Underlying market and economic dynamics in 2023 have been a mixed bag of often contrary and volatile factors – including downward-trending inflation; interest rates bouncing between 6% and 7%; unceasing uncertainty regarding what the Fed will do next; substantial rebounds in stock markets; bank, commercial real estate and debt-default crises; international political, economic and military conflicts; high-tech layoffs amid generally strong employment statistics; and a recovery in buyer demand, sales activity and home prices, but all 3 remaining significantly lower than the peak of the market in spring 2022. And within the city, market conditions often vary by property type (houses generally seeing higher demand), neighborhood (the downtown market remains relatively weak) and/or price segment within types and locations.
Ultimately, the market is defined by neither just demand nor supply, but by the balance between the two. As we’ve moved deeper into 2023, that balance has generally tilted to sellers’ advantage, with homes selling faster, with more offers, for higher prices. Part of this is due to seasonal dynamics: Spring is commonly the highest-demand, most active selling season of the year. But the contrast with the 2nd half of 2022, when demand and sales plunged, is more than seasonal. It also reflects a rebound in psychology, with many buyers deciding to move forward with their life plans.
For most Bay Area markets, summer has historically been a slower period after spring – with some regions, such as San Francisco, seeing a relatively short (6 to 8 week) spike up in activity in autumn before the big midwinter slowdown – but typical seasonal trends have been upended a few times in recent years. Certainly, a substantial amount of buying and selling will continue to occur in coming months, as well as variations in underlying economic conditions, which we will cover in detail in future reports.