CALIFORNIA - If you are planning to purchase a San Francisco, California property, there are a few things that you need to know. In the past few years, prices have been very high. But, the recession has affected the real estate market across the state. In particular, the multifamily market has been affected. Though occupancy and rental rates have declined, the rate of development activity has not.
While San Francisco is not experiencing an oversupply problem, the housing market is still competitive. Home sales are down by nearly a third from last year. Meanwhile, interest rates are starting to impact prospective buyers. But, home prices are still expected to rise by 7% over the next five years.
While the Bay Area real estate market is still in a transitional phase, the recent influx of new homes to the market has helped to re-balance the supply-demand dynamic. While this may not create a buyer's market in 2023, the lack of inventory increases buyer activity.
While the pace of home price appreciation in the Bay Area is projected to slow slightly in the next few months, it is projected to resume a more normal pace by mid-2023. However, the last two years have been anything but ordinary. The COVID pandemic led to a surge in homebuying demand, which depleted inventory and pushed prices up. The median home value in the Bay Area real estate market increased by 20% over the past few years, but this growth rate is not sustainable over the long term. As the demand decreases, house values will cool down.
The housing market in San Francisco is overvalued and stretched. Rising mortgage rates and affordability crushing could lead to a crash in the 2023 market. However, the overall market will not likely hit a new all-time high in 2023. Therefore, 2023 could be a good time to sell your home. However, investors should be cautious. With low home inventory and rising prices, you should be prepared to sell your property in 2023.
New office construction is expected to remain weak in the Bay Area. However, the drop in sentiment will continue to affect the office market. According to the survey, half of the Bay Area panelists said their plans were unaffected by the pandemic, while one-third of those in Southern California are scaling development by 15 percent. As a result, land costs, labor costs, and building materials will likely rise.
After years of increasing home prices, California's housing market is finally showing signs of slowing down. In June, sales were down by nearly one percent. This is the first decline in home sales since May 2020. Meanwhile, the unsold inventory index reached its highest level in two years. Active listings also rose by 28.8% in May, the highest since November 2016.
