Bay Area home prices near record $1 million amid Covid crisis

Bay Area home prices climbed to near-record levels in November, touching nearly $1 million as suburban properties lured buyers with ample space and worry-free, bedroom-to-home-office commutes.

Buyers drove up median prices 17 percent to a staggering $995,000, snapping up single-family homes in the suburbs at a fast pace even during the start of the holiday season and deepening COVID pandemic. The eight-county mark topped the $982,000 October median. Alameda County has not reported complete home sales data for October or November.

Record-low interest rates, dipping below 3 percent, and strong demand for more remote workspace have propelled the Bay Area home market through the economic and health crises.

CoreLogic deputy chief economist Selma Hepp said the Bay Area home market continues to be boosted by the region’s strong tech and professional sectors.

“It’s telling us the demise of the big, expensive Bay Area is not there,” Hepp said. “It speaks to the resilience of the area.”

The surge in home sales and higher prices in November was led by Contra Costa County, where sales soared nearly 50 percent from the previous year. The median sale price in the county jumped 23 percent to $757,000, according to sales data from DQNews and CoreLogic.

David Stark of Bay East Realtors Association said buyers are taking the real estate slogan “drive a little, save a lot” to heart, grabbing suburban homes farther away from employment hubs in San Francisco and on the Peninsula. Homes in the Tri-Valley and central Contra Costa County have been particularly desirable, he said.

“The market’s on fire,” Stark said. East Bay communities, he added, “are the sweet spot.”

Alameda County single-family home prices in November increased 40 percent from the previous year to $1.05 million, according to agent sales data collected by the California Association of Realtors.

Other Bay Area communities continued to get more expensive. Santa Clara County median prices grew 8.8 percent to $1.3 million, Solano County increased 11 percent to $480,000 and Marin jumped 18 percent to $1.4 million, according to CoreLogic. San Francisco single family home prices inched up 3.6 percent to $1.58 million, while San Mateo County fell 3 percent to $1.49 million.

Overall, November home and condo sales — typically a slower buying time as families settle in for the holidays — jumped nearly 30 percent from the previous year.

The condo market remained cool, and agents say smaller spaces, closed common areas and tight quarters have driven away potential buyers during the health crisis. Median prices for condos grew 2 percent to $748,000. The rebound in condo prices suggests the market may have already hit a low point, Hepp said.

Cupertino agent Ramesh Rao said many tech clients are looking to add space after spending months in cramped home offices and juggling responsibilities with young children. Buyers are more likely to ask for pools and big yards.

But Rao cautioned that work-from-home edicts may not be permanent for every tech employee. He has encouraged buyers to look into the sluggish townhome and condo market. “Don’t be just a follower,” he said. “This is the opportunity to buy a townhome of your choice close to work.”

Silicon Valley clients have been asking about Proposition 19 — the newly-passed state measure allowing most older homeowners to sell their homes, move elsewhere in California and preserve favorable property tax status. Agents believe the new law will encourage more long-time owners and empty-nesters to put their homes on the market.

Many older Bay Area homeowners, he said, “want to take advantage of Prop. 19.”

Bay East Association of Realtors president Tina Hand said home inventory has been shrinking, even as demand has climbed in Alameda County. Some sellers feel pinched — able to make a profit on the sale of their home, but unable to afford more space in their own neighborhoods and communities.

The 2020 holiday season was unusual, Hand said. Late-year home sales are typically made by investors driven by tax consequences. This year, however, seemed to be driven by families looking to be in a new home for the holidays, she said.

“We’re still in a sellers’ market,” Hand said. “It would be nice if it evened out.”