The housing market in these two Bay Area cities is red hot, report says

The Vallejo-Fairfield metro area was No.1 on the list in February and has been on the company’s top 20 list for the last several years. But during the pandemic, homes in that market have been selling at a particularly rapid pace.

In February, half of Vallejo homes sold under 14 days, 21 days faster than last year and 49 days quicker than the U.S. average. And while the median listing price increased 7.8% from February to March, it’s still much more affordable compared to its large Bay Area neighbors, San Francisco and San Jose.

Realtor.com takes into account market demand and pace of the market to determine an area’s “hotness.” That is determined by the number of unique viewers per property and the number of days a listing is active on Realtor.com’s website.

In the latest hottest housing markets report, California had six in the top 20, more than any other state. Nicolas Bedo, economic research analyst for Realtor.com, said California has always been a popular place to live since 2016, the furthest back the company’s data goes.

“Temperate climates and tech jobs have buoyed major California markets for a long time,” he said. “Tech hubs like San Francisco and San Jose have drawn substantial homebuyer demand over the years. However, as those markets became too expensive to sustain the demand, ‘spillover’ markets like Vallejo and Stockton have risen to take their place as homebuyer hot spots.”

He said California’s “continued and expanding economic growth” consistently produces up-and-coming markets that offer affordability compared to major cities, and the draw for cheaper markets has only escalated with declining mortgage rates that hit a historic low of 2.86% at the beginning of the year. But now they are starting to tick back up, reaching 2.99% in March, which is the highest rate since September 2020.

“The combination of rising prices and rising rates adds a ticking clock for buyers looking to stay within their budget,” he said. “This is especially true in California where higher-than-average home prices mean even bigger dollar swings in monthly payments as mortgage rates rise and fall.”

While affordability is still driving demand, median listing prices for the hottest markets were on average 18.9% higher than the national price in March. This may reflect a willingness of buyers to pursue pricier homes as they aim to lock in favorable mortgage rates, which are projected to keep climbing.

Other Northern California cities in the top 20 include Yuba City in Sutter County, which came in seventh place with a median listing price of $427,000. The Santa Cruz-Watsonville area was No. 8, with a median listing price of $1.2 million, and Stockton-Lodi followed at No. 9 with a median listing price of $468,000. The Modesto area came in at No. 12, with a median listing price of $499,000. And in the far northwest corner of the state, the Eureka-Arcata-Fortuna area came in at No. 18, with a median listing price of $439,000.

Here is the full list (the chart can also be seen here):

Kellie Hwang is a San Francisco Chronicle staff writer. Email: kellie.hwang@sfchronicle.com Twitter: @KellieHwang

Article source: https://www.sfchronicle.com/local/article/The-housing-market-in-these-two-Bay-Area-cities-16113233.php

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