The South Bay, particularly San Jose, has recently experienced the most significant decrease in home inventory in the United States, according to a report on The Real Deal. Active and new listings in the Bay Area have plunged by more than a third year-over-year, posing challenges for homebuyers and agents alike. Meanwhile, inventory growth in San Francisco and the East Bay fell by roughly a quarter, which seems to be influencing housing supply and demand, pushing home prices further up and affecting the wider industry.
The peak of inventory growth occurred in winter 2022, when San Francisco saw a 57% year-over-year increase in active listings, and the South Bay area recorded an 80% spike, according to Realtor.com. However, these trends preceded a nationwide decline in listings. In fact, a prospective home seller’s inability to make a move was attributed to the “lock-in effect” as they struggle with low interest rates and other socioeconomic factors. Bay Area's real estate industry is further complicated by massive layoffs in the technology sector and fluctuations in the stock market, all contributing to a lack of available homes for sale, as noted by Sabrina Speianu, the author of the Realtor.com report.
Facing an increasingly uncertain housing market, Bay Area homebuyers are struggling to purchase a home before selling their existing one, which only serves to intensify the property supply issue, per data published by CBS News.
However, there are indications of possible market stabilization, given that San Jose's listing prices have risen slightly, and the percentage of homes with reduced prices has dropped by 2%. Concurrently, the heart of the issue for South Bay residents is the low inventory and high prices, causing them to look for homes beyond the area at increasing rates. According to data from Realtor.com, in Q1 2023, a staggering 90.8% of San Jose metro residents were seeking homes outside the area.
San Jose homebuyers have primarily been focusing on Californian markets where housing is more affordable, while the largest discounts can be found in Las Vegas, where the median home price is less than a third of San Jose's $1.5 million median price.
The gap between available homes and buyer demand has resulted in significant price hikes across the state. In particular, San Francisco Bay Area home prices have soared, with Santa Clara County's April median sales price increasing to $1.8 million and San Mateo County's April median sales price reaching almost $1.97 million, according to The Almanac News. This price growth contrasts with the larger US market, where price growth has slowed to a rate not witnessed since 2016.
