Study: The income needed to buy a home in the Bay Area has …

35825 920x1240 Study: The income needed to buy a home in the Bay Area has ...

The most arresting data point in a new report from the California Association of Realtors reveals that the income needed to buy a median-priced single-family home in the Bay Area has nearly doubled in five years.

Back in 2012, a minimum annual income of $90,370 was needed to purchase a Bay Area home at the median price of $447,970. Now, a home buyer needs to be bringing in $179,390 to afford a mean-priced house at $895,000, the report looking at second-quarter 2017 home sales data concludes.

This reality of skyrocketing real estate prices might seem rather unfair to those of us who haven’t seen our salaries shoot through the roof. If you’re trying to save for a home, it can be difficult to keep up with the rising prices unless you’re receiving significant raises at work.

Before you house-hunt, you’ve got to answer two questions. How much house can you afford, and how much house should you actually buy?

Media: Money Talks News

And even if you do achieve that golden salary of $179,390, don’t expect it to get you anything within San Francisco city limits where the median-priced home costs a staggering $1.45 million and requires a salary of $290,630.

 In fact, according to the report, only 12 percent of buyers in the city can actually afford a median-priced single-family home.

The outlook is also rather grim in San Mateo (14 percent ), Marin (17 percent), Santa Clara (17 percent) and Alameda (19 percent) counties, all among the least affordable spots in the Bay Area.

Solano County was the most affordable with 44 percent of buyers being able to purchase a median-priced home of $412,000 with a salary of $82,580. Here 44 percent of buyers can afford a home. Sonoma and Napa ranked the second most affordable with 25 percent of home buyers able to buy a home.

Article source:

Posted in SF Bay Area News | Tagged | Leave a comment

Baby boomers head by the hundreds to Sacramento ‘active-adult’ communities

Past building booms in Sacramento relied on first-time home buyers and growing families. These days developers see a major market in the wave of retiring baby boomers ready to cash out, downsize and enjoy “resort-style living.”

A growing number of developments in the capital region are aimed squarely at the 55-plus crowd, including the nearly 1 million baby boomers in the San Francisco Bay Area, many of whom are hitting retirement age with lots of home equity.

Median home values in four of the nine Bay Area counties have exceeded $1 million, while average home prices in Sacramento County remain closer to $300,000. That means buyers from the Bay Area often can pay cash for a home here and bank the rest for retirement.

“The demographics really point to the baby boomer aging population (as new homebuyers),” said Mike Wyatt, the Northern California division president of national homebuilder K. Hovnanian. “There’s a huge number that come to that age yearly. It’s a continuing trend that will go on for the future.”

Baby boomers – the massive swell of children born in the post-World War II years, from 1946 to 1964 – are now roughly 53 to 71 years old. Nationally there are about 75 million baby boomers still alive, with nearly 1.2 million living in the Bay Area and the four-county Sacramento region as of 2015, according to the Pew Research Center and the U.S. Census Bureau.

The millennial generation, now in their 20s and 30s, are an equally large group.

That’s why homebuilders are aiming many of their post-recession efforts at younger buyers and retirees. The groups often want the same thing – low maintenance living with lots of amenities at prices they can afford.

For the graying masses, K. Hovnanian has built its Four Seasons 55-plus communities around the nation, including in El Dorado Hills and North Natomas. Sales have been brisk in those developments, and the builder is planning at least one more Four Seasons project for Rancho Cordova, Wyatt said.

In the builder’s Natomas subdivision, Four Seasons at Westshore, more than 500 single-story homes surround tennis courts, a swimming pool and a 23,000-square-foot “lodge” with a fitness center, library, billiards room, card room and an arts-and-crafts area. A man-made lake has miles of walking trails.

“Dress up for a social event at the ballroom or dress down to catch a flick at the movie theater,” the development’s website says, touting its “resort-style living.”

Current offerings in the “Winter” portion of the subdivision include homes from about 1,300-1,800 square feet in the $300,000s. The Spring, Summer and Autumn areas are already sold out.

Next door, another national homebuilder, Lennar, is constructing its “Heritage Westshore” development, which shares the clubhouse and other amenities with K. Hovnanian’s homebuyers.

Lennar has similar “Heritage” 55-plus communities in El Dorado Hills and the Vineyard area of Sacramento County.

Sharon Sprecher, a real estate agent from the Bay Area, recently sold her house near Danville and bought a single-story home at Heritage Westshore. She purchased the largest model available, over 2,200 square feet, which came with granite counters, solar panels and other features that usually cost extra.

Sprecher said she added hardwood floors and travertine backsplash tile in the kitchen and still got what she considered a bargain.

“I’m a Realtor, and I can tell you that the prices have become outrageous (in the Bay Area.),” she said. “What I bought here would be in Danville $1.2 or $1.3 million. With all my upgrades, it was under $450,000 and it’s gorgeous.”

“I paid cash for the house, and I was able to put money in the bank,” she said.


Building for Boomers

Baby Boomers from the Bay Area are selling their pricey homes and retiring to the Sacramento region. How the two regions compare in home value, population near retirement age and homeownership:


Homeowners association fees of around $200 a month pay for upkeep, including front-yard maintenance, and other amenities, she said.

Sprecher said she was drawn to her new home for financial reasons, but also because she used to live in Granite Bay and still has close friends in the Sacramento region. She also liked the opportunity to make new acquaintances and take part in activities in a community of her peers.

Another big plus, she said, is living near Interstate 5 and Interstate 80 and being able to drive 10 minutes to Sacramento International Airport, 90 minutes to Danville, where she still has clients, or 15 minutes to downtown Sacramento with its theaters and restaurants.

“I just like the idea of being close to the action,” Sprecher said.

Tracie Cone is buying a house in Heritage Westshore, too, but she’s moving only a short distance. She currently owns a home along the Sacramento River on Garden Highway, about four miles in a straight line from her new house.

“I would be the least likely person in the world to move into an active-adult community,” Cone said, describing herself as a rural Bohemian. “It took a while to tell people because it was so shocking.”

The house she lives in now was built by a well-known architect; it sits on stilts with water views and big shade trees around it. Her prior abodes have included a 160-acre ranch, a 5-acre property and a 1-acre place with a large saltwater pool.

Cone said she’s tired of dealing with flooding and maintenance and just wants to be able to relax as she gets older.

“Every place I’ve had in the last 20 years has been a huge amount of work,” she said. “I just turned 60, and I’d like to be able to retire and leave my place and travel and not have to worry.”

Cone and her partner are buying a detached single-family home with three bedrooms, two baths and a two-car garage. It comes with a small lot – “enough for a few fruit trees and garden beds,” she said.

“They take care of your front yard; you don’t even have to deal with that anymore,” Cone said. “We’ll have a pool, but someone else has to clean it.”

Friends who didn’t initially understand her desire to live in a 55-plus neighborhood started to get it when they saw the model of the home she’s buying and the clubhouse, she said. Some of them are now interested.

Kevin Carson, president of New Home Co. for Northern California, said housing aimed at baby boomers has been popular in the company’s McKinley Village development in East Sacramento and that more of it is needed around the region.

“I think the real growth Sacramento has in store for it is active-adult communities,” Carson said.

Many retirees, he said, will want to sell their more-expensive homes in the Bay Area and move to the Sacramento region for its affordability. Others, who own larger houses in the Sacramento area, will want to downsize.

He pointed to the success of Del Webb’s Sun City 55-plus developments in Lincoln and Roseville, both of which proved extremely popular.

Wyatt, with K. Hovnanian, said his company also believes there is much greater potential for 55-plus housing in the Sacramento area. K. Hovananian would eventually like to have up to four active-adult communities around the capital region.

“There’s a high demand for active lifestyle communities,” he said. “If it’s in the right location, it will outperform market-rate housing.”

He said older couples who once might have moved out of state to retire now want to stay closer to home.

In the past, “they would pick up and move to Florida or Arizona or Las Vegas,” Wyatt said. Now, he said, “In many cases, they just want to stay where they are or close to their children.”

Article source:

Posted in SF Bay Area News | Tagged | Leave a comment

Real estate: Developer describes ‘epic’ impact of Google’s downtown San Jose plans

Mike Kim grew up in San Jose and can deftly describe the transformation of the city’s downtown — its gradual, and at times painful, progress toward becoming an urban destination.

Planners and developers have been waiting for the day when there are enough feet in the street to create a big city vibe in the downtown core.

That day may be upon us now that plans are on the table to remake downtown San Jose into a massive, transit-centered Google village with up to 20,000 new jobs. Separately, Adobe Systems has announced its own expansion plans to bring 3,000 more workers downtown.

We turned to Kim to discuss the “sheer magnitude,” as he put it, of these proposed efforts.

As chief investment officer for Simeon Properties, Kim has skin in the game. Simeon developed the 21-story Centerra luxury apartment complex, which opened downtown last year. It plans to break ground by next spring on its 20-story Post Street Tower, bringing more luxury apartments to downtown. And Simeon continues to assess other development possibilities as Google advances with its plans.

Those plans “will forever change the trajectory of the city,” Kim said.

This interview has been edited for length and clarity.

Q: What’s your take on the Google proposal and its impact down the line?

A: It’s very difficult to wrap your head around the fact that in downtown San Jose — where the existing office stock is about 5 million square feet — Google is now proposing to build an additional 7 million to 8 million square feet. It is a game changer of epic proportions.

In real estate, the market makers are governments, capital markets and major employers. Employers such as Google make market opportunity because the instant they arrive and hire, that creates demand, and suddenly you’ve got to have real estate to live, work and play in. Look at the transformation in the Mid-Market district in San Francisco when Twitter moved in, or the Uber news in Oakland — and that’s only a fraction of what Google is proposing in San Jose. This Google news in San Jose is so big that it eclipses even the Adobe news, which is enormous — the addition of 717,000 square feet and 3,000 employees.

0ad7d sjm l svchat 0814 6 Real estate: Developer describes epic impact of Googles downtown San Jose plans
Mike Kim meets with business manager Hope Reed at Centerra, a luxury apartment complex developed by Simeon Properties in downtown San Jose. (Patrick Tehan/Bay Area News Group) 

Q: What else do you see coming?

A: The strongest drivers of real estate are jobs and wage growth. Google is coming, Adobe is expanding, Apple is coming to north San Jose, Amazon is arriving – so locally, you have a pretty robust growth in jobs and income. This soon-to-arrive worker base — these are the same workers who created the massive housing shortage in SOMA (in San Francisco) and drove up rents and prices there. The same thing is going to happen in San Jose, but the impact will be more dramatic. Because in SOMA, it was already a fully built environment; it’s not like you could drop in 10 million square feet. But in San Jose, it can accommodate millions of square feet of new product, so the effect is going to be tremendous. And that same demographic that drove up prices across the board in San Francisco, whether in office, rent or retail, is going to do it again in San Jose.

Q: How quickly do all these changes happen?

A: If you drop 5,000 new workers who are well paid onto downtown San Jose, that creates instant demand for housing, office space and retail. But new real estate lags behind the hiring pace, because the development process is a lengthy and cumbersome process. So until supply can come online, the demand’s going to be ramrod straight, and there’s going to be very little to satisfy that demand. Which results in a rapid rise in prices in rent in the existing stock until the supply can catch up with the demand.

Q: I’m not hearing much about addressing the issue of affordability.

A: One of the best ways to mitigate the affordability issue is to have a robust housing supply across the income spectrum. Unfortunately the general plans for Silicon Valley cities are really job-centric, not housing-centric. Everybody’s still looking to have more jobs in their communities than housing; nobody wants to be the bedroom community for Mountain View or Palo Alto.

Q: Cities don’t necessarily want a lot more housing, because it strains services.

A: You have to pay for parks, schools. That’s the conundrum and the difficulty of this debate. The burden on the city’s general fund to service more residents is a challenge.

Q: But again, what’s the solution for “regular people” who already can’t afford to live in San Jose and the region, generally?

A: One of the reasons gentrification happens is because people who can afford to pay more don’t have any places to go, so they push out people in older neighborhoods. So the entire housing spectrum needs to be filled, but if you don’t supply for the people at the upper income, they’re inevitably going to push out people at the next tier down, and in turn they push out the following tier and so on.

Q: I’m not seeing much “mitigation” of the problem here. There are so many jobs being created at the top of the food chain.

A: Yes, where we are in the market cycle, excess demand is being created through the hiring by these large companies, and the supply is lagging. That’s true, but there will be a down cycle where the demand drivers — new jobs — will subside. And that will afford some price relief.

Mike Kim profile

Age: 48.

Grew up: San Jose.

Place of residence: Lafayette.

Positions: Chief investment officer, Simeon Properties; serves as a trustee for the Graduate Theological Union in Berkeley.

Previous jobs: Director of acquisitions, BRE Properties (now Essex), 2006-2008, San Francisco; vice president of development, Pulte Urban Group, 2000-2006, Pleasanton; naval officer, U.S. Navy, 1994-2000.

Education: United States Naval Academy, B.S. political science with concentration in general engineering, 1994; University of Southern California, master’s in public policy and urban planning, 2005.

Family: He lives with wife Sara and their seven children (one daughter and six sons).

5 Facts About Mike Kim

1. His first job was as a newspaper delivery boy for the San Jose Mercury News: “Old-school style, on a bike at the crack of dawn. At the peak of my game, I could fling the Sunday paper from the opposite side of the street and land it center on a tiny porch.”

2. While in the U.S. Navy, he “visited over 30 countries across five continents, captured pirates on the high seas, swam across the equator, scuba-dived all the major oceans and seas of the world, almost crashed into an iceberg in the North Atlantic, and logged enough nautical miles at sea to circumnavigate the globe four times.”

3. Best way to relax and recharge: “Sailing alone on the San Francisco Bay, one of the most scenic and challenging sailing conditions anywhere in the world.”

4. Personal hero: His wife Sara, who “does the lion’s share of the work in raising our seven kids, runs the family ranch in Lafayette, and founded a thriving co-op school.”

5. Favorite colors: Black, “because it comprises and absorbs all colors,” and green, “because there are near infinite shades of green observable in nature.”

Article source:

Posted in SF Bay Area News | Tagged | Leave a comment

Many Bay Area homebuyers want out, look to Sacramento

Overwhelmed by traffic and the steady climb of housing costs, potential homebuyers in the Bay Area are setting their sights on other markets, especially Sacramento and Seattle.

Analyzing 75 housing markets across the U.S., a new report by Redfin finds that the San Francisco metropolitan area — defined to include San Jose and Oakland — tops the list for having the most online searchers considering a move away from the metro area where they live.

New York is second on the list, followed by Los Angeles and Washington, D.C., as ranked by the brokerage’s “Migration Report” for the second quarter. It indicates that homebuyers increasingly are looking to leave expensive coastal cities in search of affordability.

The report — based on a sampling of more than one million users of the Redfin website — adds data to the body of evidence indicating that many Bay Area residents have had enough. In March, the Bay Area Council released a poll showing that 40 percent of the region’s residents said they want to move away in the next few years, a jump up from the 33 percent who said they wanted to leave a year earlier.

Redfin reported that San Francisco house hunters — faced with a median sale price of $1.25 million — most commonly look to Sacramento, where the median has been climbing, but still feels like a bargain: $376,000. Add in job opportunities in government, the health care industry and at nearby UC Davis — not to mention the attraction of the city’s old residential neighborhoods, the growth of its downtown and Sacramento’s proximity to the Gold Country and Tahoe — and one can get a sense of why buyers would be interested.

In the age of the mega-commuter, Sacramento is seen as a place to live affordably while driving or taking public transportation to Bay Area jobs.

The most common out-of-state destination for Bay Area-based buyers is Seattle, where the median price has been rising at a double-digit year-over-year clip and now sits around $750,000. For the time being, that’s apparently cheap enough for some buyers from the San Francisco metro area. Seattle boasts major employers, including Amazon, Microsoft and Boeing. (Redfin is headquartered there, too). Its closeness to mountains and water, as well as its lively cultural assets and its renowned restaurant and cafe scene make it a magnet for millennials and out-of-town buyers, generally.

For homeowners in Los Angeles, Redfin reported, the most common destination is San Diego — or Las Vegas, for those looking to leave the state.

Conversely, San Diego registered the greatest “net inflow” of Redfin’s online users, with the largest concentration of searches launched there by potential buyers from Los Angeles. Second on the list for “net inflow” was Sacramento, with a preponderance of searches there launched by buyers now living in the Bay Area.

The Bay Area also is the top point of origin for searches by out-of-towners looking to live in Austin, Texas, a growing tech hub where home prices may be going up, but remain affordable — at least by Bay Area standards.

Taylor Marr, a data scientist who worked on the report, cited “strong buyer demand and competition in mid-tier cities” including Phoenix, Atlanta and Sacramento.

The report also noted that Chicago, Boston and Seattle have the highest share of residents looking to stay in their current metro areas.

Article source:

Posted in SF Bay Area News | Tagged | Leave a comment

Income needed to buy a Bay Area home has doubled since 2012

The income needed to buy a median-priced home in the Bay Area has more than doubled since 2012.

That striking bit of news comes from a second-quarter report by the California Association of Realtors. It shows that a minimum income of $90,370 was required five years ago to purchase a median-priced single-family home of $447,970 in the nine-county Bay Area. Today, in the wake of substantial job growth, particularly in the tech industry, the minimum necessary income has climbed to $179,390 while the median price has ratcheted up to $895,000 for the region.

But while that $179,390 might get you something in Alameda County (where the median home price is $880,000) or Solano County ($412,000), it’s not likely to get you anything in San Francisco ($1,450,000), San Mateo County ($1,469,000) or Santa Clara County ($1,183,440).

The state’s least affordable counties were San Francisco (where only 12 percent of buyers could afford a median-priced single-family home), San Mateo (14 percent) and Santa Barbara (16 percent), followed by Marin, Santa Clara and Santa Cruz (all 17 percent). In Alameda County, 19 percent of buyers could afford a median-priced home, compared with 31 percent in Contra Costa County.

The report shows that the housing crisis has become a statewide phenomenon, with affordability hard to come by anywhere.

California buyers needed a minimum annual income of $110,890 to qualify for a single-family home priced at $553,260, the statewide median in the second quarter of 2017. Compare that to the first quarter of 2012, when a minimum income of $56,320 was needed to purchase a home priced at $279,190, the median at the time.

The monthly payment on a median-priced, single family home in California in the second quarter — including taxes and insurance on a 30-year fixed-rate loan — was $2,770, assuming a 20 percent down payment and an effective composite interest rate of 4.09 percent.

The second-quarter report adds that 29 percent of California households could afford to buy a $553,260 median-priced home — down from 32 percent in the first quarter. The percentage of buyers able to swing a deal for condos and townhomes was higher — 38 percent — as those homes have a lower median price of $443,400.

The state’s most affordable counties were Tehama (57 percent of buyers there could afford a median-priced single-family home), Kern (54 percent), Sutter (53 percent) and Kings and Tulare (52 percent).

Article source:

Posted in SF Bay Area News | Tagged | Leave a comment