Bay Area’s home prices remain high even as population growth slows.
Bay Area home prices maintained their record levels last month, despite sluggish population growth.
The median price paid for an existing, singlefamily home in the Bay Area was $ 1.1 million in November, unchanged from October’s record and up 18.9% from last November. Sales were down 7.3% from October but up 34.4% from November 2019, according to a California Association of Realtors report released Thursday.
On Wednesday, the California Department of Finance reported that the state’s population grew only 0.05% between July of this year and last, its slowest pace since 1900. More people moved out of California to other states than vice versa, immigration slowed, the birth rate dropped and the death rate increased.
In the Bay Area, the population declined in Napa, Sonoma, Marin and San Mateo counties.
It rose in the five other counties, but at slower rates than the previous year. San Francisco had the “fastest” growth rate, 0.31%.
“We did see an uptick in outmigration ( statewide), but the population still increased,” said Jordan Levine, the association’s deputy chief economist. “Even if there was less demand ( for homes) this year, we are still up against 30 years of underbuilding. There is still such an imbalance of supply and demand, which is one reason we are seeing outmigration.”
And even though people are moving out of the Bay Area, if more renters decide to buy homes in the area, prices could go up.
Jonny and Amie Davis owned a home in Oakland’s Rockridge neighborhood for seven years. But now that they have a 6month old daughter and are both working from home, they needed more space and made a quick decision to sell it.
“We decided on a Wednesday, put it on the market the following Monday, because Rockridge was nuts. Another house sold up the road sold for an amount we couldn’t quite fathom,” Jonny said.
They listed the 1,647squarefoot home, as “coming soon,” at roughly $ 1.2 million on Oct. 16. Seven days later, they accepted a $ 1.69 million offer and closed seven days after that. But now they’re on the other side, house hunting in Oakland, Lafayette and Orinda in an overheated market.
“If it’s a good property, it will sell in days. You have to make a decision really quickly,” Jonny said. They’re renting a home for six months from a family that wanted to get away while their kids aren’t in physical school. Jonny hopes things will calm down before their lease runs out.
“Maybe we are taking a bet the market can’t continue to go so crazy all the way into next year,” he said. “There are certain places where I can’t see how it can continue.”
The family’s agent, Linette Edwards of Abio Properties, said, “The majority of my listings are selling with multiple offers. The migration continues. People in San Francisco and ( downtown) Oakland are buying into the East Bay for the yards and space. In Contra Costa County, a lot of people are selling and buying homes in more remote areas.”
Edwards said about threefourths of the roughly 30 sellers she has represented since the pandemic began moved out of state. “Covid has spurred people to move faster in their life plans.” One seller decided to retire earlier than planned, sold his home in Walnut Creek and moved to Puerto Vallarta.
But, she said, competition for singlefamily homes is still strong because inventory is limited and people are still moving into the area from out of state. Condos, on the other hand, represent “a great buying opportunity.”
The median price paid for a Bay Area condo last month was $ 750,000, up 1.4% from October and up 2.7% from November 2019.
The median is the price at which half of homes sold for more and half for less, and can be influenced by changes in market mix. For example, if buyers purchase more entrylevel homes and fewer luxury homes, the median can go down even if prices overall went up.
A home at 3930 Canyon Road in Lafayette listed at $ 899,000 attracted 33 offers and sold this month for a whopping $ 1.75 million, even though it was in such disrepair that many prospective buyers didn’t even enter the property.
“I thought it was a teardown. It was not a good candidate for a flip,” said listing agent David Otero of Highland Partners. “I was expecting it to sell in the $ 1.1 million to $ 1.2 million range.”
The previous owner was 102 and died in the home.
“It had a ton of settlement, mold” and floor damage from a leaking roof, he added. Light fixtures had been removed and replaced with hanging bulbs, and a failed attempt to create a basement ended up looking like an “underground bunker.”
But the home had an acre of land in the coveted Happy Valley neighborhood. It was left in a trust to Tulane University, which was thrilled to get the sales proceeds for its education fund, Otero said.
Levine noted that the Bay Area led the state in sales growth last month, but that’s partly because at this time last year, it was “a little slow out of the gate when the rest of the state was ramping up. The ( Bay Area’s) growth rates are slightly exaggerated” because of that.
Normally, the real estate market slows down in November and December. One reason that it’s still going strong is “pentup demand that couldn’t express itself in April and May,” when sales slowed to a crawl because of strict limits on showings and economic uncertainty. Open houses are still banned.
“We also might be borrowing some sales from next year. Folks want to get in before ( mortgage) rates go up,” Levine said. “There’s also a structural component — folks have more flexibility on where they can live. They also have more needs; our homes are more important to us than ever before.”
With the first doses of the coronavirus vaccine being distributed, and the economy opening up, “we are going to see ongoing pressure on prices,” he predicted.