Reporter- San Francisco Business Times
As housing prices inch toward or past pre-recession levels, we have to ask, how much higher can Bay Area home prices go?
Home prices in San Francisco pushed up 18.2 percent in April compared with the previous year, but have gone up a whopping 47 percent over two years from April 2012 to April 2014, according to the most recent SP/Case-Shiller Home Price Index. The San Francisco figures include five inner Bay Area counties.
“In all recoveries, the market has regained peak values (of the previous cycle) within a year or two,” said Patrick Carlisle of Paragon Real Estate Group. “Once economic recovery begins, the market goes crazy. There’s so much pent up demand.”
We may be past the crest of the crazy. Home price growth is slowing down in San Francisco — April was the first time in 13 months that the region’s housing market grew by less than 20 percent year-over-year. Still, prices are going up.
During the past two decades, Bay Area home prices have followed a similar pattern during economic cycles: They go up, then they go down and then they go up again, but each time they go up, they go up higher than before. And depending where you are looking it, we may not be at that point yet.
Prices shot up during the tech boom in the late 1990s then dropped after the bust. They peaked even higher in 2006 before hitting a recession low in 2011. They have been on the upswing again, but the region as of April, the region as a whole is still 14 percent lower than its previous peak in May 2006.
That’s not true everywhere. Large swathes of the region have already zoomed past previous peaks such as San Francisco, Fremont, Berkeley, San Mateo, Redwood City, Alameda, Pleasanton, Menlo Park, Foster City and Lafayette.
Blanca Torres covers East Bay real estate for the San Francisco Business Times.