Home » Housing News » Reader QA: Home Prices in the San Francisco Bay Area
By Brandon Cornett | 3/16/11
Reader Question: “We live in Oakland but are considering a move soon. We have an appointment with a real estate agent to go look in Livermore and San Ramon, California. Can you tell me anything about the real estate market in these areas, or the San Francisco Bay Area in general? I’m wondering about home prices and how much they’ve come down. Are we at the bottom? Would now be a good time to buy?”
Bay Area Home Prices Real Estate Trends
The real estate market in the Bay Area is very diverse, in terms of home prices. There’s a lot of price differential from one city to the next, and sometimes from one neighborhood to the next within the same city. With that said, I don’t think the Bay Area as a whole has hit bottom yet. In fact, they just experienced one of the biggest price drops of any metro area in the U.S.
According to Altos Research, home prices in the San Francisco metro area declined by 3.53% from January to February. The 90-day trend showed an even bigger decline: “All 27 of the major markets tracked by Altos showed price decreases during the most recent quarter, most significantly in San Francisco … which showed declines of 9.31%.”
Here’s a must-read article from the Wall Street Journal. It talks about San Francisco home prices in 2010, but the article was published recently. So it will give you some insight into where the market has been, and where it might be headed.
San Ramon home prices seem to be stabilizing faster than Livermore, but both areas could see continued declines in the coming months. San Ramon looks like it might (keyword “might”) be bouncing along the bottom right now. This would mean small ups and down for the near future, with an upward trend in the next 6 – 12 months. Just note that I used the word might two times in that sentence.
A lot of San Francisco real estate agents will point to the steady appreciation that occurred during the first half of 2010. But this was almost entirely due to the California tax credit for home buyers, which has since expired. It was artificial market stimulation that evaporated when the government stopped the incentive.
Real estate agents will say anything to make things seem better than they really are — it’s in their interest to do so. You can’t blame them really. You just have to take it with a grain of salt. On a side note, if your agent wants to throw tomatoes at me when reading this, please make sure they’re organic.
And then there’s the whole foreclosure situation. I think foreclosures will drive inventories up through most of this year, which puts even more downward pressure on home prices. RealtyTrac already predicted a 20% rise in foreclosure filings for 2011, with an all-time high occurring sometime this year.
I’d Buy Outside of San Francisco
What does all this mean? You can probably expect further declines in home prices for most cities in San Francisco metro area. But the true bottom may not be far off. I’d buy a house in the outskirts right now, but probably not within the city of San Francisco. I think the outlying cities are going to see some appreciation much sooner than the metro.
Even if prices drop a little after you buy a house, it’s probably nothing to worry about. Barring another housing crisis, you’ll start seeing some appreciation soon — and it could be significant appreciation.
You have more bargaining power than the seller does right now. But tread carefully when making an offer. Some homeowners realize that it’s a tough market to sell in, so they’ve priced their homes competitively. Despite the sluggish housing market, a multiple-offer scenario could still occur if the home is priced well. So if you come in and low-ball the homeowner out of a false sense of security, you could see your offer rejected. In other words, you should make your offer based on the realism of the asking price.
This article makes a good companion piece for everything we’ve just discussed:
Is now a good time to buy a home?
Disclaimer: This QA response contains forward-looking statements about real estate prices in the San Francisco area. These statements are based on information available at this time. The real estate market changes rapidly. So these remarks should not be taken as gospel.
Filed under Home Prices
Article source: http://www.homebuyinginstitute.com/news/san-francisco-prices-155/