Home News Bay Area home prices set to keep falling in 2023. Here’s by how much

Bay Area home prices set to keep falling in 2023. Here’s by how much

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Bay Area home prices are likely to continue to fall through 2023, with San Francisco expected to be the hardest hit, according to multiple data sources and experts.

Across the state, prices are also expected to fall over the next year. The California Real Estate Association predicts that median California home prices will fall 8.8% to $758,600 in 2023.

The price drop is due to a combination of macroeconomic and sociological factors that have forced the Bay Area market onto buyers for the first time in more than a decade, said Patrick, Bay Area chief market analyst at real estate group Compass. Carlyle says. .

“Ultimately, power has moved from the seller to the buyer, so the buyer should feel very comfortable negotiating very aggressively,” he said.

Forecasts come as house prices and values
the bay area has already fallen
several months in a row.According to a recent report from real estate broker Compass, the median is
Downtown SF Condo Sales Price
and South of Market districts, down 16.5% year-on-year due to a “triple whammy of economic, demographic and quality-of-life issues.”

However, the real estate market in the San Francisco metropolitan area remains
the most expensive in the country
According to Zillow data. Buyers have more power, but getting a home in the Bay Area is still not considered affordable.

Orphe Divounguy, senior economist at Zillow, said that is unlikely to change in 2023. Bay Area home prices have risen 25% in the past three years, according to Zillow, and next year’s projected price decline still won’t add value. He said he has lowered the price to affordable levels for most people.

Mr. Carlisle said he doesn’t believe the falling prices will drive more people to the Bay Area. The tech boom of the 2010s brought
Hundreds of thousands of jobs.

“There is still an amazing amount of wealth here,” he said. “The price is so high even when the price drops that it takes a significant price drop to attract people.”

The affordability issue means that while all different types of real estate are affected by falling prices, more people are settling into affordable and smaller spaces.

Experts say high interest rates due to inflationary pressures are a key factor that is expected to keep prices down next year as they are depressing demand.

Markets hit all-time highs in the spring, especially in the Bay Area, Carlyle said, making them the highest prices in the country, creating an overheated market. economies hit hard by stock market volatility,
unemployment in the technology sector,
Demand in the region is further declining.

However
higher mortgage interest rates
It also means that sellers are less likely to list their homes and return to the market. That means inventory growth is likely to continue to slow. Divounguy said this would prevent prices from falling more than expected.

The San Francisco metropolitan area, which includes Oakland and Hayward, is expected to see the biggest decline among the Bay Area metropolitan areas. Home prices in San Jose are projected to fall 1.8%, while Napa prices are projected to fall 2.4%.

It’s not just the Bay Area. Both Zillow and CoreLogic expect prices to fall in several metropolitan areas across the country, especially in the most expensive metropolitan areas.

“The Bay Area has some lead in price declines, but I think the rest of the country will do as well,” Carlyle said.

However, experts say the drop in price does not indicate an impending crash, but rather that the market is cooling off from an overheated position.

“Financial and real estate markets have always been cyclical,” he said. “Markets are overheating and entering a period of irrational exuberance. This is definitely where we went during the pandemic….it is part of the human economy.”

“This downward adjustment is welcome because it allows us to bring more people back into the market,” Divongay added.

Danielle Echeverria and Adriana Rezal are staff writers for the San Francisco Chronicle. Email:

[email protected],
[email protected]
Twitter: @DanielleEchev

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