Bay Area Home Sales Grow 9%, Bounce Back from 15-Year Low

Bay Area home sales have increased by 9%, rebounding from a 15-year low recorded in 2023. This improvement occurred despite mortgage rates rising to 6.5%, nearly double the historically low rates of around 3% seen during the pandemic. Glen Mitchell, a Half Moon Bay-based agent, observed that “buyers realize rates aren’t going to get any lower. They just get used to them.”

This growth has been accompanied by a 6.6% rise in home prices across the nine-county region, according to data from the California Association of Realtors (CAR). Home price increases were seen across the region’s core counties:

• Contra Costa County: a 3.1% increase to $876,263

• Alameda County: a 6.1% increase to $1.3 million

• San Francisco: a 4.3% rise to $1.6 million

• Santa Clara County: a 9.3% surge to $1.9 million

• San Mateo County: a 6.6% increase to $2.1 million
  

Prices also rose in Marin, Napa, Solano, and Sonoma counties. The ongoing strength of the tech sector, despite volatility, has helped fuel a robust demand for high-end properties.

All-Cash Transactions Remain Strong All-cash transactions made up 20% of home purchases across the region. In certain affluent neighborhoods, these deals were even more prevalent:

• Atherton's 94027 ZIP code: 65% of home purchases were made in cash

• Walnut Creek's 94595: 67%

• Berkeley's 94709: 68%

Economic Optimism Tempered by Inventory Issues Jordan Levine, the chief economist at CAR, expressed a cautious optimism about the recovery, noting, “I do think the worst is behind us. But it’s not going to be a V-shaped recovery.”

Despite a 16% increase in listings across the core five-county Bay Area, the overall inventory remains far below pre-pandemic levels. The housing shortage is being exacerbated by low levels of new construction. Levine stressed that a lack of development in recent years has slowed the pipeline of resale properties, which traditionally helps maintain market balance.

Rising Interest Rates Impact Market Activity Interest rates on 30-year fixed-rate loans peaked at 7.22% in May 2024, traditionally one of the busiest home-buying seasons in the Bay Area. These elevated rates have contributed to a tightening of housing supply as potential sellers delay putting their homes on the market to avoid losing their favorable lower-rate mortgages.

Sources:

• The Real Deal article

• California Association of Realtors (CAR) statistics

• Comments from Glen Mitchell and Jordan Levine via The Real Deal