Even a pandemic of historic scope that shut down most of the world in 2020 hasn't been able to slow down the Midpeninsula's housing market. After briefly going into semi-hibernation for less than two months in early spring 2020 during the initial COVID-19 lockdowns, the local market reopened with surprising strength and resiliency — and has since shown no signs of slowing down.
Pent-up demand blurred the traditional slowdowns during last year's summer and the winter holidays, and, not surprisingly, industry professionals predict a lively, robust spring 2021 market along the Midpeninsula, limited only by available inventory and continuing COVID-19 restrictions on open houses, broker tours and other property showings.
But agents and prospective buyers have figured out a lot of productive workarounds to these restrictions: Buyers routinely screen new properties online before making arrangements to view them in person. Agents produce elaborate online presentations, particularly for high-end properties, and participate in online broker tours.
"It has been pedal to metal ever since last May and June," said Lucy Berman, a real estate agent at the Golden Gate Sotheby's International Realty office in Palo Alto. "The market has been just crazy. Extremely active."
A report compiled earlier this year by Sotheby's found that housing sales throughout the Bay Area were 30% higher this past February than a year ago, while 67% of those transactions were higher than the asking price, compared to 50% a year earlier.
It also found the median price of a home in Santa Clara County increased from $1.35 million in February 2020 to $1.46 million this past February, while San Mateo County saw an increase from $1.57 million to $1.76 million during the same period. The number of homes sold in Santa Clara County also jumped from 484 to 638, and from 221 to 278 in San Mateo County over this same period.
Statewide, the median housing price hit $758,990 in March -- a nearly 24% increase since March 2020, according to a report from CalMatters based on figures released by the state Department of Finance on April 23. It’s at least the sixth time California's housing market has broken its own record amid the pandemic — it did so five times in 2020 alone, cracking the $700,000 median price mark for the first time in August, according to CalMatters.
Berman said prospective buyers are flooding into the Silicon Valley market from outside the Bay Area, but also regularly moving around inside the market. Most are looking for more interior space to accommodate work and school activities and additional exterior space for outdoor activities and recreation, as well as to serve as a buffer of sorts.
Properties that are new, or remodeled and turn-key ready are at a premium in Santa Clara and San Mateo counties. She said buyers are not looking to oversee renovations of older properties, due to cost, convenience and health and safety reasons.
"Inventory is low," Berman said. "Some long-term owners living in those larger homes are reluctant to downsize right at the moment."
Spacious homes and properties in places like Woodside, Portola Valley and Los Altos Hills that moved slowly a couple of years ago are now very popular, Berman said. But, so are well-priced, single-family homes in good condition in the mature, tree-lined neighborhoods of Palo Alto, Menlo Park, Los Altos, Mountain View and Redwood City.
While townhomes and condominiums are trying to shake off 2020 doldrums — as buyers favored larger, single-family properties and many younger buyers moved back in with parents to save money during quarantine times — entry-level homes priced at $2.5 million and below are drawing multiple offers reminiscent of the frenzied local market from 2015 to 2018, according to Brian Chancellor, Realtor in the Palo Alto office of Sereno Group.
Prospective buyers who have lost out on previous sales often make offers well above asking prices in their next purchase attempts.
"Some of our markets are even surpassing the number of offers we saw three, four or five years ago," Chancellor said.
Not surprisingly, prices have risen in the high single digits in most categories, he said.
Midpeninsula homebuyers are further spurred by comparatively low-interest rates and profits made from robust stock market investments. High demand and low inventory are driving sales ranging between $10 million to $30 million among high-end properties.
And local residents aren't just driving real estate sales on the Midpeninsula, Chancellor said. They're snapping up second homes in premier resort areas such as Santa Cruz County and Lake Tahoe.
Despite sluggish sales during the height of the pandemic last year, Chancellor said he sees renewed interest in the local condo market this year. He shepherded the recent sale of a Sunnyvale property for $1.198 million — $200,000 over the asking price.
Tight spring inventory should improve, Chancellor said, as longtime local homeowners increasingly decide to take advantage of Proposition 19. Passed by voters in November, the new tax law allows homeowners, among other things, to hold onto their previous property tax levels when they purchase new homes elsewhere in California.
That may include buyers entering the Midpeninsula market, as affluent buyers relocating from densely developed cities like San Francisco flee south to purchase big houses surrounded by large oak trees, tennis courts and horse corrals in semi-rural precincts of Woodside and Portola Valley, said Elyse Barca, a Realtor and luxury home specialist at the Menlo Park office of Compass Real Estate.
Her recent transactions include many of the $5 million-plus sales in Atherton, Menlo Park and Palo Alto.
"It's not surprising when people are sheltering at home, they become acutely aware of the deficiencies of where they live," Barca said. "During the past year, space became extremely important for people needing more of it for working from home, educating children at home and exercising and recreating at home."
Barca agreed with Berman and Chancellor that once reopened, the local housing market never skipped a beat — even for last year's contentious presidential election and aftermath. Elections typically can have a depressing impact on real estate activities.
And, like Chancellor, Barca foresees an uptick in condo and townhome sales this spring. In fact, interest in entry-level and less-expensive properties is popping.
A property she recently listed on a Monday drew more than two dozen messages of interest within four days. Two prospective buyers requested a showing.
"Properties priced compellingly at $2.5 million or below are drawing tremendous levels of interest," she said.
Barca said the shift to a greater online presence for Realtors and their clients is a logical one during the health crisis.
"Curb appeal has become less important than web appeal," she said.
But, in a pandemic-affected market as competitive as the Midpeninsula in 2021, all online and in-person tools are being pressed into use, said Menlo Park real estate agent Brett Caviness. He said he has seen many properties draw anywhere from five to 20 offers in recent months. And that sends prices in only one direction.
"Well-priced, well-prepared properties are easily selling for up to 20% higher over last year," Caviness said.
He said strict coronavirus protocols in place since last year — including restricting property showings to no more than two people from the same household who exhibit no COVID-19 symptoms — are among the bigger challenges to doing business these days.
"If prospective buyers do not have an appointment to see property by Thursday of any given week, it's virtually impossible for them to get in to see a property that weekend," he said.
The priorities of those prospective buyers has changed dramatically in the past year, Caviness said.
"In recent years, before COVID, buyers wanted very much to be close to work," he said. "They wanted that short commute to Google or Facebook. Now, nobody says that."
Nowadays, his clients are casting a much wider net, ranging from San Mateo in the north to Sunnyvale in the south.
"They are much less city specific in their searches now, more focused on a bigger area that might work for them. And they're looking for larger properties."
As for Midpeninsula Realtors like himself, Caviness said if he could bring back any pre-COVID-19 industry practice, it would be in-person broker tours.
"Open houses are nice, but not as crucial to our work, because they often draw people who are not serious buyers," he said. "Virtual broker tours are helpful, but doing them in person really makes you feel in touch with your colleagues in the industry and, of course, the market."
Chancellor predicts that if COVID-19 cases continue to drop as a larger percentage of the population is vaccinated, restrictions could start easing up over the next three to six months.
"I could see traditional broker tours and open houses beginning to come back," he said. "If we stay on the right path, things could start getting back to normal later this year."
View more stories in Spring 2021 Real Estate publication here.