The Latest Out of the Box Trends in Bay Area Realty
San Francisco realty – Is this the right time to buy a Condo?
It might just be the right time. In an interesting twist in San Francisco realty, many condominiums are sitting at fifteen percent off pre-pandemic prices in the expectation of attracting new residents. Desperately seeking suburban spaces in which to stretch those social distancing muscles, Bay Area dwellers escaped the urban landscape and left condos open for others.
San Francisco’s urban condos are going for less than any time since 2018. Condo prices in the five-county San Francisco Bay Area dropped 1.2% in January 2021from December, the eighth month in a row of month-to-month declines.
Suburbs mean more space. And that might just mean Sacramento?
People may just have needed an excuse to seek greater spaces and living areas and Covid certainly gave people a good reason to look away from the tight-knit living quarters in the inner cities of the Bay Area. And with the option of working from home, new vistas of the concept of commuting took hold. All of a sudden, the axis of Lafayette-Moraga-Orinda wasn’t out of the question at all. Indeed, Sacramento even became a possibility.
It’s not hard to understand why. Core Logic reports a January 36% Bay Area wide increase in sales of single-family homes in eight Bay Area counties. That’s in part due to high demand and low inventory.
And yet, a report compiled earlier this year by Sotheby’s found that housing sales throughout the Bay Area were 30% higher this past February than a year ago, while 67% of those transactions were higher than the asking price, compared to 50% a year earlier.
Houses go on the market and within hours the sellers receive multiple offers, many of them waiving contingencies and appraisals, frequently with buyers coming out of the Bay Area real estate market flush with dollars and willing to pay cash for their Sacramento purchases.
The concept of what a home is and what is now expected from it have been transformed over the course of several months and, naturally, preferences have adapted.
A recent National Association of Home Builders (NAHB) study found that COVID has impacted the housing preferences of 25% of home buyers. More specifically, the survey asked about location preferences both prior to COVID-19 and now: did buyers’ preferred location change as a result of the pandemic?
Results show that a segment of home buyers have in fact shifted their preference towards the outlying suburbs due to the health crisis.
The days of the suburbs being the final resting spot for the participants in “white flight” from the 1950s – 1980s, today’s market is quite different.
According to the NAHB study, among Asian home buyers, 62% preferred a suburban location prior to COVID-19, compared to 71% now –a 9-point increase.
Among African-American buyers, the share rose seven points, from 56% to 63%. And among Hispanic buyers, it increased six points, from 46% to 52%. Meanwhile, the share of Caucasian buyers who prefer a suburban location did not change much because of COVID-19, up only one point from 56% to 57%.
Of course, one need not travel as far away as Sacramento to find a cool suburban home. In their search for home offices, backyards, and more space, many homebuyers have begun to gravitate toward the East Bay and into the excellent suburbs there–for instance Walnut Creek, Alamo, San Ramon, Danville, Pleasanton, Benicia, Martinez, Fremont/Hayward, Dublin, Brentwood.
Bay Area realty and working from home(or wherever)
People taking advantage of flexible work policies did so largely because they saw it as an avenue toward achieving a better work-life balance; 78% of respondents to a Flexjobs.com survey cited that reason. Reducing commuter stress was another.
Remote work is likely here to stay. CNN has reported that Mercer, an HR and workplace benefits consulting firm, polled roughly 800 employers. 83% of respondents said they would have more flexible remote work policies after the pandemic. And why not? The same survey said 94% of respondents said productivity remained the same or increased after remote work measures were in place.
Real estate and technology used to be seen as different realms, but remote work has erased the distance between the two sectors. It used to be important for real estate investors to monitor these trends closely to understand how advances in technology would impact the future of real estate. Now it’s impossible for many real estate offices to even function without fully embracing remote work.
A study conducted by the Bay Area Council Economic Institute finds that up to 45 percent of the jobs in the Bay Area are eligible for remote work, equating to a total of 1.79 million remote eligible jobs in the region. The nine Bay Area counties together have about the same number of remote eligible jobs as Los Angeles County (1.70 million), but the region has a larger share of the total workforce remote eligible compared to other geographies. San Francisco County and Santa Clara County have the highest shares of remote work eligible jobs in the region, accounting for more than half of all jobs in each county. In sum, it seems likely that remote working is here to stay.
One of the other interesting changes brought on by Covid was a temporary disappearance of the Open House. And even though experience shows that Open Houses are typically not purchased by the people who attend these festivities, the California Department of Public Health has conditionally opened houses back up under certain limitations (As of May 12, 2021):
- People who feel sick or have COVID-19 symptoms may not participate
- Physical distancing must be maintained
- Hand sanitizer should be made available
- Face coverings are required
The biggest advantage of open houses is that buyers, sellers, and Realtors® don’t have to coordinate schedules and make appointments to see properties. Of course, many Realtors® have observed that only serious buyers are willing to schedule an appointment to see a house.
Whatever ambiguities may exist in what is hoped to be a fast approaching post-Covid environment, the rules of the road have changed and the experienced professional Realtor® is still the best guide when navigating the ever-changing landscape.