Where’s San Francisco? Where’s San Jose?
Realtor.com’s 2017 housing forecast rubs a crystal ball to predict the nation’s 100 top markets — and if you’re used to seeing the Bay Area at the top of “hot” housing lists, this new set of rankings may surprise you. The San Francisco-Oakland-Hayward metro sits in the 37th position for 2017, while the San Jose-Sunnyvale-Santa Clara metro occupies the 39th spot.
Why so low?
The rankings are based on the projected price appreciation for each given market as well as its volume of sales. And while San Francisco and San Jose do well in the price category, with projected housing appreciation of 8.41 percent and 8.26 percent, respectively, sales activity looks dismal. The two metros are expected to barely eke out sales increases next year: The number of homes sold are expected to go up just 1.17 percent in San Francisco and 1.26 percent in San Jose.
Compare that to Arizona’s Phoenix-Mesa-Scottsdale metro, ranked No. 1 for 2017 — it will show a healthy mix of appreciation (up 5.94 percent) and sales (up 7.24 percent), according to the forecast. The extended Bay Area boasts just one metro in the Top 10 markets: Sacramento, where realtor.com projects price increases of 7.18 percent, along with sales increases of 4.92 percent.
While the Bay Area is otherwise shut out, five of the Top 10 markets are on the West Coast: Los Angeles-Long Beach-Anaheim (No. 2 on the list); Sacramento-Roseville-Arden-Arcade (No. 4); Riverside-San Bernardino-Ontario (No. 5); Tucson, Arizona (No. 9); and the Portland-Vancouver-Hillsboro metro in Oregon and Washington state.
Jonathan Smoke, realtor.com’s chief economist, projects that the national market will moderate in the next year, with median prices rising 3.9 percent and existing home sales increasing just 1.9 percent. Tight inventory, it seems, is a national problem.
Smoke also predicts that the post-election uptick in mortgage rates “may price some first-timers out of the market.”
Yet he and the rest of the data team at realtor.com forecast that millennials (at 33 percent) will dominate the 2017 pool of buyers, with baby boomers (at 30 percent) close behind. And the team sees millennial buyers flocking to Midwestern “hotbeds,” including Madison, Wisconsin; Columbus, Ohio; Omaha, Nebraska; Des Moines, Iowa; and Minneapolis.