Record returns for Bay Area homes
Aggressive buyers push up year-over-year median sale prices for the 70th straight month, topping mark once held by dot-com boom era
The good times started to roll in April 2012. The Warriors had a solid new backcourt named Curry and Thompson and local home prices started to climb again.
Since then, Bay Area homes have gained value year-over-year for a record 70 straight months, according to real estate data firm CoreLogic. It’s been nearly six years, and the Warriors and the housing market look stronger than ever.
Some counties have seen average property values nearly double during that stretch, including appreciation of more than 80 percent in Alameda, Contra Costa, Santa Clara and San Mateo counties. That’s nearly twice the national increase during the same time.
In Alameda and Solano counties, real estate offered better returns than even the Dow’s 87 percent run-up between April 2012
and December 2017.
“It never cooled down,” said Mark Wong, an agent at Alain Pinel in Saratoga. “It just kept heating up.”
The streak tops the real estate fever that overtook the valley during the dotcom boom from early 1996 though September 2001. But agents say there’s more stability now in the region’s economy from established and expanding tech giants such as Apple, Google and Facebook. They don’t expect the real estate run-up to slow down.
The latest sales report from January reflects a steady rise in home prices, pumping up values for property owners while leaving first-time buyers busting budgets to purchase a starter home. Experts say prices were boosted by continued tight inventory and a growing, well-paid workforce.
The sheer scarcity of homes for sale is driving up bids. The Bay Area median price for a resold home rose to $712,000 in January, an 11.8 percent gain from a year ago, according to a report released Wednesday by CoreLogic.
Median sales prices in San Mateo rose 30 percent from the previous January, reaching $1.31 million. Santa Clara prices jumped nearly 24 percent to $1.05 million. Alameda rose about 14 percent to $755,000, and Contra Costa home prices went up 7 percent to $535,000.
Gains have reached double digits for the last six months.
But rising prices also meant a drop in home sales. The 3,410 purchases of resale homes last month represented a dip of nearly 4.5 percent from last year, according to CoreLogic.
Over the long term, the Bay Area bounced back more quickly from the real estate crash than other parts of the country, said CoreLogic research analyst Andrew LePage. He noted that other metro areas in the West, including Los Angeles, Seattle and Phoenix, have seen similar strong runs in their housing markets. But the Northern California run has been notable for its record-busting prices.
“The Bay Area is impressive, or daunting, depending on your perspective,” LePage said.
Local agents say the streak has been fueled by the combination of a strong local economy steadily adding tech jobs, rising stock prices that benefit tech professionals, and confident buyers.
William Doerlich, an agent with Realty One in San Ramon, said the market began to turn around 2011 and 2012 with the help of federal tax breaks.
“It really started what we’re seeing — this fairly robust market,” he said.
Alain Pinel’s Wong said many clients were looking to catch the bottom of the market around 2012. “But whenever you see the bottom,” he said, “you’ve missed it.”
Wong has seen houses in hot spots like Cupertino, Los Altos and Mountain View going for almost 50 percent over asking price. “It’s a very good long-term investment,” he said.
Agents continue to point to the shortage of new homes being built as a key reason for escalating prices. By one estimate, the region added six times as many jobs as new housing units between 2010 and 2015.
“We’re not nearly keeping up pace,” said Gustavo Gonzalez, a San Jose agent. “We’re not trying to send somebody to Mars here. We’re trying to build more houses.”