High-Priced Bay Area Homes Lead Market Recovery
Expensive homes in the Bay Area and other high-end markets are historically responsible for market revival. So, why high-priced homes and not middle class residences that comprise most of America? According to the Home Value Forecast (HVF), higher-priced markets are in a league all their own, untouched by tight underwriting and large loan-to-value mortgages that plagued the rest of the nation.
Prestigious markets like much of the Bay Area showed strong price growth compared to lower-priced areas. High-priced homes tend to be in desirable locations where inventory is extremely limited. Buyers in these areas are also in a higher buying bracket than most of the nation, where average sold prices have skyrocketed to all-time record levels.
The HVF took notice of one of Silicon Valley’s most prestigious zip codes: Palo Alto. The HVF compared performance for lower and higher-priced homes in Palo Alto and found that the most expensive homes were the first to show price gains over this past year. The report concludes, “This suggests that high price homes are market leaders both across different markets as well as within the same market.” The rate of price appreciation for higher-priced homes was also much greater.
The Bay Area is not the only high-end market to see such high velocity. Los Angeles County, particularly the Manhattan Beach community, has seen prices rise to all-time highs. Some of the other top markets in the nation include Boston-Quincy, Massachusetts, Indianapolis-Carmel, Indiana and Santa Ana-Anaheim-Irvine, California.
Do you think the Bay Area’s swift recovery is sustainable in the long-term?