San Francisco has seen a record increase in home prices in recent times. ACL Real Estate and Property Management analyze whether this growth is a sign of a healthy real estate market by reviewing the recently released report by The Demand Institute.

San Francisco, CA (PRWEB) March 18, 2014

Analyzing the recent report published by The Demand Institute, leading real estate and property management firm ACL Real Estate and Property Management says that San Francisco is unlikely to continue to witness the double digit housing price growth it experienced in 2013.

According to their report, A Tale of 2000 Cities, published by The Demand Institute in February 2014, home prices are likely to increase by an average of 2.1% per year during 2015-2018. However, this figure does not fully reflect the huge pricing differences the nation is likely to see across region. Here is how the report sees prices across states by 2018.

The report also demonstrates the disparity between home prices and the median income, with rents in San Francisco as high as thrice the national average. The Case-Schiller House Price Index for June 2013 had put the price rise in San Francisco at 47%, the highest among all the metropolitan areas studied. This increase, The Demand Institute’s report says was “largely driven by investors buying up swaths of distressed homes to meet growing rental demand.” At the same time, the report forecasts an annual growth rate of 2.1% for single-family homes during 2015-2018, given the expectations of better equilibrium between demand and supply.

“Rising housing prices is not always an indicator of a healthy market because health is more a function of whether people can afford homes at those prices in the long term,” says a spokesperson from ACL Real Estate and Property Management. According to the report published by The Demand Institute, 41% of households faced a moderate-to-severe housing cost burden in 2013 (with 25% carrying moderate burden and another 16% carrying severe burden). The Harvard Joint Center for Housing Studies defines a moderate cost burden as “the need to allocate 30 to 50 percent of pretax household income to essential housing expenses: mortgage principal and interest payment, rent, insurance, taxes, and utilities,” while a severe burden occurs when this figure rises to 50 percent.

The situation is scarcely better for renters. Following the 2007-2008 recession, more and more homeowners have turned into renters, leading to rising demand for rental accommodation. According to The Demand Institute’s study, 31% of tenants in the United States are today spending about 30%-40% of their pre-tax income on housing, with one in every four spending more than 50%. So, is the San Francisco residential market really healthy?

About ACL Real Estate and Property Management: With wide experience and a proven track record in quality service and reliability, ACL Real Estate and Property Management has carved a niche for itself for its real estate and property management services in the East Bay and Peninsula areas. The company has a successful track record of assisting home owners in both selling and buying any type of property. The company also offers comprehensive property management services that ease the process of selecting tenants, maintaining the home and ensuring timely rent collection for homeowners.

For the original version on PRWeb visit: http://www.prweb.com/releases/2014/03/prweb11678686.htm

Article source: http://www.virtual-strategy.com/2014/03/18/rise-sf-bay-area-home-prices-sign-healthy-real-estate-market

We’ve written numerous times about how crazy expensive buying a home in the Bay Area is for the average folk.  Out comes another survey, this one by the National Association of Home Builders/ Wells Fargo Housing Opportunity Index, that confirms what we already know about Bay Area real estate.  As AOL Real Estate reports, this survey looks at a metropolitan area’s median home price and median income and then determines what percentage of the homes an average homebuyer can afford.

The San Francisco metro area ranks 2nd in the nation in housing affordability

Based on these statistics, the San Francisco metro area was the second least affordable area to buy.  With a median home price of $659,000 and median income of $103,000, only 31.4% of homes are affordable to the average Bay Area resident.  This wasn’t too far off from New York City, which was the least affordable place to buy, where the average New Yorker could afford to buy only 28.5% of homes there.

Heading south along the bay, San Jose was ranked the sixth least affordable place to buy.  The median home price there was $530,000.  Median incomes in the San Jose metro area were $105,000 and based on these two numbers, about 46.2% of homes are affordable to the average homebuyer.  Better, but still not great.

San Jose is 6th in the country in housing affordability

Interestingly, the article also points out that San Francisco and San Jose were two of only a handful of metro areas where the median income was in the six figures – all thanks they say to the once again booming tech industry.

In all, California heads the list as the least affordable state.  In addition to San Francisco and San Jose, the metro areas of Los Angeles, Santa Ana and San Diego made the list.  To look at the other areas that made the list, click here.

Article source: http://blog.sfgate.com/ontheblock/2012/12/07/san-francisco-2nd-san-jose-6th-least-affordable-places-to-buy-in-the-country/

Still, while mortgage refinances soar to a two-year high, weekly numbers from the Mortgage Bankers Association show that applications to purchase a home are down by 6 percent over the past year.

Jason and Pascale Royal would love to move up to a bigger home. With a new baby and a dual income, they are even willing to pay more for a bigger mortgage. The trouble is, the mortgage on their south Florida home is about $100,000 more than the home is currently worth. To add insult to injury, they can’t get any help from the bank or the government.

“Because we’ve been current on our payments and have never been late or missed one, we don’t qualify for any of these short sales or any of these special programs to help underwater borrowers,” says Jason Royal.

Jason and Royal are among 11.4 million borrowers, or nearly 24 percent of all residential properties with a mortgage, that are currently in a negative equity position, according to CoreLogic. In addition, 2.3 million borrowers have less than 5 percent equity, referred to as near negative equity. But mortgage analyst Mark Hanson takes it one step further, adding that most move-up buyers need to just 6 percent extra to pay the Realtor, but 20 percent to put down on the next mortgage. He therefore puts real or “effective” negative equity at 80% loan to value; that is, you probably need about 20 percent equity in your current home to move up. He calculates about 25 million borrowers don’t meet that amount of equity. That’s twice as many underwater borrowers as most analysts and politicians purport.

“Investors and first-timers have come in and out of the market throughout history at various times for various reason, but underpinning housing has always been move-up/across/down buyers,” says Hanson. “Half of the repeat buyers have died. They are down for the count due to negative equity, “effective” negative equity, low quality credit, or legacy 2nd liens they can’t extinguish. This is a huge problem for anybody betting on ‘escape velocity’ or a ‘durable recovery’ in housing.”

The Royals could just walk away, as many like them already have. The Obama administration has been pushing its program that pays lenders to slash mortgage balances, but this week the regulator for Fannie Mae and Freddie Mac said the two mortgage giants will not participate. The administration claims reducing principal will keep borrowers from walking away. Fannie and Freddie’s regulator, Edward DeMarco, claims offering principal reduction will cause current borrowers to miss payments just to qualify. The Royals appear to prove both of them wrong. They won’t walk away and they won’t stop paying.

“I bought this house, I sat down, I signed the paperwork, I knew the numbers, and so I’ve made my payments as committed, and I don’t want to stop paying to create a situation where the bank wants to get me out of the house. I’d rather do it in a way that’s fair to both parties,” says Jason.

But the Royals also won’t move, and therefore won’t be able to contribute to the housing recovery.

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