Here’s your mid-year San Francisco housing market update for the rest of 2023, courtesy of everyone's favorite top SF Bay Area Realtors at Danielle Lazier Vivre Real Estate! 🙋♀️
We've reached a turning point in the year, so let's take a closer look at the macro market trends and signals that will shape the real estate landscape for the next six months.
As we wrap up the first half of 2023, we're seeing some interesting national trends in the real estate market. Home purchases are starting to decelerate, and prices are expected to decline for the second half of the year. Inventory usually peaks around this time, with the best inventory getting listed in the first half of the year.
This year has had some big surprises. Six months ago, it was generally safe to expect an extension of last fall where inventory would keep rising due to ultra-low demand. But demand stabilized and new supply became even more rare, leading to declining inventory and home prices holding up (or rising).
San Francisco Perspective: As San Francisco Realtors, we're seeing a similar trend. The demand for homes in our city has remained strong, despite the broader market trends—mortgage rates, tech layoffs, economic uncertainty, and so on. However, the supply of new listings has been limited, with more sellers than buyers choosing to "wait and see," which has contributed to the resilience of home prices in our area.
Mortgage rates seem to be climbing again, and consumers are definitely sensitive to the affordability challenges that this creates. The real estate market is fragile in the face of consistently higher mortgage rates, and rapidly changing rates pose risks.
+ Best SF Realtors Tip: Want to see the latest rates? Mortgage News Daily and Freddie Mac's Prime Mortgage Market Survey are two great resources.
As of the end of June, there are now 467,000 single-family homes on the market around the US, two percent fewer than last year at this time. Home buyers are keeping prices elevated by buying basically all that is offered at these prices and at these mortgage rates.
San Francisco Perspective: In San Francisco, the impact of rising mortgage rates is particularly significant due to the high cost of homes. However, our city continues to attract buyers who see the long-term value in owning property in one of the most desirable locations in the country. Also, larger “jumbo” loans and those with shorter terms—both of which are more common in SF—tend to offer more attractive interest rates than a conventional 30-year, fixed-rate mortgage. As of early July 2023, the most popular loan type in SF is actually under 6%!
As we move through the second half of the year, we'll see if mortgage rates over seven percent slow the market again like last year and let inventory build, or if sellers remain scarce and inventory starts falling again.
The rate of home sales has peaked for the year and experienced a significant decline at the start of the month due to the Fourth of July holiday. However, people are mostly adjusted to higher mortgage rates, and there are still buyers in the market.
San Francisco Perspective: Looking ahead, the San Francisco market may continue to defy broader trends due to its unique characteristics. Despite higher mortgage rates, the desirability of living in San Francisco and the limited supply of homes could continue to support our market.
The power of data in indicating trends in demand and home prices is undeniable. We could see the steep reduction in demand happening last year at this time, which was evident three to six months before sales actually declined.
The median price of single-family homes in the US is currently $455,000, which has remained unchanged for several weeks. By July, there may be positive year-over-year home price increases.
San Francisco Perspective: In San Francisco, our median home price is significantly higher than the national average, reflecting the premium that buyers are willing to pay for our unique market. The power of data is particularly important in our city, where market trends can vary significantly from neighborhood to neighborhood.
The end of June is a transition point for the housing market for the year. This year, you'll see the headlines start to change too. Home buyers and sellers need to know what's happening. They have a lot of opinions, and there's a lot of noise to filter. That’s why we maintain an open line of communication to get our clients the actual data as soon as it becomes available.
San Francisco Perspective: Staying informed is especially important in the San Francisco housing market, where conditions can change rapidly. As your trusted real estate advisors, we are here to provide you with the most up-to-date and relevant information to help you make informed decisions about San Francisco Bay Area real estate.
As always, if you want to know what's happening in the local market as it happens, don't hesitate to reach out. We're here to help you interpret this sometimes crazy, always exciting market! With the market still in flux, it's a critical time to be properly informed.
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