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Bay Area home value continues to climb

In most parts of the country, inexpensive starter homes are making the greatest gains in value for buyers.

But once again, the Bay Area is running counter to national housing trends.

Owners in the San Jose metro area buying into the lower third of the market saw an 18 percent return last year, while high-end buyers saw a slightly higher 18.9 percent appreciation, according to real estate marketplace Zillow.

In the San Francisco metro area, which includes Alameda County, starter homes appreciated 9.5 percent over one year while luxury homes went up 11.6 percent.

Aaron Terrazas, Zillow senior economist, noted that Seattle is the only other metro area where high-end properties offered greater returns than low-end properties. Nationally, starter homes appreciated 8.5 percent last year, while homes in the top tier gained 3.6 percent in value, Zillow estimated.

The fast-rising home values across the San Jose market, he said, can be attributed to the relative affluence of the region’s buyers. “The bottom tier in San Jose is so high.”

The real estate website estimates entry-level homes in the San Jose metro area, which includes Santa Clara County, have a median value of around $750,000 — higher than the top-tier in all but five metro areas, Terrazas said.

The median sale price for a single family home in the nine county region was $765,000 in December, according to real estate data firm CoreLogic. A typical single family home in Santa Clara County went for $1.17 million, a boost of 35 percent from the previous December.

The median home value in Alameda County was $800,000, an increase of nearly 17 percent year-to-year, according to CoreLogic.

The robust annual gains in home valuations have vaulted far beyond normal returns for homeowners and investors. Historically, San Jose homes have seen values grow between 7 percent and 8 percent per year, according to Zillow statistics.

During the last five years, values for San Jose homes at both ends of the market have nearly doubled. Starter homes values have been driven up 88 percent, while luxury homes, with a median value of $2.1 million, have appreciated 74 percent.

William Doerlich, an agent with Realty One Group in San Ramon, said Bay Area luxury

homes priced at more than $3 million can take as much as two months to be sold — typically because owners are willing to wait to get their price.

Sales for low- and middle-range homes have been “off the charts,” he said. He cited one client trying to purchase a condominium in Emeryville and competing with 22 other offers.

Values for entry-level homes were the hardest hit real estate segment during the 2008 housing mortgage crisis and recession, Terrazas said. The recent gains in that part of the market were recouping some of the value lost a decade ago, he said. The segment has seen the highest demand and it’s out-pacing supply, he said.

The median price for a bottom tier home in the U.S. last year was $120,000, while a top-tier home went for $363,000, according to Zillow. Entry level home prices made the biggest gains last year in Tampa, Fla., and Las Vegas, each increasing by about 20 percent in the past year.

The Bay Area recovered from the real estate crash and recession faster than other parts of the country, Doerlich said. “We caught up three or four years ago,” he said.

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