If you’ve been reading recent media reports, you might think the Bay Area real estate market has shifted firmly into “buyer’s market” territory. Stories of growing inventory and homes sitting longer on the market paint a picture of declining demand. But that narrative is out of context—and in many cases, simply misleading. Headlines scream “crash,” but the Bay Area’s real estate pulse tells a different story—one of fierce demand, record prices, and a supply crunch that refuses to relent.
Yes, some Bay Area neighborhoods are experiencing higher inventory, but a deeper analysis is critical. You have to look at the why, where, and what’s behind the listings. The reality is that most of the Bay Area still doesn’t have enough quality inventory to meet demand. As of Q1 2025, months-of-supply inventory in desirable submarkets like Palo Alto and Menlo Park remains below 2 months—a classic seller’s market threshold—while less desirable areas hover closer to 4–6 months, per local MLS data.
Take Los Altos, for example—10 homes in the past 3 months sold for $1 million to $1.6 million over asking. The same is happening in Cupertino, Mountain View, Palo Alto, Menlo Park, San Carlos, and Belmont. These communities have seen record-high sales, and $3 million+ has become the new normal in pricing. In tech-driven hubs like Cupertino and Mountain View, 65% of homes sold above asking in Q1 2025, averaging 8 offers per property (Compass market reports). Median sale prices reflect this heat: Santa Clara County hit $1.85M in February 2025 (up 8% year-over-year), while San Mateo County crossed $2M, according to the California Association of Realtors. When a home is well-located, updated, and insurable, it attracts multiple offers and sells quickly—often far above list price. In Palo Alto, 95% of listings under $4M closed within 14 days this year.
So what about the homes that aren’t selling?
In many cases, these properties are impacted by new realities that buyers can’t or won’t take on. For example, California’s evolving insurance landscape has become a major factor. A 2024 California Department of Insurance study found that 15% of Bay Area homes in high-risk zones lost coverage eligibility in the past two years, pushing sale times up by 40%. Homes with knob-and-tube wiring, wood shake roofs, or locations newly re-mapped into high fire or flood zones may be effectively uninsurable—and if buyers can’t get insurance, they can’t get a mortgage. That’s a deal breaker, not an indicator of a buyer’s market. In Woodside, a $4M home with a wood shake roof sat unsold for 120 days after insurers pulled out; meanwhile, a $3.5M updated ranch in the same ZIP code sold in 9 days with 12 offers.
Other homes sit because they are overpriced from the start—sometimes due to overly ambitious expectations from sellers. Still others are outdated or in need of extensive repairs, or they’re located in areas with underperforming schools, which is a major consideration for many buyers.
But let’s be clear: homes that don’t meet market demand due to insurance issues, condition, location, or pricing expectations don’t define the broader market. A buyer unwilling to purchase an uninsurable, outdated home in a fire zone isn’t a sign of a market shift—it’s just good judgment.
The Bay Area’s economic engine keeps this market roaring. Despite tech layoffs in 2023–2024, Bay Area tech salaries rose 6% in 2025 (Glassdoor), fueling cash-heavy buyers who bid $1M+ over asking without blinking. Even with mortgage rates at 6.5% in March 2025, all-cash deals accounted for 40% of sales above $3M, per Compass and Redfin—insulating the luxury market from rate hikes.
In summary, the Bay Area market remains highly competitive in desirable neighborhoods. Strong demand and limited quality inventory continue to drive multiple offers and escalating prices in many areas. The headlines may be loud, but they’re not telling the whole story. This isn’t a market cooling—it’s a market recalibrating. Follow the numbers, not the noise: the Bay Area remains a seller’s paradise, if you’ve got the right property.
