Bay Area home prices have started to pick up, with cautious buyers stepping back into the market amid low inventory and steady demand.
The median sale price in January for single-family homes rose, year-over-year, in Santa Clara, San Mateo, Alameda and Contra Costa counties, according to a new Zillow analysis. The biggest risers were in tech-heavy San Mateo, where the median sale price increased 6.3 percent to $1.47 million, and Santa Clara, with the price up 2.7 percent to $1.21 million.
The median sale price in seven Bay Area counties in January was $865,900, according to Zillow. Data for Marin and Napa counties was not immediately available.
“This winter is a very different picture from last winter in the Bay Area,” said Zillow economist Jeff Tucker. “Buyers have really come back to the table.”
High demand and few homes for sale have been a steady refrain as the region sinks deeper into a housing crunch. Median home values made record gains between 2012 and 2017, before hitting a lull in 2018 and 2019. Longtime homeowners have seen their equity soar, while many would-be homebuyers have remained renters or left the region.
For buyers able to get into the market, low interest rates — hovering around 3.5 percent for a standard, 30-year mortgage — have increased buying power and budgets.
The low inventory of homes for sale has added a sense of urgency for buyers, putting additional pressure on prices and making for faster sales. “Inventory is so low, homes aren’t languishing,” Tucker said.
New listings dropped 14 percent in San Mateo County and 16 percent in Santa Clara County from the previous January, according to MLSListings. The total inventory of single-family homes, which includes new and old listings, dropped almost 30 percent in San Mateo and nearly 40 percent in Santa Clara.
Although prices have regained momentum, the number of sales have dipped as highest-in-the-country listings have pushed many out of the market.
Sales fell in 4 of 5 core Bay Area counties, with only buyers in Contra Costa County purchasing more homes than last January. Home sales volume fell 8.7 percent in Alameda, 5 percent in Santa Clara, 4.2 percent in San Mateo, and 23.7 percent in San Francisco, according to Zillow.
Agents say the market has started to accelerate in neighborhoods around employment centers. In Santa Clara County, prices rose year-over-year for the second straight month after falling modestly for almost a year.
Ramesh Rao, a Coldwell Banker agent in Cupertino, said first-time buyers are once again house-hunting. He’s seen demand grow among Silicon Valley tech employees, whose incomes were boosted by a strong stock market until recently.
An open house at a three-bedroom home in Milpitas on the first weekend of January drew more than 200 people over two days. The home, in a strong school district, listed for $1 million, received about 10 offers, and sold for $1.16 million.
Another home in West San Jose sold before an open house, with a buyer making a preemptive offer far above the listing price, he said.
“If you want to sell, now is the time,” Rao said. “If the house is in a good school district, at the right price, buyers will come.”
Homebuyers remain busy in the East Bay, agents report. High prices in Santa Clara and San Mateo counties have pushed many families to look in more affordable cities that still have reasonable commutes to offices on the Peninsula.
Tina Hand, president of the Bay East Association of Realtors, said demand has begun to pick up. “We’re starting to see multiple offers,” said Hand, an agent based in Pleasanton.
The typical first-time buyers are two-income couples with professional careers and young families. With busy lives, they’re often unwilling or unable to work on fixer-uppers, she said.
Turn-key ready homes are appealing to young couples. “Buyers want move-in ready,” Hand said. “They really don’t have the time.”