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2021 Breaking All the Real Estate Records

12/28/2021

Low interest rates, housing shortage, everyone working from home, etc etc etc., all of which came together to create the perfect storm for another record-breaking year in real estate. Here are the new housing records set in 2021.

Rates were low low low low low low (sung in Flo-rida's voice). Prior to the pandemic, the lowest rates to date were set in 2012 at 3.31%. This year, it went down to 2.65%!
Inventory was non-existent. So many buyers, so little homes.
Home price appreciation went through the roof. Annual home price growth reached a new high in October, increasing 18% year-over-year.
Higher prices = larger loans, reaching $1.6 trillion by the end of the year. My mind cannot even compute that many zeroes.
Asking prices were higher than ever before, a stat that's probably skewed in the Bay Area since we apparently like to price homes $1M below the actual sales price.
Median sales price hit a new high, surprising no one.
Sellers gained the most in resale value, averaging $100,178 in profits on a typical home sale in the third quarter of 2021. Times that by a few multiples for the Bay Area.
Homeowners had so. much. equity. Increasing prices led to a record $9.4 trillion in tappable equity during the third quarter (the amount of money a homeowner would be able to access from their home while still retaining 20% equity). Imagine all the new marble countertops and stainless steel appliances you can get with that $$$.
Homes sold fast! Competition hit a peak in March/April when 61.5% of homes under contract had an accepted offer in two weeks. 46% of homes had an accepted offer in one week. Cut that time in half for the Bay Area.
Rents went up, seeing double-digit year-over-year growth for the past 5 months. Renters are paying an average of $291 more per month in rent than they were a year ago. The largest increase is for 2-bedroom units, with the median price of a 2-bedroom increasing to $1,993, or an additional $330 per month, in large metropolitan cities.
Foreign investors sat on the sidelines, thanks to pandemic lockdowns and restricted travel. They bought 107,000 homes and spent $54.4 billion in real estate purchases, the lowest totals since 2011 when investors bought 210,800 properties and spent $66.4 billion. Imagine the market we would've had if they had actually participated in the fun.

Cheers to the new year with a more balanced housing market! Hopefully.

Trends of the S&P

11/1/2021

While I'm all for the boring and unsexy investment strategy of maxing out my Roth-IRA contributions year after year for the next many years, I'm just going to leave this chart here as a note to self to buy a little extra during the next dip.

You Get What You Pay For

10/25/2021

Which house would you buy if you had an extra $1.5million lying around?

Home Prices Are Not As High As They Appear

4/5/2021

Housing is up more than 240% since 1989 and up 56% since 2013. WILD, right?? Well, take those numbers with a grain of salt.

In certain areas, yes housing may appear unaffordable to some. But it’s actually not as bad as it looks. To put home prices into context, look at mortgage rates over time. Typical interest rates were greater than 10% in 1989. 10%!!! So while prices were far lower back then, the cost of borrowing was way higher. And after adjusting for inflation AND interest rates, monthly mortgage payments are now actually 30% lower than they were in 1989.

Now ok fine, admittedly these statements don’t exactly apply to very high cost of living areas like New York City or Silicon Valley. But the point is, housing is not as expensive as it appears to be based solely on its sales price. You just have to look at the bigger picture to make a more realistic assessment.

The Suburban Land Rush

4/1/2021

The pandemic has somehow pushed median Bay Area home prices over $900,000. You read that right—you need nearly a million dollars to purchase an average home here! *insert crying emoji*

As we’ve seen for the last year, high demand for single-family homes in suburban areas and tight inventory has driven home prices up tremendously in most Bay Area counties (with San Francisco home prices being the one exception at less than 1% growth).

All-cash offers, waived inspections, and competitive bidding wars have become a mainstay in the real estate market these days. One agent in San Ramon mentioned seeing luxury homes sell for TWICE the county’s median home value in recent months. And buyers are even looking to snap up properties in outer-suburban cities like Gilroy, Manteca, and Morgan Hill.

Bidding War Frenzy

3/22/2021

It's rough out there for home buyers—bidding wars, crazy fast appreciation, and homes going into contract in a week! A strong stock market and low interest rates have increased the purchasing power of buyers. With such fierce competition, buyers need to get pre-approved and be ready to go see homes the second they hit the market to stand a fighting chance. You know what they say: “If you stay ready, you don’t gotta get ready”...or something like that.

Also, plot twist: millennials are unexpectedly the ones driving this market, buying multi-million dollar "starter homes". Amazing what you can afford once you stop going out to brunch for avocado toast.

It's our pandemiversary

3/15/2021

Remember last March when the world shut down and we all rushed to the grocery stores to buy toilet paper in an irrational panic? Well, here we are one year later and that same energy seems to have translated to any decent house that pops up on the market. Along with many other agents, I've been spending the last many months taking a brutal beating with my buyers in this insane housing market. Buyers are waiving all contingencies and far exceeding the comp prices just for the chance to get a house. 20, 30, even 40+ offers are not uncommon anymore. And there's no signs of this letting up for the rest of the year. But unrelated good news: at least we get to procrastinate one more month until May 17th to do our taxes!

The Weirdest Market We Ever Did See

2/28/2021

In a strange turn of events, rent levels and home prices have diverged across the country. Home values increased in all of the 100 largest metros in the U.S. But in some of the richest cities—rent prices fell, many by double-digit percentages.

Why is this very unusual trend happening? Like so many other financial and social matters, it might be the economic divide. The pandemic has unfortunately widened the gap between those who are thriving financially and those who are barely scraping by. While the stock market continues to go up, making wealthy people even wealthier, millions of Americans remain unemployed and struggling.

And the same is happening in our housing market. As demand for homes soars and prices are increasing at a much faster pace than incomes, high-end homeowners are seeing their property values skyrocket. Meanwhile, those looking to purchase low to middle-tier houses are finding it difficult to even afford a place.

Everyone is Leaving the City

2/24/2021

But they're not ending up where you might think. SF residents are indeed leaving the city in droves, but they're not going very far. We keep hearing about this mass exodus to more affordable places like Austin or Denver, but USPS data shows that they're mostly heading across the bridges to other Bay Area counties including Alameda, San Mateo, and Marin. Maybe after things return to normal(ish), everyone will want to head back to the city again and there will finally be more inventory everywhere else!

Grocery Store Wars

1/20/2021

ATTOM Data Solutions, the company that holds the premier U.S. property database, released its annual 2020 Grocery Store Wars analysis, which shows that living near certain stores like Whole Foods, Trader Joe’s, or ALDI, can largely impact home appreciation. They found that homes near a Trader Joe’s took the lead in home equity with homeowners earning an average of 37% equity compared to 33% for Whole Foods and 26% for ALDI.

For investors, it was the properties near ALDI that provided an average gross flipping ROI of 58% compared to 36% for homes near Whole Foods and 30% for Trader Joe’s.

Honestly, my plan was always to live near a Trader Joe’s anyway. Have you tried their bon bons?? But now that I know it can get me higher home equity too? Win/win.

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