With millions out of work, and restaurants, shops and retailers closing, one spot in the economy shines for thriving and affluent professionals — Bay Area real estate.
As if the devastating pandemic had passed over the tech campuses, Spanish-tiled roofs and Tesla-filled garages of Silicon Valley, luxury home sales exploded in August and drove median prices up 16 percent from the previous year to levels approaching the market peak in 2018.
The median sale price for an existing single family home in August in the Bay Area was $975,000, according to DQNews data. The gains were driven by a limited supply of properties for sale and a greater portion of high-end homes selling, agents and economists said.
“We’ve never seen such high price appreciation in a recession,” said Selma Hepp, deputy chief economist with real estate data firm CoreLogic. “The recession hasn’t hit everyone the same way.”
Year-over-year prices soared throughout most of the nine Bay Area counties: increasing 19 percent to $1.73 million in San Mateo; 18.6 percent to $1.34 million in Santa Clara; 18.6 percent to $770,00 in Contra Costa; and 13.4 percent to $975,000 in Alameda. The pandemic has continued to cool demand in San Francisco, where prices gained 3 percent to $1.55 million, according to DQNews.
The number of Bay Area homes sold grew by about 9 percent from last August, as traditional spring buyers waited until summer to tour and close deals.
Nationally, home prices climbed 14 percent, year-over-year, in late August and September, according to Redfin. The company’s chief economist Daryl Fairweather noted warning signs on the horizon — waning mortgage applications and more home listings boosting supply.
“Although the housing market is still red-hot, there are some early signs we may be nearing peak price growth,” Fairweather said. “This is likely to be as good as it gets for home sellers, who definitely have had it very good for a very long time.”
But the Bay Area is expected to counter that national trend. Professionals in tech and other fields have been able to work remotely, sustaining a stronger economy than regions dependent on service workers like Las Vegas, Hepp said. In recent years, home prices in both regions have climbed. But CoreLogic now projects Bay Area home prices will rise 7.8 percent, while Las Vegas prices will fall 6.5 percent by August 2021.
Bay Area agents say demand is driven by techies and professionals looking for more space for family and home office Zoom-rooms.
Will Doerlich, an agent with Realty One Group in San Ramon, said single family homes in the suburbs of Contra Costa and Alameda counties have been atop many wish lists. Fewer homes for sale has meant fierce bidding wars in the East Bay. “It’s not slowing down,” he said.
One listing in San Leandro for a small, two-bedroom house on a big lot drew 500 views online within the first 24 hours, Doerlich said. The home received 11 offers and sold for $40,000 more than the list price. That type of interest has been consistent during the summer, despite covid safety restriction limiting access for home tours, he said.
Agent Jeff LaMont of San Mateo said low interest rates and strong employment in software and biotech industries have driven millennial couples into the market. His advice to buyers: “Don’t overthink it. Grab the cheap money while you can.”
The typical interest rate for a standard, 30-year fixed mortgage is 2.9 percent, according to a Freddie Mac October survey.
The growing popularity of the suburbs has been fueled by major tech firms allowing many employees to work from home well into next year, minimizing commutes as a factor for homebuyers. Google, Facebook and Salesforce announced workers could stay home through next summer, and Twitter left the decision open-ended.
Zoheb Allam and his wife, Nishaath Khan, decided to move to San Francisco shortly after they were married. The couple, both tech workers, planned to spend two years living the city life — restaurants, bars, theaters and shops within walking distance of their SoMa apartment.
“We always dreamed what it would be like in the big city,” said Allam, 31. “When covid hit, our story changed.”
Their $3,700-a-month one-bedroom in SoMa was a small redoubt in a neighborhood of closed bars and limited office and restaurant traffic. The large homeless population and some residents with aggressive behavior made them weary of routine trips.
“We felt very boxed in,” Allam said. “What is really the point of sitting in San Francisco, paying the kind of rent we’re paying?”
They started looking for homes in Alameda County and opted out of their lease after one year. They settled in a two-bedroom apartment in Livermore, and continue to search for their first home. They’d like to stay in Livermore. “It’s the right move,” Allam said, “at the right time.”