Wealth managers have even been advising his clients to buy bigger homes, and McNair said he’s personally looking to invest more in real estate as well. The highest inflation in decades makes real estate an attractive hedge, and stock market volatility is also encouraging clients to focus on real estate to lock in gains, he said. McNair’s clients are primarily in tech, private equity and venture capital, and some are rushing to get a home under contract before mortgage rates rise further. Real estate agent Billy McNair takes in the scene from a window at a Menlo Park home he is selling.īilly McNair, a top broker at Compass with over $320 million in sales last year, said market forces are making real estate more attractive to high-end buyers in Silicon Valley. I don’t think it’s sustainable,” Hepp said of national trends. “I do expect to see slowing in home price growth. But the Bay Area is expected to outperform, with increases of 12.7% in the San Francisco metro area, 13.4% in Oakland and 15.91% in San Jose. Areas that are adding more housing typically see slower price appreciation, Hepp said.ĬoreLogic expects national home prices to rise only 5% between February 20 after a 20% increase in the prior year. Sunbelt states where prices have boomed and investors have flooded in have less stringent building codes and more areas to expand, bolstering housing inventory compared to the Bay Area. “Even if you take out the people who are priced out, you still have substantial demand to keep home prices growing.” “Demand is so outsize compared to supply” in the Bay Area, said Selma Hepp, CoreLogic deputy chief economist. The San Francisco, Oakland and San Jose metro areas were among only 9% of markets considered undervalued, and the only ones on the West Coast. housing markets and found 65% were overvalued when comparing home prices to local incomes, including all major regions in Arizona, Florida and Texas. Real estate research firm CoreLogic recently analyzed all the major U.S. “You’re still going to be able to drive on it for quite a while, but it’s getting softer,” Carlisle said.
Carlisle likens today’s market to an overinflated tire that’s sprung a leak, releasing some air. Real estate agent Billy McNair selling this Menlo Park home.īut that’s different from falling prices. “The huge interest rate jump will hammer the lower-cost markets where people have less cash,” said Carlisle. Rising mortgage rates are expected to dampen demand, causing home prices to rise more slowly this year and pricing more people out of the market.
“I think the wealth of the Bay Area will buffer it,” said Patrick Carlisle, Bay Area chief market analyst at real estate brokerage Compass.
#Bay area housing bubble 2021 drivers
They said the two drivers of the region’s stratospheric $1.4 million median home price aren’t going away: tech fortunes and low inventory. But four housing experts in the Bay Area said there aren’t local signs of a bubble and the market is expected to stay competitive.
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