October 20, 2021


our dream home

S.F.’s real estate market is an outlier in one big way, according to latest Zillow data

4 min read

Unlike the rest of the country, Bay Area home buyers are seeing more options on the market compared with last year — but those houses are more expensive than ever and buyers are snapping them up within days, according to a new report.

The latest monthly market report from real estate listing website Zillow showed San Francisco’s housing inventory in May went up 8.7% from April, and 25.6% from this time last year. The other large Bay Area city listed in the report, San Jose, saw an inventory increase of 8% from April and an increase of 30.3% year-over-year.

Inventory in San Francisco has been rising monthly since February, according to the report, but nationwide, inventory saw its first monthly rise since July 2020. And inventory in San Francisco has been seeing year-over-year gains since last August, while nationwide inventory in May was down 31% from last year.

Matt Kreamer, a data public relations senior manager for Zillow, said the Bay Area is a “definite outlier” compared to the rest of the U.S.

“The Bay Area is really the only place inventory has been up from last year,” he said.

For-Sale Inventory in San Francisco in May 2021.

Zillow Economic Research

However, “That hasn’t done a lot to slow home value growth or the pace of sales,” he said. “Much of that annual change has to do with how incredibly low it was a year ago, so there’s still a long way to go before inventory catches up to demand.”

While more homes are available, the Bay Area’s housing market has remained red-hot: Prices are at record levels and rising, selling within days, often at well over asking price, according to Zillow’s May market report.

A typical home in San Francisco is worth $1.26 million, which is the record high for the city, according to Zillow. That’s up 11.6% from a year ago and 2.8% since April. The value of a typical home as calculated by Zillow is an average of the middle third of the market, minus the top and bottom 5%. The full methodology can be found here.

Zillow Home Value Index in San Francisco in May 2021.

Zillow Home Value Index in San Francisco in May 2021.

Zillow Economic Research

Homes in San Francisco are staying on the market for about nine days before going under contract, with 61% of homes selling above the list price in March compared to 46% in March 2020.

Zillow data shows that, in San Jose, a typical home is worth $1.38 million, up 11.4% more than a year ago and 3.3% since April. Homes in that city stayed on the market for about 11 days before being scooped up, and 60% of homes sold above the list price in March compared to 48% in March 2020.

Kreamer said while home values are up more than 11% from a year ago in the Bay Area, growth in the region was still behind the national rate of 13.2% and well behind some popular destinations for local residents seeking to relocate to elsewhere in the state — such as Sacramento and San Diego, where growth in home values was near 20%.

“The Bay Area is the most expensive housing market in the country, and growth had slowed and even turned negative in places before the pandemic because so many people simply couldn’t afford to buy there,” Kreamer said. “But the pandemic brought with it the Great Reshuffling — masses of Americans moving to homes that better suit their new needs — and much of the current growth is being carried by suburbs in the East and North Bay, while it’s much slower in the city of San Francisco.”

Kreamer said Zillow expects home values to keep rising at a similar pace in the short-term with continued high demand, low mortgage rates and increasing numbers of Millennials looking to buy homes amid record-low inventory.

“Our current forecast calls for 15% growth nationally by a year from now,” he said. “The Bay Area’s likely to be slightly below that, but still incredibly high by historical standards.”

Zillow Observed Rent Index in May 2021.

Zillow Observed Rent Index in May 2021.

Zillow Economic Research

Rental prices are also increasing in the Bay Area, going up 1.6% since April in San Francisco with a typical rent of $2,867. Typical rents are found by calculating price differences for the same rental unit over time, then aggregating those differences across all properties repeatedly listed for rent on Zillow. The company also created weights for the index based on the latest U.S. Census Bureau data. Find the methodology here.

Rental prices in San Francisco bottomed out at $2,786 in January and have been increasing monthly ever since, according to Zillow. In San Jose, typical rent was $2,874, up 1.6% since April. Prices in that city bottomed out in February at $2,801 and ticked up each month since.

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