Bay Area Real Estate Update July 2023

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Real Estate

Say Goodbye to Big Families: How San Francisco's Housing Crisis is Changing Everything


In San Francisco, households are getting smaller due to rising housing prices, the pandemic, and remote work. Data from the state's Department of Finance reveals a significant decline in the number of people per household in the past decade. 

In 2023, the average number of individuals living in a San Francisco household was 2.11, down from 2.35 in 2013—a 10.2% drop, the second-largest after San Jose. Multi-family housing, like apartments, dominates San Francisco's housing market, accounting for nearly 70% of the total. 

This shrinking trend extends beyond San Francisco, affecting households throughout California and the US. As San Francisco becomes increasingly expensive, it has become less appealing for larger households, leading many young people to seek homeownership and family life elsewhere.


Breaking Records: How Santa Clara Became the Hottest Spot in the Bay Area

Amid population declines in cities like San Jose and San Francisco, Santa Clara stands out as the South Bay's thriving star. From 2020 to 2023, it experienced the highest growth rate among major Bay Area cities.

Over three years, Santa Clara gained over 4,300 residents, marking a 3% increase. In just one year, more than 2,000 newcomers flocked to the city, boosting its population by 1.5%.

This growth is driven by a housing boom, expanding Santa Clara's housing stock by over 6%. Multifamily units, including 2,600 new apartments, grew by 12.5%. Single attached homes, like duplexes, saw significant 7% growth since 2020.

Despite being relatively affordable with an average home cost of $1.5 million, Santa Clara's popularity continues to soar. Discover why this Silicon Valley city is attracting residents at such a remarkable pace!

Hot Market Alert: Bay Area Home Prices on the Rise Again! Is the Boom Back?

After months of declining home values, the Bay Area's housing market is showing signs of recovery. In March, two counties experienced growth, signaling a potential rebound. While overall home values have decreased compared to a year ago, the monthly declines are shrinking and even reversing in some areas. Sonoma and Napa counties saw modest increases of 0.2% and 0.1% respectively, the first growth in any Bay Area county since June 2022. San Francisco and Solano counties also improved, with a slight decline of 0.1%—a significant change from previous months. The spring and early summer months are traditionally busy for home sales, suggesting a warming trend in the market. Factors such as remote work and interest rate fluctuations have influenced these changes.

Game-Changer: Bay Area Real Estate Makes a Stunning Recovery!

Home values in the San Francisco metro area, including parts of the Peninsula, East Bay, and North Bay, rebounded after a nine-month decline, according to Zillow. The slight increase of almost $800, or 0.07%, comes as no surprise to real estate agents and economists as the market enters its busy season. The Bay Area has experienced cycles of booming prices followed by corrections, and it is expected to rebound once again. The recent uptick in buyer activity, open houses, and offers indicates a trend of rising prices. With anticipated lower interest rates, buyers are encouraged to secure a home now and refinance later. Some Bay Area counties, such as Solano, Marin, Sonoma, and Napa, saw home values increase, while others experienced declines. The low inventory of listings contributes to the market's turnaround and may lead to rising prices. Despite challenges, the Bay Area remains a resilient and promising market for buyers.

Changing Lives: The Shipyard Development's Impact on Affordable Housing in San Francisco

Despite numerous challenges, the San Francisco Shipyard housing development continues to produce affordable homes. Construction at the project, which started a decade ago and includes 12,000 approved homes, has persevered through lawsuits, a recession, an environmental cleanup scandal, and the pandemic. The development has remained resilient, with new buildings and parks being built, and more residents calling it home. As the city experiences a housing slowdown, the redevelopment of the former naval base is entering a busy phase, with a new 77-unit building opening and construction set to begin on three buildings adding nearly 200 affordable rental units. This ongoing development is crucial for San Francisco to meet its state-mandated goal of planning for 82,000 units, including 46,000 affordable houses for low and middle income groups, over the next eight years.

The Truth About San Francisco Condo Prices: Should You Buy Now?

Despite the recovering Bay Area housing market, condominium prices in San Francisco's downtown area remain reduced, indicating the ongoing struggle to bounce back from the pandemic. Data from the San Francisco Association of Realtors reveals that the median price for downtown condos in April 2023 was $941,500, lower than previous years since 2014. Unlike other neighborhoods experiencing a boom, downtown condos saw a decline during the pandemic. Although challenges like open-air drug dealing and decreased housing demand persist, real estate experts believe this presents an opportunity for potential buyers who have faith in the city's future recovery. With reduced prices and greater negotiating leverage, now may be the right time to purchase downtown units in state-of-the-art buildings.


Allstate's Shocking Move: What It Means for Homeowners in California

Allstate, the fourth largest property and casualty insurance provider in California, has quietly stopped writing new homeowner, condominium, and commercial insurance policies in the state. The company took this step last year to focus on protecting current customers. The reasons behind Allstate's decision are not immediately clear, but State Farm's recent announcement to cease issuing new homeowner policies due to inflation, wildfires, and rising reinsurance costs suggests that insurance challenges in California may be more severe than widely known. While over 100 insurers still operate in the state, homeowners in high-risk fire areas might face difficulties obtaining coverage, potentially leading to increased reliance on the FAIR Plan, a state-offered "insurer of last resort." Insurers' actions could be influenced by factors such as rate approval processes, forward-looking climate risks, and compensation requirements from the FAIR Plan.


California's June Weather Forecast Is Unpredictable

California is known for its diverse and dynamic weather patterns, and June is no exception. With the transition to El Niño conditions, the state can expect dramatic swings in temperature and humidity. The curling of the jet stream over the Pacific Ocean has already caused shifts in weather patterns, from scorching heat waves to marine layer clouds. The coastal areas will likely experience more low-pressure systems, resulting in a phenomenon known as June Gloom. Warmer waters in the eastern equatorial Pacific could lead to the formation of additional low-pressure systems, bringing drizzles and light rain. Extended simulations suggest that weak low-pressure systems will move toward Point Conception, affecting Southern California with cloudy and foggy days. Inland valleys in the Bay Area may see abrupt changes between warm, dry days and cold, misty troughs. Brace yourself for a roller-coaster ride of temperatures and humidity as the developing El Niño conditions shape California's weather in June.


Unveiling the Winners and Losers: Which Cities Are Bucking the Trend?

The housing market is experiencing intense competition and low supply, leading to a rise in home prices once again. According to the S&P CoreLogic Case-Shiller Indices, national home prices in March were 0.7% higher than the previous year. Regional variations are significant, with the West seeing weaker prices, particularly in Seattle (-12.4%) and San Francisco (-11.2%). On the other hand, the Southeast remains the strongest region with a 5.4% increase. However, the decline in home prices since June 2022 may have halted, as March's results suggest a potential end to the downward trend. While the year-over-year numbers show a decline in prices for most cities, there has been a month-to-month increase in prices nationally, with Miami, Tampa, and Charlotte experiencing the highest gains.


Multi Family Homes: The New Trend in Construction Spending

Private residential construction spending in April increased by 0.5%, with a 0.6% rise in spending on multi family homes. This marks the first increase since June 2022, despite higher mortgage interest rates. However, compared to the previous year, spending is still 9.2% lower. The growth in total construction spending is largely driven by increased investment in multifamily construction, which has seen continuous monthly increases since August 2022. Spending on single-family construction, on the other hand, decreased by 0.8% in April and is 24.7% lower than a year ago. The NAHB construction spending index shows a slowdown in single-family construction due to supply-chain issues and high interest rates, while multifamily construction has experienced steady growth.