I offer observations below concerning a number of trends in Bay Area real estate prices. Given market changes that have occurred just since early spring, my comments below would appear to apply to those markets that have not seen a surge in buyer interest, such as San Francisco, and markets surrounding Silicon Valley.
Spring and summer are prime home buying seasons in the Bay Area. Yet a fast-paced market and other economic conditions are adding tremendous challenges to the process, except for some hot markets such as those surrounding Silicon Valley. Average buyers now face competitive investors and other prospective buyers paying cash. Factor in a shortage of homes for sale, bidding wars that drive prices up, less dependency on appraisals, and the result: a uniquely frustrating situation for many hopeful homeowners. Offerings that would appeal to average buyers in a normal market like lower-priced homes, and condos are going to cash-paying absentee owners and investors, according to the real estate information company DataQuick. Plus, appraisals are often waived these days when cash buyers are scooping up fixer-uppers and distressed properties.
Average buyers are also facing stricter financing requirements, particularly self-employed and commission-paid workers. As the economy continues its recovery, many owners in certain markets hit hardest by foreclosures can still only sell their homes at a loss or minimal gain.
Bay Area rents have shot up too, shutting out many would-be residents. For property owners who want to sell in this market but can’t,or from a financial perspective shouldn’t, options include renovating, leasing, or waiting until a more favorable market is re-established.