The Bay Area real estate market finished 2021 with sales and home values climbing at their fastest rates since the pre-pandemic frenzy of 2018, back when the typical home price was still under $1 million and a few suburban bargains remained.
Median home prices in the nine-county region rose 17% in December to $1.1 million, continuing the year’s white-hot market driven by few houses for sale and a flood of new buyers willing to join bidding wars.
“The market’s carried over from last year,” said Santa Clara agent Alan Wang. “It’s very competitive.”
The median sale price for an existing single-family home in the Bay Area rose from $939,000 last December to $1.1 million in December 2021, according to CoreLogic and DQNews data. The rising prices were led by Santa Clara County, up nearly 24% to $1.55 million, followed by Alameda County, up almost 16% to $1.1 million, and San Mateo County, up 12% to $1.68 million. San Mateo remains the region’s priciest county.
Contra Costa County home prices jumped almost 10%, to $795,000, from the previous December, and San Francisco edged up 2% to $1.58 million. Six of the nine Bay Area counties saw increases greater than 10%, according to sale data.
Record low numbers of homes for sale are driving bidding wars and putting sellers in command of the market. Potential speed bumps — the prospect of higher interest rates, the COVID-19 omicron surge and holiday distractions — didn’t slow down buyers.
Even as the pandemic heads into a third year, “people are largely better off” financially, said CoreLogic senior economist Selma Hepp. The $1 million list price might well become the new normal in attractive destinations like the Bay Area and parts of Los Angeles, she said.
While the Bay Area is one of the most expensive markets in the country, Hepp said a strong economy and high incomes support the prices. “The Bay Area is not considered an over-valued market,” she said.
The suburbs remain more attractive than core cities, with home values in San Francisco increasing just 2% from the previous year, while Santa Clara County values grew more than 20%.
Millennial homebuyers have become a greater portion of market in recent years, as young families looking to settle into their first home found low interest rates and remote work careers that demanded more space. “Everywhere you look, they had reasons to buy,” she said.
The number of homes sold even ticked up slightly from the previous December. Condo sales have also started to rebound, up nearly 8% to a median price of $749,000, according to CoreLogic.
Bay Area agents report furious demand, with buyers searching in affordable neighborhoods that would have been less desirable pre-pandemic.
Matt Rubenstein, a Walnut Creek agent, compared the market to musical chairs, where buyers rush through open houses and elbow their way into a deal. “There’s low inventory, but there’s still enough demand,” he said.
Rubenstein has had clients visit more than 20 homes who are still unable to win a bidding war. East Bay homes now regularly sell above listing prices — something unusual in many communities pre-pandemic.
He has often helped buyers make pre-emptive offers to try to get ahead of the competition.
Some tech buyers took a step away from house-hunting, as recent stock market gyrations have cut into the personal wealth of professional couples.
Menlo Park agent Billy McNair has seen some clients pause their searches after the January drop in tech stocks. The majority of his clients, he said, use equity grants and programs to fund purchases.
“I saw some buyers who were apprehensive,” he said but added that the hesitation only lasted a few days.
Silicon Valley properties are selling at premiums, bid up by an influx of first-time buyers and families continuing to look for more space, Wang said. Even bids $500,000 over a list price have fallen short.
Tech families, suffering fewer financial consequences from the pandemic, are driving demand. “They have a dream,” Wang said, “and they want to achieve that dream.”