After a sluggish 2023 in which Bay Area home sales sank to the lowest level in 15 years, activity across the nine-county region rose 9% in 2024 as buyers and sellers came to terms with higher interest rates.
“I do think the worst is behind us,” said Jordan Levine, chief economist for the California Association of Realtors, which provided the year-end sales data. “But it’s not going to be a V-shaped recovery.”
Real estate agents say the market may never return to the heights of the COVID-19 pandemic when prices and the number of transactions reached an all-time high as buyers raced to take advantage of historically low interest rates of around 3%.
Still, the median sales price across the region increased 6.6% between 2023 and 2024. It rose 3.1% to $876,263 in Contra Costa County, 6.1% to $1.3 million in Alameda County, 4.3% to $1.6 million in San Francisco, 9.3% to $1.9 million in Santa Clara and 6.6% to $2.1 million in San Mateo County. Prices also ticked up in Marin, Napa, Solano and Sonoma counties.
It’s been a challenging year for the real estate industry in California. Sales across the state, which total around 400,000 in a typical year, were down to just 268,180 this year, up from 223,940. Agents also were forced to make changes to how they set commissions, a rules change that came in the wake of allegations of anti-competitive industry practices.
Amid all of that, the biggest impediment for home sellers and buyers remains high interest rates that hovered around 6.5% all year. Some would-be sellers are holding onto pandemic-era mortgages, with little motivation to hop back into the market if it means they’d have to give up their lower rates.
“It’s kept people from wanting to put their homes on the market because they just don’t see where they can go,” said Glen Mitchell, an agent based in Half Moon Bay. “Sellers might want to downsize into a smaller home, but with interest rates so high, people find their payments on a smaller home might not be too different than their existing home.”
Rates on a 30-year fixed-rate mortgage peaked at 7.22% in May, typically the busiest season for home buying in the Bay Area. They now sit just below 7%.
“We started the year off on a strong note, but with rates shooting up right during the spring home-buying season, we lost a lot of that momentum,” Levine said.
Rates hit a low point of 6.08% at the end of September, which prompted many buyers to rush into the market — among them, Arpit Sharma and his wife, Tina Mansukhani.
The couple moved to Foster City from the East Coast in 2022 but decided to rent as they got acquainted with the area. They hoped that, in the meantime, rates would come down, too. When they saw rates drop in the fall, they started looking into homes and were pre-approved for a mortgage with a 5.5% rate.
Starting with a budget of around $1.5 million, the couple searched the Peninsula for a four-bedroom, three-bathroom house but found they needed to adjust both their budget and their expectations.
After losing one home to an all-cash offer then upping their budget to $2 million, they submitted the winning bid on a three-bedroom, two-bathroom house in Foster City that was smaller than what they sought but still located in their desired school district.
“As you impose different criteria, you’re not left with too many houses,” said Sharma, 44. “I wish there was more inventory.”
Though the number of listings across the core five-county Bay Area ticked up 16% from last year, according to Compass, inventory remains significantly lower than pre-pandemic levels. Agents predict it will remain tight in 2025 due in part to high interest rates as well as the lack of new construction.
“We don’t build enough in California,” Levine said. “The new construction pipeline isn’t being filled up, and therefore the resale pipeline that should’ve happened from units that we would’ve built five or 10 years ago never took place.”
Low inventory coupled with sustained demand kept prices high in 2024 and will likely push them higher in 2025.
Prices growth was particularly high in tech hubs such as Sunnyvale and Santa Clara as more companies instituted return-to-office policies and commuters sought out nearby homes, said Matthew Swenson, an agent based in Los Gatos.
“People are now buying because they know they’re going to need to be in the office three to four days a week,” Swenson said.
The luxury market also remained strong in the Bay Area last year, fueled by a strong stock market with major gains across the tech sector.
“People accumulated wealth through the stock market in 2024, and many used it toward buying a home,” said Olivia Lee, an agent based in Redwood City.
All-cash sales represented one in five home sales across the Bay Area in 2024. That share of homes was even higher in certain ZIP codes — in tony Atherton’s 94027, it was 65%; in Walnut Creek’s 94595, it was 67%; and in Berkeley’s 94709, it was 68%.
In the meantime, agents say that buyers reliant on financing may need to find creative ways to make their monthly payment more affordable, such as a rate buy-down or pooling resources with friends.
“Buyers realize rates aren’t going to get any lower,” said Mitchell. “They just get used to them.”