Luxury buyers ramp up the competition in California’s Bay Area

By LISA KLEIN

The Bay Area in northern California has long been a desirable location for upmarket homebuyers, boasting miles of beautiful coastline and spectacular mountain views combined with prestigious universities and a more-than-famous technology innovation scene.

The region also has limited housing stock due to both topography and constrictive zoning laws, creating luxury markets where even the most affluent buyers have to outbid each other.

Despite housing limits, “the greater Bay Area really has too many luxury markets to count,” said Christine Christiansen, a senior sales associate for Vanguard Properties.

Cali competition

Home to San Francisco, California wine country and the tech-haven Silicon Valley, it is no secret why the Bay Area has some of the priciest and in-demand real estate in the United States.

Home-buying competition is always high, but the pandemic saw even affluent consumers struggling to snag a home in one of the area’s nine prestigious counties: Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, Sonoma and San Francisco.

“It is basic economics,” Ms. Christiansen said. “Demand overshadows supply in many areas. I practice in Marin County, where there is intense competition for certain homes.

“Building new housing in desirable areas of Marin is very difficult due to limited availability of buildable land and other factors,” she said. 

“So, when a home in pristine condition, located in a desirable school district, with an easy commute to San Francisco and with other popular characteristics is listed, there will be many bidders who are prepared to go over list price.”

Victorian-era homes mix with high-end condos in San Francisco. Image credit: Getty Images

With tech employees working from home in droves, those buyers have found themselves in multiple bidding wars and paying hundreds of thousands of dollars over asking for a single-family home.

In May, a home sold for $1 million over the list price.

According to Zillow data, almost two-thirds of homes in the Bay Area sold above list price in the first quarter of 2021, compared to 47 percent last year. Per the California Association of Realtors, home prices had increased 38.9 percent year-over-year in May 2021.

“With that said, there are many locations in the greater Bay Area, and even Marin County, where homes can be had without the intense competition and high prices we hear about in the media,” Ms. Christiansen said.

“For example, if a home is located in a great school district, close to town with a great commute to the city but has a small yard or is near a busier street, or perhaps does not have a pool, it may sit longer and may ratify for list price or even below,” she said.

Diverse digs

So what are Bay Area residents fighting for? The answer is as varied as the region.

“Luxury buyers are as diverse as the Bay Area itself,” Ms. Christiansen said. 

“Each family is unique,” she said. “Some have a collection of classic cars, so they need a large garage space. Many insist on a pool and spa, or at least the space to add those amenities. Some want horse stables or hobby vineyards. Others need a large garden area.

“Many insist on privacy and beautiful views of the Bay. Some would prefer mountain views or Mt. Tamalpais if it means they can have more privacy.”

San Francisco, the urban center of it all, has its classic Victorian and Edwardian homes.

“Many of these have been painstakingly remodeled to modern standards on the inside, but retain their historical features on the outside,” Ms. Christiansen said.

“The neighborhoods of Sea Cliff and Pacific Heights have always had many high-end luxury homes,” she said. “Nob Hill and Russian Hill, of course, are classics.”

Newer options are available in plenty as well, with high-end condos sprouting up downtown and south of Market Street and many families custom-building their own single-family homes.

A peaceful home with its own vineyard in Calistoga. Image courtesy of Vanguard Properties

“Luxury buyers who gravitate toward the city are generally more comfortable stepping outside and right into an urban environment,” Ms. Christiansen said. “They want a home where they can be close to all the amenities the city has to offer.”

North of the city, Marin, Napa and Sonoma counties are filled with large luxury estates with more room to relax and maybe a hobby vineyard or private dock thrown in.

“Buyers in these areas are generally looking for privacy and space,” Ms. Christiansen said.

“Luxury properties in these areas will have lots from several acres to several hundred, with views of vineyards and mountains,” she said. “Many if not most, will have horse stables, tennis courts, pools and spas, ample room for a vintage auto collection and guest houses.”

Families turn to Marin for its kid-friendly community and superb schools with easy access to San Francisco.

To the east lie mostly suburban counties centered around Berkeley and Oakland.

To the south is the famed tech hub Silicon Valley, where Palo Alto and San Jose have mainly ranch-style homes that come at a cost. This is also where Stanford University calls home.

“I think if you ask 10 people why they are attracted to the Bay Area, you will get 10 different answers,” Ms. Christiansen said. “There is a home and a community here for any interest, profession or lifestyle you can name.”

Leave a Comment