Republican tax bill derails plans of home ownership for some Bay Area residents

ABOVE: Read more about how BevMo wants to let customers choose which wines they should stock, how the Republican tax bill may be stalling home sales, and a former MLB won a lawsuit after fighting a naked man prevented him from pitching at the pro level.

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Months after the GOP tax plan slashed certain breaks for property owners, some wannabe homeowners already report the changes have thrown their home-buying plans for a loop.

In a nationwide survey, 26 percent of people with plans to someday buy a home said they’re putting off the purchase because of the tax changes, according to data collected by Apartment List. Small local samples showed 27 percent of Californians and 39 percent of San Francisco-area residents surveyed reported the tax plan prompted them to wait.

The numbers suggest the tax bill, which tightens restrictions on how much homeowners can deduct on property taxes and interest on their mortgages, is already discouraging some people who had once dreamed of closing on a house. But the impact appears to be moderate, despite some experts’ initial worries. Nationally, 57 percent of potential home owners surveyed said the tax changes had no impact on their home-buying plans, while 51 percent of Californians and 48 percent of Bay Area residents said the same.

Apartment List surveyed 1,085 people across the country, including 115 in California and 23 in the San Francisco metro area, which includes San Francisco, Marin, San Mateo, Contra Costa and Alameda counties.

“I don’t think it’s going to have widespread ramifications, but I think we are going to see an impact,” Apartment List housing economist Chris Salviati said of the tax plan.

The GOP tax bill, signed into law in December, reduces the cap on tax deductions homeowners can claim on interest paid on their mortgages — lowering it from $1 million to $750,000. It also capped deductions for state and local taxes, including property taxes, at $10,000.

be198 tax 0321181 Republican tax bill derails plans of home ownership for some Bay Area residents

Those slashes hit Bay Area homeowners harder than anyone else, according to an Apartment List analysis. San Jose-area residents would lose out on $5,400 in tax deductions in the first year of their mortgage, and $114,000 over the course of a 30-year mortgage, according to Apartment List. That analysis is based on a median home value of $911,900 in Santa Clara and San Benito counties.

In the San Francisco area, homeowners would lose $4,500 in the first year and $109,000 over a 30-year mortgage, based on a median home value of $796,100 across San Francisco, Marin, San Mateo, Contra Costa and Alameda counties.

“Obviously the Bay Area has some of the most expensive housing in the country, and property tax rates here are fairly high as well,” Salviati said, “and because of those things, we end up being the hardest-hit area.”

Some people are expecting the tax changes, which lower the overall tax rate for many income brackets, will help them achieve their dream of home ownership. Nationally, 13 percent of people surveyed by Apartment List said they expected to have a lower overall tax bill, and planned to put those savings toward a home.

Politics also seem to play a role in how potential homeowners view the tax plan — nationally 38 percent of Democrats said it negatively impacted their plans to buy a home, compared with just 10 percent of Republicans.

James Morris, a realtor with offices in San Jose and Saratoga, said the tax changes don’t seem to be a big worry for most of his clients. It’s those who own the area’s most expensive homes who will face the biggest losses, he said.

“Anyone who’s got a high-value property in California, who’s paying a lot of property taxes, just got completely hit,” Morris said. “That’s the biggest whack right there — anybody who’s got a house over $2 million, $3 million.”

Apartment List analysts say one big question still remains — how the tax plan will impact home prices.

In early December, while lawmakers were finalizing the tax bill, the National Association of Realtors predicted the changes would lead to California’s home values plummeting between 8 and 12 percent. That could make homeowners reluctant to sell, further squeezing an already tight supply of homes in regions like the Bay Area, the group warned.

But Morris says those fears are overblown.

“What really drives that,” he said, “more than this tax bill, is lack of inventory and (an abundance of) jobs.”

Article source: https://www.mercurynews.com/2018/03/21/republican-tax-bill-derails-plans-of-home-ownership-for-some/

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Dreamit gets $12M from Tampa Bay real estate investor who wants to make the region an innovation hub

1808e GettyImages 491918598 600x400 Dreamit gets $12M from Tampa Bay real estate investor who wants to make the region an innovation hub

Tampa Bay is probably not a region that jumps to mind when most people think of communities with a robust startup scene, but real estate investor Jeffrey Vinik is hoping to change that. He has deepened his relationship with Dreamit Ventures, a venture fund that invests in early stage companies, by investing $12 million in its accelerator. The deal seeks to support Vinik’s vision of making Tampa Bay an innovation hub.

Vinik’s partnership with Dreamit dates back to 2016 when they jointly launched an UrbanTech program, which engages startups such as those developing industrial automation, design software, urban mobility and water management.

Vinik, who owns the NHL team Tampa Bay Lightning and being a minority shareholder in the Boston Red Socks, is involved in the $3 billion Tampa Bay Urban Redevelopment Initiative led by Strategic Property Partners, a joint venture between Vinik and Bill Gates’ Cascade Investment.

“Together, healthcare and real estate present large opportunities for innovative startups that can deliver substantial impact while generating attractive returns,” Vinik said in a news release about his new investment.

Last year, Vinik outlined plans for an innovation hub, according to the Tampa Bay Times.  The idea is to establish a central location that brings together startups, venture capitalists, potential mentors, academic resources, lawyers and financial advisers.

Vinik is also not a stranger to the healthcare sector. He has invested in bioelectronic medicine business ElectroCore and anti-aging therapeutics company Silk Therapeutics.  He also donated an acre of land to the University of Florida in 2014 to build a new medical school.

The prospect of Dreamit deepening its relationship with Vinik holds a lot of excitement for Craig Anderson, Director of Innovation at not-for-profit health system BayCare in Tampa Bay.

“The healthcare startup community in Tampa Bay is burgeoning and that is where extra support from DreamIT and Mr. Vinik can make a difference — bringing expertise and funding to this space and helping it grow For these new startups to thrive they need early adopters…My focus has been to build the innovation practice for BayCare and determine how we can work with those companies.”

Anderson said the institution often starts with a pilot to assess the startup’s technology and the return on investment. He added that its number one concern is the experience for their patients and physicians. If the technology ticks each of those boxes, then the health system has the appetite to scale that technology.

Tampa Bay also has the resources to make an attractive alternative to the Bay area, Anderson contends. He pointed to the competitive cost of living in the region and a ready supply of young talent from area universities such as University of South Florida, University of Central Florida and Florida Polytechnic.

 

In an emailed response to questions, Dreamit Chief Innovation Officer Steve Barsh described how Tampa Bay fits into the accelerator’s program, which was tweaked a couple of years ago to focus more on roadshows that would bring its startups in front of investors and potential customers.

“We are in a base city (e.g. Philly, Tampa for about two weeks). We are on the road with Dreamit startups two weeks in various cities during customer immersions and two weeks during a bi-coastal investor roadshow (San Francisco / Bay Area, Boston, New York City). The rest of the 14 weeks the companies work with us remotely.”

Dreamit also revealed a group of 10 healthcare startups selected for its latest cohort, spanning care coordination, nurse staffing, caregiver support, clinical study design and execution and practice management tools for independent primary care physicians. Here are some of them:

Patient engagement business FRND Health works with accountable care organzations, primary care physicians, hospitals, payers and senior housing to provide a network of registered nurses, nurse practitioners and licensed clinical social workers to patients with the goal of reducing ER visits.

Surgical education business GibLib curated a web-based, mobile library of surgical procedures and medical lectures which are also available via Ocular virtual reality goggles. The company plans to extend its resource as a way to help users earn continuing medical education credits.

Health Tensor claims to use artificial intelligence to review patient data, diagnose the most common conditions, and create documentation for physicians, according to a summary of the company. One of the goals of the business is to reduce coding queries.

 

Trials.ai provides seeks to address some of the pitfalls of failed clinical trials. It claims to use AI to improve clinical trial protocol recommendations, automate study design, and optimize execution, according to a description from Dreamit.

Photo: StockFinland, Getty Images

Article source: https://medcitynews.com/2018/03/dreamit-accelerator-gets-12m-tampa-bay-real-estate-investor/

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Bay Area rents on the rise again after ‘cooling…

A real estate analytics firm has some good news for Bay Area landlords — and bad news for tenants: Rents began rising again last year after a brief “cooling off period” in late 2016.

“The Bay Area region should register one of its best rent performances since at least mid-2016,” the Texas real estate analytics firm RealPage wrote in a new report for the real estate industry.

In a trend likely to fuel an already supercharged fight over rent control in California, landlords in San Jose, San Francisco and Oakland began raising asking prices again last spring and continued to increase rents in lease renewals for existing tenants. Monthly lease transaction data show “improved momentum” for apartment operators and investors, according to the report, echoing predictions of an upswing last month by the real estate data firm Yardi Matrix.

But for tenants unable to keep up with escalating rents, the conditions feel anything but improved.

“It’s totally backwards,” said Charitie Bolling-Tosuner, a third-generation San Franciscan whose family faces eviction from the two-bedroom Bayview area rental house they have lived in for more than a dozen years — and once hoped to buy — because they can’t afford the $5,700 rent. Bolling-Tosuner is a member of Alliance of Californians for Community Empowerment, one of the groups behind the rent control ballot initiative.

“For us, for people who actually work small-paying jobs and are trying to work here in the city, it’s hard for us,” she said.

San Jose is leading the nation in rent hikes, with a jaw-dropping 52.4 percent increase since 2010, according to the firm. Oakland and San Francisco were close behind, with increases of 51.1 percent and 48.6 percent, respectively, during that time period. The report found that the current uptick will be more modest than in previous years, but that low unemployment and continued job growth will keep rents high.

Rent for an average one-bedroom apartment costs $2,460 in the San Jose metropolitan area, $3,400 in San Francisco, and $2,100 in Oakland, according to a recent analysis by the real estate website Zumper.

California lawmakers and pro-housing activist groups have been pushing for more housing development as a way to shore up supply and lower the costs for renters. But the new inventory — while double the Bay Area’s average rate in recent years — is not expected to be great enough to have much of an effect on the market, RealPage concluded.

Meanwhile, rent-control proponents are gathering signatures for a November ballot initiative to repeal Costa Hawkins, a statewide law banning certain types of local rent control, such as price controls for condominiums, single-family rentals and apartments built after 1995, when the law was passed.

Democratic lawmakers have also proposed bills this year to expand renter protections, such as giving tenants more time to challenge evictions and creating a statewide law establishing a set of valid reasons that can be used to evict tenants.

Article source: https://www.mercurynews.com/2018/03/15/sjm-l-renthike-0316/

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State Looking to Require Cities to Plan for Rising Seas

California officials are taking their first, tentative steps toward requiring cities to plan for severe sea level rise that scientists now say could conceivably elevate high tides by up to 22 feet by the middle of the next century. Such a deluge would overtake much of San Francisco’s southeastern waterfront, submerge huge swaths of West Oakland and Alameda, and inundate large portions of cities along the Peninsula and in the South Bay.

As developers continue their scramble to build dozens of office complexes, housing developments and sports facilities bordering San Francisco Bay, a state-funded study recommends that local planners adopt a risk-averse approach to permitting developments such as hospitals and housing — facilities with low “adaptive capacity” — in areas that have even little chance of flooding in the coming decades.

The Ocean Protection Council, part of the California Natural Resources Agency, has published a draft guidance document for coastal cities, endorsing the emerging consensus among climate scientists that accelerated ice melt in Antarctic glaciers means the oceans could rise far more rapidly than studies indicated even a few years ago.

Previous studies found that comparatively conservative scenarios would have devastating effects, with the Pacific Institute estimating 4.6 feet of sea rise would cost the Bay Area $62 billion in property damage and endanger 270,000 people during floods. No one has begun to estimate the effects of much higher sea rise.

That recent science was interpreted last year by a high-level group of scientists convened by Gov. Jerry Brown. The team examined the direct impact to California, and the council folded the recommendations into the new draft policy, updating a previous guidance that relied on a 2012 study by the National Research Council.

Few other states have attempted to craft policy that incorporates the new data from Antarctica. The upper end of those projections suggests that sea levels could rise by more than 8 feet globally and as much as 10 feet in the Bay Area by 2100, not counting additional storm surge.

S.F. Officials Skeptical

Jenn Eckerle, deputy director of the Ocean Protection Council and lead author of the state guidance document, said California must guide cities toward precautionary thinking. “We’re actually taking the number that the scientists have provided, and saying, ‘Listen, these are the places that are at risk,’” she said. “These are the numbers that you should be focused on. We’re actually providing this extra layer and level of guidance that no other state has done before.”

San Francisco officials, while applauding the reference to cutting-edge science, expressed skepticism about the state’s readiness to help cities codify the predictions into local land-use policies.

Chief among the critics is David Behar, climate program director of the San Francisco Public Utilities Commission. Behar organized a working group to evaluate the new projections, issuing a statement that said state projections “do not provide sufficient guidance on how to use them in a planning, decision-making, or adaptation design context.”

Previously: Wild West on the Waterfront

Sea Level Rise Threatens Waterfront Development

The debate in setting effective sea level rise policies across dozens of jurisdictions focuses on how to be fair when telling developers what kinds of land uses will be permitted. The state’s new guidance outlines a complex formula that assigns a probability of occurrence to a range of elevations to which local water levels could rise and the rate at which that might happen. The likelihoods of these different outcomes are based on a range of global carbon emissions scenarios.

According to the guidance document, if emissions continue unabated, there is a 67 percent likelihood that bay waters will rise by at least 3.4 feet by 2100. Previous research had suggested 3 feet of sea level rise was most likely. Just a few inches of water can flood whole city blocks.

There is a 1-in-200 chance that with high emissions, sea levels could rise by 13 feet in 2150. An even more extreme projection places the worst-case scenario for 2150 at 22 feet, though scientists did not have enough confidence in that projection to assign a probability.

“While probabilistic projections are sought proactively by some, in many instances they are arriving on the desks of planners, engineers, and decision-makers who have little background in the methodologies used,” said the statement from Behar’s group, which was endorsed by the Army Corps of Engineers, the U.S. Global Change Research Program and several climate researchers.

They specifically critiqued the mathematical technique known as Bayesian statistics — relying on what is known today based on confirmed data to predict trends that are fundamentally uncertain. This approach “may lead decision-makers to be overconfident about their knowledge of the future,” the report said. “For example, lack of understanding of the true sensitivity of the numbers in the upper-half of the distribution to uncertainties and assumptions may lead to a failure to appropriately consider possible high-end futures,” especially extreme sea level rise after 2050.

In a joint comment logged with the draft guidance, the Public Utilities Commission and the Port of San Francisco said they agree with the spirit of the guidance update but said the Bayesian probabilities were presented without explanation and would be “opaque to the vast majority of decision-makers.”

$23 Billion in Projects Affected

The new guidance will affect billions of dollars of real estate development, including the Golden State Warriors’ basketball arena, Mission Rock and the historic Pier 70. Since 2015, Bay Area builders have invested more than $22.8 billion into waterfront projects at less than 8 feet above high tide, an elevation that could see flooding from rising sea levels and storms by the end of the century, the Public Press reported in a spring 2017 cover story.

Eckerle, of the Ocean Protection Council, said the state is already seeing the effects of sea level rise all along the coast. “Sea levels will continue to rise,” she said. “We’re trying to get people to think about planning for the future, and not just 30 years or 50 years, but way into the future.”

Kristina Dahl, a climate scientist at the Union of Concerned Scientists, said the state predictions are “in line with where the sea level rise scientific community has moved in the last few years.”

“This will affect people’s lives in a few different ways,” she said. “A policymaker or a developer will have an explicit guidance saying, ‘This is how much sea level rise is in your area.’ It will make it easier for people to make well-informed decisions and ideally translate into less risk for homeowners and business owners.”

Dahl said the new policy doesn’t go far enough in some areas. The guidance document does not mention the more frequent, if less severe, “sunshine flooding” — inundation from higher and more frequent tides — that the Bay Area could soon experience.

In July, her group released a report that said the Bay Area would face these kinds of sunny-day flooding events as early as 2035.

The Ocean Protection Council planned on adopting the guidance on Jan. 31, but after comments from San Francisco officials were received, adoption was pushed to March 14.

Strategies for Adaptation

The state’s new guidance includes a checklist cities can use to identify a range of sea level rise projections and evaluate risks of future flooding.

The guidance asks that cities and developers collaborate on regional solutions, such as building wetlands and natural infrastructure instead of concrete seawalls. It also recommends that cities consider allowing the most at-risk neighborhoods to be reclaimed by rising waters.

Policies outlining flooding adaptation and design specifications differ from city to city, and the development plans of some of the Bay Area’s largest projects are evidence of that lack of consensus around the science and how to regulate waterfront land use.

Some plans, like those detailed for the development of a 702-acre neighborhood around the massive Candlestick Point-Hunters Point Shipyard development zone, include surveys of years of scientific papers that describe future sea level rise ranging from half a foot to 4.6 feet by 2100 without detailing a long-term adaptation strategy.

In its final environmental impact report issued in November 2017, developer Lennar Corp. wrote that the estimates of sea level rise vary significantly, and the company outlined a plan to build up the land to protect against 1.3 feet of sea level rise with “a design that is adaptable to meet higher than anticipated values in the mid-term, as well as for the long-term.”

“What is clear is that the science of climate change and sea level rise is evolving, implying that it is prudent to develop community designs that can accommodate various levels of sea level rise over the planning horizon, rather than design to a specific report or estimate,” the document states. The new waterfront neighborhood could have up to 10,000 new homes.

The risk is not only to new construction. According to the Union of Concerned Scientists research, the new eastern span of the Bay Bridge from Oakland to Treasure Island was not designed to be resilient if the bay rose by several feet. The new span opened in 2013, with an estimated life of 150 years. In a white paper, the researchers wrote that 3 feet of rise “will permanently flood the bridge’s eastern ramp” bayward from the toll booths.

Working With Nature

In addition to presenting a synthesis of new scientific studies, the Ocean Protection Council’s guidance documents recommend approaches for addressing sea level rise that emphasize the use of wetlands and other natural barriers.

“While hard structures provide temporary protection against the threat of sea level rise, they disrupt natural shoreline processes, accelerate long-term erosion, may increase wave and storm run-up, and can prevent coastal habitats from migrating inland, causing loss of beaches and other critical habitats that provide ecosystem benefits for both wildlife and people,” the report warned.

Adrian Covert, vice president of public policy for the Bay Area Council, a business group, praised the focus on wetland restoration and said the new projections detailed by Brown’s scientific working group for the Bay Area should be “assumed to be true.”

But he said he’s unconvinced by the notion of “managed retreat,” the idea that neighborhoods threatened by rising waters could be turned into parks or natural areas rather than protected by seawalls.

“The report says that it should be considered as a possibility. No one would disagree with that,” Covert said. “I’m skeptical. It doesn’t take a whole lot of infrastructure to make a managed retreat economically unfeasible. We’re not going to be relocating the city of San Francisco to the Sierra Nevada because of sea level rise. It’s going to require a defense. And the same is true with Silicon Valley. And the same is true with a lot of the East Bay, and a lot of portions around a lot of areas around the bay are going to need to be defended.”

The guidance document asks cities to assess the risk of rising sea levels with online flooding prediction mapping tools developed by the U.S. Geological Survey, Our Coast, Our Future and other institutions. The Ocean Protection Council said these tools “are also helpful aids in communicating about sea-level rise across local, state, and regional communities and planning and decision-making venues.”

Pier 70 Development

The council also recommends developers consider how long buildings will be used. Mike Mielke, the Silicon Valley Leadership Group’s senior vice president of environment and energy, said the guidance document will be useful for local adaptation and restoration planners.

“We’re understanding that we can’t continue to build right up to the bay water line,” he said. “The water line is going to rise, and it’s going to change over time. We have to think about how we are now going to respond to that threat and how we’re going to develop differently.”

In October, San Francisco gave final approval to the redevelopment of a 28-acre former industrial site at Pier 70 that will include up to 2,150 homes, as well as 1.75 million square feet of stores, offices and light industry. The environmental review prepared by developer Forest City in August relied on the National Research Council’s now-outdated predictions for sea level rise of 3 feet by 2100. Those plans might have required changes had they been approved a month later. The approval process is evidence of the breakneck speed at which climate science is advancing and the difficulty local governments have in keeping up with waterfront building standards.

After lower courts chipped away at the long-held interpretation of the California Environmental Quality Act, the state Supreme Court in 2015 overturned decades of land-use law by upholding lower court rulings that cities could no longer require developers to take into account the effects of climate change on their projects. The decision has unsettled public officials and planners, and critics say it will allow real estate interests to saddle taxpayers with a gigantic bill to defend against rising seas.

Steps Toward Setting Standards

Even the Ocean Protection Council’s fresh predictions seem to be superseded by more recent science. In December, Robert Kopp, a Rutgers University researcher and member of the governor’s working group, published an updated prediction that if global carbon emissions from industry remain high, sea level rise could pose a runaway risk by the end of the century. In a blog post, Kopp wrote:

“Consider two roads. One leads to 2 feet of global-average sea-level rise over the course of this century, and swamps land currently home to about 100 million people. The other leads to 6 feet of rise, swamping the homes of more than 150 million. … At least from measurements of global sea level and continental-scale Antarctic ice-sheet changes, scientists won’t be able to tell which road the planet is on until the 2060s.

“But our study also shows that the world can make the 2-foot road much more likely by meeting the Paris Agreement goal of bringing net greenhouse gas emissions to zero in the second half of this century.”

While more detailed science about ice-sheet behavior will help narrow predictions, he added, “decision-makers at all scales — from homeowners to governments — should plan for the future cognizant of this ambiguity.”

The new state effort is not merely advisory. It takes tentative steps toward setting standards for waterfront planning and holding local planners accountable.

Under the Ocean Protection Council’s guidance document, cities will be required to incorporate the new policy into their general plans. The requirement stems from a provision in a 2014 climate bill proposed by state Sen. Hannah-Beth Jackson, a Democrat from Santa Barbara. The bill requires cities to draft their own climate policies by 2022 that reflect up-to-date state guidance on climate issues including sea level rise.

“While some cities and counties have been proactive in developing climate change plans for their localities, many have not,” Jackson said at the time.

Cities Will Bear Heaviest Burdens

A report on climate change policy by the Little Hoover Commission, an independent state oversight agency, said local leadership is necessary because cities will bear the “heaviest burdens of emergency response and recovery during disasters and disruption.”

The California Building Industry Association, which has opposed many state regulations and spent significant resources shooting holes in the California Environmental Quality Act, opposed Jackson’s legislation. In a statement logged with the bill, the association said the state should rewrite its existing flood and fire code rather than require cities to craft climate action plans.

For years, scientists have warned that melting ice sheets and glaciers pose a danger to Bay Area cities. Rising sea levels will cause the San Francisco Bay to expand, threatening neighborhoods across the region.

Shoreline development has boomed in the last decade as more and more people want to live and work near the water. Many residents have moved to the shiny new neighborhoods that have risen out of derelict industrial areas and defunct navy bases along the bay.

Cities benefit from the tax revenue of this development. Politicians see building new homes on marginal lands as an answer to the state’s housing shortage And developers seek the profit and prestige from building high-profile mega-developments, including the headquarters of technology giants Google in Mountain View and Facebook in Menlo Park.

But there is little regional coordination on solutions to the threat of rising seas, and cities disagree about what constitutes the best and most current science.

In the absence of consistent regulation, shoreline development has accelerated in recent years. Bay Area builders are planning to build at least 35 waterfront megaprojects located at elevations that could see occasional flooding at the end of the century, the Public Press has found.

Reporters began a tally in 2015. Besides corporate campuses for technology giants, developments include projects at Treasure Island and in San Francisco’s Mission Bay neighborhood, and an arena for the Golden State Warriors, who are relocating from Oakland.

In April 2017, the Public Press reported that industry groups, led by the California Building Industry Association, pursued a legal strategy to undermine a key provision of the state’s preeminent environmental law that cities had used to help protect their waterfronts.

An abridged version of this article appears in the spring 2018 print edition of the San Francisco Public Press, which is for sale at select retail locations.

Article source: http://sfpublicpress.org/news/2018-03/state-looking-to-require-cities-to-plan-for-rising-seas

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San Francisco’s Surging Market Shows No Signs of Slowing Down, Bubble Bursting

San Francisco’s median home prices have surged for the last six years, rising 106% between 2011 and 2017. That’s pushed up prices across the board, including in the luxury market.

And while the city also enjoys a booming jobs environment, it’s against the backdrop of a volatile stock market that a question naturally begs to be answered: Is the Golden City’s housing market at risk of blowing up?

Not quite, industry experts say.

“We actually refer to this as an elevated risk of bubble activity but nowhere near close to what true bubble behavior would look like,” said Javier Vivas, director of economic research for Realtor.com.

A dramatic change in local market conditions, however, could exacerbate that “elevated risk” level, he cautioned.

More: Bay Area Luxury Sales Double Despite Market Uncertainties

Soaring for six years

Median sales prices in the city have soared since 2012 and topped out at  the end of 2017 with single-family homes selling for an average $1.5 million in the fourth quarter of 2017. Condominiums and lofts ended the year at an average $1.195 million; they’ve since ticked down, according to data provided by Patrick Carlisle, chief market analyst for Paragon Real Estate Group.

At the top of the market, luxury home values (single-family houses and condos selling for $2 million or more) appeared to peak in 2016 at an average of $1,230 per square foot countywide and $1,592 per square foot in the city’s priciest district, the historic North Beach waterfront, according to Paragon.

Luxury condo prices in particular stagnated between Q4 of 2016 and Q4 of 2017, posting 0% growth year-over-year compared to 10% growth in the overall market, according to Realtor data provided by Mr. Vivas.

One condition to watch, Mr. Vivas said, is San Francisco’s inventory problem. New housing construction was essentially flat between 2016 and 2017, he said, while the number of new households created annually, has grown, according to new Realtor data.  

A more likely red flag for the San Francisco market in the near future, according to Mr. Vivas, would be an increase in home-flipping, which is apparently making a comeback in some regions of the U.S., including booming metros like Denver, Seattle and Atlanta. The practice of buying, renovating and re-selling a home to make a quick profit, popular with investors, is considered to have been a major contributor to the housing bubble and subsequent market crash 10 years ago. President Donald Trump favors loosening regulations on consumer lending that were enacted as a result of the recession— a move that could excite the house-flipping industry.  

More: 130-Year-Old House in San Francisco is One of the City’s Most Expensive

Tech sector’s impact on housing

Of course, the rapidly growing tech sector creates both promise and the potential for peril in the wider Bay Area housing market, experts indicated.

“We’re in the midst of this giant high-tech boom and there’s been an almost unbelievably huge creation of new wealth in the Bay Area,” said Mr. Carlisle, chief market analyst for Paragon Real Estate Group. “More developers than ever have decided to target the luxury and ultra-luxury condo market.”

Mr. Carlisle, a 30-year veteran of the industry in the Bay Area, noted several new condominium towers that have been slowly but steadily rising in the posh neighborhood south of Market Street, including the lavish new 70-story building at 181 Fremont.  

The expectation is that many tech companies have yet to—but will indeed—make an initial public offering, and therefore continue to mint millionaires overnight who will absorb the housing supply. But the luxury market has softened in the last 18 months as affordability has become an issue, experts said, which creates some tension.

“One has to ask, is there really enough inherent demand for condos that cost, $3 million, $5 million, $10 million, and of course up to $40 million?” Mr. Carlisle said.

Another trend to watch is outward migration, as rising prices in the overall market gradually drive residents beyond city borders in search of affordability.

More: Click to Find out the Tax Implications of Buying a Condo Versus a House in San Francisco

San Francisco County, together with the nearby Oakland and Hayward hubs, ranked No. 2 (after San Jose) in Realtor’s recent study of markets with the lowest “inbound to outbound home-buying interest,” Mr. Vivas said. The study was based on internet views of listings on Realtor.com. A low inbound-to-outbound ratio means a market is less affordable and has less inventory available but has higher expected job growth than the markets from that it receives inbound views, according to Realtor.

San Francisco residents are looking for housing in Alameda, Contra Costa and San Mateo, as well as further away, in Sacramento, Los Angeles and Phoenix, the Realtor study states.

“This is possibly people saying, ‘Look, I’ve had a job now for two years, and the rent situation is not affordable,’ so they start to think about buying, but they can’t,” Mr. Vivas said. Then, “they start to look outward, and they’re commuting further, or working virtually, or altogether cashing out and going somewhere else.”   

At the same time, rising U.S. interest rates, Trump’s plan to impose tariffs on imported steel, and the ramifications of the new tax law all have potential to throw a wrench in the San Francisco real estate market, said Nina Geneson Otis, broker and owner of Metropolitan Properties.

At the moment, Ms. Geneson Otis said she is waiting to see how those factors, especially the tariffs on imported steel, play out against the strong local job market.

“If the cost of these materials keeps going up, then construction costs are going to keep going up,” she said. “We’re used to having a lot of our materials be pretty (competitively priced), because it can all be imported,” such as solar panel parts from China and Korea.

More: Iconic San Francisco Gay Bar Now $6 Million Home

Warning signals to keep an eye on

Mr. Carlisle noted that housing crashes in San Francisco have historically been triggered not by local crises but by national or international ones, such as the stock market crash of 2008, the sell-off after 9/11, or the global panic that led to the “Black Monday” crash of 1987.  

“We have a lot of issues going on in the Bay Area that I think are warning signals about our local economy … but none of them that I see triggering some sudden dramatic crash,” Mr. Carlisle said.

Lisa Blackwell, a broker at Compass who sells high-end condos as well as luxury East Bay houses, suggested that rising interest rates could spur San Franciscans who are thinking about selling their homes to do so sooner than later.

“It should have some micro-effect,” Ms. Blackwell said of the higher rates, but not a huge impact because many luxury homebuyers make cash purchases.

In general, however, she feels little anxiety about the risk of a housing bubble.

“I don’t see any housing bubble coming, in part because we have enough people and we have the salaries to pay for what people are getting,” she said. “And there are always way more buyers than there are sellers.”

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Article source: https://www.mansionglobal.com/articles/91618-san-francisco-s-surging-market-shows-no-signs-of-slowing-down-bubble-bursting

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