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The year 2022 was a wild one for San Francisco Bay’s real estate market. There were fewer sellers listing homes compared to the previous year and buyers faced higher interest rates that made payments less affordable.
Despite having started as a continuation of 2021’s trends, with sellers having all the power and buyers desperate, everything began to shift by the middle of the year. From May onwards, Bay Area home sales started to decrease.
Now, the question everyone is asking is, “What’s the San Francisco Bay Area real estate market forecast for 2023?” What can sellers and buyers expect as the Bay Area real estate market goes through changing economic and housing trends?
This article provides an overview of the 2023 San Francisco Bay Area real estate market trends to help you plan ahead, whether you’re a seller or a buyer.
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San Francisco Bay Real Estate Market 2023
Before we get started with the 2023 San Francisco Bay Area real estate market forecast, let’s define the Bay Area. The Association of Bay Area Governments considers the nine counties listed below to be the San Francisco Bay Area:
- Alameda
- Contra Costa
- Marin
- Napa
- San Francisco
- San Mateo
- Santa Clara
- Solano
- Sonoma
There are several factors affecting the Bay Area real estate market in 2023. It is important to know what these are in order to have an accurate forecast for this year.
Inflation
Inflation hurts purchasing power and can tighten the buyers’ budgets, affecting the demand on the lower ends of the market. However, because demand is so strong, this is unlikely to have a major impact on home prices unless other economic hurdles develop.
Decreasing Population
The estimated area population has declined from 8.45 million in 2020 to 8.28 million in 2021. This was caused by pandemic-related job losses, high rents, and migration. San Francisco County had the largest one-year population decrease at 6.3%.
Rising Mortgage Rates
Homeownership has become much more expensive, as 30-year mortgage rates are at generational highs. Consequently, potential buyers may decide to wait for home prices to decline to secure an affordable monthly payment.
Higher Rents
As of 2022, Bay Area rents are 1% to 3% below pre-pandemic rates, but these are expected to increase in 2023. Higher rents may encourage people to buy a property, but it may also make it more difficult to save up for a down payment.
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What Do You Think the Housing Market in the Bay Area Will Look Like in 2023?
The real estate market in the Bay Area has traditionally been a seller’s market. However, in 2023, there will be a balanced market between buyers and sellers.
Expect to see some price adjustments as the housing inventory grows. Buyers will have more options and home prices will likely flatten. Furthermore, there is a potential for prices to be lower than the pandemic real estate boom.
Unlike the speculations of some, there will be no collapse of the real estate market. On the contrary, 2023 will offer home-buying opportunities to those who were priced out last year despite the higher interest rates because home values will come down a bit.
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For Home Buyers: Will 2023 Be a Good Time to Buy a House in the Bay Area?
Given the signs indicating that it might be easier for many buyers to purchase a home as prices drop, yes. Keep in mind, though, that you need to be in a strong position to buy a home, which means that:
- You have a steady job
- You have saved up for a down payment
- You have a great credit score
- You have low levels of debt
If you happen to have all of these ticked on, then you can start working with a realtor to find that dream home in the Bay Area.
One of the advantages of buying a home in 2023 is, you get to enjoy the benefits of homeownership sooner rather than later. Owning a house means getting to build equity in a property. This can help increase your net worth and give you more borrowing options should the need arise.
Inventory levels may still be low, but there are more properties coming on the market. Homes are going to sit on the market for longer, so buyers can take their time.
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For Sellers: Will It Be Advantageous to Sell in 2023?
Despite the forecast that the real estate market in the Bay Area will be one that’s balanced between buyers and sellers, 2023 will be one of the best times to sell. Many homes will still be selling above the asking price, and property values will remain above pre-pandemic levels.
As inventory is relatively limited, sellers will still be able to demand to dictate their price. It is best for Bay Area home sellers to list their property at the soonest possible time to have a higher probability of selling their home quickly.
Conclusion
The previous year may have been a shock for both buyers and sellers in the San Francisco Bay Area, but 2023 is predicted to be a much better time for anyone who wishes to sell or buy a property.
Let me help you get the most from the Bay Area’s real estate market. Give me a call today at (510) 746-8240.
Frequently Asked Questions
What is your outlook for the San Francisco Bay Real Estate Market in 2023?
The Bay Area real estate market is predicted to provide a balance between both buyers and sellers. Home prices will drop a little and inventory is expected to increase.
Given current market conditions, what advice would you give to a homebuyer or seller in the Bay Area?
Despite optimism on the forecasted changes in the real estate market in 2023, the market can be tricky. It is best to evaluate one’s personal financial situation before committing to buying a house.
Sellers, on the other hand, will benefit from listing their property at the soonest possible time. This will increase the probability of getting their property sold quickly.