According to recent data from Compass, price reductions in the Bay Area are up over 200%. The home market is still cooling down.
This is in contrast to the extremely hot real estate boom of last summer, which was stimulated by the pandemic demand for more room among purchasers and the historically low financing rates. Since July 2021, interest rates have roughly doubled.
Sales of homes are down 38% overall from last year. Meanwhile, a recent survey from the real estate firm revealed that this summer has seen a sharp decline in house appreciation rates.
With 57% of transactions closing over the final list price, down from 73% in April, the proportion of residences that sold for above asking prices has also significantly decreased.
Since mid- to late summer is traditionally a slower selling season in the Bay Area, chief market analyst Patrick Carlisle said it’s still too early to determine whether the market is in a correction.
According to him, the market typically strengthens in the fall with a wave of new listings, with San Francisco’s September typically having the largest number of new listings of any month.
It will be revealing, according to Carlisle, to see if it holds true this year and how shoppers react. Even while fewer new listings are entering the market, the number of active listings is increasing significantly, according to Carlisle. “Accordingly, declining demand is what is causing the increase in supply. It appears that some sellers are currently waiting to sell while they wait for the outcome.
HOUSING AFFORDABILITY INDEX TELLS THE TRUTH
After the California Association of Realtors published its housing affordability index a few weeks prior, which painted a striking image of how pricey the area has grown, this has happened. The minimum income needed to buy a median-priced property in San Francisco increased from $350,400 to $450,800 during the second quarters of 2021 and 2022. San Mateo’s minimum income increased from $390,400 to $512,000, making the situation even worse. In the previous year, the Bay Area increased from $248,000 to $337,200. These numbers, which take taxes and insurance into account, are based on a 20% down payment.