In recent interviews, industry experts have shed light on the current state of the real estate market in California’s major metropolitan areas, particularly in light of a report from Redfin. Despite a slight improvement in market activity, sales remain significantly below pre-pandemic levels, with only 2% of homes changing hands in places like Los Angeles and San Francisco over the past eight months.
According to Redfin’s findings, the residential sales rate in the San Francisco metropolitan area stands at 16.6 homes sold per 1,000 available properties, which includes single-family homes, condos, townhouses, and co-ops. Nearby Oakland and San Jose show slightly higher figures, around 17 sales per 1,000, marking them among the lowest in sales rates in the country’s most populous metro areas.
Redfin also provided a comparison of sales volume against the total number of residences, whether they are on the market or not, to gauge housing supply. The resulting turnover rates are notably lower than those seen before the pandemic; between January and August of 2019, around 20 homes sold per 1,000 in both the San Francisco and San Jose areas, and about 25 in Oakland.
After several years of steady decline, turnover rates spiked in 2021 due to record-low mortgage rates driving a surge in home sales. However, as mortgage rates increased once again, 2023 saw turnover in all three metro areas drop to its lowest levels in at least a decade.
Sales rates for condos and townhouses typically outpace those of single-family homes, although they have also declined sharply over the last five years. In the San Francisco area, the sales rate for single-family homes decreased from approximately 17 homes in 2019 to 15 in 2024, while condos and townhouses dropped from 28 to 19 during the same period.
Interestingly, compared to the overall national trend, the Bay Area’s decline in residential sales rates from 2019 to 2024 has been relatively modest. According to Redfin, the Bay Area is the only location among the fifty most populous metros in the U.S. that experienced a slight increase in sales rates over the past year. Redfin’s Chief Economist, Chen Zhao, attributes this anomaly to the steep drop in the sales market at the end of 2022 and into 2023, with recent slight decreases in mortgage rates fostering increased market activity.
Despite this, the Bay Area’s turnover rate remains one of the lowest in the country, comparable to Los Angeles, Anaheim, and San Diego. Over the first eight months of this year, the average sale rate in the most populous U.S. metro areas reached 25 homes per 1,000, a stark contrast to California’s major markets.
Zhao emphasized that California’s low turnover rates are significantly tied to the ongoing housing affordability crisis, compounded by Proposition 13, which links property tax assessments to the purchase price, incentivizing homeowners to hold onto their properties instead of selling.
He also noted that if mortgage rates continue to decline, the Bay Area could see more residential transactions. However, there’s no guarantee that mortgage rates will ease; they tend to be more volatile compared to federal rates. In fact, just in October, the average rate for a 30-year mortgage surged from 6.08% to 6.32%, reversing a decline observed in September.
