A: Most people express astonishment at the steep rise in Bay Area home prices. We’re more surprised people perceive this as an extraordinary event. This is the center of the universe for the technology that we all carry in our pockets and our purses. Bay Area innovation allows us to call, e-mail, text, post, tweet, search and play from almost anywhere at any time.
We take these devices for granted as if they were a wallet or car keys. The power of immediate access to information and people is breathtaking. Our clients come to San Francisco and Silicon Valley from all over the world with new ideas for creating the future. They have money to invest and dreams of raising their families in the Bay Area. They are all, for the most part, very well-educated, highly motivated and handsomely compensated.
With high demand and the available inventory historically low, the effect on home prices is natural. The average price per square foot in Palo Alto is now beyond $1,500 with average list price surging toward $3 million. In Hong Kong, it’s $4,000 per square foot.
No wonder the buyers who come here from overseas see our area as a bargain. With the huge imbalance in supply and demand, we can look forward to more of the same in 2016.
Michael Hall, Pacific Union Real Estate, (650) 465-1651, michael.hall@
pacunion.com; Tricia Soliz, Pacific Union Real Estate, (650) 833-9442, firstname.lastname@example.org
A: The most surprising thing about the market this year is the prices that homes continue to fetch, paired with the amount of buyers competing for houses. Even in the downturn, the Bay Area was a multiple-offer market. But now instead of offers being over by orders of $10,000, it’s hundreds of thousands of dollars above asking for the most desirable homes.
I’ve had several experiences of discussing homes with buyers and telling them although the homes were listed at $1.2 million, they were likely to go for $1.8 million. It’s shocking to people.
BART walkability seems to be a huge factor in determining the level of interest for a house, and therefore its final price. There have always been buyers who prefer the urban vibe and being able to walk to BART, food, movies and bookstores. But in the past few years, this has exploded as more people emigrate from San Francisco because of better values in the Oakland/Berkeley area.
Areas once marginal are gaining in value and changing as new and more prosperous owners move in. For example, West Oakland now commands high prices with multiple offers.
Another surprise this year is that because of the urgency about walkability, houses in the hills are not commanding the same kind of frenzy. I hear less about needing a view, so there may be good buys up there.
Zanna Knight, Coldwell Banker, (510) 459-7198, email@example.com
A: The explosive growth of high-tech jobs in the Bay Area and the increasing financial risk we face with this is the biggest surprise in this year’s Bay Area real estate market.
Since 2009, high tech has created 30 percent of all new jobs in the Bay Area.
This has come at the expense of non-tech jobs in finance and insurance and heightens our exposure to being primarily dependent on the tech industry for our job growth.
Of the 126 public high tech companies (excluding Apple and Google) in the Bay Area, 69 companies (55 percent) have not made a profit this year.
What happens to the home buying market if the Bay Area tech industry shrinks?
Just as Houston’s economy is primarily dependent on the oil industry, the Bay Area’s growing dependency on high tech could impact our continued economic growth and demand for housing.
Sotheby’s International Realty,
(510) 220-2598, firstname.lastname@example.org