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Housing in America’s most expensive region is going to get even pricier.

For all the talk of the U.S. tax overhaul hitting wealthy blue-state real estate, the San Francisco Bay area is set for more home-price gains. Its technology-fueled economy and persistent housing shortage are sending values ever higher — and that may get even more pronounced as tech share sales mint millionaires in San Francisco and Silicon Valley.

“The scale of the wealth created here and the scale of the technology sector is going to outweigh the effect of the tax plan,” said Patrick Carlisle, chief market analyst with Paragon Real Estate Group in San Francisco. “The Bay Area is unique because we have companies that didn’t exist five years ago and that are now the biggest the world. There’s no place on Earth that has a similar dynamic.”

Even after a years-long boom that has already priced out many residents, the San Jose metropolitan area is expected to be the hottest U.S. housing market in 2018, according to a report this month by Zillow that factors in home values, rents and jobs. San Francisco ranks as No. 5.

The areas led Realtor.com’s list of the top U.S. markets in January, based on listing views and the length of time homes were for sale.

The San Jose region — which includes Silicon Valley towns such as Palo Alto and Cupertino — saw the median home value soar 21 percent last year to $1.17 million, while inventory dropped 41 percent to “crisis levels,” according to Zillow. In areas from Oakland to Marin County, the story is the same: too much demand and too little supply.

Share Sales

Home prices will keep rising as more startups go public or sell shares privately, generating cash for tech investors and workers, according to Carlisle. Dropbox Inc., the San Francisco-based file-sharing company valued at $10 billion, has filed confidentially for an initial public offering and aims to list in the first half of the year, according to people familiar with the matter. Investors led by SoftBank Group Corp. this month completed an $8 billion purchase of stock from Uber Technologies Inc. shareholders, bringing a flush of money to early investors in the massive startup. The Japanese conglomerate, meanwhile, is hungry for more deals.

In San Francisco, low unemployment, at 2.2 percent, and the expansion of large employers such as Dropbox, Facebook Inc. and Google is likely to ensure demand for housing will continue outstrip supply. The median house price in the city soared 11 percent to a record $1.5 million in the fourth quarter, while the average time it took to sell fell to two weeks from 22 days a year earlier, according to a Paragon report.

The rapid speed of transactions came as a surprise to Tania Fowler, who in September sold the Edwardian three-story house she grew up in. The Inner Sunset home, which sold for $200,000 above the asking price in an all-cash deal, was on the market for two weeks.

“From the time we accepted the offer to close of escrow was seven days,” Fowler said. “I used to sell real estate in the Sacramento area and had seen 20-day COEs at the height of the market bubble, but never seven days.”

At the high end of the market, with prices above $3.5 million, there’s already preparation for IPOs, said Gregg Lynn, an agent with Sotheby’s International Realty in San Francisco. Several executives with high-tech companies have hired agents at his brokerage to locate homes for them in anticipation of “liquidity events” in the near future, he said.

“They want properties ready to go,” Lynn said.

‘Dealing With It’

Such demand is expected to outweigh the concerns that the U.S. tax revamp will hit home prices. The new law limits deductions for state and local taxes, including property taxes, and also caps deductions on mortgage interest at loans up to $750,000 — an amount that’s easily exceeded in the pricey Bay Area market.

“The market is so strong, it’s not changing people’s outlook,” said Paul Barbagelata of Barbagelata Real Estate in San Francisco. “Everybody is kind of dealing with it.”

Home values in the city could go up by another 5 percent to 10 percent this year, Barbagelata said.

Across the Golden Gate Bridge, Tracy McLaughlin, an agent specializing in Marin County, said that even during the normally quiet weeks around the holidays she was getting calls for listings that she temporarily had taken off the market and had a potential buyer fly in from Italy to look at a property.

She discounted the impact of the tax bill on the Marin County market because many of the homes sell for more than $3 million, often in cash transactions, making the loss of tax benefits a minor factor for the buyers.

“Consumer confidence is what drives the market here,” McLaughlin said.

Some Worries

The Vallejo-Fairfield area is still among the country’s hottest real estate markets, but hovers in third place, according to Realtor.com.

This only means that home-buyers are still flocking to the area, Solano Association of Reators President Johnny Walker said Thursday.

“The Realtor.com Hottest Markets List is a snapshot in any given month of active listings viewed by prospective buyers versus the days on market as an indicator of supply,” he said. “Compared to the super hot markets in San Francisco/Oakland and San Jose/South Bay, landing in the number three position these past two months actually bodes quite well for Vallejo as we continue to benefit from buyers seeking more affordable areas.”

As local inventory increases and we enter the more active spring-summer buying season, we should see the area’s rankings climb, he said.

Nadine Woloshin, senior vice president of Realtor.com, said the Vallejo-Fairfield area is one of 13 in California to make the firm’s top 20 list in January.

“Spurred by the years-long tech boom in the San Francisco Bay Area, the top three spots on realtor.com’s monthly list were San Francisco, San Jose, and Vallejo,” she said. “During January, homes in those metropolitan areas sold 45 to 50 days more quickly than homes in the rest of the country, on average.”

Only five other states — Colorado, Texas, Ohio, Michigan and Idaho — made the most recent top 20 list.

Chico moved up 13 spots since December, tying it with Midland, Texas for the top movers spot for the month, the report shows. This puts Chico into the top 20 for the first time since last April, it says.

“There is no doubt that housing in many parts of California is as hot as the Mojave in August,” realtor.com economic research director Javier Vivas said in a news release. “Even with sky-high prices, homes in places like the Bay Area typically sell twice as quickly as homes in the rest of the country, thanks to a supercharged economy and a major dearth of available properties. Barring a major change in the state’s economic strength, we expect these housing market conditions to continue for the foreseeable future.”

The report shows that it takes a home in the top-ranked San Francisco-Oakland-Hayward area a median of 39 days to sell, down from 44 in December, when the area ranked second.

The area switched spots with now second-ranked San Jose-Sunnyvale, Santa Clara, where the median age of inventory fell from 36 to 33 days.

The average age of inventory in Solano County is 44 days, unchanged from December.

Ranked 20, Boise City, Idaho’s median age of inventory rose to 66 from 59 days in December, when it ranked 26.

Contact Rachel Raskin-Zrihen at (707) 553-6824.

Article source: http://www.timesheraldonline.com/general-news/20180125/solano-county-remains-nations-third-hottest-real-estate-market

Article source: http://www.auburnjournal.com/article/1/24/18/downtown-auburn-real-estate-office-gets-new-owners-new-name

A downfall to living in the Bay Area is its housing crisis. Residents are surrounded by some of the most expensive homes in the nation but are unable to afford them. Those who are, are faced with a shortage of home buildings and it doesn’t look like conditions will change anytime soon, according to a report.

With Silicon Valley’s growth comes an increase in buyer demand and a shortage of home buildings causing a low inventory in popular cities. San Jose’s housing inventory was down over 40 percent, the biggest drop nationwide and inventory in San Francsico’s metro area was down 27 percent, the second biggest drop in the country, SF Gate reported.

“In a community like the Bay Area where land and labor costs are very high, it’s difficult to imagine a set of policies that would sharply increase inventory in prime locations,” Zillow Senior Economist Aaron Terrazas tells SF Gate. “More likely, marginal increases in inventory will come from denser development — which often carries high prices — or from more affordable building in further-flung exurbs.”

Terrazas also told Sf Gate that those who live in less-expensive sector of the market, have a harder time finding housing as buyers who are able to afford million dollar homes have more to choose from.

“In the San Francisco metro there are almost twice as many homes on the market in the top price tier than in the bottom price tier,” Terrazas tells SF Gate.

Home owners in the Bay Area should think twice before selling their homes as recent federal tax changes discourage them from selling and missing out on mortgage deductions but they in turn also limit local deductions, something that may lead homeowners to sell, SF Gate reports.

“Since they lose these extra benefits if they move or refinance, homeowners benefitting from these additional deductions may choose not to move posing a headwind to inventory moving forward,” Terrazas tells SF Gate. “However, limits to state and local income tax and property tax deductions may push some long-time owners to downsize or leave the area.’

Though living in the Bay Area continues to increase in cost and decrease in housing inventory, state-level proposals have the potential to change the current situation, Terrazas tells SF Gate. “The California Legislature is considering a number of bills to address the region’s crushing housing affordability challenges. In addition, state legislators are exploring ways to moderate the effects of new limits to the federal deductions.”

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