Earlier today, members of the Bay Area Modern team attended a sold-out breakfast meeting hosted by our local association of Realtors. The highlight of the event? An insightful presentation by Dr. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), who shared his latest real estate and economic outlook.
With housing market trends shifting both nationally and locally, here’s what you need to know if you’re a homeowner or a buyer in the San Francisco Bay Area.
Market Recovery in Sight?
The past two years have been some of the most challenging for home sales. Existing home sales across the country hit historic lows, but there are signs of recovery ahead. Dr. Yun forecasts a 9% increase in existing home sales in 2025 and a 13% rise in 2026 as economic conditions improve.
While these numbers reflect the national market, the Bay Area—known for its high home prices and competitive real estate environment—will likely experience its own unique trends. Historically, the Bay Area has been one of the first regions to see housing rebounds due to strong job markets and continued demand from high-income buyers.
Bay Area Home Prices: A Stronghold in the Market
One of the most significant takeaways from the presentation was the resilience of home prices. Nationally, home values have continued to rise, with median prices expected to increase by 2% in both 2025 and 2026.
In the Bay Area, median home prices remain among the highest in the country. Despite fluctuating mortgage rates, limited inventory has kept prices stable. For homeowners, this means real estate continues to be a solid long-term investment, helping build substantial wealth over time.
For buyers, while affordability remains a challenge, price stability suggests buying sooner rather than later could be a smart move—especially before demand pushes prices higher in the coming years.
Mortgage Rates: The Key to More Sales
While both local and nationwide housing forecasts are optimistic, mortgage rates have been a major barrier for both buyers and sellers in the past year. Despite the Federal Reserve implementing rate cuts, mortgage rates have remained stubbornly high.
Dr. Yun’s forecast predicts rates hovering around 6.5% in 2025, with potential dips closer to 6% by 2026. While this is still higher than the ultra-low rates of 2020-2021, it is an improvement over the recent peaks above 7%.
For buyers waiting on the sidelines, a slight drop in mortgage rates could significantly improve affordability. For sellers, lower rates mean more buyers entering the market, leading to increased competition and potentially stronger offers.
Inventory Challenges: What’s Available?
A major factor influencing the real estate market is inventory availability—or rather, the lack of it. National housing inventory has remained low, and the Bay Area is no exception. With fewer homes for sale, buyers often face limited options and strong competition, keeping home prices elevated.
The good news? New home construction has returned to pre-pandemic levels, which could help ease supply constraints in the long term. However, in a market like the Bay Area, where new construction is limited, resale homes will continue to dominate. If you’re considering selling, 2025 could be a strong opportunity to take advantage of lower competition. If you are a local homeowner, you can use our AI-Powered Home Value & Equity Checker Tool for Bay Area homeowners to find out the current and trending value of your property.
Bay Area Jobs and Housing Demand
One of the most reassuring trends for Bay Area real estate is the continued strength of the job market. Since 2000, the Bay Area has added over 400,000 jobs, reinforcing the demand for housing in the region.
With high-paying industries like tech, finance, and biotech driving employment, homeownership remains a top priority for many professionals. As job stability continues, so will the demand for homes, making real estate a smart investment for both homeowners and potential buyers.
Looking Ahead: A Smart Time to Make a Move?
While real estate markets fluctuate, the Bay Area remains one of the strongest and most resilient in the nation. If you’re a homeowner, your property’s value is likely to hold strong. If you’re a buyer, waiting for perfect conditions may mean missing out on opportunities as prices rise over time.
If you’re considering buying or selling a home, our team at Bay Area Modern Real Estate is here to guide you through the current market. Contact your Bay Area Modern Realtor today to discuss your real estate goals and make the most of the opportunities ahead!
