The Bay Area has more homes on the market than during last summer, but buyers just aren’t biting.
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Across the nine-county region, home sales remained slow in June, quashing the real estate industry’s hopes that 2025 might finally be the year the market recovers from a three-year slump.
Sellers, getting desperate, are starting to lower their prices. In Contra Costa and Alameda counties, one in every three homes for sale saw a price drop in June. In San Mateo and Santa Clara counties, it was one in every two homes, according to Redfin data.
“If you’re a seller and think the number your neighbor got in 2022 is what you’re going to get today, you’ll be disappointed,” said Victoria Tseng, a real estate agent based in Berkeley.
“Sellers are looking at where the market was a few years ago, and agents are warning them that the market isn’t there,” said Jill Toler, a San Jose-based agent. “If we’re not getting offers, we need to put the home at a different price.”
That could mean buyers have more negotiating power right now — that is, if they’re willing to swallow the still–high prices.
While lower than their peak in April 2022, prices remain much higher than they were before the pandemic, according to recently released data from the California Association of Realtors. The median sale price of an existing single-family home in the nine-county region remained $1.4 million in June, also unchanged from the same time last year. The median home price was $940,000 in Contra Costa County, $1.3 million in Alameda County, $1.7 million in San Francisco, $2.2 million in San Mateo County and $2.1 million in Santa Clara County.
The June data typically reflects purchases decided in May or April that closed at some point in June.
The high prices, plus mortgage rates above 6.5%, have pushed homeownership out of reach for many Bay Area buyers. President Trump has been pressing Federal Reserve Chair Jerome Powell to cut interest rates, though the central bank is widely expected to leave rates in place when they meet in the coming days, as the Fed looks to tamp down persistent inflation.
On social media Wednesday, Trump laid blame for the sluggish housing market with Powell.
“Housing in our Country is lagging because Jerome ‘Too Late’ Powell refuses to lower Interest Rates,” he posted. “Families are being hurt because Interest Rates are too high.”
The president’s pressure campaign is highly unusual, and has ignited questions over whether the Federal Reserve can preserve its independence from the executive branch.
Mortgage rates are correlated with the Fed’s interest rate, but aren’t directly tied to it.
For a buyer putting 20% down on the median Bay Area home, the 6.5% rate for a 30-year mortgage translates to a $7,439 monthly payment, versus $5,097 when rates were at just 3% during the pandemic.
Those higher monthly payments mean those who can buy are taking their time to find the right property.
“Buyers are choosy — they want a home that’s move-in ready and cleaned up,” Toler said.
She advised buyers to be wary of the classic refrain used by real estate agents: “Marry the house, date the rate.”
“Buy the house you can afford,” Toler said. “Don’t overspend.”
To afford a home, some buyers are resorting to creative solutions, like splitting the cost with a friend.
Architect Craig Wora, 48, and his friend, Eduard Lucas, decided to look for homes together earlier this spring. Tseng, their agent, helped them find a tri-level condo in San Francisco’s SOMA district listed close to $1 million. It was the first home they saw, and they decided to put in a bid slightly over asking, taking advantage of the less-competitive market.
By combining their savings, the friends were able to put together a 40% down payment on the home, which also helped them save on their monthly mortgage costs. Together they pay $3,700 for their mortgage — about the same price they paid when they were renting together.
“Compared to when I bought a house in 2018 in the Bay Area, the climate is more relaxed,” said Wora, who moved into his home in May. “Especially for condos, we saw a lot of inventory on the market.”
Across the Bay Area, inventory is up 35% from the same time last year, CAR data shows.
With more options to pick from, buyers aren’t jumping on homes as quickly. The median time on market has increased to 20 days, up from 14 days last June.
“The market is always slower in the summer,” said Casey Sternsmith, an agent based in Burlingame. “We’re just not seeing that movement.”