S.F. housing market: Still very few homes, selling even faster – San Francisco Chronicle

The Bay Area housing market is heating back up — but not by much, with the mortgage rate drops that many home buyers were awaiting showing little sign of materializing anytime soon.

More homes in the San Francisco metropolitan area are selling this year compared to early 2023, and properties are entering the market slightly faster. But those numbers are still far lower than they were prior in 2021 and 2022, and behind pre-pandemic levels.

About 2,000 homes in the San Francisco metropolitan area sold in early 2024, up from 1,600 in 2023, a particularly slow year for the Bay Area housing market. That compares to 3,200 in 2022.

Those sales reflect accepted offers for houses, condominiums and apartments with four or fewer units, according to Redfin, which defines the San Francisco metro area as the city and San Mateo County.

Though the number of homes being bought and sold in the San Francisco metro area remain below pre-pandemic counts, many of the properties that do hit the market get snatched up quickly. More than half — about 56% — of homes sold in the region this year found a buyer within two weeks, Redfin’s data shows, up from 47% in early 2023. That’s also a higher rate than pre-pandemic years. In 2019, for example, 50% of homes sold within that time frame.

For most of 2023, it seemed like the longer home buyers waited, the further prices dropped, said Steven Mavromihalis, a San Francisco real estate agent with Compass. But when the Federal Reserve announced late last year that it planned to cut interest rates in 2024, buyers started coming back to the market.

“We have all this pent up demand … and nobody wanted to be the person standing up without a chair when the music stopped,” Mavromihalis said.

But those interest rate cuts — and the flood of home buying many real estate agents expect it to bring — haven’t arrived yet, delayed by stubbornly elevated inflation.

From March 11 to April 7, the most recent four-week period for which Redfin has data, homes in the San Francisco metro area sold in a median of 15 days, about a week faster than the median time a year ago.

San Francisco and San Mateo County aren’t the only parts of the Bay Area where the market has remained sluggish, but others are showing a bit more dynamism. The number of new listings, in particular, has recovered a bit more quickly in other nearby metro areas. In the San Jose metro area, where home prices surged after the pandemic began, new listings rose by 23% between early 2023 and early 2024. Sales rose by 21% over the same period.

“It’s not anywhere near where we need to be to meet buyer demand,” said Nikki Edwards, a Realtor at Silicon Valley-based EQ1 Real Estate. “(There’s) definitely still a shortage here.”

The Oakland metro area also saw more homes hitting the market, with a nearly 19% jump. But sales grew by just 5%.

Many home buyers and sellers are hesitant to enter the market with the average mortgage rate for a 30-year loan still near 7%. But while some buyers have shaken off their “rate shock,” Edwards said, homeowners who purchased at a much lower mortgage rate often feel locked in to their current property.

The slowly growing demand for homes — and the lack of supply — is a major reason home prices are still growing despite elevated mortgage rates, Edwards explained.

“These sellers are still holding off. They’re definitely not ‘flooding the market’ by any means,” she added. “(But) they’re starting to trickle in a bit more.”

Reach Christian Leonard: [email protected]