Bay Area housing market – Northern California real estate still in a housing bubble. Bay Area housing prices for 2012. $300,000 in per capita home equity evaporated since 2005.
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Bay Area housing is one of the most inflated real estate markets in the entire country. It is an interesting social experiment seeing couples battle it out for a rundown property that is slightly bigger than a college student’s pizza filled apartment. Northern California housing has been in a bubble for as long as I can remember. Prices have fallen deeply in some regions like Contra Costa County and Solano County. Places like Sonoma, Napa, and Alameda counties have all witnessed intense corrections since the peak in prices were hit. But what will happen to Bay Area housing prices in 2012? The trend is likely to disappoint those thinking that prices will serendipitously rise up simply because of the Golden Gate special touch.
The rise in Bay Area home values is part of the California housing bubble yet is more pronounced in the north. I’m not sure if we should be proud about being the leading spot of reality-disconnected real estate in the world but that is what we have. Even with the dramatic decline in Bay Area home prices, some choose to ignore the numbers that prices have corrected.
Take for example this data:
Bay Area median price
November 2005: $625,000
February 2012: $325,000
Bay Area housing has seen a 48% price decline for the entire region and has wiped out $300,000 on a per capita home basis yet some still choose to ignore that a correction has occurred. Is seven years not enough to bring some people back to reality? Yet when it comes to Bay Area real estate, this is what we are dealing with.
Many buyers in the Bay Area are currently investors:
Why does the above matter? Because these investors are looking for cheap properties and they are a big part of the market. 26 percent of all purchases last month came from investors and the chart clearly shows the path of where things are heading. The typical property they bought cost $230,000. We are a long way from that $625,000 figure. All those funky California loans are sure coming back to bite us hard in 2012.