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When Will Bay Area Home Prices Drop?


In 2019, property prices in San Francisco began to rise. San Francisco housing values were at an all-time high by February 2020, when the coronavirus epidemic struck. There's no way to give a definitive answer to that question. However, current housing market trends indicate that property prices in the Bay Area are unlikely to fall in 2021. Indeed, according to recent estimates, property values in the region would continue to rise in 2021, possibly even outperforming the national average.

During 2020, the San Francisco Bay Area, in particular, suffered major price increases. According to the same C.A.R. report, at the regional level, all major regions had a higher than 10% increase in median price over the previous year. In December, the Central Coast saw the greatest year-over-year price increase, up 17.9% over the previous year. With a 16.4 percent gain, the San Francisco Bay Area was ranked second. As of mid-January, that is where we stand. But what about the months ahead? Will home prices in the Bay Area fall in the second half of 2021? Will they keep climbing? Will they "plateau" in the next months, or will they continue to rise?

Home prices in most sections of the Bay Area could continue to rise through 2021, if recent estimates are accurate. We went to the economic research team at Zillow, a real estate data business, for more information on the matter. There, housing market researchers study national home-price patterns and frequently make projections about how prices will change in the future.


The Supply-Demand Gap is Huge

Low inventory levels are currently combining with strong demand from house purchasers in the Bay Area real estate market. This gap is placing enormous upward pressure on property prices throughout the region.

Housing prices have been progressively rising for the past year for this reason. It's also why housing researchers (like those at Zillow) predict that property values in the Bay Area will continue to rise in 2021.In most parts of the San Francisco Bay Area, there is currently less than a two-month supply of homes for sale. This is a theoretical metric for tracking inventory levels over time.

The basic conclusion is that home inventory in the Bay Area is currently much below what is considered a balanced real estate market. This indicates that the market favors sellers over buyers. Right now, there's a lot of competition among purchasers as they try to outmaneuver one another in order to get houses that are in short supply.


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