Prospective buyers tour a house for sale in Foster City, Calif., on Thursday, April 2, 2020. (Anda Chu/Bay Area News Group)
For many would-be homebuyers, a house that’s sat on the market for over 30 days in early summer raises a red flag.
But a month may be a new normal in the Bay Area. Across Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties, about 53% of active home listings in June 2024 were “stale,” sitting on the market for 30 days or more without going under contract, a 6.5% increase from last June, according to a new report from real estate brokerage Redfin. Nationally, the number of aging listings was 64.7% in June— almost 9% higher than 2023.
“Sellers are not finding buyers as quickly as they used to,” said Sheharyar Bokhari, a senior economist at Redfin. “Home prices have not really fallen, because inventory across the country has gone into a really low level, especially last year.”
But low inventory contributing to more stale properties might seem counterintuitive, given the higher demand and increased competition fueled by low inventory. If there are fewer homes, why aren’t buyers rushing to make offers? Blame sellers.
In anticipation of higher demand, homesellers are pricing their properties too high relative to what the market can support, real estate experts say. Higher prices combined with high interest rates means larger mortgage payments. As a result, homebuyers unwilling to swallow larger payments are leaving inventory on the market for longer periods of time in hopes that sellers will reduce their prices.
But there’s little incentive for them to do so if they would be trading pandemic-era interest rates of 2% to 3% to purchase a new home at 7% or 6.8%, Bokhari said.
Within the Bay Area, sellers in Alameda and Contra Costa counties saw the highest year-over-year increases in stale listings. Nearly 53% of Alameda County listings had been on the market for more than 30 days — a 7.6% annual increase from June 2023 — while Contra Costa saw almost 50% of listings go stale, a 7% increase.
Urban areas — San Francisco, Oakland and San Jose — all saw increases as well. San Francisco registered the most stale homes, with 62.5% of active listings on the market for at least 30 days — up 2.1% from June 2023. Even though Oakland had fewer stale properties — 50.8% — its share increased by 6.9% from last year.
On the other hand, San Mateo and Santa Clara counties saw negligible change.
The market in Redwood City, for example, “is still very hot,” said Mimi Quach, a real estate agent based in San Jose. Most houses sell in less than two weeks and Quach hopes her client’s Redwood City home — listed on Redfin 38 days ago — will sell within 10 days after open houses this weekend.
In highly affluent areas like San Mateo and Santa Clara counties, prospective buyers often have the means to pay in cash, avoiding both mortgage payments and interest rates.
“The people who can really buy right now are the higher-income folks,” Bokhari said. For homes in Contra Costa and Alameda counties, the uptick in stale inventory may be due to a more constrained group of potential buyers, he explained.
For Alex Khodadad, a real estate agent based in Contra Costa County and the East Bay, these larger “days on market” numbers are rather normal. As long as a house is priced correctly, it can sell within 30 to 45 days, Khodadad said.
“Since the pandemic, markets have never been the same again,” Khodadad said. While sellers were anxious about slower turnarounds and buyers were hesitant to buy at high interest rates, “now they are getting used to it,” he said.
Quach said she’s seeing more stale inventory in San Jose, but added that it’s “really case-by-case” and more likely for hard-to-compare properties.
While some sellers get lucky, others have had to compromise. Sellers who can’t find ready buyers may decide to rent out their property with the hope of maintaining some cash flow, Khodadad said. Others who do not want to deal with the logistics of renting may choose to take the home off the market, make some improvements to the property and re-list, he added.
Those who absolutely have to sell — such as people relocating to other states — may decide to lower their price and take a $40,000 to $50,000 loss, Khodadad said. In May 2024, around 6% of home sellers decreased their original asking prices, according to a Redfin report.
Buyers and sellers also are looking to see whether interest rates come down in the next few months. Interest rates have declined slightly since the beginning of July, according to Freddie Mac.
For Khodadad, a decreasing interest rate means that inventory and supply might finally be catching up, as he hopes for “more movement” in the market near the end of summer.
Originally published at Tom Li