In my 27+ years of real estate experience, there have always been two main indicators that play an influential role on housing prices. The first is the economy. The second is low interest rates that affect affordability. A good economy implies job growth, consumer confidence, and the potential to grow one’s own assets. This provides confidence in large purchases like a home.
As we all know, when there is job creation, there is an increase in the population. The Bay Area over the recent years has experienced immense job growth. Just in the year 2014, 113,500 new jobs were created. And how does this immense job growth affect the population? It has been estimated that in Contra Costa County alone, there has been an increase of 45,180 new residents from 2010 to 2013. (view graph below via Wolframalpha.com)
Population and job growth are not the only factors that play into housing prices of the Bay Area. Supply of new housing is also key to our current housing price boon. It’s not hard to see that San Francisco and the peninsula are densely packed areas, which makes it seemly impossible to create enough housing to keep pace with recent growth. Over the past few years, it has not been uncommon for a house to be put on the market for a week and receive 10+ offers. Now that’s demand!
With skyrocketing home prices and increased rental rates, what’s making residents buyers rather than renters? With higher price tags, buying a home may be out of reach for a great number of people. Fortunately there’s been good incentive to buy rather than rent. One of the greatest incentives for today’s buyers are the interest rates. Although the Bay Area has reached the housing high of 2006, mortgage rates are below 4% now, as opposed to the 6% high 9 years ago. This percentage may not seem very significant, but when it comes to the colossal price-tags of Bay Area homes, that small percentage increase makes all the difference.
The driving force of employment, namely the tech industry, should continue to prosper and drive in more demand for the foreseeable future. Because of these factors, the growth trend should continue to keep demand and rent very high as long as interest rates remain low.
If you are considering purchasing a home, you need an experienced agent whose focus is to ensure satisfaction to his clients. Let me prove to you that I’m the right agent for the job. Please visit my website and check out my zillow reviews. If you’d like to get in touch, I’d love to hear from you. You can email me at marco@marcogetsresults.com or give me a call at (925) 548-4711.
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