Reporter- San Francisco Business Times
The Bay Area’s roaring housing market appears to be quieting down to more of an inside voice.
In November, home prices in the region increased by about 1.3 percent — a gain, but not nearly as strong as the city’s 23.2 percent year-over-year leap, according to the SP/Case-Shiller Home Price Indices, which tracks home prices across the country.
Nationwide, home prices in November fell by 0.1 percent, but showed 13.8 percent growth during the previous year. San Francisco remains in the country’s top 10, but experts expect the market to return to lower home price appreciation levels.
“Individual markets are showing signs of slowing down, which is helping to set up a mixed bag this year for buyers and sellers,” said Stan Humphries, chief economist with Zillow, a real estate information company. “Buyers can expect more inventory and less investor competition, while sellers used to seeing huge price gains month after month may feel some whiplash as that slows down.”
A slowdown maybe be good news for prospective buyers, but another major concern is rising interest rates, which can curb rising prices since they increase the cost of owning home.
“There are certain parts of the Bay Area that have surpassed whatever high values they had in 2006 and are now more expensive than ever,” said Svenja Gudell, a senior economist with Zillow. “Rising prices plus higher mortgage rates give you lower affordability. It’s just really darn expensive right now in the Bay Area.”
Going forward, Bay Area home prices will likely still climb, Gudell said, by about 7.5 percent for 2014, which seems like a drastic drop compared with the 20-plus percent growth in 2013.
Historically, the average yearly appreciation in the Bay Area is around 4 to 5 percent, so 2014 promises to be another strong year for the housing market.
Blanca Torres covers East Bay real estate for the San Francisco Business Times.