New data showing that San Jose had the biggest listings drop in the nation matches what Bay Area agents are saying anecdotally about the lack of inventory. And that the drop in supply will keep prices from dipping too much lower, with a possible turnaround on the horizon.
Active listings and new listings were both down by over a third in the San Jose metro market year-over-year, according to data from Realtor.com’s May report. Inventory in the San Francisco metro, which includes the East Bay, fell by closer to a quarter, according to the report.
Inventory growth peaked in both markets last winter, with San Francisco showing a 57 percent year-over-year increase in active listings in December 2022. Active listings were 80 percent higher in the South Bay. This puts the Bay Area a little bit ahead of the national trend, which showed inventory peaking in February and declining since but still up overall, according to Realtor.com’s Sabrina Speianu, who authored the report.
Nationally, potential sellers reported feeling “locked in” to their low interest rates as one reason behind the decline in listings, she said via email. Plus, in the Bay Area, there are additional factors keeping homeowners from making moves.
“In light of the recent large-scale layoffs and weaknesses in the tech sector, along with recent fluctuations in the stock market, homebuyers in the Bay Area are facing increased uncertainty and challenges in purchasing a home before selling their existing one,” Speianu said. “This situation could potentially contribute to a further decrease in the availability of homes for sale in the area.”
The May report also shows that Bay Area listing prices are up slightly and the percentage of homes with reduced prices dropped by 2 percent in San Jose and less than 1 percent in San Francisco, while other markets are still posting big increases in price reductions.
While the possible stabilization of the market is good news for sellers, the low inventory and high prices are pushing South Bay residents into other markets at higher rates, according to Realtor.com data. In the first quarter of 2021, 78.5 percent of San Jose metro residents were looking at homes outside of the area on Realtor.com. In the first quarter of 2022 this increased to 86.3 percent, and in the first quarter of 2023 it increased again to 90.8 percent, Speianu said.
The 10 markets with the greatest interest from South Bay buyers were mostly in California where homes are less expensive than San Jose’s $1.5 million median price. The biggest discount in the top 10 goes to those leaving the state entirely and heading to Las Vegas, where the median home is listed at less than one third that price and 14 percent of active listings have been reduced.
Nationally, price growth slowed to the lowest rate on record since 2016, according to the report. Austin had the biggest year-over-year asking price drop in the country at more than 7 percent. Nearly one in three listings in the pandemic-era hotspot has seen a price reduction, a 12 percentage point increase since last May, and its active listings have more than doubled.
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