Housing Costs Stretch Bay Area’s Geographic Footprint

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Altamont Pass as seen from the San Joaquin Valley.

The Bay Area’s roaring job market is attracting workers from all over Northern California, but an increasing number of them don’t live within the traditional nine-county region, largely due to housing-affordability issues.

Citing research from the Bay Area Council, The Mercury News reports that, on average, 602,000 vehicles enter and leave the nine-county region each weekday from what is called the “Northern California Megaregion.” Not including the Bay Area, this region includes six counties in the Sacramento area, three in the Northern San Joaquin Valley, and three in Monterey.

A quick look at housing costs and price growth goes a long way to explaining why so many workers endure such brutal daily commutes. The Bay Area’s 2015 median home value of $750,000 is three times more expensive than in San Joaquin, Stanislaus, and Merced counties combined. And while home values in San Francisco Countyhave increased 49.1 percent over the last 10 years, they decreased by 48.4 percent in Merced County over that same time period.

So what can be done to keep more of these workers off the road and ease Northern California’s worsening gridlock? The Bay Area Council recommends investing in public transportation, streamlining the housing-permit process in urban job centers, and growing employment in the Sacramento and San Joaquin Valley regions.

Source: Pacific Union blog

(Photo: Flickr/Michael Patrick)

Bay Area’s Cities – Nation’ Best Prepared for the Future



Good news for Bay Area residents and homeowners who are in it for the long haul: Our region’s two largest cities have been named the nation’s most prepared to meet the challenges of the future.

That’s according to findings from a recent conference by Harvard University and computer giant Dell, which ranked the top 25 most future-ready cities in America based on three major economic criteria:  the ability to attract innovative citizens, businesses that thrive on collaboration, and infrastructure strength. Based on those factors, San Jose stands as the most future-prepared city in the U.S., ranking high for its job market, worker productivity, and wage growth. San Francisco ranks No. 2 for future-readiness, earning points for human capital, innovation, and investment.

San Jose and San Francisco also had some of the highest percentages of college-educated residents in the country, although the summit found that both trail other top future-ready cities in terms of infrastructure.


Source: Pacific Union blog

San Francisco’ s Millennials Are the Nation’s Highest Taxed


Bay Area millennials are already pessimistic about their housing options over the next few years, so news that they fork over more in taxes than their counterparts in any other area of the country is unlikely to come as any consolation.

In a recent analysis, SmartAsset found that although millennial workers in San Francisco earn the second-highest median annual wages in the country — almost $60,000 — they also have the highest effective tax rate, at 26.84 percent. The average San Francisco millennial pays just over $16,000 in taxes, including federal, state, and local fees. San Jose millennials have an effective tax rate of 22.91 percent, shelling out nearly $12,000 each year, 11thhighest in the U.S.

As SmartAsset points out, one key difference between millennials and previous generations is that the barrier to homeownership is greater than in the past. In 1980, 44 percent of adults under 35 owned a home, compared with 35 percent today.


Source: Pacific Union

(Photo: Flickr/Phillip Ingham)


San Francisco Bay Area Companies on 2016 Best Places to Work Lists



Airbnb’s San Francisco headquarters.


Nearly one-third of America’s 50 best companies to work for are located right here in the Bay Area, and their happy, highly paid employees will likely continue to drive housing demand for the foreseeable future.

In its annual Employee Choice Awards, Glassdoor ranks the 50 best large U.S. companies based on workers’ reviews of their employers. Employees rate their companies on criteria such as compensation and benefits, the CEO, career opportunities, and workplace culture.

Bay Area-based tech companies have a heavy presence at the top of the list, taking five of the top 10 spots for employee satisfaction. This year, San Francisco-based vacation-rental website Airbnb ranks No. 1 in the U.S. for employee happiness, with workers awarding the company an overall score of 4.6 on a five-star scale. Glassdoor puts the average annual salary for Airbnb software developers at about $132,000.

Foster City-based insurance software maker Guidewire Software, which didn’t rank in the top 50 on last year’s list, made great strides on the worker-satisfaction front, zipping into the No. 3 spot with an overall score of 4.5. The company’s software engineers earn an average of $117,000 per year, with senior positions pulling down an additional $26,000.

Three of Silicon Valley’s best-known tech giants also landed in the top 10: Facebook (No. 5), LinkedIn (No. 6), and Google (No 8). LinkedIn and Facebook moved up the list from last year, while Google fell from the top spot. Software developers earn an average annual salary of $125,000 at Facebook, $132,000 at LinkedIn, and $127,000 at Google.

Ten other Bay Area-based companies were rated among the top 50 for best employee morale, six of them from the tech world. San Jose’s Adobe Systems ranked No. 19, followed by Protiviti (No. 23), Apple (No. 25), Twitter (No. 26), Salesforce.com (No. 32), and Workday (No. 35).

But Bay Area techies aren’t the only ones satisfied with their employment situation. Biotech company Genentech was No. 34, followed by architecture and design firm Gensler at No. 38. Two companies from the energy sector also cracked the top 50: San Ramon‘s Chevron (No. 39) and San Mateo-based SolarCity (No.50).

If current job-growth patterns persist, there will be no shortage of workers moving to the Bay Area in search of both a higher salary and greater career satisfaction. In a recent report, the Center For Continuing Study of the California Economy said that Bay Area companies were responsible for nearly half of the state’s job growth in October.

(Photo: Flickr/Sharon Hahn Darlin)

Most San Francisco and San Mateo County Homes Sale Above $1 MIllion Mark

Bay Area property prices continue to enjoy double-digit-percent annual increases, even as appreciation slows across the rest of the Golden State. And in Silicon Valley, homebuyers seem to have no shortage of cash at their disposals.1milsm

PropertyRadar’s most recent Real Property Sales report puts the September median price for a California home at $405,000, down 2.4 percent from August and up 3.3 from one year earlier. On a monthly basis, the median price fell in 21 of California’s 26 largest counties, though it remains near an eight-year high statewide.

In a statement accompanying the report, PropertyRadar Director of Economic Research Madeline Schaff noted that while appreciation is cooling across the state, Bay Area gains are still holding strong.

“Home prices in the Silicon Valley corridor, consisting of San Francisco, San Mateo and Santa Clara counties, continue to buck statewide trends and are experiencing double digit price appreciation,” she said. “The increased demand from plentiful well-paying jobs, exorbitant rents and fear of higher mortgage interest rates has sent home prices into the stratosphere.”

The report says that home prices in Santa Clara County increased by 13.8 percent year over year in September while rising 11.3 percent in San Mateo County, among the highest growth rates in the state. Extraordinary demand for Silicon Valley real estate appears to also be fueling appreciation in nearby Santa Cruz County, with prices there climbing by 18.3 percent on an annual basis in September, the highest rate of growth in California.

Silicon Valley homebuyers seem like they are swimming in cash, with all-cash deals accounting for 21.5 percent of transactions in the region so far in 2015 and nearly two-thirds of buyers dropping down payments of at least 20 percent. “At median price levels bouncing off of a million dollars, that is an impressive statistic,” Schaff said. In fact, more than half of all home sales in San Francisco and San Mateo counties in September exceeded the $1 million price point.

A graphic accompanying the report shows that the median sales price in most of Palo Alto and Los Altos actually appears to be above $2 million. Schaff doesn’t see price gains in the region slowing until buyer demand subsides or lenders become more tightfisted.

(Photo/Flickr: Alan O’Rourke)

Source: Pacific Union


What a Tech Bubble Could Mean for San Francisco Real Estate Market

Should history repeat itself and the Bay Area’s mighty tech empire again come crumbling down, homes may lose some of their value, but long-term demand seems almost certain to persist.

A Realtor.com blog post examines the likelihood of a tech bubble and what effects its bursting might have on the housing market. While stopping short of saying that current economic conditions indicate a looming bubble, the article notes one unsettling similarity to the dot-com era: the proliferation of so-called “unicorns,” companies valued at at least $1 billion without the financial results to warrant it.

During the late 90s tech-industry meltdown, employment in Silicon Valley in the sector declined by 17 percent, and home prices dropped by 25 percent. Realtor.com Chief Economist Jonathan Smoke said that while a tech downturn would certainly impact Bay Area real estate prices, the silver lining could be relaxed demand and fewer bidding wars. But even if a tech bubble were to temporarily cause frenzied demand to ease, the Bay Area’s lack of housing inventory will always be a moderating factor.

Source: Pacific Union

(Photo: Flickr/Anthony Quintano)


California Unemployment Rate Falls to Half of Recession Peak

The Golden State’s unemployment rate dropped in August, reaching half of the level recorded during the depths of the recession five years ago. Bay Area jobless claims followed suit, falling from the previous month in all nine counties.goldenbearflag

According to the latest numbers from the California Employment Development Department, the state’s unemployment rate declined to 6.1 percent in August on a seasonally adjusted basis, down from a high of 12.2 percent in 2010. California added more than 36,000 jobs in August, 470,000 over the past year, and 2.06 million since the beginning of the economic recovery in February 2010.

Commenting on the data, Palo Alto-based Center for Continuing Study of the California Economy says that those jobs represent 14.3 percent growth over the past five-and-a-half years compared with the nationwide rate of 9.7 percent. The organization notes that most of August’s job growth was due to gains in the government sector, while the professional- and business-services sectors saw losses. Both trends may be seasonal, due to an earlier beginning to the school year and companies transitioning from contract to permanent employees.

Jobless claims fell in each of the Bay Area’s nine counties from July to August, bucking the previous month’s pattern of across-the-board increases. San Mateo County continues to have the state’s most robust job market, with an unemployment rate of 3.3 percent on a nonseasonally adjusted basis, followed by Marin (3.5 percent), San Francisco (3.6 percent), Santa Clara (4.0 percent), Napa (4.2 percent), and Sonoma (4.3 percent) counties.

The Bay Area has demonstrated remarkable improvement in job growth since unemployment levels peaked, which according to EDD historical data was generally in 2010. Santa Clara, Napa, and Sonoma counties offer excellent examples of this trend, as all three saw unemployment rates peak at more than 11 percent during the recession’s darkest days.

In fact, CCSCE says that Bay Area job levels are now 10.6 percent higher than their prerecession peaks, by far the most in the state and up from 10.2 percent in July.

(Photo: Flickr/eyeliam)

Down payment -Still Difficult for First- Time Home Buyers

Hundred dollar billsFor many people, the biggest obstacle to buying a home is the down payment — especially  in the high-priced Bay Area, where 20 percent down can amount to a small fortune. And the challenge is compounded for first-time buyers.

In a recent survey by TD Bank, nearly two-thirds of would-be homebuyers (62 percent) said that they would like to provide a sizable down payment of 20 percent or more, but most were unable to do so. In fact, by an almost equal margin (64 percent), respondents said that needing to save money for a down payment was the biggest deterrent to buying a home. The second biggest obstacle (45 percent) was needing to pay down personal debt.

Homeownership was even tougher for millennials, with 70 percent of respondents saying they needed to save for a down payment and 52 percent needing to pay off debt.

“Buyers today may find it difficult to save for a large down payment, especially young adults who are saddled with substantial student loan debt,” said Scott Haymore, head of pricing and secondary markets at TD Bank. “The great news is, today many lenders are offering home affordability and down payment assistance programs, so it’s important to shop around for a mortgage and learn more about the options available.”

A separate survey, meanwhile, found that 65 percent of respondents between the ages of 24 and 34 were willing to give up modern conveniences such as a cell phone, Internet access, cable TV, or Starbucks in order to save for a down payment. Curiously, the poll, by business-advisory firm The Collingwood Group, found that older generations — respondents between the ages of 35 and 75 — were less motivated: Only 60 percent said they were willing to forego such conveniences.

The Collingwood Group survey also found that 75 percent of millennials would rather apply for a home loan with a traditional bank than an alternative lender or nonbank institution. Other generations were more open to new options, with 68 percent of those ages 35 to 75 stating a preference for a traditional bank.


Source: Pacific Union

(Photo: Flickr/Ervins Strauhmanis)

A college degree- an almost must-have to buy a home in Coastal California

A college degree is almost a must-have for millennials who hope to eventually own a home in major Golden State coastal urban centers, but even with a diploma, young Bay Area buyers can expect to save for more than 15 years to meet the traditional down payment amount.grads

In a new study, Trulia examines how student loans affect millennials’ abilities to amass a 20 percent down payment and the length of time needed to do so. The company found that student debt does indeed temporarily impede the ability to save for a down payment and that a diploma is a necessity in expensive housing markets like the Bay Area.

California cities dominate Trulia’s list of the 10 markets where saving for a down payment takes the most years, regardless of whether the hopeful young buyer holds a college degree. San Francisco tops the list for longest savings period, with the average college-educated millennial requiring more than 29 years to squirrel away the $560,590 down payment. If that sounds like a long time, consider that San Franciscans without a college degree will never earn enough to put 20 percent down on a home in the city.

Trulia ranks the San Jose market No. 5 for longest savings period, with the average 25-30-year-old household requiring nearly 18 years to save the $289,072 down payment. San Jose residents without a degree can expect to wait nearly half a century — 45.4 years — to amass a 20 percent down payment.

In Oakland, which ranked No. 7 on Trulia’s list, buyers with a diploma can enter the market nearly twice as fast — 15.6 years to save $193,453 — as those without, who will take 27.3 years to save 20 percent of a home’s price. Other California markets that ranked among the top 10 for longest savings periods for college-educated millennials were Los Angeles (18.8 years), Orange County (18.5 years), San Diego (17.7 years), and Ventura County (15.5 years).

However, Bay Area buyers without college degrees can substantially shorten the savings cycle by cutting the down payment in half. A San Francisco resident who puts down 10 percent of the purchase price goes from never being able to own a home to being able to save the down payment in just under three decades. A 10 percent down payment in San Jose and Oakland can help those without a degree save for a home about three times faster: 15.4 years and 11.3 years, respectively.

A final — and likely far less attractive — option for California buyers without a degree who don’t want to wait a decade to save for a home is to consider relocating to Detroit or Dayton, Ohio, where it takes just over five years to sock away a 20 percent down payment.

(Photo: Flickr/State Farm)

Bay Area Housing Markets Highly Unaffordable for Low-Down-Payment Buyers

Although nine out of 10 U.S. homes are more affordable than their historic averages for buyers using low-down-payment programs, that’s not the case here in the Bay Area, according to a recent report.twenties

In a study conducted with Down Payment Resource, RealtyTrac analyzed 370 U.S. counties for affordability and accessibility to buyers making down payments of 3 percent. Typically, buyers who leverage programs like the ones introduced by Freddie Mac and Fannie Mae late last year include first-time buyers and boomerang buyers – those who underwent foreclosure during the housing bust and want to purchase property again.

The report says that 90 percent of those counties were more affordable for low-down-payment homebuyers in April when compared with their historic averages, based on the percentage of income necessary to purchase a median-priced home with 3 percent down. San Diego ranked as the No. 1 U.S. county where homes were the most affordable compared with their historic averages, with the average low-down-payment homeowner spending 52.7 percent of their income on mortgage payments. Southern California’s Riverside County placed No. 2 for best low-down-payment affordability, with 39.3 percent of income earmarked for housing costs.

Here in Northern California, it was a completely different story, with four Bay Area counties ranking among the country’s 10 least affordable for first-time and boomerang buyers when compared with historic numbers. Perhaps not surprisingly, San Francisco was the least affordable U.S. market for low-down-payment buyers. A San Francisco homebuyer who placed a 3 percent down payment would actually need to pay more than they earn to afford a mortgage: 113.97 percent of income, compared with the county’s historical affordability of 83.48 percent.

San Mateo County was the nation’s fourth least affordable down-payment market, requiring 87.17 percent of income to purchase a home compared with the historic average 69.98 percent. Marin County followed in the No. 5 spot, with the average owner spending 71.78 percent on housing compared with 66.5 percent historically.Santa Clara County was the nation’s seventh least affordable low-down-payment market, with 62.37 percent of income necessary to make mortgage payments, compared with a historical average of 52.36 percent.

ReatlyTrac says that the average U.S. down-payment assistance benefit was $10,443 in April. San Francisco buyers using such a program can expect to receive $51,713 in funds, the most of any county in the nation. Homebuyers in Lake Tahoe‘s Placer County had the nation’s fourth highest levels of down-payment help at $35,475.

In a statement accompanying the report, Down Payment Resource CEO Rob Crane said that low-down-payment buyers likely have options in most U.S. metro areas, even those that rank among the least affordable. Still, as RealtyTrac Vice President Daren Blomquist cautioned, some first-time and boomerang buyers hoping to realize or regain their homeownership dreams might have to trade short commutes for down-payment assistance.

“This analysis demonstrates that low-down-payment borrowers can find affordable housing and good accessibility to down payment help in a wide variety of markets nationwide,” he said. “However, within many major metro areas the most affordable and accessible markets for low down payment buyers are often those furthest from jobs and other amenities that many buyers want.”

(Photo: Flickr/The Comedian)