Bay Area Housing Market Update - November 2024

Hi everyone, this is Sean Engmann with your housing market report for November. The elections are in the rearview mirror and though most people have been focusing on the presidential election, there were a number of key state and local changes that are likely to have more of an impact on the housing market than the presidential campaign.

Two key ballot measures went down to defeat. Prop 5 would have lowered the threshold for approval of bonds for housing and infrastructure, which means that the threshold for affordable housing bonds remains at two-thirds. Prop 33, which would have enabled local governments to expand rent control, also went down to a resounding defeat. Both of these measures had the potential to substantially impact the housing market, but things will continue as-is.

Prop 36, which increases penalties for theft and drug crimes, overwhelmingly passed. That has the potential to help property values through the reduction of crime and it also could help stem the exodus from the Bay Area since the beginning of the pandemic, where every Bay Area county has seen a reduction in population.

San Francisco will have a new mayor in January and expanding and streamlining new housing were key elements of his platform. These proposals include reducing fees and inclusionary requirements for housing projects, revising zoning to help create new housing projects, and opposing the expansion of rent control which Mayor Breed had supported.

One of the immediate reactions to the election was that the Fed reduced interest rates by 25 basis points, which was the second rate cut this year. The last cut did not translate into any relief in the mortgage rates. Rates had been slowly trending down from 7.5% in April to 6.15% at the time of the rate cut. Since then, rates climbed back over 7% and sit just below that mark as of November 8th.

The high rate environment hasn’t tremendously hurt the housing market, though things are moving at a slower pace than they were when rates were at record lows. Median house sales through the first three quarters came in at just under $2M in San Mateo County, followed by Santa Clara County at $1.9M, Marin at $1.725M, San Francisco at $1.639M, and Alameda at $1.31M. It’s notable that San Francisco, which used to lead the way, has slipped to the fourth most expensive county. In San Mateo, the market continues to move briskly as 59% of homes sold above their list price, that’s down from the Spring but right in line with the seasonal trend.

Things should continue to proceed as normal through the winter months with inventory drying up and the market slowing down for the holidays. Of course, there will be some areas that are more active than others. Most forecasters are expecting a boost in inventory and a reduction in interest rates as we enter 2025. I’m a little more cautious as the inflation numbers continue to rise and the employment numbers remain relatively weak. As such, I don’t anticipate a substantial reduction in mortgage rates, though they may continue to very slowly work their way down.

For sellers, now is a great time to begin getting your home ready for the Spring market which will be here before we know it, and if trends hold, will be very competitive throughout the Bay Area.  For buyers, winter is always a good time to get a deal as many other buyers are on the sidelines for the holidays.  Your pickings might be a bit slimmer though.

If you're considering selling or know someone who is, check out my Power Seller's Guide, which is chock full of tips and useful information about the process. It is a great resource for anyone thinking of selling or who wants to learn more about the selling process.