Even though home price appreciation has cooled considerably in the East Bay thus far in 2014, the housing market in the region remains relatively heated. The median price of existing single-family homes grew 17.7%, to $611,400, from the second quarter of 2013 to the second quarter of 2014 in Alameda County, while prices increased by 12.4%, to $451,000, in Contra Costa County. In comparison, prices rose by 13.6% in San Francisco and by 10.5% in the South Bay. Declines in distressed sales in the East Bay have contributed to the cool down, as the number of distressed properties sold at a discount has taken up a smaller share of the overall housing mix in the region. At the same time, demand for housing, which has been boosted by the continued relaxation of lending standards, historically low interest rates, and a gradually healing economy explains why the housing market has remained heated in 2014.
Home and condominium sales in the East Bay continued their slide through the second quarter of 2014. Sales are down 8.9% year-over-year in Alameda County and 11.0% in Contra Costa County. Sales are down in the East Bay primarily because of the tight supply of housing in the region. Another critical factor is the decline in the number of distressed properties on the market. As such, sales will continue to lag in the East Bay until greater efforts are made to alleviate the ongoing shortage of housing supply in the region.
Much like the housing market, demand for apartments in the East Bay has continued to grow in 2014. The region’s apartment vacancy rate declined by 10 basis points from the second quarter of 2013 to the fourth quarter of 2014, to 2.7%, and has been relatively stable during this time. Meanwhile, rental prices increased by 4.6% over the year, to an average rent of $1,517 per unit. The cost of rent in the East Bay accounts for an average of 39.1% of the median household income for renters in the area, compared with 43.3% in San Francisco and 35.1% in the South Bay. However, rental prices in San Francisco (6.8%) and the South Bay (6.2%) grew at a faster rate than they did in the East Bay during this time, widening the affordability gap between the East Bay and the rest of the Bay Area, thus making the East Bay more attractive to renters.