Homes for sale in the Bay Area are at their lowest level in 20 years. Here’s why

It all makes perfect sense. I have a 2.5% fixed rate mortgage. That and prop 13 together make sure that my yearly costs get lower and lower in real-money terms (accounting for inflation). Renting the property out can easily cover mortgage, property tax, HOA, insurance, and maintenance. So... why would I sell? In fact the difference between rents that can be charged on my place in CA, and the abovementioned costs of keeping it are enough to cover rent in a nicer cheaper CoL area...

Would I sell at all? Maybe, but I can afford to wait till higher prices, even if that takes 3 years, or 5, or 20.

FWIW, this is not unique to the Bay Area. The only people moving right now seem to be:

* Those forced to by job situations.

* Those selling a second home that's now at an inflated price.

California has a huge swath of homeowners with Prop 13 (low property taxes) while others don't. They will never move and cannot afford to do so.

Also, most who own outright may still hold the false belief of perpetual rising prices. And often with most of their net value is tied to the value of their home, they will wait it out regardless of the real long-term future outlook. Bay Area prices will probably not decline unless many big tech companies leave. It probably won't happen but there's a possibility of it.

Inflation loop: people are overleveraged + new loans are expensive → house prices up due to lower listings

tl;dr The prospect of paying significantly higher mortgage rates is dampening homeowner interest in selling. Despite these rates, demand is sufficient to be keeping prices high.