The Local Lowdown: June 2024

Michelle Kim | June 28, 2024

The Local Lowdown

Quick Take:

Median home prices are slightly below peak levels across the East Bay. As more new listings come to market, we expect prices across most of the East Bay to continue rising, though they will likely remain slightly below the record highs.
Active listings, sales, and new listings rose in the East Bay month over month, which are all beneficial for the housing market. We expect inventory to increase into the summer and return to a more normal market after the slowdown experienced over the past year and a half.
Months of Supply Inventory still indicates a sellers’ market in the East Bay, although more new listings have alleviated some of the excess demand in the area.

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

The median single-family home price rose year over year in the East Bay

In the East Bay, low inventory and high demand have more than offset the downward price pressure from higher mortgage rates, and prices generally haven’t experienced larger drops due to higher mortgage rates. Month over month, in May, the median single-family home price fell 2% in Alameda but rose 1% in Contra Costa. Year over year, prices were up 9% in Alameda and 5% in Contra Costa. Condo prices rose slightly in Alameda but declined in Contra Costa from April to May. We expect prices in the East Bay to remain slightly below peak this year, although new highs are possible in June or July 2024. Low, but rising inventory is buoying prices as buyers are better able to find the best match.

High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates above 6%. Now that rates are above 7%, sales could slow once again during the time of the year when sales tend to be at their highest.

Inventory, sales, and new listings rose for the fourth month in a row

Since the start of 2023, single-family home inventory has followed fairly typical seasonal trends, but at significantly depressed levels. Low inventory and fewer new listings have slowed the market considerably. Typically, inventory peaks in July or August and declines through December or January, but the lack of new listings prevented meaningful inventory growth. Last year, new listings and sales peaked in May, while inventory peaked in October. New listings have been exceptionally low, so the little inventory growth in 2023 was driven by softening demand. In December 2023, inventory and sales dropped, but more new listings have come to the market in 2024, which has driven the significant increase in both inventory and sales so far this year. The market is already looking healthier, and we expect more new listings and sales in the summer months.

With the current inventory levels, the number of new listings coming to market is a significant predictor of sales. New listings rose 8% month over month, and sales followed suit, increasing 7%. Year over year, inventory is up 32%.

Months of Supply Inventory in May 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, which is reflected in its low MSI. MSI trended higher in the second half of 2023, moving above three months of supply for condos. From January to April 2024, however, the East Bay MSI fell significantly before rising slightly in May, indicating the housing market still favors sellers.