homesmillbrae.com

A: 2018 should be another robust year in the Bay Area for real estate. San Francisco will continue to experience a strong demand for single-family homes, especially on the north side of town where there is an extreme lack of inventory. State-of-the-art homes will continue to command top dollar and prices per square foot due to the cost of construction skyrocketing and the process for permitting moving at a sloth-like pace, especially if you are going outside the envelope (original footprint) of the home. We do not expect the new tax laws to affect activity or values of Bay Area real estate. If Interest rates take a big-leap, it could affect the entry level buyer.

New pockets of neighborhoods are developing all over the city and the Bay Area as prices continue to climb. Walkability and transportation are key factors adding to value. Both condominiums and single-family homes with great walk scores, close to coffee, restaurants, shopping, schools and transportation will see the strongest demand. San Francisco condominium buyers will have a wider range to select from due to many of the new condominium projects coming to market as reflected by the strong interest in Dog Patch as it becomes a destination neighborhood.

The Van Ness corridor is starting to develop micro-neighborhoods with new condominium projects being developed around the new CPMC complex and the Civic Center, these properties allow easy access to Polk, Union, and Chestnut streets as well as Hayes Valley. Sutro Heights and the Outer Sunset are drawing firsttime buyers who want a single-family home with a beach town feel and easy access to commercial areas.

Ana T. L. Dierkhising, Pacific Union Real Estate, (415) 264-6848, ana@anatld.com; Val Steele, Pacific Union Real Estate, (415) 810-5234, val.steele@pacunion.com.

A: While it’s virtually impossible to predict what will happen in future housing and security markets, here’s a brief overview of what we know: According to the SP Case Schiller Price Index, since 1984, the San Francisco Bay Area housing market has experienced three full market cycles, with growth cycles averaging five to seven years: 1984-1990; 1995-2001; and 2002-2007.

Downturns averaged one to four years: 1991-1994, 2001, and 2008-2011. We are currently five years (2012-2017) into our fourth growth cycle since 1984. Our last downturn in 2008-2011 was the biggest downturn over the past 30 years, and our current price growth period is still below the price increases experienced during the 1984-1990 and 1995-2001 cycles. As we all know, during periods of expansion, the San Francisco market is driven by booming growth in the technology sector and the failure of housing supplies to keep up with seemingly insatiable demand.

My sense is that we will experience more moderate growth and price increases in 2018 when compared to 2017. The first half of 2018 will likely be driven by buyers in the market for homes below $3.5 million, acting aggressively to take advantage of still-low interest rates and attractive financing options. With tax reform driving substantial growth in the financial markets in early 2018, many analysts believe it’s likely that the Federal Reserve will ramp up rate increases in the second half of 2018. Although the San Francisco housing market is less sensitive to interest rate increases than most other markets, my sense is that this dynamic will slow price growth in San Francisco during the second half of 2018.

Dean Badessa, Sotheby’s International Realty, (415) 474-5140, dean@deanbadessa.com.

A: As we start 2018, many of my client conversations revolve around buyers concerns about rising interest rates and the new tax plan.

The expectation is that buyers will have to spend more to own a house, which in turn, will drive down home prices. I don’t expect that these factors will have as much of an impact on home prices here as they would in other markets.

In the East Bay, we are still seeing record prices. Lack of homes for sale and strong buyer demand could overshadow the new tax implications and rising interest rates, and keep home prices high.

Though we all have our opinions, no one can tell you what the future may hold. If you’re planning on buying a home and living there for the long-term, you won’t be able to guess what the market will do next. Decide where you want to live, what you can afford, and then go for it.

Devin Ratoosh,

Marvin Gardens Berkeley,

(510) 919-5499,

devin@ratooshGroup.com

Article source: https://www.sfgate.com/realestate/article/Sound-Off-What-are-your-Bay-Area-real-estate-12494466.php

Back in September, a modest ranch house sold in Sunnyvale for $782,000 over its asking price, signaling that the Bay Area housing market was even crazier than it seemed.

That sale was extreme: The buyer paid $2,470,000 for a four-bedroom, two-bath house — less than 2,000 square feet — that had listed for $1,688,000. But the deal turns out to have been an over-the-top version of what has become the new normal in the Bay Area, where home buyers are more likely to pay over-asking prices than anywhere else in the nation, according to a report from Zillow.

The analysis shows that 68.5 percent of the homes sold last year in the San Jose metropolitan area went for over the asking price. The median amount paid over the list price was $62,000, which translates as 6.8 percent above list. Those were the highest numbers in the county.

The San Francisco metropolitan area, which includes the East Bay, was close behind in second place: 64.5 percent of deals were for over asking and the median amount paid above the list price was $41,000, or 6.0 percent over list.

The low housing supply has become a national phenomenon, forcing home prices up almost everywhere. Between 2012 and 2017, the share of homes selling for above the asking price in the United States rose from 17.8 percent to 24.1 percent. The median amount paid over list last year was $7,000.

But in the nation’s tech centers — most notably San Jose, San Francisco and Seattle — the trend has become acute.

“In the booming tech capitals of the California Bay Area and Pacific Northwest, paying above list price is now the norm,” said Zillow senior economist Aaron Terrazas. “In the face of historically tight inventory, buyers have had to be more aggressive in their offers.”

Over the past five years, the Seattle metro posted the largest increase in the share of homes that sold above asking, rising from 20.3 percent in 2012 to 52.4 percent in 2017.

In the San Jose metro area, the five-year jump was from 49.1 percent to 68.5 percent, while the share of over-asking deals jumped from 43.0 percent to 64.5 percent in the San Francisco metro during that same period.

As competition among buyers has increased in the Bay Area’s core, the over-asking trend has also emerged in the region’s fringes:  Between 2012 and 2017, the share of over-asking sales rose from 34.6 percent to 41.2 percent in the Sacramento metro, where the median amount paid above the asking price last year was $9,000.

Given the combination of strong buyer demand and limited home supply here and nationally, Terrazas doesn’t expect the over-asking situation to change much in the near future.

“We don’t expect this inventory crunch to ease meaningfully in 2018, meaning buyers will be facing many of the same struggles this year,” he said.

Article source: https://www.mercurynews.com/2018/01/11/bay-area-housing-over-asking-bids-are-the-new-normal/

(Click here, if you are unable to view this video on your mobile device.)

Bay Area housing trends are easily summarized: As the supply of available homes dries up, prices go up. It’s the law of supply and demand.

But why is the housing supply — insiders use the term “inventory” — so tight to begin with? And what can be done to expand the supply? For answers, we turned to Ralph McLaughlin, chief economist with Trulia, the residential real estate website.

McLaughlin, 36, is a former college professor who brings a conversational ease to subjects that might otherwise seem convoluted. He also has a keen sense of the Bay Area market: Raised in San Jose, he lives in Alameda in the East Bay, and he works in San Francisco, where Trulia is headquartered. For these reasons, we turned to him for the story behind the numbers.

This interview has been edited for clarity and length.

Q: In a nutshell, what was the story of Bay Area real estate in 2017?

A: It was yet another year of price appreciation outpacing income growth and falling inventory that doesn’t seem to be reversing course anytime soon. It’s the same story we’ve been hearing for the last three to four years, but it’s becoming increasingly problematic for homebuyers. They’re likely to be more frustrated than they’ve ever been.

And that keeps me up at night — being from the Bay Area, it’s very tough knowing so many childhood friends who no longer live here because they can’t afford it. Recent data show the average person moving into the Bay Area earns $8,500 more than the average person who leaves: $90,000 for those coming in and $81,500 for those going out. That’s strong evidence that many middle-income Bay Areans are being priced out and replaced by earners with higher paying jobs.

Q: Why does the region’s housing supply keep shrinking? We hear about year-over-year decreases of 30, 40 and even 50 percent or more in some parts of the region.

A: There are two reasons why inventory continues to fall and prices continue to rise, and the unfortunate reality is that the problem is likely to get worse before it gets better.

The first reason is that we just aren’t building enough homes. And building new homes is extremely important for inventory because they create a chain reaction effect: You build a new house, then someone buys that house, and the buyer likely sells their existing house, and the person who buys that house will sell their home. And that continues down the line until an investor or first-time homebuyer buys that house. So one new home may lead to a four-to-five-fold increase in existing inventory.

Second, the Bay Area — and San Jose in particular — has an aging population. Most homeowners are between 40 and 60 years old, and that’s a time in life when they’re less likely to move. This demographic is less likely to move because they have children in the house, or they have no incentive to move because retirement is imminent. So you have a demographic roadblock to expanding inventory.

Q: Let’s look ahead: What impact will the congressional tax overhaul have on the supply of Bay Area housing?

A: The tax plan may actually make the inventory problem worse. That’s because the cap on the mortgage interest deduction has been reduced from $1 million to $750,000. This is likely to slow the market for homes where homebuyers would have to take out a mortgage for more than this amount. In addition, because existing homeowners are grandfathered in at the $1 million level, they’ll be incentivized to stay put and not move.

Q: What are some policy changes that could expand the housing supply?

A: At the national level, we could incentivize investors who snapped up homes in 2012 – at the bottom of the housing market – to sell. Many of these homes, especially single-family ones, would otherwise be available stock for first-time homebuyers. So if we gave investors a one-time free pass on capital gains, they might put those homes on the market.

Q: But maybe they’d wind up being purchased by other investors.

A: Not likely. This isn’t a great time to be an investor in the Bay Area, so we would hope those properties would be bought up and occupied by families.

Q: Why isn’t it a great time to be an investor?

A: If I bought a house in 2012, the rent I would get on that house would have been enough to pay for the mortgage. If I bought a house today, that’s not as likely, even though rents have risen in the interim. This is because prices have risen much more relative to rents, and that makes investing in rental properties less attractive.

Q: Let’s hear a second policy that could help expand inventory.

A: We could do a better job at providing housing for those that need it most. While not a perfect market solution, preserving existing affordable housing, stabilizing rent growth, and otherwise promoting the development of below-market-rate units helps households who might have to otherwise migrate out of the region stay here. We could also do a better job at encouraging the development of market-rate units, and while they don’t directly benefit low-income households, doing so helps keep higher-income households from looking down market for homes.

Q: And what about the bubble? Will it burst?

A: I don’t think there’s a bubble at all because growth in the market is being driven by economic fundamentals: Strong job growth and low supply equals high prices. The best that we can hope for is that price growth moderates to a place that is closer to inflation and that wage growth slowly catches up. But that will take a long time, probably decades if things continue as they are. It’s taken decades to get us into this mess, and if we don’t step up our housing game soon, it could take us decades to get out.

Ralph McLaughlin profile

Place of residence: Alameda.

Position: Chief economist, Trulia.

Previous jobs: Land acquisitions analyst, Urban Arena, LLC, 2004-2008; assistant professor of urban planning, University of South Australia, 2009-2012; assistant professor and director of real estate development, San Jose State University, 2012-2014.

Education: University of California at Irvine, Ph.D. in planning, policy, and design, 2009; University of Arizona, bachelor of science in geography and regional development, 2003.

Family: Suzie, wife of 10 years, and their Brussels Griffons Bru (11) and Maisy (10).

Five facts about Ralph McLaughlin

1. Born and raised in San Jose, he graduated from Piedmont Hills High School in 1999. He lettered in baseball, football and water polo.

2. One of his first jobs as a teenager was slinging hot dogs at San Jose Municipal Stadium during San Jose Giants games. He then upgraded to valeting cars at the Hotel De Anza after the season was over.

3. One of his passionate hobbies is home brewing. In 2011, while living in Australia, he won the gold medal for best amateur-brewed IPA in the country.

4. He has broken a total of eight different bones over the years, primarily as a result of cycling, snowboarding and playing baseball.

5. He is distantly related to the English author Daniel Defoe, although he hasn’t yet read “Robinson Crusoe.”

Article source: https://www.mercurynews.com/2018/01/11/unpacking-the-bay-area-housing-market-why-does-the-inventory-keep-shrinking-and-will-prices-ever-gulp-go-down/

(Click here, if you are unable to view this video on your mobile device.)

Maybe you thought it couldn’t get any worse — that housing prices would finally cool off in 2018 after years of record-breaking appreciation.

Think again. A new report from Zillow projects that the San Jose metropolitan area will be the hottest housing market in the nation in 2018, with home values rising dramatically: another 8.9 percent on a year-over-year basis. The San Francisco metropolitan area, which includes the East Bay, will be the fifth hottest market with a 3.8 percent increase in home values, according to Zillow’s new report.

“Over the past five years, San Jose home values have appreciated 78 percent,” the report said, putting the area’s housing crisis into perspective. Its analysis “highlights just how strong the San Jose market really is. While San Francisco home values have recently started to cool, San Jose is off to the races.”

The San Jose area’s median home value right now is $1,128,300, making it the nation’s most expensive market, according to Zillow. The median home value in the San Francisco metropolitan area — San Francisco, Marin, San Mateo, Alameda and Contra Costa counties — is $893,100, the second highest in the U.S. The Seattle metro area is third most costly, with a median home value of $463,800.

Why do prices keep rising in these markets? It’s largely because “the tech industry continues to roar,” said Zillow senior economist Aaron Terrazas, “attracting thousands of new residents per year to tech-dominant markets” including San Jose, San Francisco, Seattle and Denver.

Aside from San Jose and San Francisco, the 10 hottest markets in the nation this year will include two metros in the Northwest (Seattle and Portland), two in Texas (Austin and Dallas), two in North Carolina (Raleigh and Charlotte), one in Colorado (Denver) and one in Tennessee (Nashville), according to the report.

Zillow, the online real estate database company, based its projections on six factors: its home value and rent forecasts for the 12 months of 2018; income growth; population growth; unemployment rates; and the number of job openings per person in each metro.

Article source: https://www.mercurynews.com/2018/01/10/san-jose-is-the-nations-hottest-housing-market-in-2018-zillow-says/

Sure, there might be more worthwhile causes, such as childhood disease or homelessness, but let’s not forget those poor souls across America who are witnessing their beloved golf courses closing because of a lack of dues-paying members.

Before writing that angry email, please be advised I’m kidding. The remaining members of the de Anza Country Club in beautiful Borrego Springs, in San Diego County, don’t expect your help. Any checks sent will be quickly returned uncashed.

It’s a story worth telling, though, simply because it’s a microcosm of what’s been happening in small “rural” towns across the nation. We live in a proverbial bubble in the Bay Area, and quite often are oblivious as to how much of the nation is struggling.

More by Nick Hoppe

• To drive, or not to drive
• Babysitting can be very lucrative

• 
  
  
  

  The world is full of good people

For those readers who are unfamiliar with Borrego Springs (and I would guess that is about 90 percent of you), it’s a town of about 3,000 people. It sits all by itself in the desert, about 1½ hours southwest of Palm Springs and two hours east of San Diego.

It’s a beautiful setting, surrounded by Anza-Borrego Desert State Park, the largest in California. It has no traffic signals, no movie theaters, no huge supermarkets, no department stores. Just natural beauty, framed by mountains and desert landscape. And ideal winter weather.

Its isolation is its greatest blessing, and its greatest curse. Come from San Diego and it’s two hours of difficult but scenic winding roads. Come from Palm Springs and it’s 1½ hours of desolation driving, except for a possible quick stop in Salton City, on the shores of the Salton Sea. Their best-selling T-shirt, sold in the liquor store, reads “Salton City — 7 billion flies can’t be wrong!” You get the picture.

Borrego Springs, though, is an oasis. Developed in the 1950s, it quickly grew to 3,000 full-time residents, which is where it stands almost 70 years later. Its main street is wide enough for six lanes of traffic, whereas two lanes would have been more than enough. Prime commercial lots remain unbuilt. The growth never came.

We were introduced to Borrego Springs and the de Anza Country Club about 10 years ago by some friends who had a second home there. They loved the place, and eventually, after several weekend visits, we fell in love as well. The ultimate moment was when we walked into the clubhouse and some longtime members looked up and said excitedly, “Look, here come the youngsters!”

Since we were in our mid-50s at the time, that sounded pretty good. With home prices very reasonable, especially compared to the Bay Area, we were fortunate enough to buy a second home and join the club for some occasional welcome relief from Northern California winters.

Like the town, the club was plugging along when we joined. It had 250 members and some substantial cash reserves. Now it has 132 members and a cash deficit. Members have died or moved away and not been replaced by new homeowners. And interest in golf is at an all-time low.

While Northern California real estate prices have skyrocketed, Borrego Springs prices have dropped considerably. It’s a constant struggle for restaurants, hotels and other businesses to be successful. There is no real industry besides tourism, and the town’s isolated location makes a visitor think twice before making the trip.

I’ve always found it interesting to compare the booming economy of the Bay Area and San Diego, and the Palm Springs area, with its 500,000 people only 1½ hours away, to the small, rural town of Borrego Springs. Various factors make it difficult for some towns to flourish in this country, and Borrego Springs, despite its attractions, is a prime example.

I’ll never give up on it, though. The golf course may or may not survive (and I think it will), but the hiking and biking and wildflowers and dark nights will always be available. After 70 years, I still believe the town will be discovered, and those six lanes of traffic on the main street won’t look quite as ridiculous.

Then again, a part of me wants it to stay just the same, with no traffic signal within 30 miles. Solitude can be a beautiful thing. Yep, a blessing and a curse.

Article source: https://www.sfchronicle.com/entertainment/article/Not-all-places-are-like-the-Bay-Area-12481978.php