From the Golden Gate Sotheby’s Bay Area Market Report…
MORE INVENTORY AND JOB GROWTH POINT TO STRONG START
More homes came onto the market in the SF Bay Area in January, potentially paving the way for a strong spring buying season. One of the primary constraints on the housing market in the last year has been a low number of homes for sale. SF Bay Area workers continued to return to the office in greater numbers, which helped bolster demand for homes in the inner SF Bay Area.
Across the region, SF Bay Area employers added nearly 12,000 jobs in 2024. The unemployment rate remained tight at 4.4%, which also supported wage growth of nearly 4%. The combination of stronger job growth in 2025 and more aggressive return-to-office requirements may support even stronger buyer demand in the coming months.
While sales were stable compared with one year ago, the inventory of homes for sale jumped in a sign of potential optimism among sellers. Inventory typically builds into the spring buying season, but the January increase was particularly large relative to the last few years. More than 4,500 homes were available for sale in January across the SF Bay Area, which was 1,000 more homes than last month and nearly 1,700 more than last year. The East Bay accounted for the bulk of this increase, while inventory was more stable on the Peninsula.
More broadly, the increase in inventory may also signal a shift towards greater equilibrium after the sellers’ market of recent months.
SALES DRIVEN BY SEASONAL PATTERNS, INTEREST RATES, AND RETURN-TO-OFFICE TRENDS
As people returned from the holidays and winter weather set in, home sales slowed from December. However, with nearly 1,900 homes sold, sales were still on par with last January. Sales of higher priced homes bolstered overall sales totals, while higher mortgage rates and reduced affordability dampened sales in the lower price segments.
More than 230 homes sold for $2.5 million or more in January, a 13% increase compared with last year. Meanwhile, sales of homes priced at less than $1.25 million declined by 6%. Sales in the middle price segment, from $1.25 to $2.5 million, increased by 5%. County sales figures reflected similar trends, though the stronger return-to-office trend spurred additional buyer activity in inner SF Bay Area neighborhoods.
Sales in San Francisco County surged by 29% year- over-year. Buyer activity in Santa Cruz and Napa counties—where vacation homes typically account for a greater share of sales—was also much stronger than last year. Conversely, there were fewer sales in Contra Costa and Solano counties.
HIGHER INVENTORY YIELDS MORE BALANCED MARKET
While competition for homes was still relatively strong, especially in premier neighborhoods, buyers also had more options to choose from in January. As a result, the housing market moved closer to equilibrium, with homes spending slightly longer on the market and a larger share selling at the list price. Following the lull around the holidays, the average length of time homes spent on the market increased to 43 days in January. This was slightly longer than last year, but less than would be considered typical for January.
The share ofhomes that sold for the asking price also increased to 9% in January, the largest share since late 2020. Meanwhile, the share of homes sold for more than the asking price decreased to 44%. This share was greater than last year, but much less than the long-term average of 56%.
As seen with home sales data, the inner SF Bay Area outperformed for these metrics as competition accelerated. A larger share of inner SF Bay Area homes sold for more than the asking price compared with last year, while the average days spent on the market was stable or decreased.
LOOKING AHEAD
Overall, January highlighted the strong demand for homes close to job centers or schools and in prime neighborhoods, as well as the ongoing affordability challenges posed by higher mortgage rates. If mortgage rates remain stable, potential buyers may be more likely to accept this new reality and come off the sidelines. An increasing share of office workers should also return to the office in 2025, boosting demand for homes near
transit and corporate clusters.
These factors, along with greater job gains and positive stock market performance, would bolster the SF Bay Area housing market.
