyers to back out of the market. An offer is considered part of a bidding war if a Redfin agent reports that it has received at least one competing bid.
The cost of housing remains high in the Bay Area and across the state. In some California cities, the value of a typical home has more than tripled. As the Redfin report states, the average 30-year fixed mortgage rate is now at 5.11%, the highest since 2010.
But, experts say, low inventory and willingness from high-earning home buyers to engage in bidding wars are expected to keep the Bay Area’s home prices from declining.
“As long as we have this super unbalanced inventory situation, (mortgage rates) are unlikely to have a lot of bearing on it,” said East Bay Realtor Andrea Gordon of Compass.
Daryl Fairweather, chief economist for the real estate listings site Redfin, said there are some early signs that demand is slowing. Purchase applications for mortgages are trending downward, she said. Searches for homes for sale in pricey coastal markets, such as the Bay Area and Los Angeles, are also down.
Still, none of that has translated yet to lower home sale prices. The median sale price for a home in San Francisco was $1.5 million in March, a 9% increase from the prior year, according to Redfin.
“You do have to kind of squint to see it,” Fairweather said.
Patrick McCarran, president of the Delta Association of Realtors, has seen some indication of a “slight” cooling in the far East Bay’s housing market. Home listings that would have attracted more than 10 offers before mortgage rates began to climb earlier this year now net about five offers or fewer, he said. Homes are generally staying on the market longer, as well.
Demand in the delta region, one of the Bay Area’s most affordable housing markets, remains fueled by first-time home buyers and teleworkers from San Francisco and San Jose in search of spacious, single-family homes, McCarran said. And even though listings in the area are generally seeing fewer offers these days, enough buyers are putting competitive offers on homes to keep prices from dropping, he said.
“We’re still seeing competitive offers that are often driving prices up,” McCarran said.
The recent hesitation from buyers appears to stem more from fatigue than it does rising mortgage rates, according to mortgage broker Liz Bayer of ProMortgage.
In one of the nation’s most competitive housing markets, buyers offering non-contingent all-cash offers over asking price sit at the top of the Bay Area’s home-buyer hierarchy. That makes it difficult for other home buyers moving through the mortgage approval process to compete with the speed of an all-cash offer, Bayer said. She said she’s noticed an uptick in “hard money” loans that are pricier but come with a faster approval process than a conventional mortgage.
“Home buyers are pulling out of the market temporarily because they’re just frustrated that they can’t get their offers accepted even though they’re offering at the list price or over,” Bayer said. “But then an investor who’s looking to pay all cash gets into the mix, and they are offering a 7-day close that the buyer is not in a position to compete for.”
The recent rise in mortgage rates increases monthly payment costs, and could lead some home buyers who’ve been priced out of the Bay Area market to seek out more affordable places, such as Sacramento or the Central Valley, Fairweather said.
A buyer who puts down 20% to purchase a $775,000 home — the state’s approximate median price — would have been paying $3,600 in monthly mortgage payments at the average mortgage rate of 3.11% at the start of the year, according to a Redfin calculator.
Under the latest average of 5.11%, that same buyer would be looking at monthly payments of $4,320.
The higher rates are unlikely to significantly impact the buying power of high-earning home buyers whose wages have kept up with rising inflation, Chris Mason, an East Bay independent mortgage broker, said. Mason hasn’t seen any noticeable drops in home buyers requesting preapprovals for mortgages.
“On the demand side, it is the case that the middle class is getting squeezed the most by the combination of inflation and higher interest rates,” Mason said. “But, for the most part, in the major Bay Area markets, your median income family was never in a position to buy a house, anyways. That ship sailed five years ago.”
Ricardo Cano is a San Francisco Chronicle staff writer. Email: ricardo.cano@sfchronicle.com Twitter: @ByRicardoCano
Twilight evening view of traffic streaming by the downtown skyline of Irvine, California. Irvine … [+] home prices rose substantially over the last year, with the median sale price increasing by almost 50% from February 2021 to February 2022.
getty
With interest rates rising, the corresponding increase in mortgage rates is beginning to make itself felt in housing markets across the United States. While rising mortgage rates make borrowing more expensive and reduce affordability, they can also dampen demand by dissuading potential buyers from actively shopping for a home, according to the Mortgage Reports. The reduction in buyers can help loosen the squeeze on many housing markets’ diminishing available inventory.
The California housing market is in a league of its own. However, many of the state’s largest cities have seen a marked fall in home sales in 2022 versus 2021. Using housing data from Redfin, we analyzed several of California’s largest cities and the state of their housing markets in recent years. Read on to find out more about some of California’s largest housing markets as 2022 unfolds.
Los Angeles Housing Market 2022
The Los Angeles housing market in 2022 shares several characteristics with other California and American housing markets in general: Rising prices, declining inventory, homes going off the market quickly. However, the Los Angeles housing market is in better shape than other cities in California. The average number of days a home for sale spends on the market before being bought up is 36 days as of February 2022, down 28% from an average of 50 days in February 2021. However, this is much longer than the San Diego housing market, where the average number of days on market for a home is only 8 days in February 2022. The months of supply of homes — which is how long it would take the available supply of homes to be bought up if no new homes come on the market — stands at 1.9 months in February 2022. That’s down from 3 months’ supply in February 2021, but again, it’s better than San Diego’s months of supply of homes in February 2022, which is 0.7 months.
Over the last year, the median sale price in Los Angeles rose by 11.2%, from $850,000 in February 2021 to $945,000 in February 2022. During that same period, housing inventory in the Los Angeles housing market declined by 41.3%, from 6,119 available homes in February 2021 to 3,590 homes in February 2022. Home sales fell by 9%, from 2,063 in February 2021 to 1,877 in February 2022, but still remains higher than the number of home sales in February 2020, when there were 1,630. New listings are down even more, 15%, from 2,842 new listings in February 2021 to 2,416 in February 2022.
San Diego Housing Market 2022
The San Diego housing market is hotter than that of Los Angeles. The median sale price in San Diego has risen by 17.2% in the last year, from $705,000 in February 2021 to $826,000 in February 2022. Housing inventory in the San Diego housing market fell by a greater percentage (45.3%) than in Los Angeles (41.3%) over the last year, going from 1,223 available homes in February 2021, down to 669 homes in February 2022. San Diego homes are getting bought up quickly this year, with the number of days on the market falling by 46.7%, from 15 days in February 2021 to 8 days in February 2022. San Diego’s months of supply of homes is also dwindling, falling from 1.9 months in February 2020 to 1.1 months in February 2021, and then even further, to 0.7 months in February 2022. New listings in San Diego also declined over the last year, but not at the rate of the Los Angeles housing market: 9.7% year-over-year in San Diego versus 15% in Los Angeles.
San Jose Housing Market 2022
Despite already being one of the most expensive housing markets in California, and the country as a whole, home prices in San Jose have risen more in the last year than in either Los Angeles or San Diego. From a median sale price of $1,067,000 in February 2021, San Diego’s median sale price rose by 28.9%, reaching $1,375,000 in February 2022. San Jose’s housing inventory also fell at a rate greater than both Los Angeles and San Diego, declining by 55.1%, from 733 available homes in February 2021 to 329 homes in February 2022. Homes are getting bought up fast in San Jose, with the average number of days on market falling by 42.9%, from 14 days in February 2021 to 8 days in February 2022. The demand for housing in San Jose is also reflected in the sales-to-list price ratio, with stands at 114.3% as of February 2022; this means the average home in San Jose is selling for 14.3% more than the list price.
San Francisco Housing Market 2022
The San Francisco housing market in 2022 is also experiencing an inventory squeeze, with available homes for sale falling by 30.2%, from 1,177 homes in February 2021 to 821 homes in February 2022. Thus, the rate of decline is not as steep as in Los Angeles, San Diego, and San Jose. Home prices increased by 10% over the last year, from a median sale price of $1,350,000 in February 2021 to $1,485,000 in February 2022. In terms of months of supply of homes, San Francisco is in better shape than other major California housing markets. San Francisco’s months of supply of homes fell by 31%, from 2.9 months in February 2021 to 2 months in February 2022. The biggest year-over-year change was in the number of days on the market a home spends before getting bought. In San Francisco, the average number of days fell by 61.4%, from 44 days in February 2021 to 17 days in February 2022, though this equals the 17 days on market reported in February 2020. Whereas home sales were down year-on-year in Los Angeles, San Diego, and San Jose, in San Francisco home sales increased by 0.2%, from 408 sales in February 2021 to 409 sales in February 2022.
Fresno Housing Market 2022
Fresno is now the fifth-largest city in California, with a population of 526,147 in 2020, according to the Census Bureau’s 2020 American Community Survey. Home prices have risen over the last year, with the median sale price rising by 18.4%, from $305,000 in February 2021 to $361,000 in February 2022. Housing inventory in Fresno declined by 21.2%, from 387 available homes in February 2021 to 305 homes in February 2022; however, it experienced a much bigger drop from February 2020 to February 2021, when inventory fell by 43.4%, from 684 available homes down to 387. Fresno has also experienced an increase in home sales (up 10.7%), unlike in Los Angeles, San Diego, and San Jose where home sales fell from February 2021 to February 2022.
Sacramento Housing Market 2022
The Sacramento housing market is in very similar shape in 2022 as it was in 2021. Housing inventory is down only 15.7%, from 490 available homes in February 2021 to 413 homes in February 2022. Plus, new listings are actually up 5% in Sacramento, increasing from 679 new listings in February 2021 to 713 new listings in February 2022. The Sacramento housing market’s months of supply of homes held steady, falling from 0.8 months of supply in February 2021 to 0.7 months of supply in February 2022, although both figures are well off from the 1.5 months of supply of homes in February 2020. Home prices have risen in Sacramento but are still comparatively affordable. The median sale price in Sacramento rose by 14.8%, from $425,000 in February 2021 to $488,000 in February 2022.
Standout Findings of the California Housing Market in 2022
One of the biggest findings in the analysis of California’s major housing markets is the rise in home prices in Irvine. The median sale price in Irvine was $890,000 in February 2021, before increasing by an impressive 49.4%, reaching a median sale price of $1,330,000 in February 2022. Out of all California cities with populations of at least 100,000, Irvine’s home price increase is the largest in the state. The second-largest growth in home prices occurred in San Mateo, where the median sale price rose by 44.3%, from $1,128,000 in February 2021 to $1,627,500 in February 2022. Both of these cities have seen their housing inventory fall by more than half. In Irvine, available inventory dropped by 59%, from 500 available homes in February 2021 to 205 homes in February 2022. In San Mateo, the year-over-year decline in inventory was 52.9%, from 136 homes in February 2021 to 64 homes in February 2022.
Twilight evening view of traffic streaming by the downtown skyline of Irvine, California. Irvine … [+] home prices rose substantially over the last year, with the median sale price increasing by almost 50% from February 2021 to February 2022.
getty
With interest rates rising, the corresponding increase in mortgage rates is beginning to make itself felt in housing markets across the United States. While rising mortgage rates make borrowing more expensive and reduce affordability, they can also dampen demand by dissuading potential buyers from actively shopping for a home, according to the Mortgage Reports. The reduction in buyers can help loosen the squeeze on many housing markets’ diminishing available inventory.
The California housing market is in a league of its own. However, many of the state’s largest cities have seen a marked fall in home sales in 2022 versus 2021. Using housing data from Redfin, we analyzed several of California’s largest cities and the state of their housing markets in recent years. Read on to find out more about some of California’s largest housing markets as 2022 unfolds.
Los Angeles Housing Market 2022
The Los Angeles housing market in 2022 shares several characteristics with other California and American housing markets in general: Rising prices, declining inventory, homes going off the market quickly. However, the Los Angeles housing market is in better shape than other cities in California. The average number of days a home for sale spends on the market before being bought up is 36 days as of February 2022, down 28% from an average of 50 days in February 2021. However, this is much longer than the San Diego housing market, where the average number of days on market for a home is only 8 days in February 2022. The months of supply of homes — which is how long it would take the available supply of homes to be bought up if no new homes come on the market — stands at 1.9 months in February 2022. That’s down from 3 months’ supply in February 2021, but again, it’s better than San Diego’s months of supply of homes in February 2022, which is 0.7 months.
Over the last year, the median sale price in Los Angeles rose by 11.2%, from $850,000 in February 2021 to $945,000 in February 2022. During that same period, housing inventory in the Los Angeles housing market declined by 41.3%, from 6,119 available homes in February 2021 to 3,590 homes in February 2022. Home sales fell by 9%, from 2,063 in February 2021 to 1,877 in February 2022, but still remains higher than the number of home sales in February 2020, when there were 1,630. New listings are down even more, 15%, from 2,842 new listings in February 2021 to 2,416 in February 2022.
San Diego Housing Market 2022
The San Diego housing market is hotter than that of Los Angeles. The median sale price in San Diego has risen by 17.2% in the last year, from $705,000 in February 2021 to $826,000 in February 2022. Housing inventory in the San Diego housing market fell by a greater percentage (45.3%) than in Los Angeles (41.3%) over the last year, going from 1,223 available homes in February 2021, down to 669 homes in February 2022. San Diego homes are getting bought up quickly this year, with the number of days on the market falling by 46.7%, from 15 days in February 2021 to 8 days in February 2022. San Diego’s months of supply of homes is also dwindling, falling from 1.9 months in February 2020 to 1.1 months in February 2021, and then even further, to 0.7 months in February 2022. New listings in San Diego also declined over the last year, but not at the rate of the Los Angeles housing market: 9.7% year-over-year in San Diego versus 15% in Los Angeles.
San Jose Housing Market 2022
Despite already being one of the most expensive housing markets in California, and the country as a whole, home prices in San Jose have risen more in the last year than in either Los Angeles or San Diego. From a median sale price of $1,067,000 in February 2021, San Diego’s median sale price rose by 28.9%, reaching $1,375,000 in February 2022. San Jose’s housing inventory also fell at a rate greater than both Los Angeles and San Diego, declining by 55.1%, from 733 available homes in February 2021 to 329 homes in February 2022. Homes are getting bought up fast in San Jose, with the average number of days on market falling by 42.9%, from 14 days in February 2021 to 8 days in February 2022. The demand for housing in San Jose is also reflected in the sales-to-list price ratio, with stands at 114.3% as of February 2022; this means the average home in San Jose is selling for 14.3% more than the list price.
San Francisco Housing Market 2022
The San Francisco housing market in 2022 is also experiencing an inventory squeeze, with available homes for sale falling by 30.2%, from 1,177 homes in February 2021 to 821 homes in February 2022. Thus, the rate of decline is not as steep as in Los Angeles, San Diego, and San Jose. Home prices increased by 10% over the last year, from a median sale price of $1,350,000 in February 2021 to $1,485,000 in February 2022. In terms of months of supply of homes, San Francisco is in better shape than other major California housing markets. San Francisco’s months of supply of homes fell by 31%, from 2.9 months in February 2021 to 2 months in February 2022. The biggest year-over-year change was in the number of days on the market a home spends before getting bought. In San Francisco, the average number of days fell by 61.4%, from 44 days in February 2021 to 17 days in February 2022, though this equals the 17 days on market reported in February 2020. Whereas home sales were down year-on-year in Los Angeles, San Diego, and San Jose, in San Francisco home sales increased by 0.2%, from 408 sales in February 2021 to 409 sales in February 2022.
Fresno Housing Market 2022
Fresno is now the fifth-largest city in California, with a population of 526,147 in 2020, according to the Census Bureau’s 2020 American Community Survey. Home prices have risen over the last year, with the median sale price rising by 18.4%, from $305,000 in February 2021 to $361,000 in February 2022. Housing inventory in Fresno declined by 21.2%, from 387 available homes in February 2021 to 305 homes in February 2022; however, it experienced a much bigger drop from February 2020 to February 2021, when inventory fell by 43.4%, from 684 available homes down to 387. Fresno has also experienced an increase in home sales (up 10.7%), unlike in Los Angeles, San Diego, and San Jose where home sales fell from February 2021 to February 2022.
Sacramento Housing Market 2022
The Sacramento housing market is in very similar shape in 2022 as it was in 2021. Housing inventory is down only 15.7%, from 490 available homes in February 2021 to 413 homes in February 2022. Plus, new listings are actually up 5% in Sacramento, increasing from 679 new listings in February 2021 to 713 new listings in February 2022. The Sacramento housing market’s months of supply of homes held steady, falling from 0.8 months of supply in February 2021 to 0.7 months of supply in February 2022, although both figures are well off from the 1.5 months of supply of homes in February 2020. Home prices have risen in Sacramento but are still comparatively affordable. The median sale price in Sacramento rose by 14.8%, from $425,000 in February 2021 to $488,000 in February 2022.
Standout Findings of the California Housing Market in 2022
One of the biggest findings in the analysis of California’s major housing markets is the rise in home prices in Irvine. The median sale price in Irvine was $890,000 in February 2021, before increasing by an impressive 49.4%, reaching a median sale price of $1,330,000 in February 2022. Out of all California cities with populations of at least 100,000, Irvine’s home price increase is the largest in the state. The second-largest growth in home prices occurred in San Mateo, where the median sale price rose by 44.3%, from $1,128,000 in February 2021 to $1,627,500 in February 2022. Both of these cities have seen their housing inventory fall by more than half. In Irvine, available inventory dropped by 59%, from 500 available homes in February 2021 to 205 homes in February 2022. In San Mateo, the year-over-year decline in inventory was 52.9%, from 136 homes in February 2021 to 64 homes in February 2022.
