The Bay Area’s overheated housing market is restoring thousands of homes to their pre-crash peak values in a ZIP-code-by-ZIP-code recovery that is rapidly spreading from Silicon Valley to the East Bay.
Thirty-four of 185 ZIP codes in five counties have regained or surpassed their bubble-era peak home value or are less than 1 percent from it, according to this newspaper’s analysis of February median values for all homes from online real estate site Zillow.
Another 49 ZIPs are within 15 percent of their previous highs, including 18 in the East Bay. A year ago, only part of leafy Palo Alto had regained the value it lost after Bay Area home values crested in 2006-07.
“Seven or eight years ago, there was really a bubble,” said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. “Now it’s just good real estate where values are returning to near past peaks.”
Every part of the Bay Area has seen gains in the past year, with Silicon Valley leading the way. But parts of Contra Costa and Alameda counties, where subprime lending was heavy, are still far below their peaks.
The recovery has pulled many homeowners out from underwater — when houses are worth less than the mortgage — and convinced others it may finally be time to sell and move to bigger homes. They’re diving into a fast-moving market in which homes can sell in a day for more than the asking price.
Mike and Lois Lee sold their Danville home for $780,000 in two days this month, after their real estate agent, Mark Kennedy of Empire Realty, told them their house was again worth more than they paid for it. They made $10,000 on the sale, the result of the past year’s rise in home values.
“I had no idea the market had corrected that much,” Mike Lee said.
Kennedy said the couple tried to sell in 2011 but there were no takers, and it might have resulted in a short sale. “I would say that in a year they went from losing money to making money,” he said.
In one Sunnyvale ZIP code that surpassed its bubble-era peak in December, Greg and Daisy Biggers decided in January it was time to make a move. Their family — four children — was outgrowing the home and the market timing looked right. In fact, it couldn’t have been better.
The Biggers family sold their home in less than a week, with all offers above asking price. Then they bought a home in Orinda, paying above the asking price. The whole process, from the decision to move to the purchase of the Orinda home, took eight weeks. Both homes are in escrow, and agents declined to reveal the sales prices before closing.
“When we started looking at the market, we picked up on this up-trend in prices,” Biggers said. “We quickly decided that if we’re going do it, now is the time. We had much higher demand than we had hoped for, which is great. And things are moving really, really quickly.”
Some pricier parts of Berkeley, Pleasanton, Oakland and Orinda are 10 percent or less below their earlier peaks. Not far behind are San Ramon, Moraga, Alameda, Danville and Fremont.
“Property in Dublin is selling at prices you would more commonly associate with some parts of the Peninsula,” said Lanny Baker, president and chief executive of ZipRealty. Baker said prices should hold even as more homes come on the market.
The market is so hot that sales in a week are not unusual. According to the real estate company Redfin, 24 percent of Alameda County listings in March were pending in a week; the numbers were 32 percent in Contra Costa County, 19 percent in San Mateo County and 26 percent in Santa Clara County.
Ally Yang bought a home in Mountain View in a day after losing another home to a higher offer. Her agent, Mark Wong of Alain Pinel Realty, “sent me the listing. I said let’s go check it out. I walked in, it’s a single family, I know the value, I think it’s a good deal.”
She made an offer of $705,000 that afternoon, and it was accepted. “I think in this kind of market you just have to know what you want and go after it,” she said.
Up the Peninsula in a Burlingame ZIP code that surpassed its bubble-era peak in August, Dianna Herrmann decided it was time to downsize and put her historic, 6,000-square-foot home on the market for $3.98 million.
“I watch the real estate market a lot,” Herrmann said. In February, she called her real estate broker. “I said things are overheated, inventory is low, prices are moving up and rates are low. Is this a good time to sell?”
The answer was yes.
Fifteen days later, the house was sold in an all-cash deal for over the asking price.
“The market is faster than ever,” said Burlingame broker Jennifer Tasto. “When a place sells, there’s one person who gets it and two other people replacing that buyer.”
The recovery is in full bloom in San Francisco. The Mission Bay neighborhood, where new luxury condominiums are about all that’s for sale, edged past its prior peak in January, and other parts of the city are nearing their previous highs.
“San Francisco has recovered incredibly,” said Leslie Bauer, an agent who specializes in the South Beach, Yerba Buena and Mission Bay districts. “I would say we’re recovered beyond when the market fell.”
But the data also reflects the stark contrast between the tech-heavy South Bay and Peninsula, where many areas are surpassing their pre-crash peak values, and the far reaches of the East Bay, where home values in some places are 50 percent or more below peaks that were inflated by subprime lending.
Antioch, Pittsburg, Richmond and a ZIP code in East Oakland have a long climb ahead of them. There, values still hover near their bottoms.
Fifteen ZIP codes in Contra Costa County and three in Alameda County are more than 50 percent below their peak median home value, according to Zillow’s data. In one Antioch ZIP, the median value of a home was $177,700, only 18 percent up from an October 2009 bottom of $149,800 and 62 percent below its peak of $473,400 in January 2006.
“We have a ways to go before we recover,” said Luis Salas, a real estate agent in Antioch. “We’re far from the city and there was so much construction the prices went down a lot in Antioch — in some cases more than 50 percent from the peak. But it’s recovering.”
As prices rise in Antioch, some short sales are drawing offers over asking price and becoming regular equity sales, according to Joy Di Ricco, an Antioch real estate agent who has specialized in short sales since the market crash.
She said one client’s home was $100,000 below the amount of the mortgage six months ago.
“I told them hold off,” Di Ricco said. “Sure enough, I think in another 30 days we may have an equity sale.”
Contact Pete Carey at 408-920-5419 Follow him at Twitter.com/petecarey.
