The Local Lowdown: December 2024

Michelle Kim | January 1, 2025

The Local Lowdown

Quick Take:

Median price movements were mixed across markets and dwelling types in the Bay Area. The East Bay was the only region where prices rose month over month for both single-family homes and condos. We expect prices to contract over the next two months across the Bay Area, which is the seasonal norm.
Total inventory in the Bay Area declined significantly, as sales far outpaced new listings. We expect inventory to decline and the overall market to slow over the next two months.
Months of Supply Inventory declined over the past two months and currently indicates a sellers’ market, with the exception of Napa, which favors buyers.

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

Median prices have risen in 2024 across most of the Bay Area

In the Bay Area, home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from April 2022 to January 2023. Low, but growing inventory and high demand have more than offset the downward price pressure from higher mortgage rates. Year to date, in November, the median single-family home and condo prices rose across the Bay Area with the exception of single-family homes in Napa, and condos in Marin and Santa Cruz, which are slightly lower. Year over year, prices increased most significantly for single-family homes in the East Bay, Silicon Valley, and San Francisco. Prices typically peak in the summer months, so we expect some minor price contraction through January 2025.

High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates near 6% much more than around 7%. Mortgage rates fell significantly from May through September, but rose significantly in October. Now, rates are far closer to 7% than 6%, so we expect sales to slow further.

Sales far outpaced new listings in November, causing inventory to drop

In most of the Bay Area, the housing market has looked progressively healthier with each passing month of 2024. We’re far enough into the year to know that inventory levels are about as good as we could’ve hoped in the East Bay and Silicon Valley. That said, inventory across the Bay Area fell significantly in November. In 2023, single-family home inventory followed fairly typical seasonal trends, but at significantly depressed levels. Low inventory and fewer new listings slowed the market considerably last year. Even though sales volume this year was similar to last, far more new listings have come to the market, which has allowed inventory to grow.

Typically, inventory begins to increase in January or February, peaking in July or August before declining once again from the summer months to the winter. It’s looking like 2024 inventory, sales, and new listings will resemble historically seasonal patterns, and at more normal levels than last year. Notably though, after the inventory declines seen across markets in November, inventory is at an all-time low in the North Bay and near record lows in Silicon Valley and San Francisco.

Months of Supply Inventory indicated a sellers’ market in most of the Bay Area

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The Bay Area markets tend to favor sellers, which is reflected in their low MSIs. Currently, MSI is below three months of supply (a sellers’ market) in every Bay Area county, except for single-family homes in Napa, which favor buyers.