Bay Area home prices and sales continue to rise, even as buyers take time out for summer vacations and the new COVID-19 surge brings uncertainty to the economy.
Median prices for an existing home rose 22% to $1.16 million in July from the previous year, led by strong demand in Alameda, Santa Clara and Contra Costa counties, according to CoreLogic data. Year-over-year prices increased in every Bay Area county, including by double digits in seven of the nine counties. But monthly price dips between June and July in four counties, including Santa Clara and Contra Costa, suggest at least a seasonal slowdown.
CoreLogic deputy chief economist Selma Hepp said a greater number of luxury and high-end sales — affordable to tech workers and professionals financially unscathed by the pandemic — could be driving higher median prices.
Fall might bring a relatively slight slow down, Hepp said, but only because 2020 was a boom year for U.S. real estate. “We may see year-over-year declines, but it’s because last year was so strong,” she said.
Sales of existing Bay Area homes shot up 10% in July from the previous year. The hot markets: Santa Clara County prices rose 21% to $1.56 million, Alameda County rose 28% to $1.2 million, and Contra Costa grew 19% to $875,000, according to CoreLogic. San Mateo County prices rose 13.5% to $1.83 million, and San Francisco, reporting just two weeks of sales, went up 16% to $1.85 million.
Demand remains strong for single-family homes, even as the latest surge in COVID-19 cases has dragged the economy and delayed office reopenings for major employers across the region. Condo sales have grown sluggish, with declines in sales and prices between June and July.
Buyers remain enticed by low interest rates, still hovering around 3% for a standard, 30-year fixed mortgage.
Agents say sales typically slow in July and August when families take vacations instead of shopping for homes. The brief lowering of COVID-19 risks with vaccinations also enticed more people to travel.
Oakland agent Jeffrey Neidleman said pending sales in the East Bay dipped about 20% between June and August. “The market is a little unpredictable right now,” said Neidleman, president of Bridge Association of Realtors. “It’s all about location and presentation.”
Single-family home sales in the East Bay have remained strong, while condos have sat longer. The dense housing complexes fell out of favor early in the pandemic, as homebuyers sought more space for work and health.
Neidleman also senses some fatigue and nervousness among buyers with budgets between $1 million and $2 million. “Those buyers are tired of writing offer, offer, offer, offer, offer” and still losing, he said. “You get burnt out. It’s a guessing game.”
Despite a small price dip in Santa Clara County from June to July, competition remains tight for single-family homes on the Peninsula. “Business is just crazy,” said agent Mark Wong. About three dozen Silicon Valley homes have sold for $500,000 over list price in recent months, he said.
Peninsula properties have been selling at premiums of 30% or more over list prices. Buyers have to have financing lined up and be ready to act quickly, he said. Most homes sell as-is with no contingencies, and buyers often offer sellers weeks of free rent after a deal is closed. “Some buyers get it,” Wong said. “Some buyers don’t get it.”
Lakshmi Chavali and her husband, Subba, planned to move from Minneapolis to the Bay Area to be closer to their two children and grandchildren. The couple looked far and wide for a suitable home — big enough for family gatherings, space for a garden, but still within the budget and needs of the empty-nesters.
Chavali soon realized the Silicon Valley market worked at a swifter pace than the Midwest. Their first bid on a Bay Area house was just one of 14 offers. “It was a shock,” she said. “We did not expect that many.”
They didn’t get that home and decided to stretch their initial budget from $1.2 million to $1.5 million. They spotted a single-family home in Morgan Hill online and had a family member tour the property that night and shoot videos.
Chavali and her husband watched the video “at least 100 times,” she said. They made an offer on the four-bedroom, three-bath home the next day. The couple agreed to let the current owners stay rent-free for several weeks. The Chavalis moved into their new home in late August.
“The first time, it was like a sticker shock,” she said. “You have to adjust.”