Real Estate Roundup: San Francisco Is No. 3 in the World for Billionaires

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

THE BAY AREA MINTED 14 NEW BILLIONAIRES IN 2017
Yet more impressive news about the Bay Area’s high-octane economy: The region has more billionaires than all but two other places on the planet.

Citing a Wealth-X study, SFGate reports that the number of billionaires across the world climbed to 2,754 in 2017, a new all-time high. The United States is home to 680 of those ultrawealthy individuals, the most in the world and more than the next three countries combined.

The San Francisco metropolitan area — which includes five local counties but not Santa Clara — is currently home to 74 billionaires, the third most in the world behind New York City and Hong Kong. Fourteen Bay Area residents became new billionaires in 2017, making the region responsible for about one-quarter of the global growth.

As SFGate notes, the Bay Area’s tech-centric economy is largely behind the high concentration of billionaires in the region. Four local tech heavyweights rank among the world’s 20 wealthiest individuals in 2018 according to Forbes: Facebook head honcho Mark Zuckerberg; Oracle Co-Founder and Executive Chairman Larry Ellison; and Google Co-Founders Larry Page and Sergey Brin. Of those mega-rich individuals, Zuckerberg claims the deepest pockets, with a total net worth of more than $70 billion, making him the fifth-wealthiest person on the planet.


U.S. HOME-FLIPPING ACTIVITY MATCHES POSTRECESSION PEAK
Real estate investors are betting on continued robust home price appreciation, as the number of home flips has reached the highest level since before the housing-market meltdown.

That’s according to a recent report by CoreLogic’s Bin He, which says that home flips — defined as a property bought and resold in 12 months — accounted for 6.2 percent of U.S. sales activity during the first quarter — matching the former high observed in the first quarter of 2013. He says that six years of home price gains have significantly increased the cost of doing business for flippers, and that the rise in activity points to investors’ confidence that appreciation will continue.

Here in the Bay Area, exceptionally high real estate prices dictate that home flipping is not a viable option for most investors. In a study published last summer, WalletHub found that Oakland, San Francisco, and San Jose were among the 10 most difficult housing markets in America for home flippers.


MORTGAGE RATES HIT A SEVEN-YEAR HIGH
Prospective homebuyers who have not made a move while mortgage rates have hovered near record lows may be regretting that decision now, as rates have reached the highest level since 2011.

The latest numbers from Freddie Mac say that 30-year, fixed-rate mortgages averaged 4.61 percent for the week ended May 17, up on both a weekly and annual basis. Fifteen-year, fixed-rate mortgages followed suit, increasing to 4.08 percent.

In a statement accompanying the report, Freddie Mac Chief Economist Sam Khater said that while rising interest rates have so far not dampened homebuyer demand, that could occur as rates reach 5 percent. As CNBC reports, rising rates are already affecting refinancing activity, which fell by 4 percent two weeks ago to the lowest level in nearly a decade.


CALIFORNIA JOB GROWTH CONTINUES TO OUTPACE HOME CONSTRUCTION
Although California saw a notable increase in home-building plans in the first quarter, it still may not put much of a dent in the state’s severe inventory shortage.

As The Orange County Register reports, California home builders filed more than 28,000 residential permits in the first three months of 2018, a 30 percent year-over-year gain. That represents the ninth-largest increase in the U.S. and is about five times higher than the nationwide 6.8 percent gain in building permits.

And while California’s plans to build more homes are sorely needed, the state’s booming economy means that there is still likely to be a housing shortage for the foreseeable future. Even if developers in the state continue to file permits at the first-quarter pace, new jobs will still outnumber new housing units by nearly three times.

(Photo: iStock/FLDphotos)

Oakland Ranks as One of America’s Top Five Booming Housing Markets

  • More than one-quarter of the country’s 25 fastest-rising real estate markets are in the Bay Area.
  • Oakland ranks No. 5 on the list, boosted by rising home values and incomes.
  • According to MLS data, the median sales price for a single-family home in Oakland reached $825,000 in April, the highest in two years.

The Oakland skyline and Lake MerrittDuring the current housing cycle, Oakland has become a hot spot for Bay Area homebuyers who are priced out of San Francisco, so it’s hardly surprising that a new study ranks the city as one America’s fastest-rising real estate markets.

An analysis from SmartAsset determines the country’s top 25 rising housing markets on a 100-point scale based on housing demand, change in home values, and change in incomes between 2012 and 2016. More than one-quarter of those booming housing markets are in the Bay Area, with East Bay cities making a strong showing.

Based on the criteria above, Oakland ties for No. 5 on the list of the country’s top rising real estate markets, with a score of 92.70. Since 2012, home values in Oakland have appreciated by 11.27 percent, while median incomes have risen by 11.79 percent. The number of new residents in Oakland has also outpaced the number of new housing units by more than 6 percent.

Oakland’s rising home prices and exceptionally low inventory reflect intense homebuyer demand in the city. According to MLS data, Oakland’s median single-family home sales price reached $825,000 in April, the highest in at least two years and up by 9.3 percent year over year. There was a 1.2-month supply of homes for sale in April, meaning that the market leans heavily in favor sellers. Bidding wars remain common, with Oakland homes selling for an average of 117 percent of original price last month.

Oakland’s Alameda County neighbors Hayward and Fremont also make the list, ranking a respective No. 13 and No. 14. With a 90.68, Hayward saw home values increase by more than 20 percent, while Fremont scores a 90.46 based on double-digit percent home value and income gains. Elsewhere in the East Bay, Contra Costa County‘s Concord comes in at No. 21, notching an 85.19.

San Francisco and San Mateo round out the Bay Area’s presence on the fastest-rising housing markets list, both tied with Portland, Oregon at 23rd and scoring an 84.85. Income growth was particularly strong in San Francisco at 18.83 percent, the second-highest gain of any city included on SmartAsset’s list.

(Photo: iStock/DianeBentleyRaymond)

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: Is Now the Best Time Ever to Sell a Home?

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

AMERICANS’ CONFIDENCE IN THE HOUSING MARKET CLIMBS TO ALL-TIME HIGH
Rising home prices and a strong U.S. economy have propelled Americans’ optimism in the housing market to a record high, though persistent inventory shortages will likely remain a challenge for the foreseeable future.

Fannie Mae’s latest Home Purchase Sentiment Index rose to 91.7 in April, an all-time high, with five of the six indicators increasing from the previous month. Forty-five percent of respondents to the poll believe that now is a good time to sell a home, which is also the highest in the survey’s history.

The U.S. unemployment rate fell to 3.9 percent in April, near an 18-year low, and the economy is clearly boosting Americans’ optimism about the housing market. More than three-quarters of those surveyed told Fannie Mae that they are not concerned about losing their jobs.

If now might be the best time to sell a home across the country, the window seems to be particularly optimal in California this spring. In late March, a SmartAsset report put 17 of the best 25 U.S. housing markets for sellers in the Golden State. And last month, an analysis from ATTOM Data Solutions found that May, June, and July are the best times to list a home in most California cities.


SAN FRANCISCO HAS THE FEWEST DELINQUENT MORTGAGES IN THE NATION
Nationwide, the number of homeowners who are delinquent on their mortgages is near its prerecession low, with San Francisco having the fewest delinquencies among the largest U.S. cities.

That’s according to a CoreLogic report, which says that 4.8 percent of homeowners with a mortgage were in some stage of delinquency in February, the lowest since 2007 and near the pre-crisis average of 4.7 percent. Foreclosure rates have returned to their prerecession lows of 0.6 percent.

Of the 10 largest U.S. metropolitan areas, San Francisco has a mortgage-delinquency rate of 1.7 the lowest in the country. Along with their neighbors in San Jose, San Francisco residents are among the least likely in the country to be denied mortgages, according to a recent LendingTree study.


SOLAR PANELS ARE NOW A MUST FOR ALL NEW CALIFORNIA HOMES
Although most California homebuyers are not particularly interested in solar panels, they will soon get them anyway if they purchase a new property

As the Los Angeles Times reports, the California Energy Commission last week unanimously voted in favor of a measure that will require solar-energy systems in all newly built single-family homes and smaller multifamily structures. The initiative, which will take effect in 2020, will add about $9,500 to the cost of construction but is projected to save homeowners $19,000 in energy bills in the long run.

According to a report from The Mercury News, the Bay Area is ahead of the state when it comes to energy-efficient homes, as a handful of cities — including San Francisco — already have some solar requirements on newly built dwellings. In San Jose, roughly one-quarter of the homes currently listed on the market mention energy-saving amenities.


MOST HOME SHOPPERS EXPECT THEIR SEARCHES TO GET TOUGHER
Home shoppers appear to be keenly aware of the nation’s inventory shortage, and most feel that they will have a difficult time finding a suitable property this year.

The National Association of Home Builders’ first-quarter Housing Trends Report found that about three-quarters of prospective homebuyers believe that their searches will get harder in the coming months, up from 65 percent in the fourth quarter. Sixty-four percent of buyers report seeing fewer desirable homes on the market than they did three months ago.

Americans are also cognizant of the housing market’s deteriorating affordability conditions, with more than eight in 10 saying that they can afford fewer than half of the homes for sale.

(Photo: iStock/Feverpitched)

Labor Shortages, Materials Costs Increases to Drive Up Home-Remodeling Costs

  • A recent survey found that remodeling firms expect labor shortages to worsen this year, while worker and materials costs will increase.
  • More than nine in 10 remodeling businesses report a shortage of carpenters.
  • About 70 percent of home-improvement companies will pass increased labor and materials costs on to customers.

While most American homeowners and prospective buyers probably do not ponder the construction sector on a regular basis, current trends in that industry could affect their wallets in the coming months.

Houzz’s new State of the Industry 2018 report, which coincides with National Home Improvement Month, found that respondents from all seven construction and remodeling subsectors it tracks expect the availability of skilled workers to tighten this year. General contractors, designers, and builders are projected to be the most in-demand types of workers, with about half of those polled expecting the labor market to get tighter.

All seven subsectors also project that labor costs will increase, again led by general contractors (56 percent) and designers and builders (57 percent). About half of architects and specialty renovators and landscapers think that the aforementioned lack of skilled workers will cause job costs to rise in 2018.

That trend again persists when it comes to the cost of remodeling and building materials, which are expected to increase across the board. The number of remodeling professionals who believe that materials costs will be higher this year than last ranges from 60 percent of general contractors to 47 percent of landscaping firms.

Houzz’s survey dovetails with research published earlier this week by the National Association of Home Builders, in which more than 90 percent of home renovators reported a shortage of carpenters, with about half calling the situation serious. Other types of remodeling professionals that are in the highest demand include framers, bricklayers, drywall installers, and concrete workers.

About three-quarters of remodeling businesses told NAHB that a lack of skilled workers is leading them to pay higher wages. The impact on homeowners is nearly the same, with 71 percent of firms reporting that they pass their increased costs along to clients.

Bay Area homeowners who are considering a home-improvement project should check out Remodeling’s 2018 Cost Versus Value report, which estimates average costs for 21 popular jobs in 149 U.S. metropolitan areas, including San Francisco, San Jose, and Santa Rosa. The report also offers information on home-renovation returns, which are particularly sunny in Silicon Valley, with 18 of the 21 tracked jobs expected to turn a profit this year.

(Photo: iStock/Worawee Meeepian)

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: Bay Area Homeowners Begin 2018 as the Nation’s Most Equity-Rich

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

SAN JOSE, SAN FRANCISCO CONTINUE TO HAVE THE NATION’S MOST EQUITY-RICH HOMEOWNERSAn aerial view of San Francisco at sunset
As Pacific Union published in its first-quarter 2018 real estate report, single-family home prices in San Francisco and Silicon Valley posted substantial annual home price gains, a respective 25.5 percent and 19.5 percent. And that type of appreciation means that the Bay Area’s largest two cities remain those with the most equity-rich homeowners in the country.

That’s according to ATTOM Data Solutions latest Home Equity & Underwater report, which says that there were more than 13.8 million U.S. properties classified as equity-rich in the first quarter, representing about 25 percent of homes with a mortgage. The company defines equity-rich properties as those with loans comprising 50 percent or less of the property’s estimated value.

As in past quarters, San Jose has the most equity-rich homeowners in America, with 66.1 percent falling into that category. San Francisco is No.2 for the highest number of equity-rich homeowners at 56.0 percent, followed by Los Angeles at 45.4 percent.

Those three cities also have virtually no seriously underwater properties, ranging from .01 percent in San Jose to .03 percent in Los Angeles. Nationwide, 9.5 percent of homes were considered seriously underwater in the first quarter, defined as those where the loan amounts are at least 25 percent higher than the property’s value.


THE AMERICAN DREAM IS ALIVE AND WELL IN SILICON VALLEY
A recent study ranks San Jose among the top 10 places in the country to acheive the American dream, though if that dream includes owning a home, it will be an expensive one to realize

An analysis by SmartAsset seeks to determine the 25 best U.S. cities for living the American dream on a 100-point scale based on diversity, economic mobility, unemployment rates, homeownership rates, and median home value. After placing No. 12 in last year’s version of the study, San Jose has moved into the top 10 in 2018, ranking No. 8 with an overall score of 83.63. San Jose is one of three California cities to make the cut and the state’s highest-ranking representative.

SmartAsset notes that San Jose’s high score stems from its diversity, low unemployment rate, and income growth. But of course, the city doesn’t fare as well in the housing-related categories; San Jose’s median home value of $802,000 is the highest of any of the 25 included on the list.


SAN JOSE POSTS DOUBLE-DIGIT PERCENT ANNUAL RENT PRICE GAINS
Buying a home is not the only rising housing cost in Silicon Valley, with the region posting double-digit percent rent price increases from last spring.

Zumper’s latest monthly rent report puts the average cost for a one-bedroom unit in the San Jose metropolitan area at $2,500 in May, up 10.6 percent year over year to make it the nation’s third most expensive renal market. Two-bedroom rental costs in San Jose also rose, up 5.3 percent since May 2017 to $3,000.

As has been the case for many consecutive months, San Francisco remains America’s priciest city in which to rent an apartment, with one-bedroom prices rising 2.1 percent year over year to $3,440. Oakland, which ranks as the nation’s seventh most expensive rental market, saw similar modest annual price growth, up 1.9 percent to $2,100.


FEDERAL RESERVE HOLDS OFF ON INTEREST-RATE INCREASE
Although the Federal Reserve declined to raise interest rates at its meeting last week, economists expect it to make more hikes this year than previously believed.

As HousingWire.com reports, the Fed said that it would keep interest rates in the current range of 1.5 percent to 1.75 percent. In a statement, the Fed cited the country’s strong job growth and low unemployment rate as reasons supporting its decision to leave rates unchanged.

In an analysis of April’s U.S. job numbers, in which the unemployment rate fell to a near 18-year low of 3.9 percent, Pacific Union Chief Economist Selma Hepp projects that the Fed will raise interest rates four more times in 2018 rather than the previous forecast of three. That, she says, will cause mortgage rates to accelerate quicker than initially believed.

(Photo: iStock/muddymari)

Real Estate Roundup: California Housing Markets Are No Longer on Top of the Nation’s Hot List

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

The Coit Tower and Transamerica Pyramid in San Francisco

SAN FRANCISCO LOSES ITS STATUS AS HOTTEST U.S. REAL ESTATE MARKET IN APRIL
For the past couple of years, California cities have dominated realtor.com’s monthly list of the nation’s 20 hottest real estate markets, with San Francisco, San Jose, and Vallejo trading off the No. 1 spot. But that situation has changed as April ends, with a West Texas city claiming the title of America’s most in-demand housing market.

Realtor.com measures a real estate market’s heat level by the most listing views on its website and fastest pace of sales, and by those criteria, Midland, Texas is the nation’s hottest housing market in April. San Francisco, which had held the No. 1 position for the first three months of this year — as well as multiple months over the past few years — fell to No. 3.

The Bay Area’s other hot-list stalwarts, Vallejo and San Jose, also tumbled from the previous month, dropping to a respective No. 5 and No. 11. And while California cities have typically accounted for more than half of realtor.com’s rankings, there were just six on April’s list, rounded out by Sacramento (No. 8), Stockton (No. 9), and Santa Cruz (No. 15).

While California’s high housing costs may be causing some prospective homebuyers to peruse listings in other parts of the country, there is no shortage of local demand. According to Pacific Union’s first-quarter 2018 real estate report, single-family home prices grew by 25.5 percent year over year in San Francisco and were up by 19.5 percent in Silicon Valley.


BAY AREA ENTRY-LEVEL HOME COSTS SEE THE NATION’S LARGEST INCREASE
Over the past year, the housing market has gotten increasingly tougher on first-time buyers, and nowhere is that truer than in the Bay Area.

That’s according to research from John Burns Real Estate Consulting, which says that monthly housing costs for first-time U.S. homebuyers was $1,641 as of March, up 9 percent on an annual basis. Monthly housing costs for first-time buyers in the Bay Area are nearly three times the national average: $4,673, the highest of the 31 metropolitan areas included in the analysis. Housing costs for first-time Bay Area buyers rose by 14 percent from March 2017, the largest such increase in the country.

To contend with rapidly rising housing costs, JBREC says that first-time buyers will likely have to make some concessions, including buying smaller and older homes or those located further from job centers. That latter trend is certainly playing out in the Bay Area, as the number of workers who commute more than 90 minutes each day has soared over the past decade. A study by ApartmentList found that the number of these so-called “super-commuters” in San Francisco grew by nearly 113 percent between 2005 and 2016.


HOMEBUYER DEMAND CLIMBS TO RECORD HIGH
Americans’ consumer confidence is near a two-decade high, and that is translating into increased desire for homeownership.

Citing survey results from The Conference Board, the Orange County Register reports that overall U.S. consumer confidence is the highest in almost 17 years in April. Californians are also feeling good about the economy, with consumer confidence nearing its record peak. The state’s thriving job market likely plays a key role in that optimism, with the unemployment rate again at a record low in March according to an analysis by Pacific Union Chief Economist Selma Hepp.

The survey found that 7.8 percent of Americans expect to purchase a home in the next six months, topping the previous survey high of 7.4 percent. Besides real estate, no other major purchase — including automobiles or appliances — has currently eclipsed its prerecession peak.


MORTGAGE RATES CONTINUE THEIR RUN-UP
Mortgage rates kept rising last week, but the increases are not putting the brakes on buyer demand for loans.

The latest numbers from Freddie Mac put 30-year, fixed-rate mortgages at 4.58 percent for the week ended April 26, up on both a weekly and annual basis and the highest since August 2013. Fifteen-year, fixed-rate mortgages also rose from the previous week and year, climbing to 4.02 percent.

“Despite the increase in borrowing costs, demand for home purchase credit remains solid,” Freddie Mac Chief Economist Sam Khater said. “The Mortgage Bankers Association reported in their latest mortgage applications survey that activity was up 11 percent from a year ago.”

(Photo: iStock/tupungato)