Marin among the leaders in real estate capital gain
High and rapidly climbing prices, crazy bidding wars – is the Bay Area housing market starting to look like a bubble?
Forget it, this is not the Great Recession of 2008.
Homeowners’ equity in the Bay Area has skyrocketed during the COVID-19 pandemic, according to a mortgage and home value analysis by real estate analysis firm Attom. Equity is the difference between what an owner owes on a house and the value of a house.
Five Bay Area counties were among the top eight “stock rich” places in the United States. According to Attom, equity wealth means that the estimated loans on the property do not exceed 50% of its value.
Marin County was among them. Between the second quarter of 2000 and the second quarter of this year, the number of equity-rich properties rose from 54% to 64%, according to data from Attom. The median value of a single-family home in Marin was $ 1.8 million in July, up from $ 1.55 million in July 2020, according to the county assessor’s office.
“In addition to the equity that is rapidly increasing because home values in Marin rise, many home buyers in Marin are cash buyers or start with large down payments, unlike in other areas of the state where buyers start with less net worth, ”said Cathy Youngling. , a Compass real estate agent who is president of the Marin Association of Realtors.
Contra Costa County, once considered a more affordable suburban community, has seen the biggest jump in terms of equity-rich properties, from 44% to 57%. Alameda County fell from 56% to 66%; Santa Clara County, 65% to 70%, and San Mateo County, 71% to 74%.
“Equity levels at both ends of the spectrum have improved in the Bay Area, as they have across the country. This is mainly because most homeowners were still able to pay off their mortgages at a time when home values were rising, ”said Todd Teta, director of Attom. “Even those who lost their jobs and couldn’t keep up with their loan repayments saw their equity improve simply because home values kept rising. “
Median home prices in the Bay Area during COVID mirrored the national trend – they soared. Local home prices fell from $ 1.01 million in March 2020 to $ 1.35 million in June, a gain of 34%.
Across the nine-county region, the percentage of equity-rich properties rose from 57% at the start of COVID-19 to 64% in June, nearly double the U.S. average of 34%, according to the ‘to analyse.
As expected, virtually no Bay Area borrower (just 1.2%) is seriously over-indebted on their mortgage payments. The low rate of underwater properties makes it highly unlikely that the region will experience a wave of mortgage failures similar to the mortgage crisis that began in 2007.
But the tech-rich Bay Area, which holds some of the highest home prices in the United States, was just on par with the rest of homeowners across the country when it comes to earning equity. Teta said gains in metro San Jose and San Francisco were in the middle of the pack of 106 metro areas that Attom analyzed.
“In the end, most homeowners couldn’t have paid a dime more on their mortgages and still saw their equity increase,” he said in an email. “Since most were probably still able to pay off their mortgages, the typical Bay Area homeowner had more equity in the second quarter of this year compared to last year.”
Personal wealth tied up in Bay Area homes has created financial security for many families and has given homeowners many options for leveraging those assets. But housing and equality advocates say the analysis also highlights growing disparities in wealth accumulation between landlords and renters in the region.
Many tech workers have managed to be successful in Silicon Valley, said TechEquity’s Megan Abell, but “that’s not a complete picture of what’s going on.”
Housing costs in the High Bay area and historical discrimination have meant communities of color have been left out of property or have waited longer to buy, she said.
“This is the predominant way we create wealth in this country,” said Abell, director of advocacy for the nonprofit.
Vince Rocha of the Silicon Valley Leadership Group said the rising value of homes indicates the need to find inventive ways to build more housing for the middle class. Opening up additional residential properties for multi-family housing like duplexes would allow more families to put down roots and build wealth through homeownership. According to a recent UC Berkeley study, about 80% of residential land in the Bay Area is reserved exclusively for single-family homes.
“You can’t have a healthy economy, for example, if teachers, firefighters, and service workers can’t afford to live here,” said Rocha, senior director of housing and community development for the community lobby. companies.
Real estate experts also say the rising value of Bay Area homes has prompted homeowners to rethink things.
San Jose agent Dave Walsh, president of the California Association of Realtors, said he’s never seen a higher level of seller satisfaction. Homes in Santa Clara County sold in June at about 10% above listing prices, more than double the usual rate, he said.
“A lot of salespeople are reconsidering their lifestyle,” Walsh said. Bay Area owners ask, “Do I really need to live in the Bay Area? Can I move to Lake Tahoe? The Sacramento neighborhood?
But Walsh warned that rising net and real estate values are a double-edged sword. Tenants have often borne the brunt of the economic damage from the pandemic.
“It’s the haves and have-nots,” Walsh said, “again.”
The Marin Independent Journal contributed to this report.