Bay Area Real Estate, A Hot Investment Market
Bay Area real estate, like fine wine, only seems to get better and better with age.  It's been called the hottest real estate market in the country.  An increasing population and lack of an adequate supply of homes to meet demand is continuing to ignite what was already a hot market.  Recent statistics indicate the market  has only gotten hotter.  This February the median price of a home hit an "all time high of $569,000," up 19.5 percent  from last year's $476,000.  Prices have been increasing at their fastest rate in four years       The Bay Area is made up of nine counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano and Sonoma.  Collectively they are producing prices for the average buyer that once only would've only been affordable "for the ultra wealthy."  "Prices for single family homes are continuing to soar."  Marin County has the highest median priced home at $808,000, an 11.4% increase.  San Mateo is at $711,000, a 16% increase, and San Francisco rounds out the top three counties with a median price of $701,000, a 14% increase.  There was a lull in 2001 when "lay offs occurred" and inventory piled up but record low interest rates and the diminishing supply of homes have been the significant factor in the recovery that has set the tone for the sizzling market that has continued to defy "the still puttering valley economy"      The bottom line for the success of the residential recovery is that "there are lot of buyers and very few homes." Despite inflated prices buyers are still  snapping up what's left of available inventories, becoming avid participants in bidding wars and driving up already inflated prices.  Arlene Baxter, a Realtor with Berkeley Hills Realty has seen a "recent surge in prices." She sold two houses this past month.  One for $621,000, 25.7 percent more than the asking price and another for $511,000 that was originally priced at  $429,000.  The market isn't cluttered with young professionals or working couples making the most of their buying power investing in their future.  Buyers run the range from first time buyers, newlyweds, students, single moms and etc.          Lower  interest rates have continued to entice buyers.  With record low rates buyers have still had to commit  themselves to high monthly payments.  Bay area residents now pay an average monthly mortgage of  around $2,548, 21.9 percent higher than the average payment of $2091 the previous year.  As interest rates rise the high activity of the market may taper off a bit but the anticipation of rising rates have further set off an increase in buying that will only be curtailed by limiting the supply even further and despite the rates there still seem  to be a supply of buyers who will pay even higher prices on shrinking inventories.      Everyone is anticipating the burst of the bubble, the bottom falling out and a sharp drastic decline in prices but it's not likely to happen  in the immediate future.  Despite a slight rise in interest rates and a less than complete economic recovery sales activity has increased.  People who can buy homes are still taking the plunge.  Foreclosure rates  haven't taken a dramatic rise and  despite the lack of available property there are more  people prone  to pay more for available inventory.  The Bay Area has had a problem building enough homes to "keep pace with demand" for some time.  Land has been "restricted and expensive" and opposition to developments that can crowd "local streets and cities" isn't viewed as desirable by most homeowners.  13,720 homes were bought outside the nine county area by Bay Area residents in the first eight months of 2004.  The lack of inventory and more affordable prices have prompted them to take their equity and apply it to investment opportunities inside and outside the area.   Higher interest rates could thwart continued sales activity and price gains but most analysts don't see it having a pronounced effect for quite some time.  Prices and activity have continued to rise but they show no signs of slowing down for heightened sales activity in the spring.