The Bay Area housing market, continuing a trend of recent years, is the most expensive place in the U.S. to buy a home, according to real estate experts who track home sales.
For a region that registered record sale prices in 2021, with nearly a 12% growth in median home sale prices, the Bay Area market is beginning to level out this year, reports Norada Real Estate Investments, a Southern California firm that studies nationwide real estate trends.
Sale prices in some counties in 2022 are increasing at half the rate of a year ago, and total home sales in the Bay Area in May were 11.5 percent lower than last year. Similar trends were reported in the rest of California and across the U.S.
There remains some disagreement on how much the real estate market will cool off this year, with some experts cautioning that while inventories may grow in the fall, there still will be plenty of competition from buyers.
The continuing price increases exacerbate the challenges facing public and private efforts to increase the quantity of affordable housing in the Bay Area and the rest of the state.
In Property Shark’s most recent annual list of the 100 priciest ZIP codes in the U.S., for 2021, 35 of the top 50 ZIPs were in California, and 17 of these were in the Bay Area. Seven of the most unaffordable ZIPs were in Santa Clara County, led by two in Los Altos, with median home sale prices in the $3.9-$4 million range.
The median sales price for all counties in the Bay Area was approximately $1.5 million, topping $1 million for the 15th month in a row, Norada reported.
Fortune last month predicted that higher costs will continue to challenge 2022 home buyers, as mortgage rates this year have already far surpassed Realtor.com’s earlier prediction of 3.6%.
Home-sale price growth year-over-year is expected to more than double its originally forecasted pace (+6.6% vs. 2.9%). At the same time, Realtor.com’s updated projection for year-end 2022 mortgage rates (5.5%) anticipates that rates already may have largely adjusted for the bulk of expected 2022 Fed interest hikes.
Fortune predicted that total home sales will slow in 2022, shifting its original 2022 growth expectations to a decline of 6.7%, down considerably from the increases in 2021. It estimated that total 2022 sales will still be the 2nd highest tally since 2007, trailing only 2021.
Here are the Santa Clara County ZIP codes in the nationwide top 50 median home sale values for 2021:
- 94022 and 94024 (Los Altos)
- 94301 and 94306 (Palo Alto)
- 95050 Saratoga
- 95030 Los Gatos
- 95014 Cupertino
Norada reported that all the counties in the Bay Area posted gains in home prices as compared to last year with Marin County at the top of the list, at nearly 29%.
“Buyers in suburban areas like Santa Clara, San Mateo, and Contra Costa counties appear to be searching for bigger houses,” the real estate investment firm reported, saying that is driving up median home prices. The firm also said that increased demand from the high-income residents who can take advantage of low-interest mortgage rates is another factor in the soaring home prices.
Santa Clara was still reporting a 15% increase in median home prices in May.
The median sales price of this region, which includes all nine counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma, was $1,505,000 ($833 per square foot), unchanged from the previous month.
According to the California Association of Realtors, this is almost a 12.3% increase over the last May. It was the third highest year-over-year gain in California after the Far North (16.4%t) and Central Valley (12.4%).
Sales of existing homes were down in all the major regions of the California housing market in May, the realtors association reported.