When is the market going to turn? Maybe it already has. I know that the title might have piqued your attention, so let’s get started. Today, I have another Bay Area Real Estate market update for you. This time, we’re going to talk about the market turning. Anecdotally, I see some stuff on the ground that has made me feel concerned, optimistic, or a combination of both, trying to figure out what is going on and where we’re headed here in the Bay Area Real Estate market.
Specifically, I want to talk to you about the timing. Our market used to be very seasonal, but then COVID messed that up. Recently, however, it feels like the seasonality is back, and I think that would be a good indicator of where we might be going.
Bay Area Real Estate Market's seasons pre-COVID
Historically speaking, you would typically see a slow start in January, when the year would kick off. Nonetheless, it is still a good start to the year, real estate-wise. From an inventory perspective, some stuff would typically be leftover from the holidays. Moreover, buyers would start to come out of hibernation. They would get over the parties, the hangovers, and all of that. They would come back and then start to transact again.
By the time the Super Bowl is up, it’s already pretty much when the full-blown spring market hits. This last spring market hit from about late April, and it was hitting hard until early May. It would peter out by June, as it is traditionally a very slow month. Post 4th of July, pretty reliably, is when you would get another bump. This time, it would be the summer market—the next best market after the spring market, which we just left.
Then it would be status quo until about September. In the first two weeks of this period, you’d see many inventory pop on after Labor Day. These would be up for transactions and get eaten up. Then finally, by Halloween, if you weren’t in a contract, you probably wouldn’t be setting any record because everyone would go on to their parties and their holidays.
What happened during COVID?
So that was the typical seasonality we had experienced. However, when COVID happened, it completely messed up that seasonality last year. It took our spring market and our summer market layered on top of one another and push that from May onward. Then we didn’t see that slowdown through the holidays that we were expecting. In addition to that, this spring has just been unbelievable.
What's happening now in the Bay Area Real Estate Market?
So, it’s got everybody asking, “When is it going to stop? When is it going to turn? What’s going to happen?”
Right now, I can tell you what I see here locally, at least. Right after Memorial Day, that three-day weekend when, for the first time, people were able to travel, get out, see family, go to graduations, get into the restaurants, etc., the energy seemed to had been sucked out of the Bay Area Real Estate market.
I see many, many houses go beyond their offer date, send out emails about listings being still available, things not transacting, or only getting one or two offers that were lower than the asking price. You name it. There were actually like four or five houses on the island of Alameda that I was aware of that went over their offer date. Not to mention, several of those were really great houses, the prices were presented well, but they still didn’t get any attention for one reason or another.
It made me think, is it because there’s a level of fatigue in the buyer pool?
Also, it is as if there was an opportunity to take a break or get out, and people just took it and ran.
I recorded this video on June 17, 2021. So June, as it stands right now, is feeling very tepid. It does not feel like it is as frothy as it were, where people are banging down the doors on every single listing. That’s not to say that they’re not banging down on the good listings, on the ones that have something special like a great location or perfect floorplan. However, it’s not every listing.
In fact, my inbox is full, daily, of messages saying listings are still available or that we didn’t get anything accepted. In addition, I also got a couple of phone calls from agents on houses I was looking at for a buyer saying the same thing. They are saying, “We didn’t get many offers,” or, “We got one offer, but it wasn’t very good.” You name it.
In a nutshell, this is what I see across the board. I am also not just talking about Alameda Island. I’m talking about Oakland and all the way out to Walnut Creek. I’m talking to people over in the peninsula, and they’re feeling it, too, to some degree. So this is a trend that is happening in the buyer pool right now that I think is a really important one.
What it means for you as a buyer?
Why is the trend that is happening in the buyer pool right now is important, you ask? Well, here is why. If you’re a buyer who is actively looking in the Bay Area Real Estate market right now, this is probably the first opportunity you had in a year where you do not have to compete with 10 or 20 other offers and having the price pushed up way over, right? Especially if you find those houses that are peculiar or sitting or not quite resonating with the buyer pool in a certain way.
However, I still see that the people who transact at the high levels do so only on the really good houses. They are transacting on the houses that are just teed up, perfect, beautiful, and have a great floor plan. So if you find one of those listings that’s just not getting a lot of love, it’s a big opportunity for you.
What it means for you if you're the seller?
Meanwhile, on the seller side, if you have a property that is just beautiful, this is still an opportunity for you to kill it. If you’ve done all the renovations, got a killer floorplan, got a view, or got whatever it is, this is still an opportunity to get that price you want.
However, if you’ve got a challenging listing, for example, one that’s got a lot of stairs to the front door, or a lot of damage and needed repairs, this may not be your moment. You may want to wait until the energy comes back up so you can get to the price you’re aiming for.
Where are we going with this? Well, I just want to point out that buyer psychology is critical here. Simply put, what I’m seeing is people are not quite as aggressive as a whole. There are now fewer buyers who show up to do showings, show up to the open houses, request disclosure packets, etc. In other words, there is a little less engagement.
Then, when the offer date comes, there are now fewer offers, too, as compared to before. Instead of having ten or more, we’re having five, three, or just two offers. Usually, you’d still get a handful, but the volume of offers isn’t really there right now. Moreover, you would also not see quite the high level of spending on those offers either. So that’s just something to be really aware of.
However, I predict that the market will tick back up after the 4th of July, as it had traditionally been doing for 20 plus years before COVID happened. During this time, people usually come back, get refocused, and re-energized. They focus on trying to get something before the school year starts.
So did the Bay Area Real Estate market really just shift? Whatever it is that you want to call it, these are the things that I’ve observed happening on the ground is at the moment. Now that you’ve read my market update, do with it what you will. Lastly, whatever your next step will be, I would say this could be an opportunity or at least a piece of data that you need to consider to be strategic with your search (if you’re a buyer) or your sale (if you’re a seller) as you go forward into the rest of the year.
I hope my Bay Area Real Estate Market Update 2021 "Did the market just shift?" has helped you.
If I can give you more context on the process of buying or selling your home, please do not hesitate to reach out. My information is below.
Here’s to all your success!