Bay Area Home Sale Prices Spike 17% In March

The busy spring home-buying season has arrived in the Bay Area — but as the weather warms and more buyers scour the Internet for new listings, they’re finding a major shortage of homes for sale.

The shortage is born out in the data. By the end of March, it would have taken just a month and a half to sell off all the remaining homes on the market, down from more than two and a half months in February, according to the California Association of Realtors. A housing market is considered balanced if it has at least four months of supply.

Numbers of homes for sale have been falling since late 2022, and as inventory dropped, prices soared across the region, boosting the median home price by 17% to $1.23 million between February and March.

Oscar Wei, an economist with the Association of Realtors, said a typical monthly increase for the region during that time of year is about 9%. While Wei expects prices to continue to climb through most of the peak home-buying season this spring and into the summer, he doesn’t foresee the record-setting price jumps of the past few years. “The region is still being more cautious because of the economic environment, and also we don’t have 3% rates anymore” Wei said.

Although higher interest rates discouraged many would-be home buyers initially, it seems that around 6% is now being accepted as the new norm, and buyers are turning to alternative approaches such as adjustable rate mortgages which provide significantly lower monthly payments in the short term. After all, they can always refinance into a new fixed rate mortgage when rates come back down.

“For the right house, there’s definitely a lot of buyers” said one buyer, who with his wife and two young children were at a crowded open house listed close to $2 million recently. And it’s true that desirable homes that show well are seeing multiple offers again in some cases. As an example, considering all the home sales that were reported from Orinda to San Ramon in the past week, over 60% had more than one offer and almost half of them had 3 offers or more.

From personal experience, many of the buyers of homes in our area are coming from Silicon Valley, San Francisco and the Peninsula. Compared with home prices in those areas, East Bay homes must look like great value, and the schools are generally of a much higher standard as well.