3 Pricey Markets Getting Pricier
With inventory and interest rates so low, we shouldn’t be surprised when low-priced property markets suddenly gain value. More people can suddenly afford to borrow money and buy a home, and when the number of buyers exceeds the number of available homes for sale, prices naturally inflate. But what might surprise us is that high priced markets—those already well above the national average in terms of median prices—are also on the rise, showing decisively that in some parts of the country, wealth and high demand for property can keep real estate expensive, even in a sluggish economy.
Today we explore three markets that were already high end. Each shows not only a month-over-month increase in median price, but also an impressive year-over-year gain. And all three are in California, always an interesting state to study, because it’s so bi-polar: both hard hit by the real estate crash and seemingly impervious to it.
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Orange County, CA
When prices fell from their peak in Orange County in 2007, different areas lost value at different rates, but every part of the market felt the reverberations of the crash. Prices in the OC dipped 30 to even 50% in some cities by 2009.
But prices never dropped anywhere near the national median price for sold homes, which at the close of the most recent quarter was up 7.3% to $181,500.
Inventory plays a big part in the continued high value of Orange County homes. Down over 15% from in June from the previous month, the number of homes for sale this June was also—strikingly--down over 50% from 2011.
ZipRealty analyzed MLS covering the markets we serve, and noted that Orange County’s year-over-year price has been most noticeable since the new year. Studying the median sold price for condos and single-family homes (not including multi-family or land transactions), we discovered that not much was gained in 2011 at all; but so far, 2012 has been a whole different ball game, making a pricy market even pricier.
Silicon Valley, CA
The Silicon Valley too has enjoyed major price increases on sold homes, again in part due to lower inventory in the area. The Silicon Valley Business Journal reported in July that June, 2012 home listings numbered less than half those offered the previous June.
Boosted as well by an improved job market, largely tech based (it’s not called the Silicon Valley for nothing!), this region of Santa Clara County, roughly an hour south of San Francisco, is jumping: increased rents and increased home prices. But just as with Orange County, the biggest boom in both has been in the first two quarters of 2012, in particular the 2nd quarter.
San Francisco, CA
We’ve reported on San Francisco’s hot market before. In fact, most any real estate news source has studied the tiny city and its supply of extremely high priced homes. SF too has enjoyed a tech boom, a revolution of new companies like Twitter, Yelp, and Zynga making their offices in the city proper, offering highly-paid jobs and boosting the local economy. Rents in the city, again always high in comparison the national average, have gone up and so have home prices.
By the end of this 2nd quarter, SF’s median sold price was up both month-over-month and year-over-year.
With persisting low inventory, low interest, and a seemingly insatiable high demand for these already expensive markets, we wonder what may come. Logically, there should be a ceiling for all prices, even in high-end markets. But here are three markets whose prices have always, to a certain degree, defied logic. Take a look for yourself.
- San Francisco's Market Is on Fire
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- 3 Markets Showing Dramatic Price Gains Year-over-Year
Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in theSan Francisco Bay AreaandPacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert.