Have Bay Area homes become more affordable?

Despite record-level Bay Area home prices, high-end incomes have grown faster than housing costs in parts of the region, suggesting for some a previously unthinkable description of the home market: “Affordable.”

Single-family home expenses — mortgage, insurance and taxes — took up less of the average annual local wage in most of the Bay Area in recent months, according to an analysis by real estate analytics firm Attom. The survey of wages and home prices found Bay Area houses more affordable in all but Contra Costa, Solano and Napa counties.

8b3ef AFFORD Wages Home prices 072421 01 Have Bay Area homes become more affordable?Although the Bay Area remains among the most expensive regions in the world, Attom CTO Todd Teta said local wages have risen between 10% and 21% during the last year, while median home price gains have topped out at 9%, and in some cases — like San Francisco — have fallen for the first time in years.

“There are signs in parts of the region that things are looking up for buyers, with major expenses on single-family homes taking up less of the average local wage in the second quarter of 2021 than in the same period a year ago,” Teta wrote. “That contrasts notably with the rest of California and other upscale parts of the country.”

Although the analysis is promising for highly paid and steadily employed home buyers, it doesn’t tell the entire story, brokers and economists say. Strong stock market returns and stable remote work lifted incomes for tech professionals across the region. But the federal wage data used by the real estate company does not factor in unemployed workers — many coming from lower-paid service-industry jobs. The regional jobless rate was 5.45% in May, twice pre-pandemic levels.

Bay Area Council economist Jeff Bellisario said high housing costs are still driving people and families out of the region and making it harder for companies to attract talented workers. For many workers, it presents a difficult choice, he said.

“It becomes a question of whether you become a renter forever,” Bellisario said. “Home prices create all of the challenges in our economy.”

The Attom quarterly analysis of federal data showed the average annual income needed to buy a Bay Area home — and still have money left for living expenses — ranged from $93,000 in Solano County to $246,000 in San Mateo County.  Average wages in the region range from $63,700 to $162,700. The median monthly cost of a Bay Area home still takes up far more than the 28% of income recommended for home purchases.

The region is home to the four most expensive counties — Santa Clara, San Mateo, San Francisco and Marin — in the U.S. Median home values in these Bay Area counties are between $1.3 and $1.4 million, according to Attom.

“Without a doubt, most people earning average local wages are priced out of the house-and-condominium market throughout the Bay Area,” Teta said.

There are signs of hope for buyers. Inventory in the San Jose metro and San Francisco and the East Bay inched up in May, giving shoppers more choices now and possibly slowing future price increases. Different parts of the region saw between 2% and 3% more homes for sale in June than May, according to Zillow.

Bay Area buyers have shown they are willing and able to run prices up to record levels. Median home prices have hit $1 million, and desirable Silicon Valley properties have drawn bidding wars that drive prices hundreds of thousands of dollars over listings.

Santa Clara agent Alan Wang works with many tech couples looking in Santa Clara and San Mateo counties. He doesn’t see homes becoming more affordable for most residents. But for well-heeled professionals, he said, “it feels like they have gold bars in $100,000 increments” to drive bidding wars.

“The single-family home sector is insane,” Wang said. “I don’t see how it’s affordable.”

In the East Bay, Pleasanton agent Tina Hand said buyers are still stretching budgets to land a house. Some recent buyers have backed out of deals, and others have just left the market in frustration, she said.

“For first-time buyers, it’s still tough,” Hand said. More homes have been going up for sale this month, she said. Prices do not rise forever.

“There has to be some sort of correction,” she said. “It’s not sustainable.”


Article source: https://www.mercurynews.com/2021/07/24/have-bay-area-homes-become-more-affordable

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