A new decade has begun! And what an incredible decade for real estate in the Bay Area. Over the last 10 years, the median sales price in Santa Clara County has appreciated 115% (11.5% per year on average). From the bottom of the market in 2009 to the peak in 2018, prices increased by 155%. In July of 2008 there were over 9,000 properties for sale. We started this year with 634 Active listings.
The big questions is...WHY? Why have prices gone up so dramatically in the Bay Area, when some parts of the country have not made it back to their 2006 peak prices?
1. Business Growth. Our area has been a tech-driven job market for decades, but this reached a new level with large tech companies continuing to establish deep roots, building, buying and leasing millions of square footage of new office space. 4 of the top 5 largest companies in the world, by market value, either have their headquarters here or employ a large number of people (Apple, Microsoft, Google-Alphabet and Amazon). Of course, there are also many more companies able to pay well. Many people have moved here and need a place to live.
2. Inventory. The biggest challenge has simply been Supply and Demand. At the beginning of 2010, if no knew properties had come on the market, at the rate they were selling it would take 5.5 months until they all sold. This last December, the available properties would all been sold in less than one month. We began the decade with nearly 5,000 properties for sale and ended the decade with less than 1,000. This is all while the population has continued to grow.
3. Investment. Many foreign investors recognized the opportunity our market provided and made big purchases. In the US, the areas with the most foreign real estate investment has been New York City and The San Francisco Bay Area. At points, and what seemed to be for an extended period of time, about 30% of the home sales were foreign investors buying all-cash. This, combined with low inventory, increased prices dramatically at different points in the last decade.
4. Low Interest Rates. Interest rates on mortgages have been at a historical low for the majority of the last decade. That has made home buying more attractive, even at points where the prices had gone up dramatically.
Over this time period, the housing boom has not only impacted the Bay Area, but many other cities around the US. A benefit for those who own in the Bay Area is when the time comes to sell, you can move to nearly any other city in the United States and still have a lot of money left over. The majority of the sellers in the last decade have been people retiring out of the area. They’re following family or looking to avoid the increasing level of traffic congestion and enjoy a slower pace of life.
Wondering how your area has performed in the last decade? Here is the breakdown on prices for each area of Santa Clara County. For consistency, this is just for Single Family Homes:
San Jose: Ended the decade with a median sales price of $1.1 million (up 119% in 10 years)
Santa Teresa (Area 2). $949k (up 98% in 10 years)
Evergreen (Area 3). $1.2m (up 103% in 10 years)
Alum Rock (Area 4). $765k (up 143% in 10 years)
Berryessa (Area 5). $1.085m (up 111% in 10 years)
Central San Jose (Area 9). $975k (up 144% in 10 years)
Willow Glen (Area 10). $1.420m (up 101% in 10 years)
South San Jose (Area 11). $815k (up 126% in 10 years)
Blossom Valley (Area 12). $965k (up 93% in 10 years)
Almaden (Area 13). $1.525m (up 66% in 10 years)
Cambrian (Area 14). $1,225m (up 1004% in 10 years)
Gilroy/San Martin/Morgan Hill (Area 1). $885k (up 88% in 10 years)
Milpitas (Area 6). $1.085m (up 119% in 10 years)
Santa Clara (Area 8). $1.335m (up 130% in 10 years)
Campbell (Area 15). $1.375m (up 109% in 10 years)
Los Gatos/Monte Sereno (Area 16). $2.480m (up 102% in 10 years)
Saratoga (Area 17). $2.710m (up 82% in 10 years)
Cupertino (Area 18). $2.085m (up 108% in 10 years)
Sunnyvale (Area 19). $1.730m (up 119% in 10 years)
Mountain View (Areas 200-210). $2.128m (up 136% in 10 years)
Los Altos (Area 211-214) $3.295m (up 113% in 10 years)
Los Altos Hills (Area 221) $4.170m (up 80% in 10 years)
Palo Alto (Areas 230-243) $3.040m (up 119% in 10 years)