Home Sales Rise, Bay Area Prices Stay Steady

June is here in the Bay Area, finally ending a long, drawn out winter and bringing longer, warmer days to grateful residents eager to enjoy the outdoors. It’s also Graduation Month, as they say, with all schools from Pre-K to Dominican University hosting ceremonies to kick start summer for students and propel them on to the next chapter in their lives. Cardboard hats get tossed into the air, photos get taken, hugs abound…now what? For the older students, that could mean continuing on with grad school, taking time off or taking a job and starting at it. Intern salaries at Google average at $90,000 for the first year, on up to $125,000 for certain skill sets. Just slightly higher than the $19,000 a year I made at my first job after UCLA.

By chance, or irony, the average home price back then was just around the average starting salary, making housing “affordable” for those willing to take the leap. Thankfully, income for hard workers has increased over time, but the cost of housing has exceeded that ten-fold, at least around here in the Bay Area. The average home price in Marin is over $1.5 mil, making that first house often out of reach for many, if not for most. But as salaries continue up, will the cost of a home do the same, or will housing appreciation slow down or even drop. Given the rate of population growth in our area, it’s doubtful, but let’s look at that further. 

Besides economic factors like mortgage interest rates, stock market swings and often the headlines that day, real estate is pretty much a supply-and-demand economy. The more homes there are for sale, the cheaper the prices are. Generally speaking, that is. In the Bay Area, the core or nucleus of the housing market for single family homes is basically fixed. Sure they add new high rise units in SF and Oakland, but for a buyer who wants a front yard instead of an elevator’s front door for access to their home, we are pretty much built out. They took all the best lots first, way back when, leaving no more room to add new housing, not unless you go to the outreaches of the east bay.

There’s no exception here in Marin, however. We are pretty much a zero growth area as you’ve seen in this blog over time. And with the Bay Area population projected to grow an additional 1% a year on up to 2040 (don’t ask me why they stopped there), you don’t need to be a trained economist to see that prices of homes here will likely just keep going up, slowly but surely, at least in areas where they can’t add more housing, like Marin County. You can read the full article here, but prices don’t always go straight up. They often flatten out, as we just saw in the last year. The median Bay Area home price was nearly the same last month as it was a year ago, as seen in the SF Chronicle. The article notes a rise of nearly 8% from the previous month, but basically flat from March the previous year. April and May are two big months for home buying, so we’re likely to see that number increase. But still, maybe the market is balancing out to favor both buyers and sellers in the median arena, not just the latter. The luxury end may see a change though, if the recent IPO boom news is any indicator. Too soon to tell on that one, as many shareholders continue to be under a 3-6 month lock up and unable to sell. But what does all that mean for buyers and sellers?

For buyers, I’d say, look to the reason you’re buying. If it’s to stop wasting precious money on rent and build some future wealth, you’re tired of being under your landlord’s thumb, you want to make changes and improvements to your own home or you just want to be in control of your own future, then buy. Don’t do it because you think you can become instantly rich, buy low, then sell high, or any similar jackrabbit wealth-building plan. Buy for the long term (more than three years) and enjoy your new found economic and emotional appreciation for what you have. As the state adds more than 300,000 new residents a year, many of them will want to live where you do (some, literally), pushing prices higher, despite you thinking you “paid top dollar” or “our home will NEVER be worth more than…”. Just watch. Buyers were saying that to me (again, literally) back when the average price here was $250,000. They NEVER expected prices to crest over $500,000. Never, even though they’re now closer to $1,600,000 on average. 

Sellers? Prepare it and price it right, they will come. Get unrealistic or have too high an expectation? They will not. In fact, you’ll actually sell below market value. Buyers here are well-trained, well-prepared and ready to go. Your home will see its highest activity in the first 5-7 days. After that, it levels off, then very slowly starts dropping in value. Granted, the higher price ranges take longer than that. But for the most part, things happen fast here, so why leave money on the table by expecting too much, or by wanting the market to meet your expectations, instead of the other way around.  

That’s it for now. Let me know of any questions, but enjoy June, wherever you are. Stay safe and thanks for reading!

Ted

c 415.377.5222

ted@gomarin.com 

Filed under: Marin Real Estate Blog by Ted Strodder