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But four housing experts in the Bay Area said there aren’t local signs of a bubble and the market is expected to stay competitive. They said the two drivers of the region’s stratospheric $1.4 million median home price aren’t going away: tech fortunes and low inventory.

“I think the wealth of the Bay Area will buffer it,” said Patrick Carlisle, Bay Area chief market analyst at real estate brokerage Compass.

Rising mortgage rates are expected to dampen demand, causing home prices to rise more slowly this year and pricing more people out of the market. “The huge interest rate jump will hammer the lower-cost markets where people have less cash,” said Carlisle.

But that’s different from falling prices. Carlisle likens today’s market to an overinflated tire that’s sprung a leak, releasing some air.

“You’re still going to be able to drive on it for quite a while, but it’s getting softer,” Carlisle said. “That’s different from a blowout.”

Real estate research firm CoreLogic recently analyzed all the major U.S. housing markets and found 65% were overvalued when comparing home prices to local incomes, including all major regions in Arizona, Florida and Texas. The San Francisco, Oakland and San Jose metro areas were among only 9% of markets considered undervalued, and the only ones on the West Coast.

“Demand is so outsize compared to supply” in the Bay Area, said Selma Hepp, CoreLogic deputy chief economist. “Even if you take out the people who are priced out, you still have substantial demand to keep home prices growing.”

Sunbelt states where prices have boomed and investors have flooded in have less stringent building codes and more areas to expand, bolstering housing inventory compared to the Bay Area. Areas that are adding more housing typically see slower price appreciation, Hepp said.

CoreLogic expects national home prices to rise only 5% between February 2022 and 2023 after a 20% increase in the prior year. But the Bay Area is expected to outperform, with increases of 12.7% in the San Francisco metro area, 13.4% in Oakland and 15.91% in San Jose.

“I do expect to see slowing in home price growth. I don’t think it’s sustainable,” Hepp said of national trends. “It’s not time to panic. Things will slow down, as they should.”

Billy McNair, a top broker at Compass with over $320 million in sales last year, said market forces are making real estate more attractive to high-end buyers in Silicon Valley.

McNair’s clients are primarily in tech, private equity and venture capital, and some are rushing to get a home under contract before mortgage rates rise further. The highest inflation in decades makes real estate an attractive hedge, and stock market volatility is also encouraging clients to focus on real estate to lock in gains, he said. Wealth managers have even been advising his clients to buy bigger homes, and McNair said he’s personally looking to invest more in real estate as well.

Price growth may slow as rising mortgage rates mean fewer bids come in, but McNair doesn’t seen any declines on the horizon.

Around the $2 to $4 million price point, homebuyers are typically reliant on stock options as the primary source of funds, so a major downturn in the stock market could hurt real estate. But even in the wake of the 2008 crash, McNair recalls that local prices fell around 15% but soon rebounded in a year.

“Even when we’re seen corrections, in those times, they were fairly minor corrections,” he said.

Tech giants are still hiring rapidly and expanding facilities despite remote work policies, and McNair is seeing some home purchases triggered by people returning to offices.

Jeff Tucker, a senior economist at real estate listings company Zillow, doesn’t see a national or Bay Area bubble either, but believes the housing frenzy is fading.

“I think the pace of price growth is about to slow down. We are likely right now at an inflection point,” he said. “Rising mortgage rates are throwing a lot of cold water on the market.”

Zillow expects U.S. home prices to grow 14.9% between March 2022 and 2023, down from an earlier forecast of 17.8%. Zillow sees slower increases in the San Francisco metro area of 13.8%.

Still, the country has a shortage of millions of homes compared to demand after years of underbuilding, so bidding wars and homes selling in days are still expected in many housing markets.

“All these things were normal in California for several years,” Tucker said. “Unfortunately for buyers around the country, they’ve now gone nationwide.”

“If there’s a buyer waiting for the market to correct, standing on sidelines … I think they’re making a mistake,” said McNair of Compass. “I think the market will continue to rise.”

Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf

What can I do to prevent this in the future?

If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware.

If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.

Article source: https://therealdeal.com/sanfrancisco/2022/04/28/waymo-grows-mountain-view-hq-on-170k-sf-office-sublease/

What can I do to prevent this in the future?

If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware.

If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.

Article source: https://therealdeal.com/sanfrancisco/2022/04/28/waymo-grows-mountain-view-hq-on-170k-sf-office-sublease/

Baker Sophie Smith wanted a kitchen to produce the cakes for her business, Butter and Crumble.

For nearly 18 months during the pandemic, she tried to get San Francisco city officials’ permission to rent kitchen space from a struggling restaurant or bar.

Smith bounced between empty kitchens that shuttered during the pandemic, before landing in one at a Marina district bar. But as she told columnist Heather Knight, she hit obstacles in the form of San Francisco’s bureaucratic city government despite its verbal commitments to helping small businesses.

Her story ended up inspiring changes to city code to make things easier for entrepreneurial chefs. Read more from Knight.

Real estate trends

Who’s buying Bay Area homes? If you look at some deeds, the names aren’t people but rather entities.

The share of homes purchased by a trust across the San Francisco, Oakland and San Jose metro areas increased from 2% in 2000 to nearly 10% by 2021, according to real estate data from Redfin.

High-income families make up the bulk of trusts — the largest share of trust purchases occurred in wealthy enclaves such as Atherton and Portola Valley.

Why buy property this way? Reporter Susie Neilson takes a look at the data.

What to eat

Bay Area foodies rejoiced when Matt Horn, the acclaimed pitmaster behind West Oakland’s Horn Barbecue, first announced he would open a fried chicken sandwich restaurant. Chronicle associate restaurant critic Cesar Hernandez paid several visits to Kowbird for their exceptional fried chicken sandwiches.

The good, Hernandez writes, includes giant, palm-sized sandwiches on squishy Martin’s potato buns. Kowbird’s spicy Hot Bird, flavored with fermented chiles, and Honey Bird, slathered in sweet honey butter and pickled mustard seed, do well paired with fries and cabbage fried in bacon fat.

But there were lots that still felt “in the works” to him, such as the inconsistency of waffles that appeared then disappeared from the menu.

Around the Bay

• Helping those in need: Inflation has struck hard for Bay Area residents struggling to make ends meet. At an Oakland food distribution site, volunteers are handing out 28,000 more meals this month.

• Walkers, runners, cyclists rejoice: A 1.5-mile stretch of JFK Drive in Golden Gate Park will become permanently car-free as San Francisco supervisors vote to keep vehicles away.

• “Slap in the face”: The sudden closure of a hedge fund-owned Oakland vet clinic has left employees, pet owners and animals alike in pain.

• Drought changes: The East Bay Municipal Utility District has officially voted to cap water usage for much of Alameda and Contra Costa counties.

• New data: Antisemitism has surged, according to a new audit from the Anti-Defamation League — and the record of hate crimes in the Bay Area appears consistent with the trend.

• Crime news: Two Berkeley men are accused of selling fentanyl to undercover cops in San Francisco’s Tenderloin neighborhood.

• UC Berkeley lockdown: Police say a 39-year-old Cal student is facing felony charges for shooting threats that prompted last week’s campuswide shelter-in-place order.

• Opinion: Why my fellow nurses and I are ready to strike at Stanford Hospital.

“Historical wrongs”

The University of California system plans to offer free tuition to Native American students, as part of a program “recognizing and acknowledging historical wrongs endured by Native Americans,” according to the system’s president.

Called the UC Native American Opportunity Plan, it will fully cover in-state tuition fees for California residents who are members of federally recognized tribes.

But there’s a catch: In California, there are 55 non-federally recognized tribes, affecting roughly 80,000 people.

Read more from Danielle Echeverria.

• Plus: UC student workers blocked a Berkeley intersection as part of a protest over salaries, benefits and working conditions.

Legal and industry experts told The Chronicle that most of these trusts are likely set up by individual families hoping to preserve their wealth for their descendants. But the data includes some corporate trusts, which have grown in popularity as investment vehicles for property in the Bay Area and beyond.

Trusts come in many forms, but fundamentally, a trust is an entity that holds property for an owner or “grantor,” with the end goal of transferring it to a third person. In the case of a family trust, for example, a parent would be the original owner, or “grantor,” and the beneficiary might be a child.

Paul Hitchcock, an attorney at asset protection and estate planning firm BarthCalderon LLP, said that an increasing number of families, often wealthy ones, are placing their home into trusts for “estate planning purposes.” Essentially, if a person’s home is in a trust when they die, the home can transfer directly to their descendants. But if they leave their home to their descendants in a will only, without placing it in a trust first, the home will have to go through probate court, a time-consuming and often expensive process.

Until recently, trusts had an additional benefit: They could help prevent a property’s tax rate from getting reassessed when it passed from the deceased person to their inheritors. This changed in November 2020, when a law passed that now requires the home to have its tax value reassessed even if it’s owned by a trust, unless the person inheriting it lives primarily on that property.

The data bears out Hitchcock’s belief that wealthy families are behind the lion’s share of trusts: As of 2021, the Bay Area ZIP codes with the largest share of trust purchases were concentrated in the region’s wealthiest areas, including Atherton, Portola Valley and Burlingame.

Additionally, Hitchcock also noted that some types of trusts, like land trusts, don’t require property owners to put their real names on the property, allowing owners to shield their properties from creditors or legal actions. Wealthy owners also tend to benefit more from these benefits, because they are more likely to have multiple high-value properties that might get targeted in lawsuits.

“Litigation is out of control today,” Hitchcock said. “Because homes are worth so much money in California, they are a big asset that people go after all the time.”

The data on purchases by trust provided to the Chronicle included San Mateo, Alameda, San Francisco, Contra Costa and Santa Clara counties. Of those five counties, San Mateo and San Francisco had the greatest share of trust purchases as of 2021. In both counties, about 13.5% of home purchases were made by a trust.

The increase in trust purchases doesn’t come from family buyers alone, according to Redfin. Though the company tried to exclude most types of corporate trusts from the data by scanning an ownership code on home deeds, many purchasers leave that ownership code blank, so a significant number of corporate trusts are likely included.

Corporate investors can take advantage of the trust structure in the same way that individual or family investors can — they can use them to avoid certain kinds of taxes, legal repercussions, and shield their identities.

Because property owners using trusts and other investment vehicles do not have to disclose their names on home deeds, tenants living in corporation-owned properties don’t always know who owns their building, making it more difficult for them to hold those owners accountable through legal actions or media exposure, according to Jyotswaroop Bawa, Chief of Organizing and Campaigns at the California Reinvestment Coalition (Cal Reinvest), a nonprofit advocacy group in Oakland.

A previous Chronicle analysis found that, like family trusts and unidentified corporate trusts, identifiable corporate investors have increased over the last two decades, from under 2% of all purchases to nearly 5%. When both trusts and identifiable corporate investors are merged, the share of homes purchased has risen from 3.6% in 2000 to almost 14% in 2021.