San Francisco ranks close to the underside of U.S. metro areas in dwelling worth will increase
The US is in the midst of a record-breaking boom in property values and a massive supply shortage. However, according to a recently released Zillow report, the Bay Area has been somewhat cushioned from these effects.
The report found that the San Francisco metropolitan area – which includes Alameda, Contra Costa, San Mateo, and Marin counties – saw property values increase 7.4% year over year in April 2021. In the metropolitan area of San Jose, which includes Santa Clara and San Benito counties, property values rose 5.9%.
By comparison, property values in the United States rose 11.6% overall over the past year. And in some regions, including Phoenix and Austin, Texas, property values rose more than 20%.
Metropolitan SF and San Jose are actually at the bottom of all major metropolitan areas in terms of home appreciation, noted Jeff Tucker, a senior economist at Zillow.
But, he said, these trends look very different at the county level.
“The big insight I see here is that the most expensive parts of the bay and the urban parts of the bay have the slowest growth rates,” Tucker said.
There are a number of reasons for this, but a more important one is that people are leaving San Francisco for other parts of the Bay Area and California, reducing demand compared to previous years.
These former San Franciscans and San Joseans are contributing to price increases in the “cheaper” Bay Area counties within the San Francisco metropolitan area, such as Alameda and Contra Costa, where property values rose 14% and 14.3%, respectively this year even more than the US average. In contrast, home values in San Francisco are down 2.8%.
No county in these metropolitan areas comes close to what most Americans would call “affordable.” Average home values in San Jose are as high as $ 1.36 million, while the San Francisco metropolitan area home values hit an all-time high of $ 1.23 million. (Here, too, the SF metropolitan area includes these relatively cheaper counties such as Alameda and Contra Costa.)
The offerings could also have influenced the differences between the Bay Area and the rest of the country. While the national housing stock declined 30.3% year-over-year as of April this year, both the San Francisco metropolitan areas and San Jose saw their home stocks increase year-over-year – stocks rose 32% in the SF metropolitan area and around 37% in San José.
Part of the reason the bay has seen such a dramatic increase in supply is because of its strict response to the pandemic: the area’s housing market essentially closed last April, usually the best time for home sales. This shutdown caused the housing stock to deflate for the past April, making the April supply spike particularly large.
The Bay Area housing market hiatus in April 2020 likely had a particularly strong effect because the region initially had so little housing, Tucker said: “In San Francisco, inventories are notoriously low; It’s just not a market that has a large liquid pool of houses that are traded and available. “
Still, potential homebuyers should take courage from the inventory increase – it reflects a real trend towards balance between buyers and sellers in the bay, according to Tucker.
“The pandemic and remote working have opened up opportunities for more people,” he said. “Maybe you can keep this job in the Bay Area without having to live in the Bay Area.”
Susie Neilson is a contributor to the San Francisco Chronicle. Email: susie.neilson@sfchronicle.com Twitter: @susieneilson
