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Bay Area housing market still strong, but cooling down

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SAN JOSE (KRON) – By most measures, the local residential real estate market is still going strong.

But there are signs that the market is cooling down some, at least for now.

You may have noticed a few more “for sale” signs in your neighborhood of late, suggesting that inventories are up. Homes are still selling but there are also signs some of those homes are selling for a little less right now, says Climb Real Estate’s David Contreras.

“There is talk of it cooling off a little bit, but what we’re seeing is more of a market correction,” Contreras said.

In San Jose, for example, the real estate website Zillow reports prices were dropped on 9.5 percent of listings in June, up from 7.2 percent one year ago.

“What’s happening is we’re seeing prices not going up $100,000 or $200,000 over the asking price,” Contreras said. “Things are getting a little more tamer.”

Contreras says certain properties are staying on the market longer than what sellers have been used to during the historic five-year-plus run of rising prices.

But there are other factors to consider.

“People are a little concerned about interest rates going up, but this time of year, July through August, you’re seeing more people on vacation, so there are simply fewer buyers during that time frame.” 

Zillow expects the market to slow down next year, but a strong economy means demand for housing will also remain strong.

Don’t expect home prices to fall too far, Contreras said.

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Article source: https://www.kron4.com/news/bay-area/bay-area-housing-market-still-strong-but-cooling-down/1378944772

The median price of a Bay Area home was $875,000 in June, matching the all-time high set in May, while sales dropped precipitously to the lowest level for the month of June in four years, according to a CoreLogic report released Wednesday.

The median price of a new home, resale or condo in the nine-county region was up 12.9 percent from June of last year. Sales, meanwhile, were down 2.2 percent from May and 9.2 percent from June 2017, according to the real-estate information firm’s report.

The Bay Area continues to defy expectations that prices would drop — or at least moderate — this year as a result of rising mortgage rates and the federal tax law that limits the benefits of homeownership, especially in high-cost markets. “If a couple bought a median price house (in San Francisco), they probably lost $35,000 to $40,000 in deductions,” said Patrick Carlisle, chief market analyst with Compass Real Estate.

Yet the price of a single-family home in San Francisco in the first half of this year was $1.62 million, up an astonishing $220,000 from the same period last year, he said.

Asked if that’s a sign of irrational exuberance, Carlisle responded, “There are signs of irrational exuberance in the national and international economies, from cryptocurrencies to stock market prices to housing prices in certain select neighborhoods.”

Even though the tax law limited the mortgage interest and property tax deductions in a way that disproportionately hurts higher-end homeowners in high-tax states, it also cut federal tax rates in a way that disproportionately helps higher-income people, who often own expensive homes in coastal markets, said Garrett Frakes, a managing partner with Polaris Pacific, which markets new condo developments.

He noted that prices for new and existing condos in San Francisco, which held fairly steady throughout 2016 and 2017 as new construction came online, have started rising this year. “Last year we were looking at approximately a $1.1 million median condo price in San Francisco. This year that median has stepped up to about $1.25 million in the first six months. That is the first large increase we have seen in condo prices really since 2015.”

At the other end of the spectrum, Polaris Pacific is just finishing up the sale of 571 units in three new condo complexes in Richmond — the Shores, the Cove and Marina Bay. Prices ranged from around $250,000 to $500,000. “If we had another 500, we could have sold those as well. That demonstrates the appetite for affordable housing in the Bay Area,” Frakes said.

A new ferry service will connect San Francisco and Richmond in the fall. “Mass transit is critical to opening areas of affordable housing,” he added.

He said the modest rise in mortgage rates — a little over half a percentage point this year — “have not affected us.”

Bank of the West chief economist Scott Anderson said the big jump in home prices “is all about the jobs. The Bay Area has been outperforming (the rest of the nation) in job growth for like seven years. The latest employment report we got last week suggested really strong hiring for information and technology companies, not just in Silicon Valley but in San Francisco. It’s really driving up the price of housing in San Francisco more than in past cycles.”

The San Jose and San Francisco metro areas combined added 6,400 information technology jobs last month, far above their long-term averages, according to the California Employment Development Department.

“Until we see a softening in job growth, particularly in the tech sector, I think you will continue to see double-digit year-over-year gains” in home prices, Anderson said.

A shortage of homes for sale is contributing to the run-up. CoreLogic noted that sales of newly built Bay Area homes and condos were 31.9 percent below the historical average for June, while resales were 12.6 percent below average.

“A portion of last month’s year-over-year (9.2 percent) sales decline reflects one less business day for recording deals this June. But affordability and inventory constraints are likely the main culprits in last month’s sales slowdown, which applied to eight of the nine Bay Area counties,” CoreLogic analyst Andrew LePage said in a news release. San Francisco was the only county where sales rose year over year.

A report issued Monday by the California Association of Realtors showed little letup in demand. The median number of days a Bay Area home sat on the market before snagging an offer was 13 days in June, up from 12 in May but down from 14 last June.

The inventory shortage is the result of many factors, including the difficulty of building new homes in the Bay Area and tax laws that discourage many long-term homeowners with a large capital gain and low property tax base from selling. Although it’s worse here, inventory shortages are popping up nationwide.

The National Association of Realtors reported Monday that existing-home sales for June dropped 0.6 percent from May and 2.2 percent from June of last year. Economists polled by Reuters were expecting a 0.5 percent gain since May.

“The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers,” the association’s Lawrence Yun said in a news release.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender

Article source: https://www.sfchronicle.com/business/networth/article/Bay-Area-home-prices-flat-since-May-but-up-a-13104713.php

An oceanfront home in Pebble Beach, Calif., has sold for $25.25 million, according to public records. The home had been on the market with an asking price of $29.75 million.

The 4,662-square-foot contemporary home sits on 2.72 acres on Stillwater Cove near the Pebble Beach Lodge and the 18th fairway of the Pebble Beach Golf Links. Called La Serena, the home includes four bedrooms, five full baths and one half bath. There is a 473-square-foot guest suite over the garage with a full bath and separate entrance.

…

Article source: https://www.wsj.com/articles/oceanfront-home-in-californias-golf-paradise-sells-for-over-25-million-1534522453

Could the South Bay’s super-heated real estate market finally be showing signs of cooling?

More sellers in San Jose have been lowering their prices on real estate website Zillow recently, and rising interest rates have economists looking for a slow-down.

Zillow found that prices in the San Jose region were cut on 9.5 percent of listings in June, up from just 7.2 percent a year ago. Sellers in the San Francisco and Oakland market cut prices at the same rate as last year.

Economists from Zillow and online brokerage Redfin expect the runaway market to slow next year — but that doesn’t mean prices will go down. Bay Area prices likely will continue to climb at a slower rate and remain among the most expensive in the nation.

“Ever so slightly, the winds are starting to shift,” said Zillow senior economist Aaron Terrazas. The historic double-digit gains in Bay Area home values during the last year will likely cool off, especially in Santa Clara County.  “That’s just not sustainable over the long run.”

Redfin CEO Glenn Kelman told investors last week that homes are staying on the market longer in hot cities such as San Jose, Portland and Seattle. Buyers “have finally had enough, at least for now,” he said, according to a company transcript.

“There are still plenty of markets where home-buyer demand is strong,” Kelman said. “But for the first time in years, we are getting reports from managers of some markets that home-buyer demand is waning, especially in some of Redfin’s largest markets.”

Bay Area housing has been on a record-setting, six-year run of year-over-year price increases. The median sales price for homes in San Francisco, San Mateo and Santa Clara counties tops $1 million, and Alameda County prices are pushing toward seven-digits. Contra Costa County sale prices hit $650,000 in June.

The income needed to buy in the Bay Area continues to rise. A study by mortgage data website HSH.com found the San Jose metro area the least affordable region in the country. A household would need an annual income of $274,000 to afford a median-priced home. In the San Francisco metro area, the second least affordable region, a household would need $214,000 in income to buy a home.

Zillow forecasts home values in the Bay Area to grow next year by 7.5 percent in San Francisco and the East Bay and 11.8 percent in the South Bay.

The recent cuts in San Jose prices have come on luxury- and starter-home listings, Terrazas said. He added the drops could reflect several forces: sellers and their agents setting prices too high, a rise in interest rates and the start of the return to historic norms.

Still, he said, in Bay Area neighborhoods, “it’s not like we’re seeing bargain-basement prices.”

Local agents have spotted signs of a changing market, although prices and demand remain strong.

Tim Ambrose, an agent with Berkshire Hathaway and president of the Bay East Association of Realtors, said homes are staying on the market longer and are receiving fewer offers, but it continues to be a sellers’ market.

“It’s just a slight shift,” he said. “Nothing major.”

Some homeowners become restless if their house doesn’t sell within two weeks, he said. But Ambrose reminds clients that selling a house just two weeks after planting a “For Sale” sign is historically fast.

“We’ve just gotten so spoiled in this market,” he said.

Gustavo Gonzalez, a San Jose based agent, said he’s also seen small clues that the market is changing. Some brokers have reported that all-cash offers have declined. Others have noted the rise in interest rates, which have climbed from 4 to 4.5 percent this year for a 30-year loan, and uncertainty over new federal tax laws and mortgage deductions.

The median price for homes sold in Santa Clara County in June was $1.3 million, according to real estate data firm CoreLogic. “That’s a lot of money,” Gonzalez said, “for a lot of people.”

Article source: https://www.mercurynews.com/2018/08/16/a-slight-chill-coming-for-the-bay-area-housing-market/

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Data via Compass Realty

Data via Compass Realty

Photo: Compass

Data via Compass Realty

Data via Compass Realty

Photo: Compass

Data via Compass Realty

Data via Compass Realty

Photo: Compass

Compass Realty’s report shows full recovery for the Bay Area, and more, since the crash. It also shows alarmingly high peaks

Compass Realty’s report shows full recovery for the Bay Area, and more, since the crash. It also shows alarmingly high peaks

Photo: Compass

Data via Compass Realty

Data via Compass Realty

Photo: Compass

San Mateo is the most pricey with a median of $1.65M. This house in Menlo Park asks $1.650 for 3 beds/2.5 baths, 1640 square feet.

San Mateo is the most pricey with a median of $1.65M. This house in Menlo Park asks $1.650 for 3 beds/2.5 baths, 1640 square feet.

Photo: Redfin

Marin has a median of 1.4 million. This home aks $1.475M for a 3 bed/2,5 bath in San Rafael, 2215 square feet

Marin has a median of 1.4 million. This home aks $1.475M for a 3 bed/2,5 bath in San Rafael, 2215 square feet

Photo: Redfin

Santa Clara homes fetch a median of $1.405M. Here we have a 3 bed, 2.5 bath, just under 2,000 square feet in Mission park asking $1.45M.

Santa Clara homes fetch a median of $1.405M. Here we have a 3 bed, 2.5 bath, just under 2,000 square feet in Mission park asking $1.45M.

Photo: Redfin

San Francisco’s median for SFHs is $1.625 million. This home on San Bruno is a 3 bed, 2 bath, asking $1.6M.

San Francisco’s median for SFHs is $1.625 million. This home on San Bruno is a 3 bed, 2 bath, asking $1.6M.

Photo: Redfin

Solano County is the cheapest: here the median is $450K. This home is 4 bed, 2.5 bath, 2,030 square feet, asking $436K.

Solano County is the cheapest: here the median is $450K. This home is 4 bed, 2.5 bath, 2,030 square feet, asking $436K.

Photo: Redfin

At the close of the second quarter of 2018, median home prices in five Bay Area counties hit $1 million or more. What does it take to buy a home in these areas, and where in the Bay Area can buyers find something for half that price?

Compass Realty just released its second quarter report on the state of Bay Area real estate. According to this study, both San Mateo and San Francisco counties reached a median selling price closer to $2 million than $1 million.

Santa Clara, Marin, and Alameda all fetched a median of $1 million or more.

The least expensive county is Solano, where the median is now $450,000. This means that Solano County home values have gone up approximately percent year-over-year.

Zillow Real Estate predicts that this county will continue to rise, gaining almost another 9 percent in the coming year.

The Compass report is quick to mention that median prices aren’t always the best measure of a market, since the figure is meant to show the mid-range of sales prices. Half as many homes sold for more, and half sold for less.

However, the new figures do indicate serious issues for affordability.

San Francisco real estate agents Lamisse Droubi and Patrick Carlisle offer tips on how to prepare when buying a home in the Bay Area.

Media: Katie Wood / SFGATE

How much do you have to make to buy a home in the Bay Area?

Based on a 20 percent down payment, local taxes and insurance, buyers in both San Mateo and San Francisco offer a qualifying income close to $350,000. In Santa Clara and Marin, $300,000 will do.

And for Solano, buyers need $95,380 a year in qualifying income. The most recent Census data tell us that “Households in Solano County, CA have a median annual income of $73,900.”

Dismal affordability

The California Association of Realtors posits the mismatch between home prices and salaries has a dramatic effect on affordability.

In Santa Clara and San Francisco, only 14 percent of residents make the qualifying income to buy a home. In Alameda, it’s 16 percent. Solano has one of the higher pay area percentages: 38 percent can qualify to buy a home.

However, the report also mentions these figures don’t take into account recent political changes. Federal income taxes limiting the deductibility of property taxes and the mortgage tax credit could make for even less affordability.

The mystery

Despite being out of reach for more than half its populace, the average days on the market for Santa Clara properties is 19.  In San Francisco, that range is 30 to 40 days. In January of 2018, Solano County made news for being the nation’s third hottest real estate market.

So if not affordable to half or (way more) than local residents, who is buying Bay Area real estate so quickly, and at such prices?

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert 

Article source: https://www.sfgate.com/realestate/article/What-do-you-really-have-to-make-to-afford-a-Bay-13154061.php