California and the Bay Area in particular have long been attractive locations for Americans to move to. Despite the many great features the region has, people are finding it difficult to find and afford San Francisco apartments and Oakland houses for sale.
Not only are prospective residents struggling with the price of local real estate, but current residents are also getting priced out of the apartments they already rent. So what’s responsible for the drastic increase in real estate prices in the Bay Area?
The most recent reason why Bay Area real estate prices are on the rise is due to the COVID-19 pandemic. The pandemic has made people hesitant to sell their homes and move, resulting in a steep decline in houses on the market. With such a low supply, prices have risen greatly.
The pandemic has also posed new challenges to the Bay Area housing market, making open houses impossible due to restrictions. Virtual visits are the new norm, throwing another wrench in the local market.
Housing prices were already on the rise in the Bay Area before the pandemic, but recent events have only made the market worse.
San Fransico is an extremely popular migration destination, and the population growth of the city has fueled the rise in real estate prices. San Franciso has a lot to offer residents, and many people consider the city a great place to live based on amenities alone.
Throw in the fact that the Bay Area experiences beautiful weather and is in close proximity to a variety of job opportunities and it’s no wonder why so many people have been migrating to the area.
The Bay Area has experienced growth that has outpaced both the population growth of California’s average and the national average, growing at an astonishing rate. As long as the population is growing and becoming denser, housing prices are going to continue to rise.
Another big reason why Bay Area real estate homes have risen in price is due to gentrification. Gentrification is the process of a poor urban area receiving new funding and improved housing. Although gentrification sounds good at first, it can have some unintended consequences.
When an area is gentrified, housing prices will rise drastically. This not only affects prospective residents but also hurts current ones as well. Sometimes current residents can have their rent raised simply due to living in a gentrified area. The area around them may have improved, but their incomes haven’t, pricing them out of a home or apartment they may have had for years.
Although gentrification can improve some areas and make them safer, it does come with some negative side effects that affect the housing market.
One of the main reasons Bay Area homes have risen in price is due to the wide variety of jobs available in the region. Dating back to before the dot-com bubble burst, Silicon Valley’s large amount of tech companies pushed housing prices higher.
Although prices began to fall after the burst, they quickly bounced back with the recent tech boom. Most of the country’s biggest tech companies call the region home, making it a very attractive place to live.
It should be no surprise that workers in the tech industry that have lots of disposable income would want to live nearby. This increase in demand has pushed prices higher and is one of the main reasons why real estate prices are so high in the area.