Leave a Message

Thank you for your message. We will be in touch with you shortly.

September Market Update: Greater Bay Area

Steven Huang September 24, 2020

Real Estate

September Market Update: Greater Bay Area

Key Topics and Trends in September

The pandemic tested the efficacy of large-scale remote work, causing companies to reconsider the need for massive office spaces. Notably, Pinterest announced in late August 2020 that it paid $89.5 million to terminate its lease on a yet-to-be-built 490,000 square foot office space. The choice reflects Pinterest’s reevaluation of its workforce needs, and its realization that more employees can work from home on a regular basis. Pinterest is showing another “new normal” for companies: hiring employees from different parts of the country without requiring those employees to relocate near the office. As a result, companies and employees are less restricted by geographic location than they ever have been in the past.

SFGate reports that the Bay is not going through an abnormal population exodus; rather, the area simply is not seeing the usually high number of people moving to the Bay.

Although fewer people moving to the Bay sounds like it would lower the demand for homes and, therefore, decrease home prices, the median home price has actually remained stable through August. In order to explain why prices have not changed, we can look to affordability. According to the California Association of Realtors, a median homeowner needs to earn a minimum income of $186,400 and be able to pay $4,660 per month for mortgage, taxes, and insurance. This monthly expense is almost twice the average renter, who now pays less than $3,000 per month.

Unlike many other cities around the country where the cost of a mortgage is similar to the cost of rent, the Bay Area maintains a large gap between those that can afford rent versus those that can afford a mortgage. The rental market, which is receiving a lot of press for its steep decline, does not foreshadow a decline in single-family home prices.

September Housing Market Updates for the
Greater Bay Area

A note on the data: We utilize data from the California Association of Realtors®, which provides an incredibly rich data set. In an effort to bring you these reports in a timely manner, for the month of September, we are using July’s numbers to analyze market trends over the first half of the year. 

Single-family home prices climbed back to the highest median price on record as inventory waned and sales increased. The condo market saw a substantial increase in median prices.

Year-over-year, single-family home prices are up 11%. The Bay market as a whole has fared well throughout the pandemic with year-over-year prices dipping briefly in April and May and rebounding in the summer months.

As we dive deeper into the county data, we see that single-family homes in all counties posted gains year-over-year.

Median condo prices posted impressive gains across counties with the exception of Napa. Marin county saw significant price increases for both single-family homes and condos.

The inventory of homes for sale remains near its high for the year but are far lower than last summer. With the exception of San Francisco, inventory is lower, which we can see reflected in the increased median home prices. Lack of supply compared to demand typically buoys the Bay Area’s prices, which still remains true. Demand has remained high in the summer months, and the area may see an increase in new listings with sellers entering the market to capitalize on the favorable seller’s market.

To fully appreciate the year-over-year decline in inventory, we must look at the ways in which sales behaved in 2020. During the initial months of the pandemic (March, April, and May), buyers and sellers hesitated to enter the market or entirely withdrew from it. Sellers began to reenter the market in May, thereby increasing inventory, but not to last year’s levels. Without the usual inventory, buyers have had fewer options from which to choose, and yet, sales have rebounded, surpassing last year’s numbers. We’ve seen a large year-over-year sales increase, which is an amazing recovery from the lows in May. The increase in sales shows that there is still high demand in the area, despite the lower-than-usual inventory.

We can look to Months of Supply Inventory (MSI)—the measure of how many months it would take for all current homes for sale on the market to sell at the current rate of sales—as a metric to judge whether the market favors buyers or sellers. MSI has an average of three months in California, which indicates a balanced market. An MSI lower than three means that buyers are dominating the market and there are relatively few sellers, while a higher MSI means there are more sellers than buyers. The MSI for single-family homes fell under the three-month mark, indicating that the market is favoring sellers again. MSI decreased in all markets except for San Francisco, which is still under three months.

The Days on Market (DOM) decreased in July, corresponding to the increased sales, and is more in line with what we typically see in the summer season. DOM for the North Bay are noticeably higher than the other markets. Condos, generally, take longer to sell, which makes working with an agent that can differentiate the property and create a winning selling strategy even more important.

The San Francisco market gave us an interesting case study for a market that is always undersupply suddenly facing an influx of properties. Home prices have remained steady despite a large boost in inventory, especially for condos, over the last several months. San Francisco, and California in general, tend to live in a constant state of undersupply, which elevates home prices. We often are able to explain home price fluctuation through supply and demand, but recent months point toward a third factor, Per Capita Income, which explains why the large increase in supply did not cause a similar drop in price.

We found that San Francisco home prices track much more similarly to per capita income rather than working population (as a proxy for potential home demand) as shown in the chart below. Per capita income illustrates why home prices don’t immediately fall when more inventory comes to market. Simply put: home values are supported by the overall wealth in the area.

Those unaffected financially by the pandemic likely have more money than expected without the usual travel and entertainment expenses. With more expendable income and low cost financing, we expect home prices to remain stable.

In summary, the lower levels of inventory have made the market more favorable to sellers. We believe sales will continue to trend upward, which could bring more homes to the market to satisfy the demand for housing in the Bay Area. The housing market has shown its resilience through the pandemic, remaining one of the safest asset classes.

As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we have shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.


Recent Blog Posts

Browse our blog posts to be in the know.

North Bay October '24 Real Estate Update Ascend RE

South Bay Peninsula October '24 Real Estate Update Ascend RE

East Bay October '24 Real Estate Update Ascend RE

San Francisco October '24 Real Estate Update Ascend RE

Shaping the Future

A Creative Guide to the Top Schools Near San Francisco

14 Terrifying Bay Area Haunted Houses For The Bravest Among Us

From Ramen to Rice Paper

Discover the Best Asian Markets Near San Francisco

A Guide to the Best Mexican Eats

Top Taquerias Near San Francisco

San Francisco September '24 Real Estate Update Ascend RE

East Bay September '24 Real Estate Update Ascend RE

South Bay Peninsula September '24 Real Estate Update Ascend RE

North Bay September '24 Real Estate Update Ascend RE

Explore the Bay Area's Natural Beauty

Best Hiking Trails Near San Francisco

A Tail-Wagging Adventure

Top Dog Parks Near San Francisco

A Food Lover's Paradise

Top 10 Must-Try Restaurants Near San Francisco

Los Angeles August '24 Real Estate Update Ascend RE

San Francisco August '24 Real Estate Update Ascend RE

East Bay August '24 Real Estate Update Ascend RE

South Bay Peninsula August '24 Real Estate Update Ascend RE

North Bay August '24 Real Estate Update Ascend RE

North Bay July '24 Real Estate Update Ascend RE

San Francisco July '24 Real Estate Update Ascend RE

South Bay Peninsula July '24 Real Estate Update Ascend RE

East Bay July '24 Real Estate Update Ascend RE

Los Angeles July '24 Real Estate Update Ascend RE

Los Angeles June '24 Real Estate Update Ascend RE

San Francisco June '24 Real Estate Update Ascend RE

East Bay June '24 Real Estate Update Ascend RE

South Bay Peninsula June '24 Real Estate Update Ascend RE

North Bay June '24 Real Estate Update Ascend RE

San Francisco May '24 Real Estate Update Ascend RE

Los Angeles May '24 Real Estate Update Ascend RE

East Bay May '24 Real Estate Update Ascend RE

South Bay Peninsula May '24 Real Estate Update Ascend RE

North Bay May '24 Real Estate Update Ascend RE

Upholding Equality: The Significance of the Fair Housing Act

Bay Area: Spring and Summer Gardening Guide

North Bay April '24 Real Estate Update Ascend RE

South Bay Peninsula April '24 Real Estate Update Ascend RE

East Bay April '24 Real Estate Update Ascend RE

Los Angeles April '24 Real Estate Update Ascend RE

San Francisco April '24 Real Estate Update Ascend RE

South Bay Peninsula March '24 Real Estate Update Ascend RE

East Bay March '24 Real Estate Update Ascend RE

San Francisco March '24 Real Estate Update Ascend RE

Los Angeles March '24 Real Estate Update Ascend RE

North Bay March '24 Real Estate Update Ascend RE

Spring 2024 Farmer's Market Schedule

San Francisco February '24 Real Estate Update Ascend RE

Los Angeles February '24 Real Estate Update Ascend RE

North Bay February '24 Real Estate Update Ascend RE

South Bay Peninsula February '24 Real Estate Update Ascend RE

East Bay February '24 Real Estate Update Ascend RE

San Francisco January '24 Real Estate Update Ascend RE

Los Angeles January '24 Real Estate Update Ascend RE

North Bay January '24 Real Estate Update Ascend RE

South Bay Peninsula January '24 Real Estate Update Ascend RE

East Bay January '24 Real Estate Update Ascend RE

San Francisco December '23 Real Estate Update Ascend RE

East Bay December '23 Real Estate Update Ascend RE

North Bay December '23 Real Estate Update Ascend RE

South Bay / Silicon Valley December '23 Real Estate Update Ascend RE

Los Angeles December '23 Real Estate Update Ascend RE

2023 HOLIDAY COOKIE DECORATING SOCIAL

South Bay / Silicon Valley November '23 Real Estate Update Ascend RE

Los Angeles November '23 Real Estate Update Ascend RE

East Bay November '23 Real Estate Update Ascend RE

North Bay November '23 Real Estate Update Ascend RE

San Francisco November '23 Real Estate Update Ascend RE

2023 Bay Area Holiday Schedule

Analysis: Homes Near Trader Joe’s Have Higher Values

North Bay October '23 Real Estate Update Ascend RE

East Bay October '23 Real Estate Update Ascend RE

South Bay / Silicon Valley October '23 Real Estate Update Ascend RE

Los Angeles October '23 Real Estate Update Ascend RE

San Francisco October '23 Real Estate Update Ascend RE

Live Work Play Here

For the month of June, we have supported LGBT Asylum Project, and are hosting this brunch in honor of all the great work this nonprofit does. Come join our teams for a… Read more

Hiring Licensed Real Estate Agents

Take your real estate career to the next level!

North Bay: January '23 Housing Update

What does 2023 have in store for the housing market?

San Francisco: January '23 Housing Update

What does 2023 have in store for the housing market?

San Francisco: March '23 Housing Update

Spring has sprung and the market is feeling a lot luckier!

East Bay: January '23 Housing Update

What does 2023 have in store for the housing market?

Move by HUD and FHA to provide greater homeownership opportunities

Have questions about the market? Our team is here to help and connect you to a lender.

Mortgage Rates Drop Prompts Buyer Demand

Mortgage Applications jump due to lowest rates since September

San Francisco Owners Required to Register Homes

March 1 Deadline for Rent Board Housing Inventory

Tenant Buyouts

What does it entail, and what does it mean for the residence owner going forward?  

Your Spring Guide to Bay Area Farmers’ Markets

Full Guide to 79 different farmers’ markets in San Francisco and beyond.

Los Angeles September '23 Real Estate Update Ascend RE

North Bay September '23 Real Estate Update Ascend RE

East Bay September '23 Real Estate Update Ascend RE

South Bay / Peninsula September '23 Real Estate Update Ascend RE

San Francisco September '23 Real Estate Update Ascend RE

The 12 most delicious new restaurants in the Bay Area

Summer is here, and so are the boozy slushies, all-you-can-eat tacos and double cheeseburgers

East Bay August '23 Real Estate Update Ascend RE

South Bay / Peninsula August '23 Real Estate Update Ascend RE

North Bay August '23 Real Estate Update Ascend RE

Los Angeles August '23 Real Estate Update Ascend RE

San Francisco August '23 Real Estate Update Ascend RE

San Francisco July '23 Real Estate Update Ascend RE

East Bay July '23 Real Estate Update Ascend RE

Let’s Talk

You’ve got questions and we can’t wait to answer them.