After lull, Bay Area home prices regain speed
After a months-long slump in Bay Area home prices, the market appears poised to drive higher as buyers act on low interest rates and fight for scarce inventory.
The median sale price for a single-family home in the nine-county Bay Area edged up 1.5% in December over the previous year, the first upswing since April, according to Zillow.
Agents and economists expect a market rebound — and December's $871,500 median price could be the start of another streak. "This area has been the go-to example of where the market overheated," said Zillow economist Jeff Tucker said. "It went through a pretty major correction."
Higher mortgage interest rates and home prices soaring beyond the reach of most would-be buyers contributed to the slowdown, especially in tech-heavy San Mateo and Santa Clara counties, Tucker said.
The Bay Area market slowed in 2019 after a record-breaking run that saw price gains of 10% or more during a surge in 2017 and into 2018. Buyers — cautious, frightened or priced-out — retreated from the market. Homes took longer to sell, and bidding wars cooled in some areas.
But low interest rates, now around 3.5%, and a steady economy once again have stoked buying and selling across the region.
Led by surges in core Silicon Valley communities, the Bay Area's median sale price for a single-family home rose 1.48% to $871,500 from the previous December, according to Zillow.
Median sale prices for single-family homes jumped 4.76% to $1.46 million in San Mateo County, grew 1.43% to $1.2 million in Santa Clara County, and increased just under one percent in Contra Costa County to $639,700 and Alameda County to $870,700, according to Zillow data.
Sonoma was the only county where prices fell, dropping less than one percent to $635,300.
Tucker said the strong economy and influx of high-paying tech jobs helped the region sustain its highest-in-the-nation prices. He noted that the number of homes for sale has been dropping since fall, putting more pressure on buyers.
Bay Area agents say the market has begun a comeback.
Will Doerlich, with Realty One in Pleasanton, said open houses this month in the East Bay were drawing more than 100 would-be buyers. Doerlich canceled a winter vacation to keep up with closings, he said. "We're not seeing any slow down in demand," he said.
One property in San Francisco, generously described as a "fixer-upper" near a BART station, was drawing two or three visitors a day, Doerlich said. The home needs major work, but the $895,000 asking price was drawing the bargain seekers, the curious and the brave.
Houses in the outer suburbs are attracting first-time buyers and families looking for more room. A four-bedroom in Livermore went on the market Thursday and drew a full-price, $1.5 million offer two days later, he said. "Does that sound like a slow market?" he asked.
Tech employees have benefited from a strong stock market, and sales near major companies have surged, agents said. San Mateo County prices marked their biggest gains since May.
Santa Clara County had its first year-over-year gain since December 2018. The county had seen prices for single-family homes drop 11 straight months after years of a scorching market.
Willow Glen agent Don Sabatini said the market didn't slow down during the holiday season. Activity has remained strong for homes around $1 million. "That's where the most competition is," he said.
One client offered $970,000 on a three-bedroom home in Blossom Valley. The client's offer was nearly $200,000 over asking — and the client lost in a frenzy of 46 other bidders, Sabatini said.
"Active inventory in Santa Clara County," he said, "is extremely low."
Another client bid $1 million on a three-bedroom, as-is home in South San Francisco. Sabatini estimated the home needed another $200,000 in renovations — and his client's generous, above-listing offer couldn't clinch the deal.