Oh man… I can’t wait for the day that Covid is not the topic of these reports (or of our lives, for that matter)! But, alas… here we are…
I just saw an article about whether or not the Bay Area would be a ghost town in the next 10 years. “GHOST TOWN!” We know that the media loves drama (it’s how they make money), but this was a whole new level. Do we really believe that ALL of SF, Silicon Valley, the millions of people who live in the Bay, and the billions of dollars of real estate value are just going to — poof — be gone?!
Let’s look at what the data says about how and where people are moving. Here are a few insights from this month’s report:
1.) People are short-term minded. Generally, condo prices stabilized in the depths of Covid, as people gravitated to single family homes. But, SURPRISE! Over the past few months as things began looking better, condos picked right back up. In fact, days on market (a key real estate metric) for condos hit a record low nationally. Then, Delta roared his ugly head, so we shall see what happens next…
2.) Bay Area real estate remains a good investment. Rather than a “mass exodus”, what we actually saw was a lot of movement WITHIN the Bay Area. People moved from the urban core to more suburban and even rural areas. However, despite the media saying that the SF real estate market was going to tank, it actually appreciated in Covid ~5% YoY. (Most believe that that appreciation will be much stronger this year. We’re already seeing it with rents.) The suburban and rural areas saw bigger growth — in the double digits in almost all cases. But, overall, real estate in the Bay remains a solid investment (particularly when you factor in the tax benefits and the fact that it is the roof over your head).
3.) Covid didn’t change people’s migration patterns; it just accelerated them. Approx. 2.5% of people in SF moved out of area. Most just shuffled around locally. If they did leave, they left to places where they were already going, but it just accelerated their timeline.
How far will the migration patterns go? I just got back from Croatia… will people move there? Bali? By and large, cities are coming back, and NYC is leading the way. We know that longterm Airbnb stays increased dramatically during the pandemic as people looked for more space and embraced “working from anywhere,” but at what point do people begin returning back to “reality?”
As always, hit me up with questions or to dig into anything further. Things can be competitive out there (they likely always will be here), but I know how to help you win!
Best,
Blakely
