Homebuyers could be forgiven for thinking it was 2022.
As of March, the median sales price of a home in the nine-county Bay Area was $1.39 million, according to new data from the California Association of Realtors. That brings prices back up to levels last seen two years ago, and marks a 15.5% increase from this time last year — the biggest spike among California’s regions.
It’s a sign that prices have recovered from the dip they took during the fall of 2022, following the Federal Reserve’s interest rate hike that sent home sales activity into a downward spiral. Single-family home prices are now at $1.4 million in Alameda County, $890,000 in Contra Costa County, $1.75 million in San Francisco, $2.2 million in San Mateo County, and $1.9 million in Santa Clara County.
“Buyers in the Bay Area are realizing that there’s no point in waiting for rates to come down,” said David Stark, spokesman for the Bay East Association of Realtors. “Across the board, we’re looking at very robust price appreciation.”
But high prices are where the resemblance with 2022 largely ends.
Inventory is way down, as current mortgage rates of over 7% keep would-be sellers with historically low pandemic-era mortgages — in some cases below 3% — rooted in place. And when a home does hit the market, there’s a good chance buyers will end up in a bidding war.
The persistent lack of supply has driven down home-buying activity — across the nine counties, sales dipped in March by 5.4% year-over-year. Contra Costa County saw the biggest hit to sales, with a decrease of 21%. Low inventory helped drive the median sales price in the county up 9.5%.
For buyers, the steeper home prices and higher interest rates are a double whammy, pushing homeownership even further out of reach for many. Even just a few points of difference in interest rate can add hundreds of dollars to a monthly payment.
Buyers aren’t expected to get relief from high interest rates anytime soon. Though some economists predict rates will decline in the latter half of this year, stronger-than-expected inflation data in recent weeks could mean the Federal Reserve will keep rates at their existing level. Mortgage rates tend to track interest rates.
Despite that, real estate agents say there’s fierce competition among buyers, as some of the pent-up demand from the typically slower winter home-buying and selling season comes surging back.
“Even with interest rates where they are, buyers are still aggressively pursuing these homes,” said Ned Laugharn, a real estate agent in San Jose. “People are jumping in, because the house prices are going up faster than the interest rates are coming down.”
Real Estate advisor Teresa Baum, right, walks through a home with a visitor during an open house event on Thursday, April 25, 2024, in Oakland, Calif. The Upper Rockridge neighborhood home is listed for a price of $2,695,000. (Aric Crabb/Bay Area News Group)
Agents at Laugharn’s brokerage firm, Silicon Valley Premier Properties, have seen as many as 20 offers on a single home. Buyers are making major concessions, such as forgoing inspections, and often bidding far over asking price.
“The competition is back to what it was before the market slowed down,” Laugharn said.
Chart showing the increase in median home sale prices in the Bay Area by county for an existing single-family home.
Uncertainty over real estate commissions following a major settlement by the National Association of Realtors doesn’t seem to be giving buyers any pause either, agents say.
Homes are spending an average of just 10 days on the market these days in Santa Clara County, down from 14 at this time last year, according to Redfin data from March. Compare that to 22 in San Francisco, 13 in San Mateo and Contra Costa counties, and 12 in Alameda County.
The competition is surprising some buyers, who are having to wrap their heads around the idea that pandemic-era bidding wars may be back.
Brian Fitzpatrick has spent the last six weeks house hunting in the East Bay. He’d noticed that inventory was limited, he said, which is why he’d been waiting to look until the spring, when people are traditionally more likely to list.
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On Thursday afternoon, he toured an open house for a five-bedroom, four-bathroom spot in Upper Rockridge with views of the San Francisco skyline listed at $2.7 million — but he anticipates it could sell for much more.
“I looked at some houses last week in Montclair — one of them was sold at 30% more than asking,” he said.
“I would love to find a house today and stop looking,” said Fitzpatrick, who — after spending the last few years between Oakland and Lake Tahoe — is hoping to make the return to city life. “Who wants to spend all their time house hunting?”