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The CAR’s housing affordability index calculates the percentage of households that can afford to purchase a median-priced, single-family home in California.

By that measure, in the Bay Area, only 18% of home buyers could afford to purchase the $1.495 million median-priced home in the period from April to June. That price would require a minimum qualifying annual income of $337,200 to make a monthly payment of $8,430, which includes taxes and insurance on a 30-year, fixed-rate loan with a 20% down payment.

“Housing affordability continued to slide in California in the second quarter primarily because of rising interest rates and home prices remaining elevated,” wrote Oscar Wei, deputy chief economist for the Realtors association, in an email. “In anticipation of the Fed’s aggressive rate hikes in the second quarter, the market had pushed the average 30 year fixed-rate-mortgage to the highest level in over 13 years in late June.”

The statewide median home price also set a back-to-back record high in April and May before slightly declining in June, Wei added.

In the Bay Area, Alameda, Napa and San Mateo counties were in a three-way tie for the lowest housing affordability rate, with only 15% of households able to purchase a median-priced single-family home. In San Mateo County, a person would need a minimum income of $512,000 to afford the median $2.27 million home price, which is the highest among all Bay Area counties.

Affordability declined in almost all counties in California, so it was not a surprise that all Bay Area counties’ index figures dipped from the prior quarter.

“The dip in affordability is a reflection of the higher cost of borrowing, but it also suggests a tight constraint in housing supply in the area,” said Wei. “Even if rates were to come down eventually, we still need to build more in order to alleviate the upward pressure on home prices.”

Low housing affordability in the Bay Area, especially in Alameda, Napa and San Mateo counties, will eventually result in lower homeownership rates and could lead to increased out-migration if the housing supply constraint continues, Wei said.

Solano County is the most affordable, requiring a $140,800 annual household income for a median-priced $625,000 single-family home. But the 28% affordability rate in the second quarter of 2022 was down from 37% in the prior quarter and from 40% in the second quarter of 2021.

Statewide, only 16% of home buyers could afford to purchase a median-priced, single-family home in the second quarter, down from 24% in the prior quarter and 23% in the second quarter of 2021. That means a minimum annual income of $199,200 is needed to qualify for a purchase of the $883,370 median-priced, single-family home, with a monthly payment of $4,980.

The California county with the lowest affordability rate was Mono County at just 6%. Other counties with very low affordability are Santa Barbara at 10%, Orange and San Luis Obispo at 12%, and Santa Cruz and Monterey, both at 13%. The county highest on the affordability index is Lassen at 54%. Other more affordable counties are Kings at 39%, Shasta and Glenn at 36%, and Merced and Tulare at 34%.

Even though interest rates have declined modestly in recent weeks, with the 30-year fixed rate currently at 5.22%, Wei said “inflationary pressure will not go away in the next few months and will continue to put upward pressure on rates.”

“Home prices will remain elevated in the second half of the year, despite softer price growth for the rest of the year,” he added. “As such, housing affordability will remain around the same level, or may even dip in the next couple quarters as rates start rising again.”

This puts even more pressure on potential home buyers, Wei said.

“For home buyers, the decline in affordability means fewer of them are able to buy a median-priced home as compared to the previous quarter and a year ago,” he said. “It could mean that there will be more buyers competing in the lower price segment. And it also means buyers will need to come up with a bigger down payment if they want to buy the same median-priced home in the second quarter.”

In the U.S., affordability has also declined considerably, the report said: 38% of home buyers could afford the $413,500 median-priced home in the second quarter of 2022, down from 47% in the first quarter and from 49% in the second quarter a year ago. The minimum qualifying income is $93,200 with a monthly payment of $2,330.

Overall, home sales are down 38% from last year. Meanwhile, the new report from the real estate brokerage showed that home appreciation rates have plunged this summer. 

The percentage of homes that sold for over asking prices has also come way down, with 57% of sales closed over the final list price, down from 73% in April. 

Chief market analyst Patrick Carlisle said it’s still too soon to tell whether we’re in a market correction, especially since mid- to late summer is typically a slower selling season in the Bay Area. He said the market usually picks up in the fall with a rush of new listings and September usually has the highest number of new listings of any month in San Francisco. 

Carlisle said watching to see if that holds true this year, combined with how buyers respond, will be telling. “The number of active listings is climbing pretty quickly even though the number of new listings coming on market is not,” Carlisle said. “So the increase in supply is being driven by decreasing demand. For the time being, it seems like some sellers are now holding off to see how things shake out.”

This comes weeks after the California Association of Realtors released its housing affordability index, painting a stark picture of how unaffordable the region has become. In San Francisco, the minimum income required to purchase a median-priced home leapt from $350,400 to $450,800 from the second quarter of 2021 to the second quarter of 2022. It was even worse in San Mateo — the minimum income jumped from $390,400 to $512,000. The Bay Area as a whole went from $248,000 to $337,200 in the past year. These figures are based on a 20% down payment and include taxes and insurance.

Article source: https://www.sfgate.com/realestate/article/bay-area-housing-market-cools-17375504.php

• Mark Zuckerberg sold his San Francisco home for $31 million, according to The Real Deal.
• He still owns compounds in Palo Alto, California, and on nearby Lake Tahoe.
• These days, he seems to be spending more time in Kauai, Hawaii, where he owns about 1,500 acres.

Mark Zuckerberg has off-loaded a piece of his multimillion-dollar real estate portfolio. 

The Meta CEO, who’s worth around $62 billion, sold one of his San Francisco Bay Area homes for $31 million earlier this month. The off-market sale is the biggest residential real estate deal in the city so far in 2022, according to The Real Deal. 

The four-bedroom, four-bathroom home, which spans 7,368 square feet, is in San Francisco’s Dolores Heights neighborhood, adjacent to the famous Mission Dolores Park. Zuckerberg and his wife, Priscilla Chan, reportedly paid $10 million for it when they bought it back in 2013. 

But the property caused tension among Zuckerberg’s neighbors, who objected to the construction work that began on the home that year. Residents told the San Francisco Chronicle that they were experiencing constant noise from the 50-person crew working on the property each day and said they had been blocked from parking on their street for months. 

Permits filed with the city at the time showed that Zuckerberg planned to do millions of dollars worth of work on the home, including renovating the kitchen and bathrooms; adding a new office, media room, half-bathroom, mudroom, laundry room, wine room, and wet bar; putting additions on the rear and side of the home; and adding a new, basement-level garage that included a turntable for the cars so they could get out more easily. 

While the home is now in the hands of a new buyer — The Real Deal reports that it was sold to a Delaware-based LLC — Zuckerberg still owns property in the Bay Area. He purchased a five-bedroom home in Palo Alto in 2011, then added the four homes surrounding the property to create a private compound. He also owns two adjacent waterfront estates in a ritzy enclave on Lake Tahoe, a popular vacation destination for Bay Area residents. 

But these days, it seems like Zuckerberg is spending more and more time at his nearly 1,500-acre estate in Kauai, Hawaii, where he’s often spotted surfing and foiling, a type of water sport.

Zuckerberg began buying property on Kauai’s north shore in 2014, most recently snapping up $17 million worth of land in December 2021. Zuckerberg and Chan have donated millions to local organizations, but their presence on the island has also been, at times, controversial: Local residents told Insider last year that they saw Zuckerberg’s land purchases as a “new monarchy” that failed to respect the island’s history. 

Article source: https://www.businessinsider.com/mark-zuckerberg-san-francisco-house-sale-2022-7

Homeownership rates are shifting despite the fact that men still average significantly higher pay, and even though financial research shows U.S. women tend to pay more for homes but profit less from the sales.

The 49% homeownership rate for single women in the San Jose-Sunnyvale-Santa Clara metropolitan area is 11 percentage points higher than the rate for single men — the widest gender divide in any large U.S. market, according to the review of 2020 census estimates by home improvement site Porch. In the San Francisco-Oakland-Berkeley metro area, home to the No. 5 biggest homeownership disparity between genders, the report found that around 46% of single women own their homes, compared to 36% of single men.

“It doesn’t surprise me at all,” said Morgan Hill real estate agent Robin Bezanson, who estimated that 30% to 40% of her clients are single women. “There are so many incredible women entrepreneurs and women in our area, and I think they see the stability in having their own home.”

The increasing buying power of women, and a parallel narrowing of the homeownership gap between men and women, is a decades-long trend driven by many factors, according to a 2021 report by the Urban Institute, including rapid professional gains, shifting romantic norms and an increase in multigenerational households.

While the number of female-headed U.S. households skyrocketed from 1990 to 2019, the number of male-headed homeowner households shrank from 44.4 million to 43.1 million. About 61% of all female-headed U.S. households owned their homes in 2019, a 10 percentage-point increase from 1990, the Urban Institute report found, though gains were much smaller for households headed by Black or Latina women.

Reports on the subject also focus almost exclusively on data broken into male and female categories, not distinguishing people who identify as nonbinary or transgender. Housing studies by Bay Area cities repeatedly show that LGBTQ youth and transgender people experience higher rates of housing instability and homelessness.

“Although there are real advances to appreciate,” the Urban Institute authors wrote, “it is not a simple picture.”

That’s especially true in the high-priced Bay Area, where overall economic inequality has widened during the same period. Buying a house is an inherently personal decision that can depend on any number of factors — income, school districts, proximity to family, aesthetic preferences — but the gendered data highlights an ironic byproduct of the region’s housing crisis.

Women still earn 78 cents for every $1 a male counterpart makes in San Francisco, and less than 2% of single women currently make enough money to buy a new house here, according to a recent Zillow analysis. But for those who are able to get a foot in the door, bidding wars and rapid increases in home values can actually help level the financial playing field, according to 2020 report by researchers at the Yale School of Management.

That’s because obstacles like volatile property values or gender bias in negotiations are less likely to arise in settings where homes often go to the highest bidder or sell off-market, said Yale finance professor and report author Kelly Shue.

“Women actually do about the same as men in very tight housing markets such as Manhattan or San Francisco,” Shue said.

Across the country, however, Shue’s analysis of some 9 million home sales from 1991 to 2017 where the gender of the homeowner could be identified found that U.S. women “buy the same property for 1-2% more than men and sell for 2-3% less.” Each year, men earn an average of 1.5% more than women off their home investments, the Yale researchers found.

Though it’s impossible for researchers to understand each homeowner’s motivations, Shue said one “pretty obvious reason” for single women to buy homes at a higher rate is because they are more likely to have a child or other dependent in the home, for whom they may hope to provide stability and a higher quality of life. The challenge, she said, is when these responsibilities, or other reasons, push women to sell homes when the market is not as strong; timing accounts for about 45% of the national gender gap in home financial returns.

Shue’s primary advice for female home buyers and sellers: “Figure out ways to negotiate less,” she said. “Women would also be better off holding for longer time periods.”

In Bezanson’s experience in Morgan Hill, single female home buyers tend to be Silicon Valley tech executives or business owners shopping in the $1 million to $3 million range. They’re often “very conservative” financially, looking for smaller two- or three-bedroom homes.

She’s encouraged by more female buyers finding ways to break into the market and make strategic renovations to increase the value of their homes, building wealth over time. But at the end of the day, Bezanson said, gender isn’t top of most area sellers’ minds.

“The people who are able to get in the market,” she said, “are the people who have those cash reserves.”

Lauren Hepler (she/her) is a San Francisco Chronicle staff writer. Email: lauren.hepler@sfchronicle.com Twitter: @LAHepler

While an economic downturn would have a negative impact on the region, its effects would likely be much worse in the U.S. metropolitan areas that saw an influx of people from places like the Bay Area, a new report says.

The report, from home listings site Redfin, looked at 98 U.S. metro areas to identify whether their housing markets were likely to be vulnerable or resilient in a potential recession.

It calculated an overall risk score based on 10 indicators including average debt-to-income ratio, percent of homes flipped, home price volatility, average home loan-to-value ratio, and year-over-year change in domestic migration. The higher the overall risk score, the higher the risk of a housing market downturn.

In that equation, Bay Area homeowners have a lot working in their favor, said Daryl Fairweather, chief economist at Redfin.

“Recession risk is more to do with the financial stability of the homeowner,” Fairweather said. “Mortgage rates are really like taking your foot off the brake, while a recession is putting your foot on the brake.”

Migration hot spots where home prices soared, such as Riverside, Boise, Las Vegas, Sacramento, Phoenix and Tampa, all landed in the top 10 with the highest overall risk scores. Rust Belt and Northeast cities including Akron, Philadelphia, Cleveland, Boston and Buffalo, are among the most resilient and less likely to see a decline in home values, according to the report.

Three Bay Area metros landed in the middle of the list, meaning they are not among the most at-risk places. San Jose had a risk score of 46.4, San Francisco’s was 46.3, and Oakland was at 45.8.

“What’s different about the Bay Area is it never really heated up too much during the pandemic,” Fairweather said — though she added that some parts of the region were hotter than others, including suburban and North County locales.

San Francisco had a significant exodus during the pandemic in 2021 — behind only Los Angeles and New York in year-over-year net migration — because of its high prices and large number of remote workers, Fairweather said.

That “led to a very cool housing market,” she said.

As a result, she said, San Francisco “doesn’t really have anywhere to fall” — unlike superheated pandemic markets including Riverside and Austin.

San Jose and Oakland also had high rates of people leaving last year.

All three Bay Area metros were among the lowest in average home loan-to-value ratios — average home loan divided by home value for homes purchased in 2021. The values were 72% in San Francisco (the lowest out of all metros), 74% in San Jose (the second lowest), and 78% in Oakland (the fifth lowest).

That means that if home prices decline, homeowners would not be underwater if they needed access to cash, Fairweather explained.

The “share of second homes” metric, which measures how many homes sold in 2021 in a metro were second homes, was very low for all three Bay Area metros: 0.8% in San Jose, 1% in Oakland and 2.4% in San Francisco.

Many areas with higher percentages saw an influx of buyers who were able to work remotely and sought vacation homes as a pandemic escape, which reduced inventory and drove up prices. But with many people returning to the office, the trend has cooled, and a considerable share of those homes could go back on the market — adding to a region’s risk in a recession.

The percentages of homes flipped, which is based on how many homes were bought and resold in a given metro area within six months in 2021, is a measure of speculative activity in each metro area — according to Redfin, a higher number indicates less market stability. The percentages were relatively low in all three Bay Area metros: 2.6% in Oakland, 2.5% in San Jose and 1.9% in San Francisco.

Still, Fairweather said the pandemic heyday for substantial increases in Bay Area home values is over.

“Moving forward, San Francisco will probably see a pretty modest price appreciation,” she said. “It’s gotten so expensive that there is not much more room to grow.”

But while she said home values are unlikely to keep rising at the pace of the last two years, they should hold because the Bay Area is still a desirable place to live.

By contrast, Riverside had the highest overall risk score of 84%. The Southern California city had the highest year-over-year net migration in 2021 of more than 19,000 residents, a high year-over-year price growth in 2021 of 21%, and a relatively high percentage of second homes sold in 2021 of 7.7%.

Sacramento, which was a popular destination for Bay Area residents to move during the pandemic, ranked sixth on the list with an overall risk score of 73.1. There, the home loan-to-value ratio is 81%, 5.4% of homes were flipped last year, year-over-year price growth was 19.3% and year-over-year net migration was more than 4,100 in 2021.

Fairweather said overheating in those housing markets is what makes them risky. Riverside and Sacramento are in the same boat, she said — people fled there for more affordability, which pushed up home prices.

“People who are buying homes in Sacramento can stretch their budgets a little more, and therefore borrow more,” she said. Also, “More homes were flipped because investors recognize it’s a boom town right now.”

“It went so high up, and now it’s coming back down to earth,” she said.

If a buyer is looking at Sacramento, they should consider what would happen if prices decline, especially if they need to sell in a year, Fairweather said. As a long-term investment, the purchase might be a better deal, she said.

As for other major metros that have lower overall risk scores compared to the Bay Area, like Boston with a risk score of 32.6 and New York at 35.4, Fairweather said both cities took an especially hard hit during the pandemic, but now they are bouncing back and their “recovery is much stronger than San Francisco.”