by Lex Shan
Spring season is the time for families to hunt for a home of their dreams, bid, and purchase elusive and usually expensive properties in the Bay Area. But not this year! Even during the coronavirus pandemic, home buying and selling have picked up long before the spring surge.
The Bay Area real estate is a hot property where buyers are restless and eager to take advantage of the current low-interest rates, which have soared the demand for single-family homes in the region. This article aims to inform readers about the key trends observed in the Bay Area real estate market and guide them on making a house purchase.
Bay Area Housing Market: Impact of COVID-19 Pandemic
The San Francisco real estate comprises some of the most densely populated cities in the US and is undoubtedly one of the world’s most expensive real estate markets. None of this has changed despite the unprecedented circumstances caused by the COVID-19 pandemic. Amidst the ongoing health and economic crisis, the San Francisco housing market still made a considerable recovery in sales.
As per the real estate database company Realtor.com, the median sale price in the Bay Area is about $1.4M. Most of the affluent buyers were least affected by the economic downturn caused by the pandemic. These buyers have surged the demand for high-end luxury real estate in almost every corner of the region.
Bay Area’s Real Estate Appreciation Rate is High
As per Jeff Tucker from the Zillow Economic Research team, San Jose reported a significant price appreciation in 2020. It was a red-hot area and showed interesting divergence compared to the rest of the US. While San Francisco reported a laggard price appreciation compared to other metros in the US, there was still a price appreciation, just at a slower pace.
There has been only a short-term impact of the pandemic on the housing market in the Bay Area. When coronavirus hit the US, buyers withdrew their offers, and sellers removed their homes from the market. But this only played a minor role for a few initial weeks in the market climate.
As the shift to remote working conditions became the new normal, single-family homes in the range of $1.2M were reported to be the most sought-after property. Several buyers were seen seeking single-family homes or second bedrooms over smaller units. Since San Jose offered a large number of single-family homes, it significantly rose in 2020. In some areas, condominiums that offered alternatives to single-family homes, with dedicated outdoor space and home-office space, also become popular like single-family homes.
Real Estate Market Trend Forecast for 2021
As the pandemic eases, the demand for houses has begun to surge once again. Before we jump into the trends for 2021, it is vital to note that the real estate price appreciation in the Bay Area has not occurred overnight. The price appreciation in the Bay Area has been growing long before the pandemic hit the US.
The tech industry boom that started in 2012 sowed the seeds for real estate demand in San Francisco Bay Area. This growth was partly supported by tax incentives that attracted new tech companies into Silicon Valley. Today, the tech industry’s growth attracts hundreds and thousands of skilled professionals each year to the region and has played a significant role in driving up the housing demand.
Here is the graphical representation of historical home prices in the Bay Area with projected prices for 2021 obtained through Zillow, an online real estate marketplace.
Zillow’s latest housing market forecast indicates that all the Bay Area counties, except San Francisco, will have double-digit median price growth in 2021.
- Santa Clara is expected to lead the pack, with home values forecasted to rise over 11%.
- San Francisco is headed for a slow but promising rise of about 7.5% in the next 12 months.
- San Mateo is predicted to rise over 9.5%, while all the remaining counties of Almeda, Contra Costa, Marin, Solano, Sonoma, and Napa are predicted to increase above 10%.
Should You Invest in the Bay Area Property Market in 2021?
As per data provided by Redfin, another online real estate marketplace, the inventory of available properties in the Bay Area was holding at 1.6 months in December 2020. There has been a slight resurgence in the buyer demand that is expected to push the home prices in the coming months.
For homebuyers planning to purchase a new property in San Francisco or the entire Bay Area, it is a good time to enter the market as the mortgage rates are at the lowest. A considerably good inventory list with new listings entering the market gives buyers a good chance to invest in the market and scoop out their favorite deals. If you plan a long-term buy and hold, this may be a good investment for you and your family that will continue to increase in value over time.
New Listings Data obtained through Redfin.
Before you make your decision, it is vital to note that the entire Bay Area has always been skewed due to a persistent imbalance in supply and demand. Even though COVID-19 slightly affected the situation, the overall scenario remains the same. With limited new construction permits and increased demand with tech growth over the years, affordability may be an issue for first-time buyers.
Ultimately, investing in any property is a personal decision. It is essential first to determine your budget, and preferences before investing in any property. There is something for everyone in the market. You just need to focus on understanding your requirements and making the right choices.
Investing in the Right Property
For most investors, investing in a new house is one of the most important decisions of their life. This makes choosing the right real estate firm a vital part of the process. At Cal Agents Realty Inc, we understand how important the home buying process is for you.
Our team of professional real estate agents is well-informed about the critical factors that affect the market conditions. We can help you find the best houses in the Bay Area in your price range. If you are looking to purchase a new house or book a second home, do not hesitate. Contact us today and get a step closer to the house of your dreams!
