As the spring housing market began heating up, the median home price blew past the $2 million mark in two Bay Area counties.
In Santa Clara County, the median home price hit $2 million for the first time — a record-breaking figure that surpasses even pandemic-era highs, April data from the California Association of Realtors shows. Meanwhile, in San Mateo County, the median sales price was $2.15 million — down from its peak of $2.4 million in April 2022, but up 9.1% from April 2023, when the median price was $1.97 million.
Across the nine-county Bay Area, prices were up 15.5% from last year, reaching a median sales price of $1.44 million. The median price climbed to $1.4 million in Alameda County, $940,000 in Contra Costa County, and $1.8 million in San Francisco.
Sales of previously-owned homes increased 23% from last year, as the spring selling season hit its peak, even with 30-year fixed mortgage rates hovering around 7%.
“Interest rates aren’t floating down to where buyers want them to be, even though they have been waiting and waiting and waiting,” said Janelle Boyenga, a real estate agent based in Los Gatos. “They’ve decided, how long can I wait for?”
In the East Bay, Amanda Piñero and Kenny Handel are weighing whether a bigger place would be worth giving up their pandemic-era interest rate.
In 2021, the couple, in their early 30s, moved from Austin, Texas, to Berkeley, where they bought a 720-square-foot condo. But space has been feeling tight lately, and they’ve started looking for a new place. On Saturday, they toured a 1,000 square foot home in the Rockridge neighborhood with a small backyard for their dog, Willie Nelson.
“I struggle to let go of our current interest rate,” Piñero said. “Trying to get anything else could make us house poor.”
Kenny Handel and Amanda Piñero stand outside of an open house they toured in Rockridge on May 25, 2024. They have been browsing for homes in the area for the last few months, but have been deterred by high interest rates. (Kate Talerico/Bay Area News Group)
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Just a few percentage points increase in interest rates can add hundreds — and sometimes thousands — onto the monthly cost of a mortgage. A buyer putting 20% down on $1 million house with a 7.10% rate would pay a monthly mortgage of $5,322, versus $3,373 with a pandemic-era rate of 3%.
Calculations like this are what have kept so many sellers on the sidelines. But as the year stretches on, many find they can’t wait any longer.
“As time goes on, life goes on as well,” said Oscar Wei, a senior economist for the California Association of Realtors. “People can only delay a home sale for so long.”
The upshot is that inventory has grown this spring— new active listings in the nine-county Bay Area increased 25% from this time last year.
As activity increases, homes are spending fewer days on the market. In the nine-county Bay Area, the time on the market was 12 days — the lowest since May 2022, and down from 14 days a year ago.
Some real estate agents say high-performing tech stocks are behind the uptick in Bay Area sales, allowing tech company employees to cash out their stock options to put a higher down payment on a home.
“We tend to track to the primary tech stocks that drive Silicon Valley,” said Connie Miller, a real estate agent based in Los Altos. “As long as they’re healthy, the real estate market is healthy.”
The rallying stock market also coincides with the spring buying market, when buyers with children often make moves so they have time to register in a new school district ahead of the academic year.
Though agents say it’s a seller’s market, they still advise homeowners to make necessary updates before listing to attract the highest possible offers.
“People want turnkey properties,” Miller said. “With two incomes and people already struggling to make ends meet, the last thing they have is time for a renovation.”
Some agents expect that May will register slightly lower home sales, as interest rates hit a peak of 7.2% at the end of April, according to data from government housing-finance company Freddie Mac.
The combination of increased prices and high rates is hitting buyers like Piñero and Handel especially hard. Despite the competition they faced during the pandemic buying frenzy, the couple found it an easier market to navigate.
“2021 gave opportunities for a lot of people to get into the market,” Handel said. “Now we’re asking ourselves: Is this the new normal? Housing costs are so high.”
Unfortunately for buyers, they’re likely to stay that way — especially if interest rates come down, as some real estate agents predict, which could drive even more demand.
“Buyers may as well get in now,” Miller said. “The prices are only going to get higher.”
