Despite negative press over the last few years, the Bay Area retains its title as the most expensive housing market in the country. In December 2023, the median sale price for a home in San Mateo County was $1.655MM, and in San Francisco, it was $1.432MM—four times the national median of approximately $400,000. Over the last five years, prices in both markets have generally trended upwards despite month-to-month fluctuations.

The chart below details the year-over-year change in the monthly median sale price of single-family homes. For example, in December 2023, the median sale price for a home in San Francisco was -8.9% lower than the same month a year ago; in San Mateo County, the difference was a 7.5% increase.

In both markets, homes sold for a premium over their list price—1.6% in San Mateo County and 3.4% in San Francisco. While this is lower than the heyday for housing in the Bay Area when homes routinely sold at double-digit premiums over ask, it is still notable, especially when coupled with the less than one-month median days on market for both areas.

While prices have broadly trended up over the last five years, the bulk of those gains were during the Covid- era boom between the summer of 2020 and late spring 2022. Between June 2022 and August 2023, year-over- year changes in the monthly median sale price were negative. The Fall of 2023 marked a reversal for San Mateo County, which ended the year on the upturn, but San Francisco remains negative overall.

Looking at monthly closings, the post-Covid boom slowdown is clearly evident. The chart below details the year-over-year difference in the number of monthly closings.

Year-over-year closings picked up substantially in the Summer of 2020. They peaked in the second half of 2020 and first half of 2021 leading to smaller, and sometimes slightly negative, year-over-year changes through the end of Fall 2021. The last few months of 2021 and early 2022, while still considered part of the boom, saw much fewer sales than the height of the run-up. Between June 2022 and October 2023, year-over- year sales were consistently down until the last few months of 2023 when San Mateo County saw a reversal, ending the year with a 3.2% increase in December closings compared to the same month the previous year.

Much of the negative press related to Bay Area housing is concentrated in downtown San Francisco, particularly for condominium products. The single-family housing market, both in San Francisco and the surrounding Bay Area (in our example, San Mateo County), is doing much better than the news suggests. While the market is not as red-hot as its pre-Covid or pandemic-era boom days, it remains formidable. Homes that are priced well continue to sell.

Looking ahead, the area faces challenges related to the tech industry—2023 saw mass layoffs at some big- name firms plus the lingering effects of the pandemic-era tech company exodus—as well as the broader uncertainty going into a contentious election year. There are some positive tailwinds, however. While mortgage rates remain high relative to a few years ago, they are no longer expected to increase, with some predicting decreases in 2024. A more favorable rate environment, one that’s not seeing constant and rapid increases, will help buyers and sellers accept this new normal and re-enter the market.

All information is from sources deemed reliable but no guarantee is made as to its accuracy. All material presented herein is intended for informational purposes only and is subject to human errors, omissions, changes or withdrawals without notice.