An indicator of future home sales in San Francisco is plunging

9218e shutterstock215227885 An indicator of future home sales in San Francisco is plungingRichard Thornton/Shutterstock

Real estate agents listed three reasons for the debacle of
pending home sales in the state of California in July:

Lack of inventory for sale. This was the top
reason for 30% of brokers. The math is starting to bite: more
people are stuck in their homes as prices have soared all
around, and as mortgage payments needed to finance an
equivalent or nicer home have moved out of reach.

Declining housing
 and “high interest
rates” – which are near historic lows! – was cited by 28% of

“Inflated home prices” and “housing
 were cited by 25% of

Slowdown in economic growth, lending and
financing, and policy and regulations were other “biggest

These issues “may have pushed the market to a tipping point,” the
California Association of Realtors said in
its pending home
sales report
 for July.

And a debacle it was, particularly in the San Francisco Bay Area,
where home prices have become famously ludicrous, while the
economy is backing off its previously relentless boom. Employment
growth has slowed to a crawl, with
actual job
 for the 12-month period in two
counties – Santa Clara and Marin – a first since the Financial

Overall for California, “the housing market is showing signs of
slowing,” said the CAR report. Real estate agents “reported fewer
floor calls, listing appointments, and less open house traffic
than in June.”

For California, the index of pending home sales in July, based on
signed contracts, fell 2.6% from July a year ago on a seasonal
adjusted basis. It was the sixth month in a row of year-over-year
declines. But the overall decline of pending home sales in the
state covers up the strength in parts of Southern California and
the dizzying turmoil in the San Francisco Bay Area, where pending
home sales got crushed.

In the Southern California Region, pending home sales rose 1.4%
year-over-year, “the only major region” with an increase. But
real estate being local, there were huge differences: In Los
Angeles, pending home sales jumped 4.0% year-over-year; in San
Bernardino County 6.0%; and in Orange County 4.6%. But in San
Diego, pending home sales dropped 5.8% and in Riverside 4.2%

In California’s capital, Sacramento, where home sales had been
hot, they plunged nearly 18% from a year ago.

And in part of the San Francisco Bay Area, pending home sales
went over the cliff. In the region overall, pending home sales
plunged 11.5% year-over-year. In San Mateo County, the northern
part of Silicon Valley, pending homes sales plummeted 21.4%. In
San Francisco, they plunged 11%. And in Santa Clara County, the
southern part of Silicon Valley, pending home sales dropped 9.8%.

This chart shows the changes in pending homes sales in July
compared to July 2016 for some of the major urban counties in
California, plus for California overall (top bar), the San
Francisco Bay Area overall (second bar from the top), and
Southern California:9218e us california pending home sales 2017 07 An indicator of future home sales in San Francisco is plungingWolf

San Mateo County also has the honor of being the most ludicrously
overpriced housing market in the state, with a median selling
price of $1.5 million in July, according
to CAR data.
San Francisco is the second most ludicrously priced market, with
a median selling price of $1.43 million

So could the end of the jobs boom in the Bay Area have something
to do with the weakness in housing sales? This chart shows the
rolling 12-months growth in employment in Santa Clara County.
This southern part of Silicon Valley, which includes San Jose and
Palo Alto, has started to shed jobs for the first time since the
Financial Crisis (not seasonally adjusted data via the California
Employment Development Department):

9218e us jobs ba santa clara county employment growth 2017 07 An indicator of future home sales in San Francisco is plunging

Wolf Street

The end of the employment boom has spread across the Bay Area.
Santa Clara and Marin counties have shed jobs on a 12-months
basis. In the remaining counties, especially in San Francisco,
12-month employment growth has slowed to a trickle. And this
comes just as the Bay Area house price bubble has reached highs
that worry even real estate agents, as the survey above shows. So
it’s not that hard to see a connection.

The Bay Area housing affordability nightmare hits home, so to
speak. Read…  How Insane Home Prices in Silicon Valley San
Francisco Trip up Jobs Growth

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