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Bay Area Housing Market insights for Q2, 2021, by Kenneth Session.
By Kenneth Session
BAY AREA HOUSING MARKET FOR Q2, 2021
The housing market in the Bay Area in the first quarter of 2021 was characterized by low inventory, high demand and low interest rates; with homes moving 46% faster than last year, according to the San Francisco Chronicle. This spike can be attributed to the high demand and to the residents’ highincome earners who took advantage of the historically low mortgage rates.
According to a forecast by Noradarealestate.com, in the first quarter, the San Francisco Bay area had a 25% increase in sales with the months of supply of single-family homes declining to 1.3 months as of April 2021 as per Noradrealestate.com. As a result of this low supply, there have been immense bidding wars that have seen quite a number of would-be house owners being locked out.
As we move into the second quarter of 2021 a lot of people might be wondering if things are going to change or is this even a good time to buy a home?
WHAT TO EXPECT IN Q2?
DEMAND
As a result of the pandemic, it’s hard to compare 2021 with other sales cycles. Nonetheless, most of the trends that characterized the first quarter will continue into spring according to Forbes. The market in a nutshell will remain very competitive. According to Forbes, the demand for houses is set to even outdo the notable Spring of both 2019 and 2018.
Unfortunately, even with new inventory being constructed, it will not be able to sate the demand. The prices are going to appreciate even further in lieu of the short supply of inventory. However, the prices will let up as we enter the summer.
SUPPLY
Similar to the first quarter, the second quarter will see a lot of buyer fatigue as the bidding wars will not let up. Would-be homeowners are going to price out, according to Noradrealestate.com. This might see a lot of families opt out of the market and migrate out of the area. This in turn will drive up the demand for houses in suburbs. In addition, a lot of buyers will also have to make do with what is available in the market since inventory is set to remain low.
PRICE APPRECIATION.
With the tight inventory currently available, prices are going to keep going up. The Bay Area is posting double digits increase from the same time last year. Home owners are willing to pay over listing price to win bids, according to Noradrealestate. com. This will remain the same throughout the second quarter as finding homes will be difficult.
RENTAL PROPERTIES.
There is also hope for those hoping to rent or get a townhouse. Experts state that rents and condominium prices are going to remain low for the rest of the year. This is because the vacancies rate has doubled to 8.3% this year as many companies opt to work from home as per Noradrealestate.com statistics. As a result, rent has considerably dropped and you are likely to get a great deal. Therefore, this is the time to do it.
However, as attractive as that may appear, it’s worth noting that with the increase in vaccination, a lot of companies will be moving back to office spaces, driving the rent up in the long-term. According to a recent Forbes, real estate experts Kamini Lane and Selma Hepp advised that in order to navigate through this hectic housing market successfully, it is recommended to work with an agent who will guide and educate you on the particular market in your neighborhood. Due to the competitive nature of the market, home buyers should put in their best offers. It is also advisable that when you think of buying a house this year to get pre-approved by a licensed lender to make the process a little easier.
Prices are going to improve towards the end of the year with the increase in vaccination. This is because people will have a lot more confidence and will be willing to sell their homes. As the supply increases, the bidding wars will ebb and so will the prices. That will only improve further as the economy improves and the mortgage interest rates begin to rise.
There is going to be an imbalance of supply and demand in the bay area in the second quarter. It is however a good time to enter the market and realize your home ownership dream when the mortgage rates still average at approximately 3.0%. House pricing is not stabilizing any time soon, so if you can buy now.
Work cited
https://www.noradrealestate.com/blog/san-francisco-real-estate-market/ https://www.forbes.com/sites/ellenpairs/2021/04/23/industry-insights-into-thecalifornia-real-estate-market-from-compass-and-corelogic/ https://www.sfchronicle.com/local/article/Bay-Area-home-prices-just-hit-arecord-high-Will-16186890.php
