Bay Area home prices have continued their stratospheric surge, as the low housing supply combined with intense demand last month to further heat up the market.
The real estate business usually cools off in the summer, but this market is proving to be a pressure cooker. The median price of a single-family home in the region was $779,000, up 9.7 percent from a year earlier, the CoreLogic real estate information service reported Wednesday.
Prices in the eight counties for which June data were available have risen for 63 straight months. The median price hasn’t fallen since March 2012, and some homeowners are cashing out and leaving the region while buyers battle over scant offerings — and occasionally find a deal.
Alameda and Sonoma counties set new median price records in June of $838,000 and $612,000, respectively, while Santa Clara matched its previous peak of $1,100,000.
“In 27 years, I’ve never seen such sustained demand and appetite by buyers,” said Chris Trapani, CEO and founder of the Sereno Group. “To see prices escalating at this point in the summer is remarkable, in my view.”
Even with inventory sinking to historic lows, sales were up. They rose 9.9 percent across the region on a year-over-year basis. In Santa Clara County, they rose 7.3 percent, while Alameda County was up 7.1 percent and Contra Costa County rose 4.7 percent.
(CoreLogic’s June report does not include San Mateo County due to a glitch with data collection there.)
The increased activity suggests that the region is “quickly burning through its supply of homes for sale,” said Andrew LePage, research analyst for CoreLogic. “Inventory is down, so you’re just going through it at a faster pace.”
He noted that new home construction continues to lag — sales of new single-family homes, condos and townhomes were 35.6 percent below their June average of the last 30 years. If overall inventory levels tighten further in the months ahead, he said, “We then could see sales decline year-over-year — and not for any lack of demand, but for a lack of available homes.”
Given the competition, bids over the asking price are common, although agent Alex Seroff, of DeLeon Realty in Palo Alto, said the pricing strategy needs to be right to attract aggressive offers.
A home with a fair market value of $1.7 million or $1.8 million typically will list at $1.5 million, he said: “I need to get that level of excitement — from a lot of people making a lot of offers — to get the highest price, so I can leverage those offers against each other.”
The strategy worked out for his clients Jamie and Brooke Turner.
The Bay Area natives bought their 2,000-square-foot home in Mountain View’s Sylvan Park neighborhood for $960,000 in 2010.
Looking at Silicon Valley’s congested traffic and steadily rising prices, Jamie, a computer engineer, and Brooke, an ex-teacher who stays home with their three children, decided to sell and leave the area. They listed the home in May for $1.5 million, received 21 offers within a week and sold it for more than $1.9 million, earning nearly $1 million profit on their original purchase.
“It’s definitely a seller’s market,” Jamie said.
They closed the deal in June and moved this month to the Seattle area, where Jamie’s company has an office — and where the family’s new $2.3 million home covers 7,000 square feet on five acres.
In the East Bay, agent William Doerlich has watched as clients chase affordability to Vallejo in Solano County. Buyers are looking for a decent price and architecturally distinguished houses that “are unique, that have a certain feel. You can get that in Berkeley and Oakland, too. But you’ve got it in Vallejo at half the price point.”
His clients Henrique Bagulho and Katherine Du Tiel, professional photographers living in San Francisco, decided to look for an investment property in Vallejo. They stumbled onto a 1924 prairie-style cottage with a view of the Napa hills and decided they wanted to live in it.
The cottage listed for $379,900, drew four offers, and Bagulho and Du Tiel won out, bidding $410,500. They moved in earlier this month.
“Most people seem to think we’re nuts to move to Vallejo,” said Bagulho, “but San Francisco has become too desirable and lost a little bit of its charm. So we’ll probably be doubling our money” — they are about to sell their 1,500-square-foot home in San Francisco’s Miraloma Park — “and we’ll be living in nice quiet Vallejo, less of a hipster city. I like it. I will be able to bike to Napa.”
Sometimes a deal is found close to home, including in downtown and central San Jose, areas that haven’t always been magnets for buyers. “But with so little inventory, people are forced to be less picky,” said Sereno agent Roxy Laufer.
Her client Joy Osborne, a tech manager in Santa Clara, was ready to leave her Los Gatos condo after 11 years: “I didn’t have an outdoor space, and the laundry was downstairs. I was ready to be an adult again after too many years.”
Through the spring, Osborne, who grew up in the Santa Cruz Mountains, was outbid on five homes in the South Bay. Then she came across a tiny yellow house with a bright red door and blue-green steps. Near San Jose’s Japantown, it listed for $665,000 and Osborne — one of eight bidders — got it for $702,000, with15 percent down.
Her new house is “like a beautiful little flower in the heart of the city,” she said. “The backyard is splendid, and it’s got fruit for days. It’s got grapefruit and lemon and peach and apricot, and I feel like I’m walking into my grandparents’ farm. I feel like, ‘Wow, this is special.’”