Which California Neighborhoods Are Millennials Flocking To?

  • Downtown Los Angeles’ Historic Core neighborhood saw its millennial population nearly double between 2011 and 2016, the highest rate of growth in the U.S.
  • In San Francisco, The Castro and Glen Park are among the top 20 neighborhoods in America to experience the largest millennial population growth.
  • More than 30,000 millennials live in Los Angeles’ South Park neighborhood and San Francisco’s Mission Bay.

Millennials walking in a cityThe Golden State is home to the nation’s largest share of millennials, and they are gravitating toward Downtown Los Angeles and neighborhoods in southeastern San Francisco.

Between 2011 and 2016, Los Angeles’ 90014 ZIP code, also known as the Historic Core, saw its millennial population increase by 91.4 percent, the most of any area in the 30 largest U.S. cities included in an analysis by RentCafe. During that time period, 3,300 millennials — defined here as those born between 1977 and 1996 — moved to that part of Downtown Los Angeles, which the company identifies as America’s fastest-gentrifying neighborhood since the turn of the century.

Millennials are also beginning to gentrify Los Angeles’ 90013 ZIP code, otherwise known as Skid Row. That neighborhood had the nation’s second-largest increase in millennial residents in the five-year period — 60.0 percent, which translates to 4,700 people.

Two San Francisco ZIP codes rank in the top 20 for millennial population growth: 94114 (The Castro) and 94131 (Glen Park). The former enclave saw 37.4 percent (12,500 people) more millennials set up shop, while the latter posted a 35.5 percent increase (9,000 people).

San Francisco’s booming Mission Bay neighborhood ranks among the top 20 U.S. neighborhoods with the largest share of millennials, where 3,800 residents of that age group comprise nearly two-thirds of the population. Millennials who call Mission Bay’s 94158 ZIP code home are almost certainly earning handsome paychecks; according to a separate RentCafe analysis, it’s the second most expensive neighborhood in the Bay Area for renters, with monthly payments averaging $4,336.

New York and Chicago ZIP codes dominate the rankings of the 20 U.S. places where the most millennials live, but two Golden State neighborhoods make the list. In Los Angeles, 33,500 millennials reside in the 90011 ZIP code (South Park, just south of Downtown), while 30,500 live in 94110 in San Francisco’s Inner Mission.

Despite the Bay Area’s sky-high home prices, millennials have gained a surprisingly large foothold in the real estate market. According to a February analysis of Pacific Union data by Chief Economist Selma Hepp, homebuyers aged 35 and younger accounted for more than one-third of purchases in San Francisco and Silicon Valley between August 2017 and January 2018.

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: Silicon Valley Homes Are Selling at the Nation’s Fastest Clip

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

BAY AREA HOMEBUYERS ARE ADVISED TO ACT FAST THIS FALLA street scene in Downtown San Jose, California
Intense demand for Bay Area real estate amidst a booming job market means that homes have been selling at a brisk pace for the past few years, and that trend continues as summer 2018 nears its end.

Data from the National Association of Realtors says that U.S. homes sold in a median 27 days in July, three days quicker than they did one year ago. Homes sold faster than they did last year in 76 percent of the 500 U.S. metropolitan areas for which NAR tracks data.

Homes in the San Jose metropolitan area sold in a median 26 days, four days quicker than they did in July 2017 and the briskest pace in the country. San Francisco tied Seattle as the nation’s second-fastest-moving housing market, with homes finding a buyer in 30 days, also quicker than last year. While Vallejo also ranked among the country’s fastest-paced markets this summer, at 36 days, homes there sold slower than they did at the same time last year.

Bay Area homes continued to move quickly in August, selling in as few as 21 days in the East Bay. For more on the latest market conditions, check out Pacific Union’s August 2018 Real Estate Update.

While Bay Area homebuyers who want to close a deal should act quickly given current market conditions, they should also be prepared to place a substantial down payment — in fact the most in the nation.

ATTOM Data Solutions’ latest Residential Property Loan Origination Report puts the median U.S. down payment at $19,900 in the second quarter, representing 7.6 percent of the median sales price of properties with a mortgage and a new all-time high. In the San Jose metro area, homebuyers put down more than 15 times the national average — $306,000, which accounted for 25.5 percent of the median-priced $1,201,250 home. San Francisco followed with America’s second-highest down payment of $220,000, representing 23.9 percent on a $922,000 home.

Because of the Bay Area’s big-ticket home prices, the region also has the highest percentage of sales to co-borrowers — multiple, nonmarried parties named on the deed. In San Jose, co-borrowers accounted for 49.3 percent of sales, while they comprised 39.1 percent of activity in San Francisco.

Home prices in key Bay Area job centers have more than doubled in value over the past six years, fueled by a high-octane economy and not enough homes to meet demand.

Citing data from Trulia, The Mercury News reports that home prices in San Jose have grown by 122 percent since 2012, the highest rate of appreciation in the country. During that time, home prices rose by 108 percent Oakland and 101 percent in San Francisco, ranking those cities No. 3 and No. 4 for appreciation.

Bay Area home prices have risen on an annual basis every month since April 2012. A lack of new homes is fueling the increase, and while The Mercury News notes that building permits have recently ticked up, they remain significantly below the U.S. average.

While the Golden State’s economy is typically strong associated with the technology sector, its fastest-growing industry is actually rooted in tourism.

That’s according to an analysis by SmartAsset, which tracked the number of employees in 13 job sectors in 2015 compared with 2016 to find out which industries are growing the most in every state. During that period, California’s highest-growth industry was in transportation and warehousing sector — specifically scenic and sightseeing transportation.

When it comes to the information sector, the places that added the most software-development jobs include some unlikely states, including Arkansas, Maine, and Missouri.

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Another Survey Highlights the Importance of Schools in the Homebuying Process

  • Half of Americans with children say that the quality of the school district is important when shopping for a home, compared with only about 10 percent of those without kids.
  • More than one-quarter of homebuyers who have kids delayed a real estate purchase because of child-care expenses.
  • Regardless of whether they have children, 87 percent of all homebuyers employed the services of a real estate professional.

Survey results released earlier this summerA group of schoolchildren standing in front of a bus with a teacher showed that nearly 80 percent of recent homebuyers sacrificed some amenities to purchase a property in their desired school district, and now another poll echoes the importance of education in the real estate decision-making process.

The National Association of Realtors’ 2018 Moving With Kids Report found that 50 percent of homebuyers with children under the age of 18 said that the quality of the school district was important when shopping for a home, compared with just 11 percent of those without kids. Similarly, 45 percent of families prioritized convenience to schools when purchasing a home, while only 6 percent of childless buyers did the same.

Perhaps because of school schedules, buyers with children showed more urgency than those without when selling their current home. More than one-quarter of families said that they were in a rush to unload their home, compared with 14 percent of homeowners without children.

Both buyers with and without children prefer detached, single-family residences, but the former group predictably wants more room than the latter — four bedrooms and 2,100 square feet of living space. In fact, the need for more space was the biggest reason that families said they sold their homes, cited by 24 percent of those surveyed.

Child care expenses caused 27 percent of homebuyers with kids to delay a real estate purchase. The cost of caring for kids also forced families to make substantial sacrifices when making a final real estate decision; about 30 percent compromised on the home’s size and price, while 22 percent gave up proximity to work and the home’s condition and architectural style.

Even if homebuyers with and without kids have different preferences and constraints when choosing a neighborhood and a home, there are a couple of points where both groups are exactly alike. Fifty-four percent of families and households without children said that finding the right home was the most difficult part of the process, likely a byproduct of the nation’s ongoing housing inventory crunch. And 87 percent of both groups employed the services of a real estate professional to help them navigate the process, with referrals from family members or friends the most common method of locating a professional.

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Shared with permission from the Pacific Union Blog

What Do Americans Want in Their Ideal Home?

  • More than half of all Americans would prefer to buy a new home.
  • Waterfront homes are the most popular with buyers, while properties near golf courses are the least.
  • Nearly 80 percent of Americans say that their ideal home includes central air conditioning.

An oceanfront home in Malibu, California.While a home’s perfect location, size, and amenities are unique to each buyer’s personal situation and budget, about half of respondents to a recent survey are agree on a few key points.

That’s according to a poll conducted by Porch.com, which asked both Americans and Europeans to describe their perfect home. About 54 percent of both nationalities state a preference for a new home, and 51 percent think a suburban property is ideal.

Roughly half of Americans and Europeans believe that a waterfront location is perfect for a home, followed by about one-third who want a view of the coast, a city, or hills. The least-popular location is near a golf course, cited by less than 4 percent of both Americans and Europeans. That latter trend should come as little surprise, considering that golf is losing popularity with millennials and other younger Americans.

The classic ranch-style home is the No. 1 choice for both Americans and Europeans. Craftsman-style and Mediterranean homes are also popular with both groups, though Europeans are more likely to prefer Art Deco homes, which Americans put at the bottom of the architecture-style list.

Brick is the preferred construction material for Americans, with 27 percent saying it is part of an ideal home. Similarly, nearly 30 percent voice a preference for composition shingles for the roof.

Inside the home, 42.1 percent of American respondents said that granite kitchen counter tops are ideal, and 30.1 percent want tile floors in the that room. Nearly half prefer that the rest of home have wood floors, though 40 percent feel that carpet is the best flooring material in a bedroom.

When it comes to home amenities, Americans overwhelmingly want central air conditioning, cited by nearly 80 percent of those surveyed. About two-thirds think that an ideal home has a deck and a laundry room, and 60 percent point to a finished basement and solar panels as key features.

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: East Bay City Ranks Among the Nation’s Best for Families

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

Recently named as the least-stressed city in America, Alameda County’s Fremont is now being lauded as one of the nation’s most family-friendly communities.

That’s according to an analysis by WalletHub, which ranks the best cities in the U.S. in the for raising a family on 100-point scale based on five major gauges: fun, health and safety, education and child care, affordability, and socioeconomic factors. By the study’s criteria, Fremont ranks No. 3 in the country for family friendliness, with a score of 70.71. The Alameda County city places No. 1 in America in both the health and safety and socioeconomic categories and has the nation’s lowest divorce rate and the fewest number of residents living in poverty.

San Jose was the other Bay Area city to rank among the nation’s 20 best for families, coming in at No. 16 with a 63.32. Like Fremont, San Jose has one of the country’s lowest divorce rates.

San Francisco doesn’t show up on the list until No. 36 but earns mentions for its large number of family attractions. However, the city unsurprisingly falls at the bottom for housing affordability and has one of the lowest percentages of families with young children in the U.S.

Nationwide, home-flipping returns dropped to an almost four-year low in the most recently completed quarter, but there are still some pockets in the Bay Area where investors can turn larger profits than the U.S. average.

ATTOM Data Solutions’ latest U.S. Home Flipping Report says that flippers netted an average gross return of 44.3 percent ($65,520) since the time of purchase in the second quarter, the lowest since the third quarter of 2014. Company Senior Vice President Daren Blomquist attributes the diminishing returns to both a shortage of distressed properties on the market and rising interest rates squeezing out more potential buyers of flipped homes.

Investors hoping to get the best bang for their flipping dollar in the high-priced Bay Area would do well to focus on certain ZIP codes in the East Bay. Homes flipped in Oakland‘s 94603 ZIP code received an average return on investment of 69.3 percent ($213,950), while flippers in the city’s 94605 ZIP code profited by 68.7 percent ($285,000). In Contra Costa County, flippers in ZIP codes in Richmond and El Sobrante netted returns of about 55 percent, while those in San Pablo profited by nearly 50 percent.

Mortgage rates ticked up last week, with the latest U.S. jobs report suggesting that the Federal Reserve will raise interest rates twice more in 2018, pushing more prospective home buyers out of the market.

The latest numbers from Freddie Mac put 30-year, fixed rate mortgages at 4.54 percent for the week ended Sept. 6, up on both a weekly and annual basis. In a statement accompanying the report, company Chief Economist Sam Khater said that borrowing costs are on the rise due to the strong U.S. economy, noting that home price growth continues to outpace wage growth, further eroding affordability.

Khater’s thoughts echo a new analysis of the August U.S. employment report by Pacific Union Chief Economist Selma Hepp, which predicts that the robust job market will prompt the Fed to increase interest rates two more times this year. Hepp expects that 30-year, fixed-rate mortgages will not rise above 4.7 percent by the end of 2018.

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Generation Z Is Poised to Make a Splash in the Housing Market

  • More than 80 percent of Generation Z who are older than 18 say that they plan to buy a home in the next five years.
  • About one-third of Generation Z cite student debt as the largest obstacle to homeownership, followed closely by saving for a down payment.
  • The Bay Area, Los Angeles, and San Diego are among the top 10 places in America to purchase a home for both millennials and members of Generation Z.

Five young people looking at their smart phonesWhile millennials represent the largest group of U.S. homebuyers, they can expect the generation behind them to offer stiff competition in the market, with California a preferred destination for both age brackets.

A survey conducted by PropertyShark.com found that 87 percent of millennials expect to purchase a home within the next five years. But members of Generation Z — the oldest of whom are 23 and one-third of whom are still in high school — are not far behind, with 83 percent saying that they will buy a home by 2023.

The study notes that Generation Z’s bullishness on the prospects of homeownership may be fueled by youthful optimism and unrealistic expectations. Still, more than 100,000 members of that generation already own homes, and they have a lower level of mortgage delinquency than all other generations, including baby boomers. Members of Generation Z have managed to gain a foothold in the housing market based on both their willingness to buy less expensive homes and help from the bank of mom and dad.

Saving for a down payment remains a significant hurdle to homeownership for all three generations, with roughly one-third of survey respondents citing it as the biggest challenge. But Generation Z are the most worried about student debt; 32 percent called it the largest barrier to buying a home, compared with 17 percent of millennials and 7 percent of Gen Xers.

Perhaps because many members of Generation Z are not old enough to have multiple credit cards or other forms of debt, they are the least likely to point to credit scores as an obstacle to purchasing a home. More than one in five Gen Xers and 16 percent of millennials see credit ratings as problematic, with a recent Experian study finding that 61 percent of the latter generation lacks a prime credit score.

One thing that all three generations of homebuyers have in common is a preference for location, cited as the top amenity beyond price point. Space and air conditioning are among the other most important home features for all generations, while proximity to green spaces, gardens, and swimming pools rank at the bottom.

When asked about the top 10 locations in which to purchase a home, the Golden State is a prominent destination regardless of age. Gen Xers, millennials, and Generation Z all point to the Bay Area and San Diego as dream locations, while the latter two groups place Los Angeles in their top 10. A realtor.com report published earlier this year found that San Francisco is the No. 1 housing market for millennials, thanks in large part to the region’s high-octane, technology-focused job market.

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Shared with permission from the Pacific Union Blog