There were numerous occasions as a young man when I would seek my Dad out for his advice or insights, typically his response was not as succinct as to say “plastics” and because we were in San Francisco, telling me to go west was not an option. Often, however, his insights included a reminder that we live in San Francisco and that the rest of the country doesn’t think or act like we do here in the Bay Area. This was, for the most part a good thing, but also the reason that so many people flocked to the City by the bay.
I am often reminded of my Dad’s comments when I read trade articles regarding Real Estate. When housing trends, prices and inventory are discussed, I must remind myself that they are speaking nationally, while we in the Bay Area definitely march to our own drumbeat. I did, however, read two real strong Bay Area Real Estate specific articles that I wanted to share. One by Louis Hansen of the Bay Area News Group writes an interesting piece that discusses March being the first month in seven years to have a downward tick in housing sales, what may have caused it and what to expect. Then Kaitlyn Bartley, also of the Bay Area News Group writes about the Bay Area’s least affordable communities. In spite of the warnings put forth in Louis’ article, the Bay Area’s price still out pace most of the nation.
Check these out and let me know what you think, is it doom and gloom time, or is it time to capitalize on this hot market. As always, I look forward to hearing from you.
Snap! Record climb of Bay Area home prices broken!
Declines in tech-heavy suburbs lead to flat median sale prices
Home sales in the Bay Area lagged in March, with high prices continuing to push may would-be buyers to the sidelines.
PUBLISHED: April 29, 2019 at 10:06 am | UPDATED: April 29, 2019 at 6:13 pm
Median home sale prices in the Bay Area dipped ever-so-slightly in March, marking the end of a record-breaking, seven-year streak as even high salaries and low-interest rates failed to entice buyers into the country’s most expensive market.
Prices for existing homes in the nine-county region fell .6 percent, while the number of home sales plummeted 14 percent from the previous March, according to a report released Monday by real estate data firm CoreLogic. Declining sales and prices in the core Silicon Valley counties of San Mateo and Santa Clara led the drop-off, even as Silicon Valley tech giants continued to add jobs.
Alameda County, meanwhile, saw a slight increase in median price while Contra Costa County saw a slight decline.
Home sales hit spring lows not seen for the month since March 2008, according to the survey. CoreLogic analyst Andrew LePage said last month’s decline continues a slow-down from mid-2018, when more homes started to be put up for sale and prices no longer vaulted to double digit gains.
“It is the smallest decline possible,” LePage said. “The market has flattened out.” He added that the next few months will indicate if the drop reflects a deeper trend or simply a “pause.”
The record-breaking streak pushed Bay
Area home prices from a median of $425,000 in April 2012 to a peak of $935,000
in May 2018. The highest-in-the-nation prices led to seven-figure bidding wars
, and alarmed state
lawmakers concerned that the desperate housing shortage was threatening the
long-term economic and social health of the region.
As tech giants Apple, Google, Facebook and other software and service companies added high-salaried employees in the last seven years, a lack of new housing brought pain for would-be buyers and gain for long-time homeowners.
“We’ve hit a price point,” said Steve Levy, director of the Center for Continuing Study of the California Economy. “The market is saying we’ve hit a price ceiling.”
Levy pointed to growing a supply of new homes, which has helped curb increases in prices. But the region is still trying to catch up from a housing deficit created by slow home construction between 2006 and 2013. “We haven’t dug ourselves out of it,” he said.
Home sales flagged 14.3 percent Santa Clara County and 11.8 percent in San Mateo County. Median sale prices fell by 11.1 percent to $1.2 million in Santa Clara County and 2.4 percent to $1.5 million in San Mateo County from the previous March. Prices fell 1.1 percent to $603,000 in Contra Costa County and dropped 6.3 percent to $1.2 million in Marin County.
But the days of high prices have yet to cease, despite the slight decline in March.
The median sale price for existing homes in the nine-county region was $860,000 in March, down from $865,000 the year before. Still, some counties showed year-over-year gains last month, according to CoreLogic data: median sale prices for resale homes grew 1.2 percent to $870,000 in Alameda County, and 10 percent to $1.6 million in San Francisco.
The stalled market comes as the Silicon Valley economy storms forward. Interest rates for standard 30-year mortgages have dropped to 4.2 percent from a recent high of 4.9 percent in November.
The regional job market grew 2.4 percent from the previous March, outpacing the state growth of 1.4 percent and national growth of 1.7 percent, according to the Bay Area Council. But even as workers flock to the region, residential building permits were down 5 percent in the first two months of the year, according to the council.
Agents report healthy demand for lower-priced starter homes, and also an increase in homes for sale. But clouds have been gathering for some time.
San Jose agent Gustavo Gonzalez, president of the Santa Clara County Association of Realtors, said high prices set by sellers expecting to get top dollar contributes to the slowdown. Over-priced homes can sit on the market, and ultimately bring lower returns for homeowners, he said.
But he remains optimistic. “I don’t see the market flopping,” Gonzalez said. “There’s too much demand out there.”
Julius Chau, an electrical engineer in San Jose, recently decided to put one of his rental properties, a three-bedroom house in Evergreen, on the market. He grew tired of managing the property and saw healthy returns on a sale, he said.
The home he bought two decades ago for $300,000 sold for $1 million this month. He received about a half-dozen serious offers, and the deal was sealed within two weeks of the home going on the market.
But he probably won’t invest in another Bay Area rental. With high mortgages and costs, he said, “the cash flow isn’t great.”
Mark Wong, an agent with Alain Pinel, said properly priced homes still sell quickly. The entry-level market, around $1 million in much of the Peninsula, remains hot. In addition to Chau’s home, Wong recently sold two other homes for around $1 million within three weeks of listing.
“The high-end price is definitely softening,” said Wong, based in Saratoga. “The entry-level is really strong.”
East Bay sales remained healthy, with agents reporting solid interest in homes under $1 million in good school districts.
Nancie Allen of Masterkey Real Estate in Fremont said balance between buyers and sellers is coming back. The market remains spotty — certain neighborhoods remain strong, while others are less desirable, she said.
“It is so local,” Allen said. “We’re in shifting markets.”
The Bay Area’s least affordable communities
Where the region’s rich live
PUBLISHED: May 2, 2019 at 6:30 am | UPDATED: May 2, 2019 at 11:40 am
The entire Bay Area is notorious for its exorbitant cost of living, but the Peninsula blows away the competition when it comes to the region’s most expensive ZIP codes.
ZIP codes in Atherton, Palo Alto, Los Altos, Los Altos Hills, Portola Valley and Stanford are the six least affordable communities in terms of housing costs in the nine-county Bay Area and Santa Cruz County.
Even in the cheapest of these ZIP codes, you’d need an annual income of more than $500,000 to buy the median priced home last year, assuming that you spend no more than 30 percent of your income on housing. In the most expensive, Atherton’s 94027, you’d need to bring in more than $1 million a year.
Here are the Bay Area’s six priciest communities for buyers in 2018:
6) Stanford’s 94305 surrounds Stanford University and includes the Stanford Golf Course and the popular hiking area near the Stanford Dish. The real estate around the West Coast’s most elite university is accessible only to a few. Here, a median mortgage payment runs $13,690 a month and requires an annual income of $547,400, assuming you spend no more than 30 percent of your income on housing, according to our analysis. That’s unaffordable to all but the top 1.9 percent of earners in the Bay Area.
5) and 4) Los Altos and Los Altos Hills share two of the most expensive ZIP codes in the Bay Area. Zips 94024 and 94022, which together encompass virtually the entire city of Los Altos and the neighboring town of Los Altos Hills, require median annual incomes of $557,800 and $665,900 to afford the median monthly mortgage payments of $13,940 and $16,650, respectively. Although Los Altos includes a bustling downtown district, its neighbor Los Altos Hills, which sits west of Foothill Expressway, consists almost exclusively of residences since the town banned commercial zones.
3) Tucked away between Woodside and Los Altos Hills, 94028 in the small town of Portola Valley comes in third on the list. Here, in the wooded hills on the eastern slope of the Santa Cruz Mountains overlooking Stanford and Palo Alto, the median monthly mortgage is $14,990, which requires an income of $599,600.
2) Seven miles to the east in Palo Alto, ZIP code 94301, which stretches from north of the city’s downtown area to south of Oregon Expressway and includes Old Palo Alto and the city’s downtown shopping district, is home to tech luminaries like Google’s Larry Page and Facebook’s Mark Zuckerberg. Here, households must earn $676,600 annually to afford the median monthly payment of $16,910. That means just 0.8 percent of Bay Area residents can afford to live there.
1)The Bay Area’s most expensive ZIP code, 94027 in Atherton, has a median monthly mortgage of $26,930. Atherton is not only the most expensive ZIP code in California, but in the entire country, according to Zillow.
Click here to see the photo gallery of the most expensive zip codes of the Bay Area on your mobile device.