CASTRO VALLEY, Calif. (KGO) — It seems that not even the pandemic can drive down Bay Area home prices.
After a small dip in home sales at the start of the stay-at-home order in March, prices have rebounded and continued to climb.
Single-family homes especially are in high demand as residents sheltering at home look for more space and a back yard.
One house in Castro Valley drew unexpected attention this past month. It has three bedrooms and two baths spaced out in 1,251 square feet. It would be an ideal home, if it wasn’t in such bad shape.
“It needs new floors. It needs new windows. It needs pretty much everything,” said realtor Max Devries as he showed off the home, which has cracked windows, moldy cabinets and wood planks lifting off the floor.
The house was owned by a woman who recently passed away. Devries listed it for $400,000 and expected to sell it for about $475,000. What happened next left him in shock.
“It ended up north of $650,000,” said Devries, who got dozens of offers for the property. “COVID does not have an effect on home prices. Interest rates are a lot lower than last year, which is really moving the market. And there is no sign of slowing down any day soon.”
A tight supply is also driving up demand. An analysis by Zillow found that home prices in several Bay Area counties went up in May.
Alameda County saw a 7% increase, while home prices in Santa Clara County rose by 6%. Even though some people may be moving out of the area during the pandemic, there are more people wanting to move in.
“We definitely see more people coming in than leaving. The Bay Area is still very desirable. If not for the weather, it is for the employment. It’s still a strong economy,” said Devries.
The Castro Valley home got an astounding 55 offers. Realtor Janice Lee represented one of the potential buyers.
“My client put in an offer. All cash. No contingencies. Five-day close. But apparently our price was not good enough. The competition is pretty fierce for entry level homes,” said Lee, who has been selling homes in the San Francisco area for 15 years.
She said Chinese investors have pulled back from buying homes in the Bay Area for now, but demand is still up from people wanting to move out of condominiums into homes with more space.
“People want more outdoor space. Studios are taking longer to sell,” said Lee.
Devries said the bidding war over the Castro Valley home was likely caused by investors who are having a hard time finding fixer uppers to buy and remodel.
“They will pay pretty much whatever they need to get their hands on a property and keep their people working,” said Devries.
He speculates that the buyer will probably spend an additional $150,000 to build a two-story home on the property. He expects the remodeled home to sell for more than $900,000.