Real Estate Roundup: Bay Area Counties Are Among the Nation’s Fastest-Appreciating Luxury Markets

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

LUXURY HOME PRICES ARE UP SUBSTANTIALLY IN SILICON VALLEY
Silicon Valley‘s tech juggernaut and interest from international buyers propelled luxury home prices by double-digit percentage points in the first half of this year, with San Mateo County ranking as America’s most expensive high-end housing market.

That’s according to an analysis by realtor.com Director, Economic Research Javier Vivas, which found that four Northern California counties ranked among the country’s 10 fastest-appreciating luxury housing markets in the first half: Monterey (No. 5), Santa Clara (No. 6), Santa Cruz (No. 8), and San Mateo (No. 10). Each of those counties saw annual price growth in the 12 percent to 13 percent price range, with properties in the four counties combined selling in a median 96 days, the fastest pace of luxury sales — defined as the top 5 percent of the market — in three years.

Silicon Valley counties were of course the two most expensive luxury housing markets of the 20 included in the list. In San Mateo County, a luxury home costs $3.5 million, while in Santa Clara County, such properties command $2.8 million.

San Mateo and Santa Clara counties are two of the state’s five one-million-dollar housing markets, all of which are located in the Bay Area. The latest home sales report from the California Association of Realtors puts May’s median sales price for single-family homes in San Mateo and Santa Clara counties at a respective $1.6 million and $1.4 million.


FACEBOOK ALSO RANKS AS THE BEST U.S. COMPANY TO WORK FOR
Recently, job-search portal Indeed ranked Facebook as the best Bay Area company for employees, and it turns out that the social-networking goliath is also the top workplace in the nation.

Facebook took the No. 1 spot on a separate list of rankings of America’s top-rated workplaces from Indeed, up from No. 4 on last year’s list. While Facebook employee reviews of the company again praise its benefits and perks (such as free meals), workers also appreciate its collaborative, productivity-boosting, high-energy workplace.

Two other Bay Area heavyweights cracked the top 10: Salesforce.com (No. 3) and Apple (No. 10). Other local companies of note included in the entire list of America’s 50 best workplaces include eBay, Cisco Systems, and Charles Schwab.


FACETIME HOME TOURS HELP BUYERS ACT QUICKLY IN A HOT MARKET
Hot job markets and hot housing markets frequently go hand in hand, and thus some relocating workers are getting a leg up on the competition by buying homes they toured only via an iPhone.

The New York Times reports on this virtual home-touring trend, relaying several stories of owners who recently purchased homes sight unseen. One buyer who was relocating from Chicago to New York received a FaceTime tour of what seemed like an ideal property in the city of White Plains last summer. After reviewing links and comps sent by his real estate professional, he eventually bought the 850-square-foot condominium without ever having set foot inside.

While the buyer said he was overall satisfied with the purchase, FaceTime cannot completely replace physically being in a neighborhood. After moving into his new neighborhood in White Plains, the buyer noticed that parking on all streets was forbidden every night between 2 a.m. and 6 a.m., something he said he would have noticed had he personally been there to walk around.


FIRST-TIME HOMEBUYER ACTIVITY TICKS UP
Motivated by a booming job market and finally settling down to marry and raise families, millennials are starting to take out more mortgages, pushing up activity to an all-time high.

A blog post from Freddie Mac says that first-time buyers accounted for 46 percent of its purchased loans in the first quarter, up from 42 percent one year earlier. Freddie Mac expects that first-time buyer activity will continue to increase, while noting that price growth and consistently low inventory present challenges to homeownership for younger generations.

Another potential obstacle is rising mortgage rates. Thirty-year, fixed-rate mortgages ended the week of July 12 at 4.53 percent, up on both a weekly and annual basis.

Most Californians Expect a Housing Price Correction Within Two Years

  • Seventy-nine percent of California homeowners believe there will be a price correction by 2020.
  • Sixty percent of U.S. homeowners think that buyers in their neighborhood are currently paying too much.
  • Nearly two-thirds of Americans think that people who buy a home today will have buyer’s remorse within the next year.

California’s median single-family home price reached a new high in MayAn aerial view of homes in San Francisco's Buena Vista neighborhood, but most owners in the state believe that the rapid appreciation seen over the past few years will not last much longer.

That’s according to survey results from ValueInsured, which found that seven in 10 Americans believe that a housing correction will occur by 2020. Seventy-one percent of homeowners believe that the current price run-up is not sustainable compared with 65 percent of those that do not own a home.

In states that have seen robust price appreciation, homeowners are even more certain a correction is looming. About 80 percent of owners in California and Texas predict slowing prices over the next few years.

Similarly, 60 percent of homeowners said that people who were buying in their neighborhood now are overpaying. About two-thirds of respondents felt that they themselves would be paying too much if they were to sell their home now and buy again, which ValueInsured says is dissuading many prospective sellers from putting their properties on the market.

High prices and the prospect of slowing appreciation mean that most Americans — 62 percent — expect that people who buy a home in the current market will have buyer’s remorse within the next year. One-quarter of those surveyed believe that the buyer’s remorse will mirror that of those who purchased before the housing crash began 10 years ago.

Speaking of buyer’s remorse: Paying too much for a home is not the only regret that homebuyers with children might have, according to a new realtor.com blog post. While most prospective buyers who have or are planning to have kids likely consider school districts when making a decision, there are some aspects of a home and neighborhood that parents often overlook, including:

  • Master bedroom placement for easy access to a nursery
  • Sidewalks to buffer children from traffic
  • An open floor plan and a clear view of the backyard to make it easier to monitor children’s activities
  • A flat lot and street so that kids can easily ride bicycles
  • Safe heating systems to protect children from burns
  • A walkable neighborhood to minimize time spent packing a car with strollers and bags
  • Good neighbors

(Photo: iStock/tifonimages)

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: Nation’s Hottest Markets Move Eastward

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

BAY AREA FALLS OFF LIST OF HOTTEST HOUSING MARKETS
The Bay Area dropped out of Realtor.com’s list of the nation’s hottest real estate markets in June — the first time a California metro area was not among the top five markets in six years.

The San Francisco-Oakland-Hayward area fell to No. 6 on the monthly list, down from No. 3 in May. Vallejo-Fairfield slipped to seventh place in June, from fifth in May, as more-affordable markets move up the ranks. On average, housing markets with prices below Realtor.com’s national median list price of $299,000 jumped 12 ranking spots year-over-year.

June’s ranking shows that super-competitive markets are increasingly scattered throughout the country instead of dotted along the high-priced West Coast. Midland, Texas, was first among the hottest markets, followed by Columbus, Ohio; Boston; Fort Wayne, Indiana; and Boise City, Idaho.

“As the record pace of sales continues to challenge would-be homebuyers, the hottest market rankings show that buyers are looking for markets that offer relative affordability,” said Danielle Hale, chief economist at Realtor.com, in a statement released with the June ranking.


… BUT STRONG FORECAST LIFTS S.F., OAKLAND, SAN JOSE
San Francisco, Oakland, and San Jose are high on a list of real estate markets on track for housing booms in the near future, according to an analysis of trends by Local Market Monitor, a North Carolina research firm.

A boom is likely when a region’s average home price is at least 15 percent above the local “income price” and rising 10 to 15 percent per year, according to a  Forbes.com report on the Local Market Monitor data. By that measure, Denver is already in boom territory, with home prices 47 percent above income price and a 10 percent increase year over year.

San Francisco isn’t far behind, with prices 29 percent above income price and 8 percent growth. Oakland prices are 23 percent above income price, with 9 percent growth. San Jose prices are 21 percent above income price, with 10 percent growth.

The analysis credits strong economic growth and a shortage of housing construction for creating an imbalance that drives a boom.


INTEREST RATES WON’T HOLD BACK HOUSING GROWTH
Will rising interest rates — and therefore rising mortgage rates — imperil the nation’s real estate markets? In a word, no, according to Stuart Miller, executive chairman of Miami-based builder Lennar Corp.

“Concerns about rising interest rates and construction costs have been offset by low unemployment and increasing wages,” Miller said recently in a statement announcing financial results for Lennar. He said there is still a “short supply” of houses on the market after “years of underproduction of new homes,” but “demand remained strong” and “affordability remained consistent” thanks to interest rates that remain relatively low.

Lenora reported that revenue and profit for the second quarter topped Wall Street forecasts.

(Photo: iStock /LightFieldStudios)

 

Real Estate Roundup: Sam Jose, San Francisco Lead U.S. in Home Renovations

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

NO SLOWDOWN IN REMODELING WORK
Homeowners in the San Jose metro area reported the highest renovation spending in the nation in 2017, at a median of $30,000, and San Francisco placed second at $25,000, according to a survey released last week of more than 130,000 visitors to the home remodeling website Houzz.

Los Angeles trailed San Francisco on 2017 renovation spending by less than a percentage point to place third in the Houzz ranking, followed by Houston ($24,000) and Miami ($21,000).

Half of the visitors to the Houzz website (51 percent) said they plan to begin or continue renovations in 2018, with a median budget of $10,000. That follows strong renovation activity in 2017, when 58 percent of homeowners said they spent a median of $15,000 on renovations. Homeowners living in their current homes for six or more years accounted for most of the work, the survey found, although remodeling projects among recent homebuyers is growing.

Spending last year on kitchen remodeling increased 10 percent from 2016, and master bathrooms overtook living and family rooms as the third-most-popular room to renovate, after kitchens and bathrooms. Four in five renovating homeowners report that kitchen and master bathroom upgrades increased the value of their homes, far more than any other renovation project.


TALES FROM THE SHARK TANK
On the topic of home renovations, it’s natural for homeowners to crave a remodeling project that makes their property stand out from the rest of the homes on the block. But can you sometimes take things too far? You be the judge:

In Southern California, in the Hollywood Hills, a $35 million spec house has been outfitted with an indoor, 300-gallon shark tank stocked with eight stingrays, three houndsharks, one remora shark, a horn shark and a catshark, according to a report at Curbed.com. The two-foot-deep, uncovered saltwater tank has stepping stones placed on top so that prospective homeowner can get as close to nature as they dare.

Other, more tame amenities include seven bedrooms, 11 bathrooms, a private wellness center,  wine cellar, humidor, and a freezer exclusively for tequila.


PENDING HOME SALES RISE IN THE WEST, DOWN OVERALL
Pending home sales inched higher in Western states in May, but sales nationwide slipped, according to the National Association of Realtors, because of a large decline in contract activity in the South.

The NAR’s Pending Home Sales Index, based on contract signings, decreased 0.5 percent overall to 105.9 in May from 106.4 in April, the fifth straight month of declining sales contracts across the United States. Pending home sales in the South fell  3.5 percent in May, but rose 2.9 percent in the Midwest, 2 percent in the Northeast, and 0.6 percent in the West

“Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second lowest level over the past year,” said NAR Chief Economist Lawrence Yun, in a statement. “Realtors in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”

The lackluster spring has primarily been a supply issue, and not one of weakening demand. If the recent slowdown in activity were because buyer interest is waning, Yun said, price growth would start slowing, inventory would begin rising and homes would stay on the market longer. Instead, the underlying closing data in May showed that home price gains are still outpacing income growth, inventory declined for the 36th consecutive month, and listings typically went under contract in just over three weeks.

Yun forecasts existing-home sales to decrease 0.4 percent in 2018, and the median existing-home price to rise 5 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.7 percent.

(Photo: iStock/Feverpitched)

Real Estate Roundup: Outdoor-Entertainment Amenities Significantly Boost California Home Values

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

BARBECUES, FIRE PITS ADD MORE THAN 20 PERCENT TO GOLDEN STATE HOME PRICES
Summer officially arrived late last week, and California homeowners who have tricked-out their backyards for outdoor parties not only stand to have good times ahead but also higher home prices if and when the time comes to sell.

That’s according to a new realtor.com report, which analyzed more than 150,000 U.S. home listings to gauge where outdoor summer-fun features are the most popular and how much of a premium such amenities will command. Nationwide, the 10 states with the most home listings mentioning “summer” are almost all in areas of the country with brutal winter weather, including four in New England. (California ranks No. 9 in America for listings that mention summer, though that accounts for only less than 1 percent of homes for sale in the state.)

Barbecues, on the other hand, are mentioned in 9.5 percent of home listings in California, second in the U.S. behind Arizona. Golden State homes for sale that include mentions of barbecue list at $364 per square foot, 23 percent more than the average California listing. Similarly, fire pits, which are found in 5 percent of California home listings, add 22 percent to a home’s per-square-foot price. The state also has the country’s second highest number of listings with swimming pools — 2.8 percent — which causes list prices to rise by 14 percent.

The study comes not long after survey results from Houzz found that more than half of Americans who upgrade their homes’ outdoor spaces plan to entertain guests more. Fire pits are the most popular outdoor amenity in 2018, cited by 66 percent of the landscaping professionals that Houzz polled.


SAN MATEO COUNTY JOBS OUTPACE NEW HOUSING UNITS BY ALMOST 20-TO-1
With a 1.9 percent unemployment rate, San Mateo County had California’s lowest unemployment rate as of May, according to the latest numbers from the state Employment Development Department. And while Silicon Valley‘s job growth has been exceptional, it has the unfortunate by-product of reducing the region’s affordability and creating nightmarish freeway traffic.

Citing data from San Mateo-based Housing Leadership Council, Curbed SF reports that the county created 72,800 new jobs between 2010 and 2015 but constructed only 3,844 new homes. Worse still, most of the construction is in higher price brackets, squeezing out a significant portion of would-be San Mateo County renters.

Because of Silicon Valley’s extreme cost of living, many workers are forced to commute from California’s Central Valley and other far-flung communities. The region’s workers languish in traffic for about 37 hours each year, among the nation’s worst rates of congestion.


MARIN COUNTY RESIDENTS ARE AMONG THE NATION’S LONGEST-LIVED
Anyone seeking to maximize their time on this mortal coil would do well to secure a home in Marin County, where residents live almost as long as they do anywhere else in the U.S.

Those lucky enough to call Marin County home can expect to live an average of 83.8 years, the longest in America behind residents of Summit County, Colorado and Billings County, North Dakota. Realtor.com, the study’s author, cites Marin County’s generally healthy lifestyle and number of doctors — as well as its bans on public smoking and word-burning heaters — as factors contributing to its residents’ longevity.

But as realtor.com points out, in Northern California, living a long life comes with a big price tag. According to Pacific Union’s most recent monthly real estate update, the median sales price for a single-family home in Marin County was $1,450,000 in May, up by 4.1 percent year over year.

(Photo: iStock/KatarzynaBialasiewicz)

Real Estate Roundup: The Median Down Payment in Silicon Valley Is $300,000

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

BAY AREA HOMEBUYERS CONTINUE TO LEAD THE NATION FOR DOWN-PAYMENT SIZE
Amassing a down payment is frequently cited as one of the biggest hurdles to homeownership for first-time buyers, and a recent report sheds light on how difficult that task currently is in the Bay Area’s sky-high housing market.

That’s according to ATTOM Data Solutions’ latest U.S. Residential Property Loan Origination Report, which puts the median down payment for single-family homes and condominiums in the San Jose metropolitan area at of $298,250, nearly 18 times higher than the national average and the most in the U.S. San Francisco homebuyers placed the country’s second largest down payments of $180,000. Those figures represent about 24 percent of the average sales price in both cities.

The Bay Area also leads the country for the number of co-buyers, home purchases made by multiple nonmarried parties. Co-buyers accounted for 48.3 percent of sales in San Jose and 37.9 percent in San Francisco.

“It’s not surprising that in places like Seattle, the Bay Area, and other challenging markets buyers are looking at ways to increase their purchasing power, and reduce the amount of debt they are taking on,” Unison Director of Corporate Communications Michael Micheletti told ATTOM Data Solutions. “The sharing, co-buying and co-owning of a home movement will only grow as more millennials and Gen Z enter the marketplace.”


THE BIGGEST ISSUES FACING REAL ESTATE MARKETS
The Federal Reserve’s decision to raise interest rates last week and the resulting impact on the U.S. economy are perhaps the two biggest factors currently affecting the U.S. real estate market, an industry trade group says.

A report from The Counselor of Real Estate identifies the top 10 factors that will influence real estate markets both in the short term and over the long term. Besides interest rates, short-term issues include the recently passed Economic Growth, Regulatory Relief, and Consumer Protection Act; demographic changes; the evolution of e-commerce businesses; and of course, the nationwide affordability crunch.

Over the long term, CRE identifies infrastructure, immigration, energy and water, disruptive technologies, and natural disasters as having the biggest potential impacts on real estate markets. The organization notes that since 2006, disasters like October’s Wine Country wildfires have caused real estate markets to experience significant losses.


COULD GOLF’S WANING POPULARITY HELP EASE THE HOUSING INVENTORY CRUNCH?
While moribund golf courses represent an opportunity to build more much-needed housing, NIMBYism may prevent that trend from taking hold.

Citing data from Pellucid, a CityLab article says that the number of Americans who regularly gold dropped by about nine million between 2002 and 2016. As a result, golf courses are beginning to close, and that trend is expected to continue. An average 18-hole golf course that sits on 150 acres could accommodate up to 600 new single-family homes, and even more if townhouses and apartments are added to the mix.

But currently, shuttered golf courses in Missouri and Florida are being redeveloped for commercial purposes rather than residential. As CityLab points out, this is partially due to regulations, as many golf courses were zoned for commercial use. But transforming golf courses to housing units is also meeting resistance from residents of nearby communities, many of who are more affluent than others in the area. Earlier this year, residents of a Boston suburb voted down building a senior-living facility on a struggling golf course, while residents of a Rochester, New York suburb opted to buy a golf course and turn it into a park.


MORTGAGE RATES RISE FOLLOWING FED RATE HIKE
Mortgage rates climbed to the second highest level point in 2018 last week after the Fed raised interest rates by 25 basis points.

The latest numbers from Freddie Mac put 30-year, fixed-rate mortgages at 4.62 percent for the week ended June 14, up on both a weekly and yearly basis. Fifteen-year, fixed-rate mortgages rose to 4.07 percent.

In a statement accompanying the report, Freddie Mac Chief Economist Sam Khater said that rising mortgage rates will not have as profound of an effect on consumer budgets as in past cycles because far fewer Americans have adjustable-rate mortgages than they did 10 to 15 years ago. Still, he stressed that stronger wage growth would help homebuyers better keep up with both rising prices and mortgage rates.

(Photo: iStock/fatido)