February 2024 Housing News – Homes will NOT get more affordable around here

As we get ready to end the holiday week for some of us, I wanted to share Your Bay Area housing market data, and I’m answering 2 popular questions we are getting:

1: Why I do not believe housing affordability will improve anytime soon, which is why you should not wait, and
2: How accurate Zillow’s market value estimates are for your home?

IS THE HOUSING AFFORDABILITY BOTTOM BEHIND US ? AND WHY YOU SHOULD NOT CONTINUE TO PUT OFF YOUR REAL ESTATE GOALS

According to a report by Redfin, housing affordability in the US hit a record low in 2023, with only 15.5% of listed homes considered affordable, down from 20.7% in 2022. The report highlights racial disparities, with housing affordability being three times worse for Black households compared to white households. The number of affordable homes also dropped by nearly 41% from 2022.

While housing economists predict improved affordability in 2024 due to falling mortgage rates and more homes being listed, here is what they are missing…When rates come down, as everyone is predicting will happen towards the end of Spring, millions of home buyers will flood back into the housing market, except there is one problem lower rates do not solve: there are more new homebuyers than available homes for them to purchase. This basic supply/demand mismatch will continue to drive housing prices up here in the Bay Area, where we attract highly compensated tech professionals and other popular industries can pay higher salaries.

So, if you have a goal of buying a home, now is better than later, because we do not anticipate housing prices falling in the Bay Area anytime soon.

Home prices across the Bay Area right now

Remember, the housing market is seasonal, so don’t be fooled by what appears to be a downward trend in median list prices in SF and Santa Clara counties in the charts below. Once Spring hits, we should start seeing the pricing trend upward again as demand for homes increase. Stay tuned for our monthly updates.

San Francisco County

Santa Clara County

Alameda County

Contra Costa County

Zillow says WHAT about my home value??

Concerned about Zillow indicating a decreased value for your property in recent months? Let’s delve into the intricacies with a professional lens to ease your apprehensions.

Firstly, it’s essential to recognize that Zillow employs a data model, lacking the nuanced understanding that a professional in-person assessment provides. Custom upgrades and distinctive features integral to your property are not factored into their estimations. Zillow has not been inside your home…

The 30% plus reduction in home sales within the last 16 months poses a challenge for Zillow’s data model, and all the other data models for that matter. Attempting to compensate for this deficit, the models may not capture the full picture, akin to solving a puzzle with missing pieces.

However, the continued high demand for quality homes in the Bay Area remains robust, even amidst elevated interest rates. We anticipate a surge in housing demand as the Federal Reserve considers rate adjustments in late spring of 2024, foreseeably amplifying your home’s value.

Rest assured, there’s no cause for undue worry. If circumstances necessitate a home sale, while Zillow thinks your value might be down, I invite you to connect with me. As a seasoned real estate professional, I can offer creative solutions to address valuation concerns and guide you through this process with care and expertise.

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