July 30, 2021

MP Now News

Mortgage News

Bay Area home prices smash $1 million in April

The Bay Area spring home buying season exploded in April, with buoyant sales and prices exceeding $ 1 million for the second straight month.

The average price for an existing single-family home in the nine-county region reached $ 1.15 million in April, driven by scarce supply and strong demand for suburban space. The price marks a 12% increase from March, which, according to CoreLogic and DQNews data, signals a favorable trend for home sellers but more costly bidding wars for buyers.

Still, economists and agents say the frothy market isn’t a bubble – just a reflection of the Bay Area’s economic strength, demand for homebuyers, and too few homes available.

CoreLogic’s deputy chief economist Selma Hepp said pandemic demand pent-up is driving prices. “They are traditional buyers, not speculators,” said Hepp. “When you think of ‘bubble’ you think that there is speculation going on. But it’s not speculation. “

Analysis of FHA loans by housing researchers at the American Enterprise Institute of Bay Area Properties – particularly in the San Francisco, Santa Clara, and San Mateo counties – supports Hepp’s point of view. It found the Bay Area had the lowest loan default rates in the US last April.

The study suggests that homeowners on government-sponsored loans are making mortgage payments in the Bay Area, in contrast to the rising loan defaults that led to the 2007 property crash.

Prices are skyrocketing in once relatively affordable East Bay communities as Silicon Valley tech geeks are offering $ 100,000 above list prices to shop in peninsular cities. Low interest rates, hovering around 3% on a standard mortgage, have allowed buyers to expand their budgets.

The rise in property prices in the Bay Area was led by Contra Costa County, which rose nearly 25% year over year to $ 972,000, Alameda County, which rose 17% to $ 1.18 million, and Santa Clara County, which grew 11.5% to $ 1.52 million, according to CoreLogic data. The median year-over-year price rose 8.5% to $ 1.75 million in San Mateo County and 2.9% to $ 1.79 million in San Francisco.

Median prices rose 28% from April 2020 – a low water mark for real estate as few sales closed during the initial lockdown on COVID-19 restrictions.

Sales of all homes, including condos and new and existing homes, rose 15% from March through April. The number of transactions more than doubled compared to April.

Hepp said that part of the intense demand is driven by the fear of buyers: “I can’t get in if I don’t get in now.”

Brokers and real estate professionals say the market has accelerated to a peak last seen in 2018. Coveted houses attract several offers the day they go on the market.

In the counties of Alameda and Contra Costa, the average number of market days between January and May fell from 25 to 13 days. “The price increases in the East Bay are staggering,” said David Stark of the Bay East Realtors Association.