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  • Writer's pictureKate Barnes

5 Reasons Why The Bay Area Is So Expensive

Updated: Feb 25, 2022

The Predicament

The Bay Area is one of America's hottest real estate markets, coming neck to neck with New York when buying and selling homes. Why though, does it cost so much to buy a home in the Bay Area?

California Housing Shortage

It will come as no surprise that California has a significant housing shortage problem and it's been this way since the 70's. As more people re-locate to California to experience the thriving and vibing lifestyles of LA and San Francisco, the popularity of California outweighs the capacity to house the population.

Coming from outside of the US myself, I know what the dream feels like to want to move to California, only to find that when you arrive, it's a very expensive to get setup! However the attraction and excitement of this amazing state continues to pull in residents both domestically and internationally to enjoy the lifestyle it has to offer.

Why The Bay Area?

The Bay Area, home of Silicon Valley and thriving San Francisco are not only great tourist attractions for visitors, they also offer opportunities and pathways to success that cannot be experienced in many other parts of the America.

The issue is however, that the Bay Area has not had the development required to support the growing economy, increasing employment opportunities and compounding population. The resulting effect is an imbalance of supply and demand, creating more competition between buyers, driving up the prices.

Will The Prices Ever Go Down?

I often have people tell me they will buy a home when the prices go down in the Bay Area. While I am not a clairvoyant, I wish I was! However, I need to go back to the data to answer this question as best possible.

The Bay Area has a thriving tech industry and tech is the way of the future, so far as we can see. The recent changes with the impact of the pandemic has allowed Bay Area residents to work from home. There were layoffs and increasing unemployment levels seen across many industries. It doesn't take much to see the increased competition that we saw in places like Sacramento, where people were flocking to compete to buy affordable housing when comparing to other alternatives such as expensive rentals in San Francisco.

The economy hit its lowest during shelter in place however, demand for housing stayed strong. During shelter in place, the market did change and when the economy re-opened, demand grew back to where it was prior to the pandemic.

Increasing Demand;

- Housing shortage

- Thriving Tech Industry

- Bay Area Lifestyle

- Low Interest Rates

- Consumer Confidence In Bay Area Housing Market

Decreasing Demand;

- New work from home norm

- Relocation To More Affordable Cities And States

- Consumers Feeling Its Out Of Reach

- Rising Interest Rates

At the moment, the increasing demand factors are outweighing the decreasing demand factors. The Bay Area has alot of cushioning and despite the events of recent years, is still one of the hottest (if not the hottest) real estate market in the US.

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Kate Barnes


METIS Real Estate 415.521.6813 | |

Youtube | Dre 02092777

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