I am pleased to share with you our latest Market Report for the San Francisco Bay Area. The report begins with economic and real estate commentary presented in partnership with the Rosen Consulting Group (RCG). For the statistical report of the regional housing market, we look at the ten counties associated with the SF Bay Area, focusing primarily on detached single-family homes, with added coverage of the significant condominium market in San Francisco. Enjoy the information and insight provided in the report and I look forward to discussing the market with you.
CONTINUED PROGRESS
Building on a strong January, the housing market continued to improve in February as buyer activity improved. Despite ongoing cost-cutting in technology and other industries, the regional economy added more than 60,000 jobs last year. The unemployment rate increased slightly to 4.1%, which was still tight by historical standards. Continued economic gains combined with stable mortgage rates should support an additional rebound in housing demand through the remainder of the year.
MORE HOMES FOR SALE
For-sale inventory eased further, with a growing number of homes coming onto the market in February. The number of active listings in the SF Bay Area increased by 15% to 3,800, which was nearly 3% greater than the same month last year. Listings increased in all SF Bay Area counties, with the largest increases in Marin and Santa Clara counties and the most modest increases in San Mateo and Sonoma counties. While inventory increased in most neighborhoods, listing volume remained lower than historical averages.
ECONOMIC FACTORS PUSH SALES
While buyers were still somewhat limited by tight inventory, sales velocity accelerated. Some buyers were enticed off of the sidelines as fixed-rate mortgage rates decreased to start the year while others took advantage of capital gains from the rallying stock market. While housing market activity typically begins to improve in February, recent improvements were far more impressive than typical seasonal gains.
Single family home sales increased to 2,200, an increase of 23% from January and 13% more than February of last year. This was the largest year-over-year increase in sales activity since mid-2021. Notably, closed sales increased from January in all SF Bay Area counties, and increased year-over-year in seven counties. Alameda, Contra Costa and Santa Clara counties accounted for the majority of sales, after increases of 10%, 15%, and 26% year-over-year, respectively. Sales activity also picked up in San Francisco and San Mateo counties, where sales increased by more than 15% year-over-year.
INCREASED ACTIVITY AT HIGH END
The number of homes that sold for between $1.25 and $2.5 million increased by more than 50% from the previous month. Similarly, more than 250 homes sold for $2.5 million or more, an increase of 32%. Meanwhile, the number of homes that sold for less than $1.25 million declined slightly in February.
The increase in the active buyer pool also drove greater competition among those homes listed for sale. The average number of days that homes spent on the market decreased in all but one SF Bay Area county in February. Across the SF Bay Area, homes spent an average of 32 days on the market, which was ten days less than in January.
LOOKING AHEAD
The SF Bay Area housing market should continue to improve heading into the spring buying season. While potential buyers have adjusted to the higher mortgage rate environment, even a modest drop in fixed-rate mortgage rates can entice even more buyers to enter the market. The relatively strong economic conditions will continue to support income gains, helping to offset some of the declining affordability levels. With pricing stabilized, more potential sellers may list homes, improving the number of options for the broad pool of buyers. Accelerating sales and pricing point to the potential for the regional housing market to rebound strongly through the remainder of the year.
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