New data shows that San Jose has seen the largest drop in listings in the country, in line with what Bay Area agents say is anecdotal inventory shortages. And the reduction in supply will prevent the price from falling too much, a possible turnaround.
Active listings and new listings in the San Jose metro market both fell by more than a third year-over-year, according to data reported by Realtor.com in May. Inventory in the San Francisco metro, which includes the East Bay, fell by nearly a quarter, the report said.
Inventory growth peaked in both markets last winter, with active listings in San Francisco up 57% year-over-year in December 2022. South Bay saw an 80 percent increase in active listings. According to Sabrina Speianu, report author for Realtor.com, that puts the Bay Area slightly above the national trend, which shows inventories peaking in February and falling since then, but still rising overall.
Across the country, prospective sellers reported feeling “locked in” into their low rates, which was one reason for the drop in listings, she said in an email. Plus, in the Bay Area, there are other factors preventing homeowners from moving.
“Given the recent mass layoffs and weakness in the tech sector, as well as the recent volatility in the stock market, homebuyers in the Bay Area are facing more uncertainty and challenges before selling their existing home,” Speianu said. “This situation may lead to The supply of homes for sale in the area has further decreased.”
The May report also showed that listing prices rose slightly in the Bay Area, with San Jose seeing a 2 percent drop in price reductions and San Francisco seeing less than 1 percent price cuts, while other markets continued to see substantial price reductions.
While a likely stabilization of the market is good news for sellers, low inventory and high prices are pushing South Bay residents into other markets at a higher rate, according to Realtor.com. In Q1 2021, 78.5% of Metro San Jose residents were looking for homes outside of the area on Realtor.com. This increases to 86.3% by the first quarter of 2022 and again to 90.8% in the first quarter of 2023, Speianu said.
Most of the top 10 markets for South Bay buyers are in California, where home prices are below San Jose’s $1.5 million median. The biggest discounts in the top 10 were those who left the state entirely for Las Vegas, where the median home price is less than a third of that price and 14 percent of active listings have fallen.
Nationally, price growth slowed to the lowest level since 2016, the report said. Asking prices fell the most year-over-year in Austin, more than 7 percent. In the pandemic-era hotspot, nearly a third of listings saw price cuts, up 12 percentage points since last May, and the number of active listings has more than doubled.
