After wild year, Bay Area real estate agents foresee cooler market in 2023
SAN FRANCISCO – From record sale prices to higher interest rates, 2022 was another wild one for the real estate market.
Tim Yee, broker and president of REMAX Gold Bay Area, has 40 years of experience in California real estate. He described the market over the last few years as, "a wild and crazy ride."
Sellers had the advantage at the beginning of the year, but the year is ending with the pendulum shifting towards favoring buyers.
"We'll see some price adjustments as the inventory grows. I think it's going to level out," Yee said. "The market, for the last few years in the Bay Area, has traditionally been a seller's market. Now, I think it's going to be more of a balanced market between buyers and sellers."
Bay Area home sales decreased from month to month for most of the year, prices softened over the course of 2022, and inventory has trended upwards for most of the year, according to data from the California Association of Realtors.
Homes are also staying on the market for longer durations of time and are garnering fewer offers, according to Yee.
"Sales were off in most of our areas by somewhere between 40-50%, the number of transactions," Yee said. "Pricing, because of the lack of inventory, has stayed relatively level. There have been some decreases but it hasn't been dramatic like it was in the last recession."
Some of the major factors fueling the shift in market dynamics, from Yee's perspective?
"Interest rates, number one. Number two, the amount of layoffs in Silicon Valley have been unprecedented, so there is some consumer concern," Yee told KPIX. "Number three, the results of the pandemic – I think the outward migration of Californians has slowed a little bit. I think everybody is kind of, settling in and waiting to see what's going to happen next."
He thinks 2023 will prove to be a much better year for buyers than the previous few.
"They're going to have their pick of much more inventory, much more quality, and much better locations," he said. "I'm optimistic that we're coming into a market that's going to be a more normal market. We're in a cycle that will bode well for buyers."
Sheila Cunha, the president of the Bay East Association of Realtors, also thinks that will be the case.
"I think it's going to be a good opportunity for some buyers now who've been priced out and sitting on the sidelines to be able to get back in," she said.
KPIX's Max Darrow asked : "Even with the higher interest rates?"
"Sure it is, because the property values are going to come down a little bit," Cunha said. "We're not going to have a collapse of the real estate market."
Her advice to prospective buyers?
"Don't be afraid of the market, do not be afraid to jump in," she said.
Cunha's also provided advice to prospective sellers.
"Be realistic," she told KPIX. "Get your home ready. Do the things you need to do to make it attractive."
Yee echoed that point – saying it's crucial sellers are realistic with their expectations.
"Sellers have to be realistic. Pricing, pricing, pricing. Location will always sell," he said. "They can't look a year ago and say my neighbor got this and I want this. They need to see what the most current comparables in the market are."
