Rising Prices, Bidding Wars and Recovery: A Last Look at a Busy Year in Bay Area Real Estate

A view of Cactus Rock in Oakland's Rockridge neighborhood.

Homebuyers outnumbered sellers in 2012.

The new year dawns with bright prospects for an active and successful year in Bay Area real estate.

But 2013 comes after an awkward year of recovery. Buyers, champing at the bit after a half-decade of retrenchment and recession, were forced to compete with each other for a limited supply of homes as sellers held out for higher prices after years of declines. Bidding wars became commonplace.

Here’s a look back at the busy year that just ended:

JANUARY

  • The latest jobs data shows the first signs of economic recovery, with California’s unemployment rate falling to 11.1 percent in December 2011, the second month in a row the number declined. (Quick jump ahead: by November 2012 the unemployment rate had dropped further, to 9.8 percent.)
  • Pacific Union International’s Q4 2011 Real Estate Report is released. In it we declare that 2012 “could be one of the finest times in the past twenty years to be a buyer of real estate,” with low home prices and exceptionally low interest rates. We were right on the money.

FEBRUARY

  • Sellers are urged to “join the party” as the number of homes under contract jumps significantly. In Marin County, homes under contract were up an astounding 82 percent from the start of the year.
  • A look at the math shows that historically low interest rates give homebuyers an extra $100,000 in purchasing power. (And it still holds true today.)

MARCH

  • Rental rates are rising precipitously across the Bay Area — up 16 percent in San Francisco — making buying a home an even more attractive option.

APRIL

  • Pacific Union gets kudos from our peers with the release of a Real Trends survey showing that our real estate professionals are the fifth most productive in the United States and a report from Real Estate Magazine naming us one of the nation’s top “Power Brokers.”
  • Buyer demand in the first quarter drives an increase in the number of homes sold in all seven of Pacific Union’s Bay Area regions.
  • The upcoming America’s Cup yacht races are fueling a boom in San Francisco real estate as buyers jockey for homes with commanding views of San Francisco Bay.

MAY

  • Homes are more affordable than ever, according to a report from the California Association of Realtors. The percentage of households that could afford to purchase a median-priced, single-family home in the Bay Area rose to 45 percent in the first quarter, a record high.
  • Rising home sales and prices make clear the housing recovery is on solid footing in the Bay Area, according to our own monthly market analysis and a report from the California Association of Realtors.
  • Pacific Union expands in Northern California with the opening of offices in the North Lake Tahoe area.

JUNE

JULY

  • Pacific Union’s exclusive interview with economist Stephen Levy makes clear that the economic recovery has reached all corners of the Bay Area and is enduring.
  • Our Q2 Real Estate Report shows home sales are up more than 30 percent across the Bay Area, foretelling a strong year ahead.

AUGUST

  • The Bay Area continues to lead California’s economic recovery, and that’s good news for the region’s housing market.
  • In a sign of how tight the housing market has become, the Oakland metro area is No. 1 in the nation for the greatest reduction of homes for sale. It’s also No. 1 for the shortest number of days on the market.

SEPTEMBER

  • Foreclosure activity drops sharply across the Bay Area, led by San Francisco, where notices of default — the first step in the foreclosure process — fall 71 percent from a year ago.
  • The Bay Area’s red-hot real estate market continues to set records, with August home sales at a six-year high.
  • Home ownership can bring big savings when compared with the cost of renting in San Francisco and Oakland, according to a report from the online real estate search service Trulia.

OCTOBER

  • The East Bay housing market has trailed San Francisco in its recovery from the recession, but recent reports suggest the region’s economy is poised for substantial growth in the coming year.
  • Our Q3 Real Estate Report has plenty of good news in it: Home values are rising, foreclosures are dropping, and housing starts are increasing across the Bay Area. We’re on track to see the best year in housing since 2005 in many regions.

NOVEMBER

  • The monthly Case-Shiller home prices report confirms that home prices continue to rise at a steady pace across the Bay Area as well as nationwide, but a close look at the numbers also reveals much more: the extent of the housing market collapse five years ago and the strength of the recovery now under way.

DECEMBER

  • The supply of homes for sale in the Bay Area remains severely constrained, but that hasn’t held back buyers. They’re snapping up properties at a pace we haven’t seen in at least six years.
  • Tech companies like Pinterest and Square are increasingly choosing San Francisco over Silicon Valley for office space, and that’s having a direct effect on residential real estate in the city.
  • The Bay Area continues to drive California’s economic recovery, with the state’s unemployment rate dropping below 10 percent for the first time in nearly four years. That’s a good sign for real estate markets.

(Photo of Oakland’s Rockridge neighborhood courtesy of Rbotman01, via Flickr.)

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