In the Bay Area housing market, supply and demand means not much supply and way too much demand. As a result, the cost of a single-family home has skyrocketed in recent years.
At least that’s been the pattern since the recession ended. And it seemed still to be the pattern as 2016 began. With interest rates low and job growth steady, buyers kept pushing up the cost of those single-family homes.
Yet there were cracks in the market’s red-hot edifice; the volume of sales was way down from the previous year. Some agents and experts even began to mention the “leveling” word. In March, when the median price for the region remained absolutely flat — zero uptick from the year before — the “softening” word was added to the conversation.
But the median price still stood at over $1 million in three counties (San Francisco, San Mateo and Marin), at $942,000 in Santa Clara County and at $680,000 in Alameda County. If this was a leveling, it didn’t bring much relief to middle-class buyers caught up in the housing crisis. They either gave up, overstretched their budgets, perhaps moved to the more affordable inland counties — or left the region entirely.
New peak prices were recorded in April, May, June and July — and then the “sluggish” word set in and didn’t go away for the rest of the year. Sales were down. Buyers were digging in their heels. By fall, outside of hotly contested areas, sellers were making price adjustments unseen in a long time. The market was losing some of its steam, and agents began to take a wait-and-see attitude as a new president was elected and the Fed talked about increasing interest rates.
The rental market followed a similar pattern: Double-digit, year-over-year increases had mostly vanished by early 2016. Consumer resistance had set in by spring. In the fall, a variety of analysts declared that rents were actually falling. Yet with an average apartment still renting for $2,500 in San Jose, $2,927 in Oakland and $3,499 in San Francisco, plenty of renters threw up their hands.
“You have to leave because you just can’t survive,” said renter Colin Jordan, who moved with his fiancee to Scottsdale, Arizona, and accomplished what had been unattainable in the Bay Area. They bought a house.
“Buyers are kind of digging in their feet and saying, ‘We’ve hit a threshold of pain in terms of affordability, and you’ve got to say no.’ ”
— Jennifer Branchini, past president of the East Bay Association of Realtors
Timeline:
January: About 17,000 families register interest in renting one of 115 units of new affordable housing in San Leandro. Given the dimensions of the housing crisis, there is “insatiable demand” for such projects, says Adhi Nagraj, director of development for Bridge Housing, the nonprofit developer of the units.
March: The median price of a single-family home for the Bay Area’s nine counties stays flat — no uptick at all from the year before.
April: The median price of a single-family home climbs to a new record peak in Santa Clara County ($1 million), as well as in San Mateo County ($1,211,500).
May: The median price of a single-family home for the entire nine-county region reaches a new peak: $751,000.
June: Homebuyers grow pickier, but many locales still report healthy year-over-year increases in the median price of a single-family home: up 7.4 percent to $550,000 in Contra Costa County; up 4.8 percent to $751,250 in Alameda County; up 7.1 percent to $1,225,000 million in San Mateo County; up 3.5 percent to $980,000 in Santa Clara County. The nine-county region’s median climbs to its all-time high: $752,000.
July: The median price of a single-family home in San Mateo County hits its all-time high: $1.25 million.
August: Kate Downing, a planning and transportation commissioner in Palo Alto, resigns from her position, citing the cost of housing. Posting her resignation online, she explains that after five years of “trying to make it work here in Palo Alto, my husband and I cannot see a way to stay in Palo Alto and raise a family here.”
September: Apartment-hunting websites and real estate information services begin to report month-over-month declines in rent costs around the Bay Area. California tenants gain a new arrow in their quiver: a law to protect them from being unfairly placed on rental blacklists that jeopardize their credit ratings and shut them out of the housing market. Gov. Jerry Brown also signs a new measure making it easier and less expensive to build so-called “granny units,” a potential boon to the region’s tight housing supply.
October: Kenneth Cole, director of San Mateo County’s department of housing, says, “We’re madly treading water.” He notes that from 2010-14, the county added 54,600 jobs but only 2,100 new housing units. “If we don’t increase the supply, the affordability will never come back.”
November: Santa Clara County voters approve $950 million in bond financing to build affordable housing. Rent control measures pass in Oakland, Richmond and Mountain View but fail in Alameda, Burlingame and San Mateo.