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


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SAN FRANCISCO MILLENNIALS FACE HIGHEST TAX BURDEN IN U.S.
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)

 

Economists think the low interest rates will continue for awhile

A message to homebuyers anxious about rising interest rates on home loans: relax. You’re not going to miss out on today’s superlow mortgage rates if you’re just now starting to search for your dream home in the Bay Area. (Or that getaway ski home in the Lake Tahoe/Truckee region.)

Fed Chairwoman Janet Yellen

Recent analysis and crystal-ball gazing by economists has generally put off a rate increase until mid-December at the earliest, and quite possibly not until March 2016. The next meeting of the Federal Reserve’s Federal Open Markets Committee is scheduled for Dec. 15-16, and Fed Chairwoman Janet Yellen has made it clear she will give the markets plenty of time to adjust to the change. If the global economy doesn’t improve markedly by December, March is a more likely date for a rate hike.

And even when rates do increase, they will crawl higher, not jump.

The Bay Area’s Yellen — remember, she was head of the San Francisco Federal Reserve Bank before taking the top job — has said that future interest-rate increases will be gradual, no more than 1 percentage point a year. And perhaps much less: Jonathan Smoke, chief economist for Realtor.com, told The New York Times that he expects to see a gradual increase in interest rates totaling no more than half a percentage point over a 12-month period.

That means that today’s interest rates will still be a bargain by historical standards. And that will help make homes in the Bay Area and across Northern California much more affordable over the life of a mortgage than their price tags suggest.

Interest rates on a 30-year, fixed-rate mortgage averaged 3.85 percent last week and have been largely unchanged for more than a month, according to Freddie Mac’s weekly rate survey. Fifteen-year mortgages were at 3.07 percent last week, with five-year adjustable-rate mortgages at 2.91 percent and one-year ARMs at 2.53 percent.

It’s worth noting that mortgage rates in Western states lately have been lower than the national average. Freddie Mac said the average 30-year FRM in the West was 3.80 percent, compared with 3.82 percent in the North-Central U.S., 3.87 percent in the Northeast, 3.89 percent in the Southeast, and 3.90 percent in the Southwest.

The bottom line: Talk to your real estate professional, start scoping out desirable neighborhoods, and get started on a preapproved home loan. But don’t forget to stop and smell the roses in your new backyard.

(Photo: Flickr/International Monetary Fund)

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)