Home prices across the Bay Area ticked up in April after months of decline, and are 28 percent higher than three years ago.
The median sales price of single-family homes in the Bay Area rose to $1.25 million in April, a 1.8 percent increase from the previous month, the San Jose Mercury News reported, citing the California Association of Realtors.
Despite home prices hitting a record peak of more than $1.5 million last spring, the median price is still 28 percent more than $980,000 in April 2020, the month after the pandemic hit.
The reason: the Bay Area still lacks enough homes to meet demand, even as high mortgage rates squeeze out would-be homebuyers. Until the region adds much more housing, prices will likely remain out of reach for most residents.
Prices haven’t dropped as much as would be expected in a “normally functioning housing market” – when factoring in high interest rates, tech layoffs, stock market fluctuations and recession fears, Matt Regan, a housing policy expert with the Bay Area Council, a pro-business group, told the Mercury News.
“But we haven’t had a normally functioning housing market for quite some time,” he said.
The 28-percent price jump surpasses a 15 percent expected increase based on long-term trends, said Oscar Wei, economist for the state Realtors Association.
Only one in five Bay Area residents can afford the median single-family home price, according to the association.
Wei said he would only expect home values to return to pre-pandemic levels if there’s a “deep recession” or developers build significantly more homes. “And that’s not going to happen overnight,” he said.
The rise in Bay Area prices stems from a buying scramble during the pandemic, as buyers took advantage of low interest rates and a new era of remote work. While demand has cooled, home prices haven’t dipped much, despite a 3 percent population loss.
Potential sellers, locked into mortgages at rates far below the 6 percent in the current market, are loath to trade up for pricey loans.
By the end of April, it would have taken two months to sell off all the remaining homes on the market, down from three months in April 2020, according to the Realtors Association. A housing market is considered balanced if it has at least four months of supply.
— Dana Bartholomew
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