The Bay Area’s wild housing market might be cooling down a little. Data shows that for the first time in a decade, Bay Area homes are selling for less than their asking price on average, the Bay Area News Group reported.
That’s not to say that it’s exactly affordable: The average price of a home in San Francisco did go down 8.3% since last year — to $1.2 million, according to Redfin. (Redfin puts that as $1.1 million in San Jose, down 6.3%, and $690K Oakland, down 16.9%.)
That's likely due to multiple factors, experts say, including the SF exodus. But one big part is that nationwide, average mortgage rates have risen significantly in the last year, climbing up to 7.08% last October, the highest rates since 2002. They’re currently about 6.3% — but compare that to 2.96% at the beginning of 2021.
A good chunk of would-be buyers are deterred, and sellers are frustrated. Buyers that can still afford a new place have a few more options, and homes have been staying on the market much longer. Redfin’s data showed that properties in Contra Costa County, for example, are staying on the market for 45 days, up from 12 this time last year.
Asking prices are down too — across the five main Bay Area counties, home prices dropped about 5% and 10% compared to February 2022, according to the Bay Area News Group. They hit their highest levels in May last year, and around 25% to 35% under that now.
But the key metric, Redfin’s “sales-to-list ratio,” which compares sales and asking prices, shows that the prices in the region are reportedly down. When the ratio is above 100%, it means home prices are selling higher than asking prices, and when it’s under houses are selling lower. For example, record Bay Area house prices in May 2022 saw sales-to-list ratios reach 114% in San Jose, meaning houses were selling for 14% above asking price. At that time, Oakland and San Francisco metros ‘ ratios were at 112% and 111%, respectively.
Now, for the first time since Redfin began keeping track since 2012, the rate has been 98% and 100% in the Bay Area for the past three months — meaning houses are selling for up to 2% below the asking price.
In contrast, just a year ago in May 2022, when home prices hit record highs, the sales-to-list ratio in the San Jose metro area reached 114%, while the Oakland and San Francisco metros were at 112% and 111%, respectively.
However, real estate agents told Bay Area News Group that desirable houses — those with yards and in good school districts — are still selling for above asking prices.
Related: Bay Area Home Prices Actually Dropping; Cities Here Dominate the ‘Fastest-Cooling Housing Markets’ List [SFist]
Image via Unsplash/pixeldan.