Things could get (slightly) better for starter-home buyers in the Bay Area

The median price dropped 3 percent from the month before, but prices typically dip between July and August, by an average of 1.6 percent over the past few decades.

Figures from CoreLogic, a real estate data firm, all include new and existing single-family homes and condos in the nine-county Bay Area.


“Last month’s gain reflects the region’s severe mismatch between housing supply and demand and, to a lesser extent, a shift in ‘market mix,’ in which a slightly higher share of sales this August were in mid- to high-cost areas,” CoreLogic research analyst Andrew Lepage said in a statement.

Defying recent trends, the number of homes sold in the region surged last month, to 8,388. That was up 11.7 percent from July and 1.7 percent from August of last year. Since 1988, the average change in sales from July to August is a gain of just 2.5 percent. Last month’s sales total was the highest for the month of August in four years, but still 10.4 percent below the long-term average since 1988.

9ed78 920x1240 Things could get (slightly) better for starter home buyers in the Bay Area

In San Francisco, the hottest part of the market continues to be single-family homes in more affordable neighborhoods such as the Sunset, Richmond and Bernal Heights neighborhoods.

“Our house market is tiny,” said Patrick Carlisle, chief market analyst with Paragon Real Estate Group. Only eight to 10 new homes come on the market each year in the city, and that includes homes that were torn down and rebuilt. “The house inventory has been static for about 50 or 60 years, while over the same period we have seen tens of thousands of condos” constructed.

Families with kids or a dog who want a backyard, nearby playgrounds, parks, or beaches or a home to remodel won’t find them in a new condo development, he said.

Mary Lou Castellanos, an agent with Sotheby’s International Realty, listed a legal one-bedroom house (with an unpermitted bedroom on the ground floor) at 1086 Alabama in the Mission District for $995,000 less than a month ago. She got 17 offers, and the sellers have accepted one for more than 60 percent over the asking price.

She also listed a small two-bedroom home with extreme mold on Gambier Street in the Portola neighborhood on Aug. 31 for $500,000. “It’s the worst thing you have ever seen in your life,” she said. A contractor’s report said, “This place is definitely not safe and not safe for children especially. It is truly an abatement nightmare for hazardous substances.”

More from Kathleen Pender

The house got eight offers, all cash (because a bank wouldn’t lend on it) and all over the asking price.

Buyers looking for a starter home who have been faced with a lack of inventory and stiff competition may soon see a greater selection of homes.

A report by real estate website Trulia said the quarter with the most starter-home inventory is fall (October, November, December), and the quarter with the least is winter (January, February, March). Among the top 100 metro areas, the San Jose metro area (Santa Clara and San Benito counties) has the biggest difference between the highest and lowest quarter, and the San Francisco metro area (San Francisco and San Mateo counties) has the fourth-biggest difference, 33.7 percent.

Longer term, buyers could get some relief as San Francisco and San Jose are permitting housing at a faster pace than they have in recent years.

For 84 large metro areas, Trulia looked at the number of housing units permitted this year, extrapolated that into an annual rate and compared that number with the average number of units permitted each year for the previous 10 years.

It found that San Francisco and San Jose are actually exceeding their historical averages, said Trulia senior economist Cheryl Young. San Jose is on pace to permit 55 percent more units this year than its recent average, and San Francisco is on track to permit 42 percent more. Both metros ranked in the top 10 metro areas by this yardstick.

On an absolute basis, however, that’s not a lot of new homes. At its current pace, the San Francisco metro area will permit 4,570 new homes this year and the San Jose metro area 9,224. By comparison, Dallas will permit nearly 49,000 units, Houston 48,000 and Austin almost 30,000.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender

Article source: http://www.sfchronicle.com/business/networth/article/Things-could-get-slightly-better-for-12221841.php

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