Housing Costs Stretch Bay Area’s Geographic Footprint

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Altamont Pass as seen from the San Joaquin Valley.

MORE THAN 600,000 LONG-DISTANCE COMMUTERS POUR INTO THE BAY AREA EACH DAY
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 Home Affordability Improves in the Forth Quarter

Housing affordability improved in the Bay Area and across California in the fourth quarter of 2015 — welcome news for homebuyers.

The California Association of Realtors said its fourth-quarter Housing Affordability Index reached 24 percent in the nine-county Bay Area, up two percentage points from the previous quarter and up three points from a year earlier. Statewide,  housing affordability stood at 30 percent — a gain of one percentage point from the third quarter but down one point from the fourth quarter of 2014.

The Housing Affordability Index tracks the percentage of homebuyers who can afford to purchase a median-priced, single-family home, and CAR credits the improved affordability to lower interest rates and level home prices.

Even with the rising numbers, however, homeownership remains out of reach for many more Californians and Bay Area residents than elsewhere in the United States. Nationwide, 58 percent of homebuyers could afford a median-priced home in their community.

In the Bay Area, housing affordability rose from the third to the fourth quarter in seven of nine counties. It stayed the same in one (Napa) and fell two percentage points in another (Marin).

Solano was the Bay Area’s most affordable county in the fourth quarter, with 45 percent of buyers able to afford a home there. It was followed by Contra Costa (37 percent), Sonoma (26 percent), Alameda (22 percent), and Napa (21 percent). The least affordable counties in the state that CAR tracks were San Francisco (11 percent), San Mateo (14 percent), Marin (17 percent), and Santa Clara (20 percent).

Homebuyers in the Bay Area needed to earn a minimum annual income of $147,080 to qualify for the purchase of a $735,170 median-priced, single-family home in the fourth quarter. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,680, assuming a 20 percent down payment and an effective composite interest rate of 4.07 percent.

(Image: Flickr/Pictures of Money)

Source: Pacific Union

California Real Estate Market – Strong Start in 2016

Golden State real estate continued to command high demand in the inaugural month of 2016, with the Bay Area’s largest two cities once again ranked as the nation’s hottest.transamerica_sunset

That’s according to the latest analysis from Realtor.com, which determines the nation’s 20 most in-demand housing markets each month by calculating the number of listing views on its website along with the fewest days on market. As in December, California cities took more than half of those slots, including seven of the top 10.

As it has for most of the past six months, the San Francisco metro area ranked as the nation’s hottest real estate market in January, with a median list price of $716,000 and homes selling in an average of 51 days. San Jose followed in the No. 2 position, where homes listed for $854,000 and left the market in 50 days.

Homes in these two Bay Area cities sold twice as fast as the national average of 100 days and were more than three times more expensive than the U.S. median list price of $227,000. Slower sales are typical in January, though Realtor.com says that it expects activity to pick up heading into the spring season.

“Our traffic, searches and listing views exhibited the January ‘pop’ we saw last year, which made for a strong spring,” Realtor.com Chief Economist Jonathan Smoke said in a statement accompanying the report. “In addition, a large number of prospective buyers have been telling us since the second half of 2015 that they plan to purchase in the spring and summer of 2016.”

Vallejo ranks as the country’s No. 4 hottest housing market, down one spot from December. Other California cities named among the nation’s top 20: San Diego (No. 5), Sacramento (No. 6), Stockton (No. 8), Los Angeles (No. 10), Santa Rosa (No. 11), Oxnard (No. 12), Yuba City (No. 14), Modesto (No. 14), and Santa Cruz (No. 18). Eleven of those 12 cities made the hot list in December, with Santa Cruz returning to the mix in January.

Realtor.com predicts that Florida could challenge California this year as the nation’s top warm-weather housing market, but as of January, just two cities in that state — Palm Bay and Tampa — were named among the nation’s most sought-after.

(Photo: Flickr/Joe Parks)

Source: Pacific Union

San Francisco metro area home price increased by more than 20%

The median price for a San Francisco metro area home increased by more than 20 percent for the 12th consecutive month, February’s S&P/Case-Shiller Home Price Indices show.san_francisco_skyline

Prices in San Francisco grew by 22.7 percent year over year in February, slightly less than in January but still one of only two areas on Case-Shiller’s 20-city composite to put up annual gains of more than 20 percent. As was the case in January, San Francisco was one of seven regions to show positive month-over-month growth (0.2 percent).

Annual U.S. home prices across the composite increased 12.9 percent in February — a slowdown from previous months, according to the report – but Golden State real estate markets still rank among the country’s hottest.

“The annual rates cooled the most we’ve seen in some time,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. “The three California cities and Las Vegas have the strongest increases over the last 12 months as the West continues to lead.”

Price gains aside, Case-Shiller’s February report notes that lackluster home sales volume and fewer housing starts are potential sources of concern for the national housing recovery.

A closer examination of MLS data as of April 29 shows positive yearly price growth for single-family homes in each of Pacific Union’s nine regions. However, gains were for the most part less dramatic than in January, when they topped 40 percent in both San Francisco and the Sonoma Valley region.

San Francisco County saw the largest year-over-year home price increases in the Bay Area in February – 31 percent – and the median price topped $1 million for the second month in a row. Our Contra Costa Countyregion also posted price gains higher than Case-Shiller’s California average: 25 percent.

Price upticks in the rest of our regions ranged from 19 percent in Sonoma County to 8 percent in Silicon Valley. Despite the moderate monthly growth, homes in Silicon Valley commanded the highest median prices of those in any of Pacific Union’s regions: $2.36 million.

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(Image: Flickr/F_lopiano)

Pacific Union Blog

Bay Area -highest housing prices in the nation in Q4, 2013

 

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A pair of recent reports – one from the National Association of Realtors and another from a Southern California real estate consulting firm – recount an exceptional 2013 in Bay Area residential real estate and deliver an optimistic forecast for the coming year.

According to NAR’s recent fourth-quarter report, two Bay Area metropolitan areas led the country in terms of median sales price as 2013 drew to a close. The San Jose area had the highest median single-family home sales price in the U.S., at $775,000, while San Francisco ranked No. 2 at $682,400. Two of the other top five priciest housing markets were also in California.

San Jose and San Francisco both posted double-digit year-over-year price hikes, along with 40 other U.S. markets of the 164 included in the report. Prices grew by 15.0 percent in San Francisco and 13.1 percent in San Jose.

NAR chief economist Lawrence Yun said that slim inventory was responsible for the double-digit appreciation in many markets, adding that new home construction could help alleviate rising prices.

A short supply of available homes and vigorous price growth across Northern California also took center stage in the January 2014 Regional Analysis and Forecast published by John Burns Real Estate Consulting.

The report divides the country into 10 regions and ranks each based on a combination of five factors: job growth, resale transaction volume, resale supply, supply of unsold homes, and year-over-year price gains. As of January, the report puts Northern California as the No. 1 real estate market in America, up one position from the previous month.

According to the company, Northern California leads the country in smallest months’ supply of inventory for both resale and unsold homes: 1.9 and 0.6, respectively. Constrained inventory appears to have heavily affected home resale activity in the East Bay market, which the report says had the smallest resale volume in the country for the trailing twelve months ending November 2013.

Northern California was one of just three markets that the report believes is heading up, noting healthy price appreciation and employment growth as particular strengths.

Our overall region was tied for first place when measuring year-over-year home price growth, which the Burns report places at 20 percent. Additionally, the company ranks two Bay Area subregions within the top 10 in the country for year-over-year job growth: San Jose and San Francisco each added nearly 27,000 jobs over the past year, gains of 3.0 and 2.7 percent respectively.

Pacific Union blog

(Image: Flickr/German Poo-Caamano)

The 263 unit- Arden- the latest condo development in Mission Bay

The Mission Bay condo king is at it again.Nat Bosa is coming to town this week to check up on his third and final condo project in the neighborhood — the 263-unit Arden overlooking the creek in Mission Bay. Bosa said the piles are in and the concrete work is starting this week. “I think we are raising the bar a little bit on this one — I am hoping I can find 263 people who love it as much as I do,” he said.

The sales office will open in late April or early May.

Bosa bet early and often on Mission Bay. He built the 99-unit Radiance, the first housing project south of Mission Creek. And then, during the darkest days of the recession, he broke ground on Madrone, 329 units next to Radiance. With the $250 million Arden, he has invested more than $500 million in the neighborhood.

While there is plenty of residential construction in Mission Bay at the moment, it is most rental. Developers UDR, BRE, and SummerHill Homes are at work on a total of 633 rental units, most of which will open in 2014. After Bosa, the only market-rate housing will come from Strada Investment Group, which is doing a mix of rental and condos on Block 1. That will break ground later this year.

While Bosa will still end up as Mission Bay South’s biggest builder, at one time he controlled nearly all the market-rate sites, including the UDR and BRE parcels. Eventually he decided to limit his exposure while holding on to what he felt were the best pieces of land.

He said construction costs are up 20 percent from Madrone, which benefitted from the fact that there was nothing else under construction at the time.

Arden backs up onto the new park along the creek and its motto is “living on the water, steps from the city.” “You have the park in front. You have the water. You have no buildings in front of you,” said Bosa.

While pointing out that pretty much everything in San Francisco is over $1,000 a square foot these days, Bosa said Arden will be priced to move.

“We have a hell of a lot of them to sell. I don’t think we are interested in just going to the top of the hill,” he said. “When we start selling, we want to sell a lot of units, so they will be priced accordingly.”

Bosa is also building in Seattle and San Diego —about $1 billion of projects right now. He says he has his hands full, but would continue to look at San Francisco deals.

“San Francisco is becoming New York in terms of real estate and Seattle is becoming more like what San Francisco used to be,” he said. “How do you stop San Francisco? You can’t. It’s all based on jobs, on tech. Everybody wants to be there rather than Silicon Valley.”

J.K. Dineen, San Francisco Business Times.