Throughout the Bay Area, buyer demand is continuing to rebound from late 2022. While mortgage applications are still down year over year, many buyers have accepted higher interest rates as the new normal and are moving forward. Open houses are seeing increased traffic, more listings are selling, and selling more quickly with multiple offers. Median sales prices have generally ticked up in 2023, though still down across the Bay Area from the market peak last spring.
Even with the increase in demand, sales activity remains below last spring. Homebuyers are acclimating to the current rate environment, but the lack of inventory is a challenge; the number of new listings has dropped dramatically. Low inventory can be partially attributed to the “mortgage lock-in effect,” where owners with very low, long-term, fixed-rate mortgages are reluctant to sell and then buy at the higher current rates.
Some uncertainty clearly continues with inflation, interest rates, stock markets, bank crises, high-tech layoffs, and now, as of early May, federal debt-limit negotiations. But, so far, the 2023 housing market has generally been moving in a positive direction.