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San Francisco often ranks among the “hottest” housing markets due to its rapidly rising housing prices. In the last month alone, San Francisco appeared on three separate lists of the “hottest” or “strongest” housing markets for 2016.

But how hot is too hot?

According to a new report from Fitch Ratings, San Francisco is reaching that point, with the dreaded “b” word being thrown around now in regards to San Francisco housing.

Fitch’s report suggests that Bay Area home prices are “overheating” and have reached a “level unsupportable by area income,” and asks if there is a “Bay Area bubble.”

According to Fitch’s report, San Francisco home prices hit an all-time high in third quarter of 2015 and are now 62% above their post-recession low in early 2012.

In the report, Fitch Managing Director Grant Bailey said that San Francisco home prices are up more than 10% in the past year alone, making the San Francisco housing market now approximately 14% overvalued when compared to the area’s underlying supporting economic fundamentals.

“The last time the Bay Area experienced this kind of home price growth was during the dot-com era from 1997-2000,” Bailey said in the report.

According to Fitch’s report, the surge in San Francisco home prices over the last three years has exceeded the growth rate observed during the 2003–2006 housing boom.

“In both the dot-com era and recent years, home price momentum was initiated by undervalued prices and strong income growth,” Fitch’s report stated. “Area home prices fell roughly 5% nominally and 10% in real terms when the dot-com bubble burst.”

The graph below, courtesy of Fitch’s report, shows the rapid rise of home prices in San Francisco compared to the rest of the U.S.

According to Fitch’s report, strong income growth in the San Francisco area has driven the home price increases as the area’s total income is up 44% since the prior peak and 18% since the post-recession low.

But Fitch’s report suggests that home price growth “appears to have exceeded” income growth.

The graph below, also courtesy of Fitch’s report, shows San Francisco’s “sustainable” level of home prices compared to the actual level of home prices over the last 30 years.

While the gap between the “sustainable” home price level and the real home price level was much wider in 2006 than it is now, the current gap is widening.

Fitch isn’t the only one that noticed how much the cost of San Francisco housing has risen lately.

Late last year, one San Francisco credit union announced that it was willing to go to extreme measures to try to help area residents buy a home.

In December, San Francisco Federal Credit Union announced a new loan program that will allow San Francisco-area borrowers to finance up to 100% of their mortgage – with no requirement for mortgage insurance – on loans up to $2 million.

Rebecca Reynolds Lytle, senior vice president and chief lending officer for San Francisco Federal Credit Union, said that the POPPYLOAN program was created to address the stark realties of San Francisco’s housing situation.

“We see POPPYLOAN as a game-changer for the San Francisco real estate market,” Reynolds Lytle said.

“Too many of our members have given up hope of buying a home because of escalating home prices and the required down payment,” she continued.

“However, these same families are paying more than a mortgage payment for monthly rent,” Reynolds Lytle said. “Paying $3,600 for a one-bedroom apartment is about the same as making a monthly payment on an $800,000 mortgage. We created POPPYLOAN to help middle class families realize their dream of buying a home without having to move out of the Bay Area.”

Overall, Fitch’s report shows that the national home price average rose 1% in the third quarter of 2015, or 5% year-to-date.

“Fitch Ratings views current price levels in most regions as sustainable and supported by improving unemployment and income growth,” the report states. “New home construction spending has picked up as the inventory of for-sale and under construction homes has fallen, reflecting further curing of the post-recession housing overhang.”

But that’s not the case in San Francisco, where prices are rising too quickly and lenders are resorting to extreme measures just to keep up.

Sound familiar?

Article source: http://www.housingwire.com/articles/36229-is-san-francisco-in-a-housing-bubble

Lynch’s home sits on the San Francisco Bay and includes five bedrooms, a soaring living space with expansive glass walls, a home theater, and an elevator. It has stunning water views from nearly every room, and it features a 58-foot long boat dock. Seems like the perfect place to retire.

Click here to view the full photogallery.

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Article source: http://curbed.com/archives/2016/02/08/marshawn-lynch-house-bay-area.php

A San Francisco home with sweeping ocean views that sold about two months ago for more than $2 million was demolished Thursday after a crack was found in the retaining wall.

The family that bought the house in October has not moved in yet, but was told by engineers that they would have to do an emergency demolition after the house moved more than a foot in just four days, putting neighboring houses in danger.

On Thursday afternoon, homeowner Ronald Martell watched as demolition crews ripped his house apart.

“It’s a great view in a great neighorhood — we just loved the location. Great place to raise a family,” Martell said as excavators took out walls and beams. He had planned to remodel, not rebuild it.

Source: The Resilience Program of the Association of Bay Area Governments

The dream house quickly turned into a nightmare. “It’s horrifying news to receive when you’re a couple of thousand miles away at your father’s funeral,” Martell said.

Martell, as well as other neighbors, had called the Department of Building Inspection to report a growing gap in the home’s driveway in the sidewalk, and a massive crack in the exterior wall.

Inspectors say the house is on an active landslide.

City workers worried the crack could cause the house in the city’s Sherwood Forest neighborhood to slide, so the Department of Building granted an emergency demolition permit before it slid into another home. The house moved 14 inches in a one-week span, according to inspectors.

Sliding House Torn Down in San Francisco

Inspectors said five other homes could also be in danger.

“It’s for everyone’s safety,” Martell said. “God forbid that the house slides down the hill into somebody’s bedroom.”

Martell is trying to figure out who will be paying the demolition and rebuilding costs, but first the cause has to be determined.

The NBC Bay Area chopper caught demolition crews at work Thursday afternoon, as the house was slowly reduced to a pile rubble.

Sliding House Torn Down in San Francisco

Downslope, water can be seen pouring out of the hillside. Other neighbors have also received notices to have their houses inspected by the city.

“The water pressure just pushed up the dirt, and the gravel moved by six inches or so,” said Cal Nakanishi, who owns  ahome nearby. “It’s doubled the width since yesterday.”

No one is sure where the water is coming from or what it will cost to prevent more damage.

Demolition crews were back Friday morning to finish the work. They plan to leave the foundation in place, hoping that it will stop the hillside from moving.

Click here to see a list of Bay Area interactive landslide maps.

Article source: http://www.nbcbayarea.com/news/local/Sliding-House-Torn-Down-in-San-Francisco-366929101.html

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A: Don’t expect the Super Bowl to have a substantial effect on the housing market.

I recall hosting an open house during the Super Bowl earlier in my career. It was surprisingly well attended. and there were some very serious buyers who came through.

Since supply remains so constrained, buyers will jump at anything that could be a possible match, regardless of when it is.

There have only been six new listings this year in Burlingame. So inventory is definitely limited.

For background, the number of homes sold in Burlingame has steadily decreased since 2012, while prices have increased.

There were 271 sales in Burlingame in 2012, and that’s decreased between 10 and 50 homes per year.

Last year, only 175 homes were sold here, while average prices rose from about $1.4 million to roughly $2.1 million.

So press forward. Serious buyers will overlook almost any event, even the Super Bowl.

Raziel Ungar,

Pacific Union,

(650) 822-7088, raziel@burlingame properties.com.

A: Inventory and buyer activity traditionally pick up after Super Bowl Sunday. Hosting the Super Bowl adds a whole other dimension to Bay Area life. It’s very exciting, but it will curtail normal activity. Expect a flurry of activity in and around San Francisco during the weeks surrounding the game.

Traffic is going to be horrific and many buyers and sellers will be distracted with guests, the game or simply hoping to get out of town. If possible, sellers should consider waiting until after the Super Bowl for their first open house.

However, not everyone will be at or watching the game, so potential benefits lurk as well. A lack of inventory and rapid transactions breed buyers who understand the need to take advantage of every opportunity.

So if you are a buyer, and you see open houses, go! You’ll even have a chance to ask the agent questions.

Agents who want to take advantage of the extra foot traffic in town and are holding homes open should do so on the Saturday before the game.

Aleso Gourhan, Sotheby’s International Realty, (510) 914-0290, aleso.gourhan@ sothebysrealty.com.

A: It’s an honor for the Bay Area to host the Super Bowl again.

Yes, the prices of homes have absolutely increased, but the desire to live and work here remains the same.

Even though this huge event will create traffic snarls and hassles, both buyers and sellers should benefit from all the excitement surrounding Northern California.

Sellers can benefit from all the people the Super Bowl will bring to the Bay Area, and buyers can feed off the excitement of wanting to live and work in a place that hosts an event of this magnitude.

Hopefully, El Niño is going to take the weekend off and the game will be played in the California sunshine. That’s another way the Bay Area will reveal itself to potential buyers. The timing could not be better — the spring is the busiest season for buying and selling homes, and it will begin after the game.

It is our job as agents to help our clients tap all this wonderful marketing surrounding this event.

Matt Heafey,

Grubb Co.,

(510) 541-1754, heafey@grubbco.com.

Article source: http://www.sfgate.com/realestate/article/Sound-Off-The-Bay-Area-the-big-game-and-local-6794347.php

Article source: http://www.sfchronicle.com/business/article/Inside-Apple-s-massive-Bay-Area-expansion-6773064.php