The Market Continues to Recover, But with Many Dynamics at Play
Buyer demand continued to rebound from the depths of the mid-winter slowdown: The number
and percentage of listings going into contract, and overbidding percentages continued to climb,
and days-on-market to drop as the spring selling season gained traction. Buyers generally
shrugged off the local banking crisis, the main effect of which, so far, has been a significant drop in
interest rates in the 4 weeks after SVB collapsed and First Republic first came under pressure.
But though conditions have improved considerably, the market remains significantly weaker on a
year-over-year basis, and across the Bay Area, median home sales prices have declined. However,
it’s worth remembering that the market in Q1 2022 was severely overheated, and approaching the
peak of a historic, 10-year boom. This will distort many year-over-year comparisons.
The number of new listings coming on market continues to be extremely low, as many potential
sellers hold off from listing their homes due to the doubling of interest rates since early 2022: This
constitutes a huge factor in market dynamics and is undoubtedly holding back sales activity.
Across the Bay Area, year-over-year sales declines in the highest price segments have outpaced
drops for less expensive homes, and their demand-to-supply ratio – the number of sales compared
to the number of listings for sale – is much weaker. Luxury home sales have been hit harder since
the market correction began in mid-2022, though they too have been rebounding in 2023.
April, May & June sales volumes are commonly among the highest of the year, and this is
especially true for luxury home sales.
