Hanson is particularly concerned about cancellations among the home builders.

(Read More: Home Builder Sales at Risk Due to Rising Mortgage Rates)

Buyers of new construction often sign contracts for homes that will not be delivered for three to nine months, and therefore the buyers do not lock in mortgage rates at the time of purchase. A buyer who signed a deal the first week in May without a mortgage is now facing a far higher potential monthly payment, perhaps an unaffordable one.

The hangover effect could be much like the drop in home sales after the expiration of the home buyer tax credit. Prices dropped as well. This, as millions more borrowers were finally coming out from underwater on their loans, thanks to increased home equity. The number of borrowers owing more on their mortgages than their homes are currently worth fell by 47 percent in the first three months of this year from a year ago, according to Lender Processing Services. Some 7.2 million mortgages are still underwater, but that’s down from a high of 17 million in 2011.

Increased home equity has helped to push mortgage delinquencies down. They dropped 15 percent in May from Jan. 1, the biggest drop in 11 years, according to LPS. If home price gains stall or if prices turn lower, that trend will reverse. Rising home equity has allowed more borrowers to sell homes they don’t want or can’t afford.

(Read More: Map: Tracking the US Real Estate Recovery)

While home sales may surge in the short term on fears of rising rates and falling affordability, the longer term may be a different story. One telling sign from the Fannie Mae survey, 56 percent of respondents expect rents to rise. That’s up 8 percentage points in one month to a survey high.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC.

Questions? Comments? RealtyCheck@cnbc.com.

Article source: http://www.cnbc.com/id/100870112

Hanson is particularly concerned about cancellations among the home builders.

(Read More: Home Builder Sales at Risk Due to Rising Mortgage Rates)

Buyers of new construction often sign contracts for homes that will not be delivered for three to nine months, and therefore the buyers do not lock in mortgage rates at the time of purchase. A buyer who signed a deal the first week in May without a mortgage is now facing a far higher potential monthly payment, perhaps an unaffordable one.

The hangover effect could be much like the drop in home sales after the expiration of the home buyer tax credit. Prices dropped as well. This, as millions more borrowers were finally coming out from underwater on their loans, thanks to increased home equity. The number of borrowers owing more on their mortgages than their homes are currently worth fell by 47 percent in the first three months of this year from a year ago, according to Lender Processing Services. Some 7.2 million mortgages are still underwater, but that’s down from a high of 17 million in 2011.

Increased home equity has helped to push mortgage delinquencies down. They dropped 15 percent in May from Jan. 1, the biggest drop in 11 years, according to LPS. If home price gains stall or if prices turn lower, that trend will reverse. Rising home equity has allowed more borrowers to sell homes they don’t want or can’t afford.

(Read More: Map: Tracking the US Real Estate Recovery)

While home sales may surge in the short term on fears of rising rates and falling affordability, the longer term may be a different story. One telling sign from the Fannie Mae survey, 56 percent of respondents expect rents to rise. That’s up 8 percentage points in one month to a survey high.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC.

Questions? Comments? RealtyCheck@cnbc.com.

Article source: http://www.cnbc.com/id/100870112

In the first three months of this year, there were nearly 1.4 million refinances on Fannie Mae and Freddie Mac mortgages alone, according to the Federal Housing Finance Agency. Of those, 22 percent were through HARP, which was recently extended through 2015. More than 2.4 million borrowers so far have taken advantage of that program.

For borrowers who don’t have government-backed loans and therefore don’t qualify for that program, rising home prices have helped allow more of them to qualify for refinances. Among borrowers, 850,000 rose above water on their mortgages, moving into a positive equity position in the first three months of this year, according to a new report from CoreLogic. While nearly 10 million are still underwater, the more that rise above, the more refinances can happen.

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“We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap,” said Anand Nallathambi, the CEO of CoreLogic.

Rising prices, however, are a double-edged sword, especially in a rising interest rate environment. Potential buyers are losing purchasing power every day, just as demand is surging.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC.

Questions? Comments? RealtyCheck@cnbc.com.

Article source: http://www.cnbc.com/id/100810389

And if a recent analysis by real estate brokerage Redfin is any indication, the city may be in the midst of a burgeoning housing bubble.

Redfin’s study looked at home sales in major cities across the country and found San Francisco to be among a handful of metro areas where the median home price-to-household income ratio is high enough to suggest the formation of a real estate bubble. Other factors, including rapid growth in prices, low levels of available properties and houses regularly selling within a week of first being placed on the market, also pointed to a similar conclusion.

“A lot of people [in San Francisco] are really frustrated that they can’t buy a home in the city because it’s so expensive,” explained Redfin CEO Glenn Kelman.

Over the first three months of the 2013, the median home sale price in San Francisco was $771,750. The median annual household income is currently $72,947. The former number is rising much faster than the latter, indicating that the price of housing in the city has increasingly less to do with what the average home buyer can actually pay.

The meager supply of available housing in San Francisco further exacerbates the problem.

“Some properties are receiving in upward of 40 to 60 offers and selling in 24 hours or less,” said Bay Area Redfin agent Charmaine Frank, who noted that on a number of occasions, every single Redfin agent in San Francisco represented a different potential buyer for a single property.

“The normal laws of economics don’t apply to the Bay Area,” added Kelman. “You could have huge unemployment numbers here and home prices would still go up because [the supply is so constrained and] there are enough people with limitless amounts of money who want to live there.”

As a result, it’s becoming increasingly difficult for anyone but the wealthy to afford a house in San Francisco. Last year, real estate blog Movoto urged prospective house hunters to cool their jets until the bubble bursts.

“Unless you happen to be a billionaire, you should probably steer clear of shopping for a new home in the city,” Movato writer Kristin Crosier advised. “Even then it would be an unfortunate way to spend your piles of money.”

In a typical real estate bubble, individuals put all their money into buying property on the assumption that they can later sell it for a profit. But market forces cause home values to eventually decrease. When that happens on a massive scale, the bubble pops, a large amount of money suddenly evaporates, and a trail of economic destruction ensues.

Deterred by skyrocketing home prices, many San Franciscans have opted to navigate the city’s mind-bogglingly expensive rental market on the assumption that renting will be cheaper. However, according to a recent investigation by real estate site Trulia, buying a home is still cheaper than renting in every major American city, San Francisco included.

This rapid growth in home sale prices isn’t limited to San Francisco’s city limits. Over the past year, the median sale price of homes in the whole San Francisco Bay Area jumped by nearly 40 percent — the biggest spike of any metro region in the country. Over that same time period, the number of new listings decreased by eight percent.

In fact, overheated housing markets have popped up all along the California coastline. After Washington, D.C., which the Redfin study ranked as having the biggest housing bubble in the nation, the next three cities — Los Angeles, San Diego and San Francisco — were all in California

“California is hot because that’s where so many people want to live,” Frank said. “There are long-term demographic patterns driving people into California.”

Related on HuffPost:

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• Sacramento, Calif.

  Year Over Year Increase: 42.57 percent

  Median Home Listing Price: $285,000

  Total # Of Listings: 2,962

• Santa Barbara/Santa Maria/Lompoc, Calif.

  Year Over Year Increase: 35.72 percent

  Median Home Listing Price: $699,000

  Total # Of Listings: 1,195

• San Francisco, Calif.

  Year Over Year Increase: 25.04 percent

  Median Home Listing Price: $749,000

  Total # Of Listings: 2,292

• San Jose, Calif.

  Year Over Year Increase: 23.53 percent

  Median Home Listing Price: $562,000

  Total # Of Listings: 2,035

• Phoenix, Ariz.

  Year Over Year Increase: 21.21 percent

  Median Home Listing Price: $200,000

  Total # Of Listings: 15,114

• Atlanta, Ga.

  Year Over Year Increase: 19.93 percent

  Median Home Listing Price: $179,000

  Total # Of Listings: 32,530

• Oakland, Calif.

  Year Over Year Increase: 17.22 percent

  Median Home Listing Price: $375,000

  Total # Of Listings: 1,911

• Seattle/Bellevue/Everett, Wash.

  Year Over Year Increase: 16.66 percent

  Median Home Listing Price: $349,950

  Total # Of Listings: 4,381

• Fresno, Calif.

  Year Over Year Increase: 16.28 percent

  Median Home Listing Price: $184,900

  Total # Of Listings: 1,949

• Riverside, Calif.

  Year Over Year Increase: 15.65 percent

  Median Home Listing Price: $229,000

  Total # Of Listings: 14,909

Article source: http://www.huffingtonpost.com/2013/04/16/san-francisco-housing-bubble_n_3088591.html

Six months, millions of new users and a doubling of its staff later, the smart-phone security company is already on the hunt for additional real estate, with the hope of moving in the second half of the year. By the end of 2011, the company expects to double its staff again, to about 100 employees.

“Every person who is buying a smart phone today has a computer in their pocket and they realize they need to keep it safe,” said John Hering, chief executive officer and co-founder of the firm. “That has created a major opportunity for Lookout.”

This growth story is playing out repeatedly in the Bay Area, pushing tech sector jobs near the all-time highs set during the dot-com boom – if they haven’t already surpassed them. Niches that hardly existed a few years ago, like mobile apps, social media and cloud computing, are now driving the region’s economic recovery.

Near peak levels

By the end of last year, San Francisco had an estimated 30,700 tech jobs, just shy of the 32,800 around the peak in early 2001, real estate firm Jones Lang LaSalle found in an analysis of state employment data. In Silicon Valley, tech positions reached 106,300 in the fourth quarter, nearing the 112,700 crest.

Figures for the first three months of the year aren’t yet available, but it’s clear the numbers have continued to rise. Tech companies like Facebook, Motorola, VMware, Hewlett-Packard and Google have leased 3.5 million square feet of space in Silicon Valley this year alone, Jones Lang LaSalle said in its report. That’s the equivalent of filling the Transamerica Pyramid seven times.

“Silicon Valley really caught fire,” said Colin Yasukochi, director of research at Jones Lang LaSalle. “The economic recovery here is being led by technology.”

San Francisco had 2.5 million square feet of tech leasing since the beginning of 2010, and has 90 firms scouting the market for another 2.3 million square feet.

The recent growth in the industry is single-handedly transforming the conditions of the commercial real estate sector in key tech markets. In Palo Alto, Cupertino and San Francisco’s South of Market district, office rents increased by 10 to 25 percent in the last year, as vacancies dropped by half, according to Jones Lang LaSalle.

For the most common type of office buildings in SoMa, average rents climbed 16.4 percent to nearly $33.50 per square foot, as vacancy plummeted from 17.4 percent to 8 percent.

It’s become the place many tech companies want to be, with Zynga, Google, TechCrunch and Mozilla leasing significant space in the district during the last year. Hering said it’s the only place Lookout plans to search for its new space.

“There’s a huge advantage of being in SoMa, in terms of being surrounded by great resources and great minds,” he said.

Growing sector

But the tech sector represents a large and growing part of the Bay Area’s economy overall.

Jobs in the industry now account for 16.6 percent of private-sector employment in San Francisco, up from a low of 12.5 percent in September 2003, according to data from the Fisher Center for Real Estate and Urban Economics in Berkeley. Tech represents 25.2 percent of employment in Silicon Valley, up from 24 percent in December 2006.

Still, in an area badly burned by the last technology-sector meltdown, concerns have already begun to surface about the sustainability of the new boom.

Yasukochi took a hard look at this issue in the first-quarter report, and concluded that there’s “no bubble in sight.”

He noted that price-to-earnings ratios, which represent the amount of money investors are willing to pay for every dollar of company profit, are far more reasonable today than they were in 2000. At the time, the P/E ratio for the SP Information Technology Index stood above 70. Today it’s just more than 16.

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/05/03/BUHP1JB97H.DTL