Price reductions in Bay Area housing market up nearly 200%

That’s in contrast to last summer’s incredibly hot real estate boom, fueled by pandemic buyers’ desire for more space coupled with low interest rates. Interest rates have almost doubled since July 2021.

Overall, home sales are down 38% from last year. Meanwhile, the new report from the real estate brokerage showed that home appreciation rates have plunged this summer.

The percentage of homes that sold for over asking prices has also come way down, with 57% of sales closed over the final list price, down from 73% in April.

Chief market analyst Patrick Carlisle said it’s still too soon to tell whether we’re in a market correction, especially since mid- to late summer is typically a slower selling season in the Bay Area. He said the market usually picks up in the fall with a rush of new listings and September usually has the highest number of new listings of any month in San Francisco.

Carlisle said watching to see if that holds true this year, combined with how buyers respond, will be telling. “The number of active listings is climbing pretty quickly even though the number of new listings coming on the market is not,” Carlisle said. “So the increase in supply is being driven by decreasing demand. For the time being, it seems like some sellers are now holding off to see how things shake out.”

This comes weeks after the California Association of Realtors released its housing affordability index, painting a stark picture of how unaffordable the region has become. In San Francisco, the minimum income required to purchase a median-priced home leapt from $350,400 to $450,800 from the second quarter of 2021 to the second quarter of 2022. It was even worse in San Mateo — the minimum income jumped from $390,400 to $512,000. The Bay Area as a whole went from $248,000 to $337,200 in the past year. These figures are based on a 20% down payment and include taxes and insurance.

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