The Bay Area's housing supply may be low, but fierce competition among spring-season buyers continued to drive up home prices, which reached record highs in March in Santa Clara and Alameda counties.
The typical single-family home cost $1,050,000 in March in Santa Clara County, up 11.5 percent from a year earlier. In Alameda County, the median price tag jumped 13.5 percent to $772,000.
Taken as a whole, the nine-county region witnessed an 11.2 percent price surge, with the median reaching $745,000 — less than 1 percent under its all-time high of $752,000, set in June 2016.
"Obviously there's not much good news here for potential first-time homebuyers," said Andrew LePage, research analyst for the CoreLogic real estate information service, which released the numbers. In a seller's market like this one, he predicted, "affordability will be a major hurdle for many home shoppers" in the months ahead.
March sales showed a turnaround from the previous month, which had been the most sluggish February for the region in nine years. By contrast, this was the most robust March in four years, with 5,096 homes selling in the nine counties, a 7.3 percent increase from a year earlier.
Sales were up 13.1 percent year over year in San Mateo County, 12.3 percent in Santa Clara County, 8.7 percent in Alameda County and 2.5 percent in Contra Costa County.
With so few homes available — the California Association of Realtors reported a 12 percent drop in active listings from March 2016 — buyers are anxious to snap up whatever they find these days. And when a listing falls into the "sweet spot" for a certain market, say, between $800,000 and $1 million in Pleasanton, sellers "don't even have to break a sweat," said Keller Williams agent Kevin Kieffer. "It's gone, it's done, almost before you get it listed."
He gave an example.
Earlier this month, one of Kieffer's clients — Ron Peat, the retiring dean of students at an Emeryville-based vocational school — decided to sell his 1,500-square-foot townhouse in Pleasant Hill. He didn't know what to expect, as an identical townhouse — more snazzily updated than his own — had just gone on the market up the block.
"I was fraught with anxiety," Peat said.
He needn't have worried. The other property drew multiple bids above the listing price -- and one of the unsuccessful bidders decided to buy Peat's townhome "before we even put it on the market," he explained, sounding a tad incredulous. "Before we published pictures or anything, we had an offer. Absolutely fabulous."
The $540,000 sale — $11,000 over the listing price — is pending, and Peat expects to move next month to the Kitsap Peninsula in Washington, about an hour from Seattle, where he has purchased a brand-new house for $240,000.
CoreLogic's LePage theorized that "job growth and the stock market run-up this year are among the factors that have stoked sales." He also wondered if February's heavy rains might have caused some potential homebuyers to delay their searches, resulting in more deals that closed in March.
"It's also possible that some people moved up their 2017 purchase plans because they feared mortgage rates would keep rising," LePage said.
Whatever the reason, numerous agents reported that the Bay Area bidding wars of old are back this spring.
The low housing supply is the most commonly cited culprit.
"We're still extremely low and extremely competitive," said Jennifer Branchini, past president of the Bay East Association of Realtors, who had expected inventory to increase in March. "But it really hasn't happened. So you'll see six offers on properties, overbidding by $100,000 — the buyers are out in full force. At open houses, I see 60 to 80, and sometimes 100 people, coming through."
Alain Pinel agent Mark Wong, based in Saratoga, noted that at least 30 properties in Cupertino and Sunnyvale had sold for a minimum of $200,000 above the listing price between late March and late April. In San Mateo, a house that listed for $3,995,000 was gone "in four days with 12 offers for $5 million, which is more than $1 million over the asking price," he said. "Is that crazy? But that's the market right there."
Given the scant inventory — "there's nothing out there" — the pressure on prices is likely to continue, Wong predicted. "It's just the golden rule of supply and demand."
Ariel Yeung, his client, learned that lesson.
A data analyst in Sacramento, she has been planning a move to Santa Clara, where her mother and older sister live. Earlier this year, the family went looking for a home with her — but Yeung was outbid three times, even when she offered $150,000 above the asking price.
"That made us pretty nervous," she recalled.
Then last month, she got wind of a 1,181-square-foot home in Santa Clara that listed for $888,000. Inured to the brutal competition, she decided to make an offer of $1,138,000, which was $250,000 above the listing price.
There were about 20 other bids, and hers won: "It's just how the market is, and we really wanted to get it, so we're OK with it," she said. "We can't do anything about it."
The deal closed on March 31.
"We are fortunate," Yeung said.
