Bay Area Real Estate Market Facts - September 2022
Bay Area Real Estate Market September 2022
Prices are going down? No wait, some people say prices are going up, so which is it? I’m going to unpack the East Bay Real Estate market for you right here, right now. This is September 2022 and we’re going to review the August data for the Bay Area Real estate Market.
I’m not gonna make you wait till the end! Everyone wants to know Home price appreciation, how much money did my house make for me in the last year?? But you gotta know, YOY Home price appreciation is really not the whole story, but here it is:
Year over Year Median house price appreciation in the Bay Area:
August 2022 > -2%
August 2021 > +18%
If you want to dig in a little deeper than just YOY appreciation comparisons and you want to understand the trends then stick with me:
Here’s what happened in August:
Overall, buyer demand picked up due to a few things:
1. Priced reductions
- August 2022 > up a massive 117% since August 2021
- July 2022 > down 12
2. Fewer buyers/less competition (this could be seasonality, kids in school and/or market uncertainty) makes buyers feel safer than they have in the past
3. Increased inventory – Simply more homes for buyers to choose from
- Inventory of homes for sale:
- August 2022 > up 38% since August 2021
- July 2022 > down 6% since last month
4. There was a dip in Interest Rates coupled with a fear of future interest rates and FOMO so buyers wanted to take advantage of this
5. A tick up of the Stock market and fear of future recession
So, how the market is shifting and what data points tell us not just where we’ve been but where we’re going.
To know where we’re heading, we really need to understand the psychology of buyer’s and sellers. We can tell the psychology is shifting into buyers and sellers accepting our new reality. This is evidenced by the numbers that define psychology. The leading indicator that tells me how buyers are sellers are settling in is :
Average Sale Price to List Price Comparison
- August 2022 > 99% of asking price
- August 2021 > 111% of asking price
Pending/Homes or contracts in Escrow
- August 2022 > down 34% since August 2021
- July 2022 > up 3% from last month
Even though Sales are still lower since this time last year, we noticed a rebound in August from July while buyers and sellers were still getting their “sea legs” (a bit like a drunken sailor, if I may) trying to figure out the new market we’re in.
Number of homes Sold
- August 2022 > down 32% fewer homes sold than in August 2021
- July 2022 > up 9% more home sold since last month
August continued the overall trend we’re seeing of Overbidding plunging while market times are increasing
Sellers pulled back on listings their homes in August and the number of new listings still remains low as past listings are taking longer to sell and homes are coming back on the market after a failed escrow.
NEW listings coming to market:
- August 2022 > down 22% since August 2021 when more sellers were listing their homes
The number of active listings actually dropped in August after 6 months of increases in Inventory. Historical seasonality probably played it’s part additionally, right before the Fall season which usually brings a secondary spike before the holiday slowdown in November.
As of early September, Interest rates have once again increased and stock markets have declined. Both continue to have a significant impact on the volatility in the market values in the Bay Area.
My advice for buyers in this market climate:
If you’re sitting on the bench, you need to get that home you’ve been looking poking around looking at. If it has higher market times, don’t worry, that doesn’t mean anything. Sellers are nervous and unsure right now, so you may find that you get a better deal than you ever imagined.
Sellers, I have 2 tips for you:
- Price it RIGHT, price it for today, not for yesterday. Buyer’s don’t care about yesterday. While there are fewer NEW homes coming to market, you need to stand out right away when your listing is fresh and NEW. You only have one chance to make a first impression in this market. If you want that excitement and momentum, you have create it!
- Make your house shine, listen to your agent and spend a couple bucks or use your equity to make needed improvements so your home will shine. Buyers have more to chose from and if you want to “win” you need to stand out as better value to the serious buyers.
I’ll continue to monitor buyer/seller psychology in the Fall selling season and report back to you!