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Thursday, February 2, 2023

Even Less Affordable: Home Prices in the Bay Area Continue to Rise

Mark Wong recently had a client who fell deeply in love with a 5,000-square-foot home in Los Altos Hills – large courtyard, great schools, lots of family space, and a remote office.

The property was listed for sale for just under $ 5 million. In hopes of crushing other buyers, Wong’s client offered $ 6 million. But the one-acre home received 16 bids and sold for $ 6.75 million.

“We exceeded the asking price by $ 1 million and didn’t even come close,” said Wong, a Saratoga-based Compass real estate agent. “Once again, Silicon Valley real estate defies gravity.”

In the Bay Area, home prices continued to climb in October, according to CoreLogic, with all nine counties reporting double-digit growth and increasing the average cost of an existing single-family home to $ 1.12 million. Alameda County – up 20% to $ 1.15 million from the same month last year – led the boom, followed by Napa Counties (up 19% to $ 825,000) and Solano (up 18% to $ 555,000). dollars).

Prices in Santa Clara County are up 16.5% to $ 1.55M, up nearly 11% in San Mateo County to $ 1.74M and up 11.6%, according to a real estate and services company. up to $ 1.75 million in San Francisco.

CoreLogic economist Selma Hepp said the rise in prices in the Bay Area could be attributed to the growing number of luxury homes being sold.

Demand has been strong in the Bay Area and across the country, she said, driven by the influx of millennials into the market and easing international travel restrictions, allowing new workers to re-settle in the United States. In other parts of the country, investors have been actively buying single-family homes.

“In theory, at some point we will run out of customers,” Hepp said. “But maybe it doesn’t apply in this case.”

She said housing supply in the US and the Bay Area could be further affected by a shortage of materials and labor to build new homes.

As prices rise, more and more potential buyers are closing out. The rise in prices in the Bay Area has made it the least accessible region in California.

According to the California Association of Realtors, the median household income needed to buy a home in the Bay Area rose to $ 235,000 in September, nearly three times the salary required in early 2012. A decade ago, about 45% of households could afford to buy a home in the Bay Area within their budget; now only 22% can afford it.

By comparison, roughly half of American households have enough income to buy a home.

Agents say the high prices in Silicon Valley were fueled by well-paid tech workers, low interest rates and a shortage of homes for sale. Agents end a record year as availability approaches record lows.

Rising prices have dampened demand somewhat, agents said, but buyers with deep pockets continue to look for properties in the suburbs. In many attractive markets, homes are sold within a week or two of being put up for sale.

“Today’s buyers have the right to buy homes for $ 2 million,” said Cupertino’s agent Ramesh Rao.

He believes Silicon Valley buyers are more interested in additional living space to generate income from relatives or rent. But Rao also saw some older residents resist the urge to sell and downsize by limiting the number of homes available for sale. “Nobody wants to sell,” he said. “It’s just a comfort zone.”

Alameda County’s market has hit an all-time high.

“Demand simply exceeds supply,” said Jeffrey Neidlman, an Oakland agent and president of the Bridge Association of Realtors. According to him, buyers were not deterred by several high-profile crimes in some parts of Auckland.

World Nation News Desk
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