May 24--Don't blame soaring home prices on the weather or the views of the water or the beautiful hills. Call it simply limited supply and seemingly unlimited, desperate demand.
The median price in April for a single-family home in the Bay Area reached a record $893,000, topping recent record-breaking numbers in the region's super-heated market, according to a report Thursday from real estate data firm CoreLogic. Prices for existing homes in the nine-county region jumped 11.6 percent from a year ago.
Strong hiring by Silicon Valley firms and historically low inventories of homes for sale -- due to a lack of new construction and homeowners staying put -- continue to push prices higher. Homeowners have watched their personal wealth grow with soaring property values, while home searchers have contorted their budgets just to get into the market.
"It's a pretty strong start to the spring home-buying season," said CoreLogic analyst Andrew LePage. "Can we hold the pace?"
The surge in April was led by Santa Clara County, where resale home prices leaped nearly 25 percent from the previous year, hitting a median price of $1.308 million, according to the report. Alameda County homes gained 11.8 percent, setting a new record price at $900,000. San Mateo County rose 7.1 percent to $1.5 million, San Francisco went up 15 percent to $1.565 million, and Contra Costa grew 10 percent to $649,000.
The record-breaking run now is entering the sixth year of year-over-year rising prices. For the last nine months, median sale prices have made double-digit gains, according to CoreLogic.
In a shift, the number of homes for sale increased from last April, with a 7 percent uptick in transactions for a total of 5,315 sales in the Bay Area, according to the data. But total April home sales were still about 16 percent below the historical average from the last three decades. "We're burning through inventory," LePage said.
Sandy Jamison of Tuscana Properties in San Jose said sellers are receiving fewer offers, but the bids remain strong. Some homeowners are rejecting offers, hoping the market will continue to rise.
But bids often drop if a home lingers on the market, Jamison said. "If you get a good offer," she tells sellers, "take it."
Bay Area buyers are fighting through multiple bids to win a new set of keys and a big mortgage payment.
John Tomlinson, a housing general contractor in San Jose, started looking for a new home in January 2017. His family wanted to expand from their three-bedroom home in Blossom Valley and have room for his aging parents.
He looked at dozens of homes and made 11 unsuccessful bids. "It moves lightning quick," said Tomlinson, 52, owner of Tomlinson Kitchen and Bath. "You have to move quick."
Finally, with a new agent, the family found a larger three-bedroom home on just over an acre in Morgan Hill, with room to build. They scheduled an appointment before an open house, arrived 20 minutes early and, after a tour, bid $165,000 over asking price. The sellers accepted their $1.37 million preemptive offer.
Agent Joe Messineo completed the paperwork early the next morning. "It was the fastest (offer) letter I ever put together," he said.
"We knew the market was hot," Tomlinson said. But he thinks the trend of multi-generations living under the same roof will grow. "Honestly, I'm not looking at this as a bad investment."
The swift-moving market has buyers looking for creative ways to jump in.
Rohit Ingale, a 36-year-old engineer in the pharmaceutical industry, wanted to find a property for his young family. Soaring single-family home prices exceeded the budget of the two-income couple, so Ingale and his wife invested in a smaller way.
They decide to continue to rent a home in Walnut Creek while looking to buy a condominium in Emeryville. After a few unsuccessful bids, Ingale closed on a one- bedroom unit for $400,000.
Ingale sees the purchase as a good investment -- the unit is already rented -- and it allows the family flexibility going forward.
"The market is very competitive," he said. Watching some of the bidding wars, he thought, "You're putting out so much money. Is it really worth it?"
The fundamentals of the robust housing market -- limited supply, growing demand -- point to more increases in the short term, several agents and real estate watchers said.
A normal market would have about as many active listings as pending sales, Messineo said. But pending sales outnumber homes on the market by about 3-1, he said. "We're in an abnormal market."
(c)2018 the San Jose Mercury News (San Jose, Calif.)
Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com
Distributed by Tribune Content Agency, LLC.
© Tribune Content Agency, source Regional News