Bay Area Home Prices Soar in November

 

Executive Summary:

  • The Bay Area’s median home price increased 14 percent year over year in November, driven by strong appreciation in Silicon Valley.
  • Sales of homes priced above $2 million grew by 72 percent in San Mateo and Santa Clara counties, 95 percent in Marin County, and 81 percent in Alameda County. These higher-priced sales were a big driver of the home price surge.
  • General market competition intensified in November, with a 10 percent increase in absorption rates and seven fewer days on the market year over year.
  • Inventory shortages continue dragging down overall sales, which were 2 percent lower than last November.
  • Fears of proposed tax changes and the potential impacts on homebuyer deductions may have fueled some of the November surge in demand.
  • Home prices In San Francisco and Silicon Valley are about 50-plus percent higher from the last peak.

The final month of 2017 appears set to close with strong Bay Area housing-market numbers, at least regarding prices. In November, home sales activity was 2 percent lower than last November, but that comes with important caveats. Wildfires certainly impacted the affected and surrounding areas. Sonoma County home sales were up 13 percent from last November, and in adjacent Marin County, sales jumped by a remarkable 24 percent. Both regions’ November increases reversed October’s year-over-year notable declines, a function of the wildfires. With November’s increase in sales, Sonoma County’s overall year-to-date housing activity is on par with 2016.

Napa County, on the other hand, saw a 12 percent year-over-year decline in sales and is the only Bay Area region where year-to-date sales are lower than they were in 2016. Sales were lower across all price ranges except for homes priced between $1 million and $2 million. Napa County has the lowest level of sales of all Bay Area counties, and overall, 85 fewer units have sold so far in 2017. A detailed analysis of Wine Country real estate activity will be available on our blog later this week.

November sales also declined year over year in Contra Costa and Santa Clara counties due to a continued rapid decline in inventory of homes priced below $1 million and a consequent lack of sales in that price range. In Santa Clara County, the inventory of homes priced below $1 million was 54 percent lower than last November. While inventory declines are not new, November once again showed falling supply across the region, down 21 percent on an annual basis. Santa Clara County again led the declines, with a staggering 39 percent drop in inventory.

Figure 1 illustrates overall year-over-year inventory changes, inventory changes for homes priced between $1 million and $2 million, absorption rates, and median days on market. Numbers in red show relatively stronger market competition when compared with other regions. For example, Marin and San Francisco counties saw 10-day drops in the median days that homes spent on the market. As noted, Napa County has seen 2017 market conditions slow in comparison with last year. Nevertheless, the second half of last year was relatively stronger in Napa County, thus a year-over-year comparison may just reflect normalizing trends.

In addition to the 21 percent year-over-year decline in inventory, Figure 1 also illustrates annual supply changes for homes priced between $1 million and $2 million, which dropped by 11 percent from last year. Again, while falling affordable inventory is unfortunately a continued and alarming trend for the Bay Area, the region also faces a declining supply of higher-priced homes, which are in demand for buyers in half of local counties. Finally, Figure 1 illustrates absorption rates for listed inventory and the change from last year. Again, numbers in red suggest relatively more competitive markets, with higher increases in the rate of inventory absorption. Silicon Valley saw the largest increase in absorption, followed by Marin County and San Francisco. All Bay Area regions showed higher absorption rates averaging 50 percent, a 10 percent increase from last November. These market indicators point to strong demand, which would have pushed transaction activity much higher this year if more inventory was available.

Figure 1: Select Bay Area November market statistics

Source: Terradatum, Inc. from data provided by local MLSes, Dec. 6, 2017.

Figure 2 summarizes changes in absorption rates, as well as changes in the share of listings that expired when compared with last November. Napa County and Sonoma County trends deviate from other Bay Area counties, a reflection of the October wildfires.

Figure 2: Annual changes in absorption rates and expired listings by Bay Area county.

Source: Terradatum, Inc. from data provided by local MLSes, Dec. 6, 2017.

One of the most striking insights from November data is the increase in median prices seen across the region, a trend not anticipated at this point in the Bay Area housing cycle or at this time of year. In November, prices were 14 percent higher on an annual basis, with Silicon Valley median prices jumping as much as 26 percent. The gain is partially driving the increase in sales of higher-priced homes — $2 million-plus — which increased by 50 percent in November and by 72 percent in San Mateo County. Again, the strong market for homes priced above $2 million characterized most of 2017 across the entire Bay Area. Overall year to date, the median home price has grown by 10 percent in the Bay Area. Figure 3 illustrates historical changes in median prices for the Bay Area’s regions, excluding Napa and Sonoma counties.

The table in Figure 3 summarizes changes in median prices by region from the last peak and the subsequent trough. The percent changes show how much prices have increased since the trough for single-family homes. All regions, except for Contra Costa County, have current median prices well above their previous peaks, with San Francisco’s median price now 64 percent higher.

Figure 3: Changes in Bay Area home prices from peak to trough to current

Source: California Association of Realtors

The increase in prices, along with stronger market competition, inevitably leads to the question of what factors drive demand and if there are signs of a bubble forming.

First, the Bay Area’s incredible job growth over the last few years, along with accompanying income growth, has definitely been the biggest stimulus for housing demand. Unlike the last housing surge of the mid-2000s, buyers today are well invested in their homes, with only 10 percent placing less than 20 percent down payments, according to Pacific Union data. The rest of the buyers have either purchased with 20 percent-plus down payments or with all cash.

Also, unlike during the last bubble, current demand far outpaces the supply of homes for sale, or homes available in general for the increase in population that the Bay Area has experienced. Next, unlike the proliferation of adjustable-rate and other exotic mortgages seen during the previous boom, homebuyers today are locking in fixed-rate mortgages at historically low rates. Finally, despite the Bay Area’s affordability crisis and home prices that exceed previous peaks, buyers are generally spending a lower share of their incomes on mortgage payments than they were during the previous cycle because of lower interest rates. This is not to say that the Bay Area’s affordability crisis is not severe, and the outcome will be loss of hardworking households that can no longer afford to live here. For more on this subject, the California Association of Realtors recently published a report examining if the state’s housing market is again in a bubble.

Lastly, with concerns around proposed tax changes and the impacts on new homebuyers, there is a potential pickup in demand stemming from those trying to take advantage of the more favorable existing tax laws, which would grandfather them in if the looming proposals come to fruition.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: A Bay Area Home for Less Than $100,000?

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

STICKER SHOCK: BAY AREA HOME LISTS FOR $99,000
An East Bay home recently commanded plenty of attention due to its astonishingly low price tag, although it ended up selling for more than five times more than its list price.

The most popular home on realtor.com’s website last week was a newly remodeled, three-bedroom home in Hayward. Built in 1953, the 1,000-square-foot bungalow hit the market in an auction with a reserve price of just $99,000 — or $92 per square foot. Visitors to realtor.com took note of the home’s diminutive price, which the company said garnered a “cascade of clicks.”

The low price helped incite a bidding war, according to Manuel Rueda, president of homly.com, the company that auctioned the home. The home eventually sold for $536,000, still shy of Hayward’s current $629,000 median list price. Even so, Rueda told realtor.com that his company was satisfied with the final sales price.


SANTA CLARA COUNTY’S MEDIAN SALES PRICE SURPASSES PREVIOUS HIGH
Bay Area home prices rose by double-digit percentage points in October, with Santa Clara County setting a new record.

Citing CoreLogic data, The Mercury News reports that the median single-family home sales price across the nine-county Bay Area was $800,000 in October, an annual gain of 11 percent. Home prices rose year over year in eight local counties, with Santa Clara County seeing a 19.7 percent gain from one year earlier. That county’s $1,125,000 median sales price represents a new peak, with appreciation driven by inventory that has been cut in half from one year earlier.

“It’s a sign of the times and a sign of the housing affordability problem the Bay Area continues to wrestle with,” CoreLogic Research Analyst Andrew LePage told The Mercury News, calling market conditions “brutal for a first-time buyer.” According to the California Association of Realtors’ latest Housing Affordability Index, only about one in five Bay Area households could afford to purchase the median-priced home in the third quarter, less than half the national rate.


HOME-FLIPPING ACTIVITY DOWN IN SAN FRANCISCO, SAN JOSE
A dwindling number of distressed properties pushed down U.S. home-flipping activity and profits in the third quarter, with Bay Area investors netting smaller profits than the national average.

That’s according to a recent ATTOM Data Solutions report, which says that home flips represented 5.1 percent of U.S. home sales in the third quarter, down from 5.6 percent in the second quarter. The average home flipper profited by $66,448, a 47.7 percent return on investment, down on both a quarterly and annual basis.

Given the Bay Area’s high home prices, it’s not surprising that flippers here were less active and made smaller profits than the national rate. In the San Francisco metro area, flips accounted for 3.8 percent of sales in the third quarter, with profits averaging 38 percent. Flippers were responsible for 3.5 percent of activity in San Jose, netting an average return on investment of 25 percent.


AMERICANS’ CONFIDENCE IN HOUSING MARKET AGAIN NEAR ALL-TIME HIGH
Optimism about the state of the U.S. housing market was near a record high in November, boosted by a jump in the number of Americans who think it’s a good time to sell.

Fannie Mae’s latest Home Purchase Sentiment Index ended November at 87.7, close to its all-time peak set in September. The amount of survey respondents who believe that the current environment is favorable to sellers was up by 21 percent from one year ago, and 11 percent think that prices will keep rising over the next year. Americans also expressed confidence in the economy, with a 10 percent year-over-year increase in the number of workers who do not fear losing their jobs.

In a statement accompanying the report, Fannie Mae Chief Economist Doug Duncan said that the index’s movement indicates modest expansion for the housing market moving forward, though he noted that the proposed tax reforms‘ effects on consumer confidence in the housing market and the economy remain to be seen.

(Photo: iStock/nortonrsx)

Pacific Union’s November 2017 Real Estate Update

Northern California’s inventory woes continued in November, with the number of homes for sale dropping on an annual basis in all Bay Area regions in which Pacific Union operates. Supply fell to a one-year low in Contra Costa County, Marin County, San Francisco, Silicon Valley, Sonoma County, and Sonoma Valley.

Click on the image accompanying each of our regions below for an expanded look at local real estate activity in November.

CONTRA COSTA COUNTY

The median sales price in Contra Costa County ended November at $1,250,000, tying the high set three times earlier this year. The months’ supply of inventory was 1.0, down on both a monthly and yearly basis.

Homes sold in a brisk 21 days and for 99.1 percent of original prices.

Defining Contra Costa County: Our real estate markets in Contra Costa County include the cities of Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek. Sales data in the adjoining chart includes single-family homes in these communities.


EAST BAY

For the 10th consecutive month, the median sales price in our East Bay region was in the seven-digit range in November, at $1,100,000. With a  0.7-month supply of inventory, the East Bay remained one of the Bay Area’s tightest real estate markets.

As in October, homes took an average of 18 days to find a buyer. Continuing a trend that has persisted for the past few years, homes again sold for substantial premiums, commanding 114.5 percent of asking prices.

Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Alameda; Albany; Berkeley; El Cerrito; Kensington; and Piedmont. Sales data in the adjoining chart includes single-family homes in these communities.


MARIN COUNTY

The number of homes for sale in Marin County fell to a one-year low in November, with the months’ supply of inventory at 0.9. The median sales price was $1,227,500, up 15 percent year over year.

Homes left the market in an average of 44 days, selling for 98.1 percent of original prices.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the adjoining chart includes single-family homes in these communities.


NAPA COUNTY

At $637,500, Napa County‘s median sales price ended November in the same general range as it has been all year. The months’ supply of inventory was 2.8, the lowest since the summer.

Homes sold for an average of 94.1 percent of asking prices, nearly identical to last November, and took 85 days to find a buyer.

Defining Napa County: Our real estate markets in Napa County include the cities of American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville. Sales data in the adjoining chart includes all single-family homes in Napa County.


SAN FRANCISCO – SINGLE-FAMILY HOMES

The median sales price for a single-family home in San Francisco was $1,500,000 in November, nearly matching the one-year high set in October. The number of homes on the market continued to dwindle, with the months’ supply of inventory at 0.9.

Sellers received an average of 110.2 percent of asking prices, nearly identical to premiums recorded in October. Single-family homes in San Francisco sold in an average of 27 days.


SAN FRANCISCO – CONDOMINIUMS

At $1,254,825, the median sales price for a San Francisco condominium climbed to a one-year high in November. Inventory moved in the opposite direction, falling on both a monthly and yearly basis to a 1.3-months’ supply.

Units sold in an average of 38 days and for 102.9 percent of original prices.


SILICON VALLEY

Silicon Valley‘s median sales price was $3,050,000 in November, unchanged from the previous month. The number of homes for sale declined to a one-year low, with the months’ supply of inventory at 1.0.

Homes sold for an average of 101 percent of asking prices, finding a buyer in 26 days.

Defining Silicon Valley: Our real estate markets in Silicon Valley include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the adjoining chart includes all single-family homes in these communities.

Mid-Peninsula Subregion

The median sales price in our Mid-Peninsula subregion reached a yearly peak in November, finishing the month at $1,885,000. Along with the East Bay, the Mid-Peninsula had the region’s most pronounced inventory drought, with a 0.7-month supply of homes for sale.

Sellers received an average of 102.9 percent of asking prices, similar to last November, with homes leaving the market in 19 days.

Defining the Mid-Peninsula: Our real estate markets in the Mid-Peninsula subregion include the cities of Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area). Sales data in the adjoining chart includes all single-family homes in these communities.


SONOMA COUNTY

The number of homes for sale in Sonoma County fell to a one-year low in November, with a 1.1-months’ supply of inventory. As a result, the median sales price increased to $659,000, a yearly high.

The pace of sales was identical to November 2016, with homes leaving the market in an average of 67 days. Buyers paid 96.7 percent of original prices, similar to numbers recorded over the past year.

Defining Sonoma County: Sales data in the adjoining chart includes all single-family homes and farms and ranches in Sonoma County.


SONOMA VALLEY

Inventory levels in Sonoma Valley were more than cut in half from October to November, with a 2.0-months’ supply for sale. Properties lasted on the market an average of 75 days, almost a month longer than in October.

The median sales price was $730,000, and buyers paid an average of 93.9 percent of asking prices.

Defining Sonoma Valley: Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the adjoining chart refers to all residential properties – including single-family homes, condominiums, and farms and ranches – in these communities.


LAKE TAHOE/TRUCKEE – SINGLE-FAMILY HOMES

The median sales price for a single-family home in the Lake Tahoe/Truckee region ended November at $699,000, just a few thousand dollars lower than in October. Homes sold for an average of 92.6 percent of asking prices, nearly identical to the previous two months.

The Lake Tahoe region had a 2.7-months’ supply of single-family homes for sale, with buyers taking an average of 83 days to close a sale.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes single-family homes in these communities.


LAKE TAHOE/TRUCKEE – CONDOMINIUMS

The number of condominiums on the market in the Lake Tahoe/Truckee region sunk to a yearly low, with a 2.8-months’ supply of units for sale. The median sales price was $477,500, a 27 percent annual increase.

Condominiums sold in an average of 122 days, nearly identical to October’s pace, and for 96.4 percent of original prices.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes condominiums in these communities.

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Shared with permission from the Pacific Union Blog

Pacific Union’s November 2017 Real Estate Update

Northern California’s inventory woes continued in November, with the number of homes for sale dropping on an annual basis in all Bay Area regions in which Pacific Union operates. Supply fell to a one-year low in Contra Costa County, Marin County, San Francisco, Silicon Valley, Sonoma County, and Sonoma Valley.

Click on the image accompanying each of our regions below for an expanded look at local real estate activity in November.

CONTRA COSTA COUNTY

The median sales price in Contra Costa County ended November at $1,250,000, tying the high set three times earlier this year. The months’ supply of inventory was 1.0, down on both a monthly and yearly basis.

Homes sold in a brisk 21 days and for 99.1 percent of original prices.

Defining Contra Costa County: Our real estate markets in Contra Costa County include the cities of Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek. Sales data in the adjoining chart includes single-family homes in these communities.


EAST BAY

For the 10th consecutive month, the median sales price in our East Bay region was in the seven-digit range in November, at $1,100,000. With a  0.7-month supply of inventory, the East Bay remained one of the Bay Area’s tightest real estate markets.

As in October, homes took an average of 18 days to find a buyer. Continuing a trend that has persisted for the past few years, homes again sold for substantial premiums, commanding 114.5 percent of asking prices.

Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Alameda; Albany; Berkeley; El Cerrito; Kensington; and Piedmont. Sales data in the adjoining chart includes single-family homes in these communities.


MARIN COUNTY

The number of homes for sale in Marin County fell to a one-year low in November, with the months’ supply of inventory at 0.9. The median sales price was $1,227,500, up 15 percent year over year.

Homes left the market in an average of 44 days, selling for 98.1 percent of original prices.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the adjoining chart includes single-family homes in these communities.


NAPA COUNTY

At $637,500, Napa County‘s median sales price ended November in the same general range as it has been all year. The months’ supply of inventory was 2.8, the lowest since the summer.

Homes sold for an average of 94.1 percent of asking prices, nearly identical to last November, and took 85 days to find a buyer.

Defining Napa County: Our real estate markets in Napa County include the cities of American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville. Sales data in the adjoining chart includes all single-family homes in Napa County.


SAN FRANCISCO – SINGLE-FAMILY HOMES

The median sales price for a single-family home in San Francisco was $1,500,000 in November, nearly matching the one-year high set in October. The number of homes on the market continued to dwindle, with the months’ supply of inventory at 0.9.

Sellers received an average of 110.2 percent of asking prices, nearly identical to premiums recorded in October. Single-family homes in San Francisco sold in an average of 27 days.


SAN FRANCISCO – CONDOMINIUMS

At $1,254,825, the median sales price for a San Francisco condominium climbed to a one-year high in November. Inventory moved in the opposite direction, falling on both a monthly and yearly basis to a 1.3-months’ supply.

Units sold in an average of 38 days and for 102.9 percent of original prices.


SILICON VALLEY

Silicon Valley‘s median sales price was $3,050,000 in November, unchanged from the previous month. The number of homes for sale declined to a one-year low, with the months’ supply of inventory at 1.0.

Homes sold for an average of 101 percent of asking prices, finding a buyer in 26 days.

Defining Silicon Valley: Our real estate markets in Silicon Valley include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the adjoining chart includes all single-family homes in these communities.

Mid-Peninsula Subregion

The median sales price in our Mid-Peninsula subregion reached a yearly peak in November, finishing the month at $1,885,000. Along with the East Bay, the Mid-Peninsula had the region’s most pronounced inventory drought, with a 0.7-month supply of homes for sale.

Sellers received an average of 102.9 percent of asking prices, similar to last November, with homes leaving the market in 19 days.

Defining the Mid-Peninsula: Our real estate markets in the Mid-Peninsula subregion include the cities of Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area). Sales data in the adjoining chart includes all single-family homes in these communities.


SONOMA COUNTY

The number of homes for sale in Sonoma County fell to a one-year low in November, with a 1.1-months’ supply of inventory. As a result, the median sales price increased to $659,000, a yearly high.

The pace of sales was identical to November 2016, with homes leaving the market in an average of 67 days. Buyers paid 96.7 percent of original prices, similar to numbers recorded over the past year.

Defining Sonoma County: Sales data in the adjoining chart includes all single-family homes and farms and ranches in Sonoma County.


SONOMA VALLEY

Inventory levels in Sonoma Valley were more than cut in half from October to November, with a 2.0-months’ supply for sale. Properties lasted on the market an average of 75 days, almost a month longer than in October.

The median sales price was $730,000, and buyers paid an average of 93.9 percent of asking prices.

Defining Sonoma Valley: Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the adjoining chart refers to all residential properties – including single-family homes, condominiums, and farms and ranches – in these communities.


LAKE TAHOE/TRUCKEE – SINGLE-FAMILY HOMES

The median sales price for a single-family home in the Lake Tahoe/Truckee region ended November at $699,000, just a few thousand dollars lower than in October. Homes sold for an average of 92.6 percent of asking prices, nearly identical to the previous two months.

The Lake Tahoe region had a 2.7-months’ supply of single-family homes for sale, with buyers taking an average of 83 days to close a sale.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes single-family homes in these communities.


LAKE TAHOE/TRUCKEE – CONDOMINIUMS

The number of condominiums on the market in the Lake Tahoe/Truckee region sunk to a yearly low, with a 2.8-months’ supply of units for sale. The median sales price was $477,500, a 27 percent annual increase.

Condominiums sold in an average of 122 days, nearly identical to October’s pace, and for 96.4 percent of original prices.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes condominiums in these communities.

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Shared with permission from the Pacific Union Blog

Most Bay Area Housing Markets Are Not Overvalued

  • Home prices grew by 7.6 percent in California and 7.9 percent in the San Francisco metropolitan area on an annual basis in October.
  • The San Francisco, San Rafael, Napa, Vallejo, and Oakland metro area housing markets are currently considered within their normal value ranges, while Santa Rosa and San Jose are overvalued.
  • By 2022, all Bay Area housing markets except San Rafael are projected to be overvalued.

Despite the high cost of purchasing a home in the Bay Area, most local markets are still within their normal value ranges, although that is not projected to be the case five years from now.

That’s according to CoreLogic’s latest U.S. Home Price Insights report, which says that U.S. home prices grew by 7 percent year over year in October. Appreciation in California and the San Francisco metro area outstripped the national rate, growing by a respective 7.6 percent and 7.9 percent. In a statement accompanying the report, CoreLogic Chief Economist Frank Nothaft noted that the national home price has grown in excess of 6 percent for four straight months, the longest such streak in more than three years.

“This escalation in home prices reflects both the acute lack of supply and the strengthening economy,” Nothaft said.

Even with continued price appreciation, CoreLogic says that most Bay Area markets are not overvalued. The San Francisco, San Rafael, Napa, Vallejo, and Oakland metro areas remain within normal value ranges, among the 36 percent of U.S. housing markets that fall into that category. Nothaft told realtor.com that the San Francisco metro area, where the median home sales price is $899,050, has always been an expensive place to buy a home, hence its normal valuation.

Santa Rosa and San Jose are the two Bay Area cities that are among the 50 percent of U.S. real estate markets currently considered overvalued. Still, Nothaft told realtor.com that he doesn’t project an imminent housing crash but rather a leveling of appreciation rates in 2018 as mortgage rates rise. CoreLogic expects the opposite for California’s housing market, where home prices are forecast to grow by 8.2 percent by October 2018.

Although most Bay Area housing markets are currently within their normal value ranges, the picture looks different five years from now. By 2022, CoreLogic expects that all Bay Area housing markets for which it tracks data will be overvalued except San Rafael.

(Photo: iStock/Spondylolithesis)

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Shared with permission from the Pacific Union Blog

Most Bay Area Housing Markets Are Not Overvauled

  • Home prices grew by 7.6 percent in California and 7.9 percent in the San Francisco metropolitan area on an annual basis in October.
  • The San Francisco, San Rafael, Napa, Vallejo, and Oakland metro area housing markets are currently considered within their normal value ranges, while Santa Rosa and San Jose are overvalued.
  • By 2022, all Bay Area housing markets except San Rafael are projected to be overvalued.

Despite the high cost of purchasing a home in the Bay Area, most local markets are still within their normal value ranges, although that is not projected to be the case five years from now.

That’s according to CoreLogic’s latest U.S. Home Price Insights report, which says that U.S. home prices grew by 7 percent year over year in October. Appreciation in California and the San Francisco metro area outstripped the national rate, growing by a respective 7.6 percent and 7.9 percent. In a statement accompanying the report, CoreLogic Chief Economist Frank Nothaft noted that the national home price has grown in excess of 6 percent for four straight months, the longest such streak in more than three years.

“This escalation in home prices reflects both the acute lack of supply and the strengthening economy,” Nothaft said.

Even with continued price appreciation, CoreLogic says that most Bay Area markets are not overvalued. The San Francisco, San Rafael, Napa, Vallejo, and Oakland metro areas remain within normal value ranges, among the 36 percent of U.S. housing markets that fall into that category. Nothaft told realtor.com that the San Francisco metro area, where the median home sales price is $899,050, has always been an expensive place to buy a home, hence its normal valuation.

Santa Rosa and San Jose are the two Bay Area cities that are among the 50 percent of U.S. real estate markets currently considered overvalued. Still, Nothaft told realtor.com that he doesn’t project an imminent housing crash but rather a leveling of appreciation rates in 2018 as mortgage rates rise. CoreLogic expects the opposite for California’s housing market, where home prices are forecast to grow by 8.2 percent by October 2018.

Although most Bay Area housing markets are currently within their normal value ranges, the picture looks different five years from now. By 2022, CoreLogic expects that all Bay Area housing markets for which it tracks data will be overvalued except San Rafael.

(Photo: iStock/Spondylolithesis)

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Shared with permission from the Pacific Union Blog