The Local Lowdown: January 2025

Michelle Kim | January 31, 2025

The Local Lowdown

Quick Take:

Median home prices rose in 2024, following historical seasonal trends. Single-family home prices in Contra Costa and condos in Alameda experienced the largest gains.
Total inventory decreased 32.5% month over month, as new listings fell more than sales. We expect inventory to continue to decline in January and the overall market to slow due to lack of supply.
Months of Supply Inventory plummeted in Q4 2024 due to the lack of inventory. Currently, MSI indicates a strong sellers’ market for single-family homes and condos.

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

The median single-family home prices are up year over year

In the East Bay, home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from May 2022 to January 2023. Low, but growing inventory and high demand have more than offset the downward price pressure from higher mortgage rates. Year over year, for single-family homes, prices were flat in Alameda and up 9% in Contra Costa, and for condos, prices were up 12% in Alameda and 8% in Contra Costa. Prices typically peak in the summer months, and the mild contraction after the post-summer peak has fallen in line with expectations. Home prices will likely decline slightly in January before rising again into the spring.

High mortgage rates soften both supply and demand, but homebuyers 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 the fourth quarter of 2024. Now, rates are far closer to 7% than 6%, so we expect sales to slow further.

Inventory, new listings, and sales fell in December

The 2024 housing market looked progressively healthier with each passing month until Q4. The promising build in inventory during the first nine months of the year was wiped out, and East Bay inventory fell near record lows in December.

In 2023, single-family home and condo 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 2024 was similar 2023, far more new listings came to the market, which has allowed inventory to grow. Condo inventory even reached a four-year high in September before declining in Q4. For single-family homes, inventory is up slightly year over year, but inventory fell significantly month over month as new listings declined at a greater magnitude than sales.

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.

Months of Supply Inventory in December 2024 indicated a sellers’ market

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 East Bay market tends to favor sellers, especially for single-family homes, which is reflected in its low MSI. In Q4, MSI dropped across the East Bay and now indicates a sellers’ market.