Real Estate Roundup: Bay Area Cities Are Among Top U.S. Spots for Coffee Drinkers

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

OAKLAND NAMED NO. 3 BEST AMERICAN CITY FOR COFFEE LOVERS
When it comes to getting a daily coffee fix, the West Coast is king, with three Bay Area cities counting among the top 10 American cities for java junkies.

That’s according to a study by SmartAsset, which ranked the best 25 U.S. cities for coffee fanatics on a scale of 100 based on criteria such as the number of coffee shops and roasters and the average price of a cappuccino. By those measures, Oakland ranks as the third best U.S. city for coffee drinkers behind Portland, Oregon and Seattle, with a score of 91.40. Oakland has a total of 623 coffee shops, 22 of which have exceptional Yelp reviews.

San Francisco takes the No 6. position with a score of 85.95. San Francisco’s 2,427 coffee houses translates to 279 shops for every 100,000 residents, the highest such concentration of any city included in the study.

San Jose follows its neighbor to the north in the No. 7 spot, notching a score of 85.12. SmartAsset notes that San Jose residents perform a large number of Google searches for the word “coffee” when trying to decide which one of the city’s 940 cafes to hit next.


WHEN TO CONSIDER RAISING YOUR HOME’S LISTING PRICE
While properly pricing a home is key to a successful sale and a huge advantage to working with a skilled real estate professional, there may be times when the right price is a higher one.

A realtor.com article offers some advice for when sellers should up the price tag on their homes, starting by studying data. If market conditions have changed significantly since a home was placed on the market, it might be prudent to consider raising its price, particularly if inventory conditions are tight (as they are currently). Also, think about whether your home has amenities that other nearby for-sale properties lack, such as a swimming pool.

Other instances in which a price hike might be warranted: if a home has been renovated since being listed, if an appraisal value comes back higher than the list price,  or simply to reinvigorate buyer interest.


THE NEWEST COMPANY PERK: DOWN PAYMENT ASSISTANCE
Amassing a down payment is perhaps the largest obstacle that first-time homebuyers face, and a new program seeks to ease that burden by making financial help a company benefit.

According to a CMG Financial press release, a new HomeFundMe program called Affinity Portal allows businesses to match employee contributions to their personal down payment savings, much like a 401(k) plan. The program is specifically geared toward millennials, whose hurdles to homeownership including student loans, high home prices, and escalating rental costs. The program also aims to help employers retain talented younger workers, 78 percent of whom leave a company within five years.

“More than ever, employers are looking for ways to retain and attract the best and brightest talent and millennials are looking for the lifestyle perks that will help them achieve their goals,” CMG Financial President Chris George said. “The Affinity Portal helps to bridge that gap by giving employers the ability to give their employees the benefits that matter most to them. A typical campaign can cut an employee’s down payment burden in half in many cases.”


TAX REFORM CAUSES AMERICANS HOUSING MARKET CAUTION
Much has been written about the recently enacted tax-reform package, and it was clearly on the minds of U.S. consumers as 2017 ended.

Fannie Mae’s latest Home Purchase Sentiment Index declined to 85.8 in December, down form November but up on an annual basis. The number of Americans who think it is a good time to buy a home dropped from the previous month to 24 percent. And though more than two-thirds of workers are not worried about losing their jobs, that number also declined from November.

“Consumers remained cautious in their housing outlook at the end of 2017, as tax reform discussions continued. In December, mirroring the other major consumer sentiment benchmarks, the HPSI reflected this caution and declined slightly,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan, said. “Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets, where consumer expectations for price increases over the next 12 months reached a new survey high.”

(Photo: iStock/Geber86)

San Francisco Homeowners Spend Big on Kitchen Remodels

  • The average U.S. major large kitchen remodeling job costs $42,000.
  • In San Francisco, renovating a large kitchen costs $70,000, the highest in the country.
  • About nine in 10 homeowners who remodel their kitchens replace countertops and appliances, and nearly as many go for a style change.

Last fall, a survey found that San Francisco homeowners spend the most money in the U.S. when remodeling their homes’ master bathrooms, and it turns out that the same trend applies to kitchens.

That’s according to Houzz’s 2018 U.S. Kitchen Trends Study, which says that the average major kitchen remodel for a 200 square-foot or larger room costs $42,000, including replacing the appliances and cabinets. Overhauling a kitchen smaller than that costs an average of $25,800.

Houzz notes that kitchen remodels cost more in coastal regions of the country, and that’s certainly true here in Northern California. The company puts the cost of renovating a large kitchen in San Francisco at $70,000, the highest in the U.S. San Francisco also has the nation’s biggest remodeling costs for small kitchens, which cost an average of $43,900 to overhaul.

Regardless of a home’s location, countertops are the most common kitchen feature to be replaced, cited by 94 percent of respondents, and that’s also the upgrade on which owners are most willing to splurge. Engineered quartz is the most popular countertop material, with 43 percent opting for that substance compared with 34 percent who choose granite. Quartz has seen its adoption rate increase over the past three years while granite has declined in popularity.

Similarly, 90 percent of homeowners replace their kitchen’s appliances during a renovation project, with nearly as many willing to splurge on them as those who spend big on countertops. More than 90 percent of respondents reported upgrading their refrigerators and dishwashers, while 82 percent are replacing microwaves

High-tech kitchens are becoming increasingly popular in renovation projects, and 25 percent of new appliances boast features such as touch-screen, voice, and wireless controls. One in seven homeowners is adding electronics to the kitchen, with TVs, electronic-device charging stations, and wireless speakers the most common devices. Houzz notes that home assistants in the kitchen are on the rise, appearing in 22 percent of remodeling jobs.

A final overwhelming kitchen renovation trend that the study highlights: the number of homeowners who opt for style changes. Nearly 90 percent of those surveyed were reinvigorating their kitchen’s style, up from 75 percent in last year’s survey, with transitional, contemporary, and farmhouse the three most favored looks.

(Photo: iStock/mustafagull)

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: Peace of Mind Is the Biggest Benefit of Smart-Home Technologies

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

SMART-HOME GIFTS HELP AMERICANS TUNE IN TO THE LATEST TECHNOLOGIES
Homeowners frequently adopt smart-home devices after receiving them as gifts, and an overwhelming majority say that it enhances their sense of well-being.

Those are two key findings from a new survey by Scripps Networks Interactive, in which 93 percent of respondents reported that peace of mind is the most important reason to add smart technologies to their homes. A near equal number of Americans — 85 percent — use smart devices for fun, and more than three-quarters said that such technologies improve their parenting skills.

When it comes to adopting smart devices, consumers look to friends for advice. Respondents to the poll said that receiving tech-related gifts feels like a personal recommendation from a friend, which was cited as the top reason for adding smart gadgets to a home.

Pacific Union real estate professionals have been helping their clients adopt smart-home technologies for the past year. In January 2017, our brokerage formed an exclusive partnership with smart-home pioneer Nest Labs that enables our professionals to distribute the company’s thermostats, smoke detectors, and security systems to their clients as gifts.


TIPS FOR KEEPING NEW YEAR’S REAL ESTATE RESOLUTIONS
Homebuyers hoping to get in the real estate game in 2018 would do well to keep a few key points in mind to help bring their dreams to fruition.

According to a Freddie Mac blog post, the first step toward homeownership is understanding what you can afford, factoring in such considerations as the down payment and closing costs. To amass a down payment, consider working with your lender on a savings plan once you have been preapproved for a mortgage.

Understanding mortgage rates is also key to a successful home purchase, as well as which type of mortgage best suits your situation. Mortgage rates remain low by historical standards as 2018 begins, with 30-year, fixed-rate mortgages averaging 3.95 percent for the week ended Jan. 4.


BAY AREA RENTS RISE TO RING IN THE NEW YEAR
Bay Area residents who are considering shopping for a home in 2018 but are still on the fence may find some motivation in the fact that rents are once again on the rise.

Zumper’s latest national monthly rent report says that San Francisco remains the nation’s most expensive rental market in the inaugural month of 2018, with the median monthly rent for a one-bedroom unit at $3,400. Rents in San Francisco inched up by 0.3 percent from December and 1.5 percent from January of last year.

Increases were more dramatic in San Jose, the nation’s third priciest rental market, where the median $2,460 one-bedroom apartment is up by 2.5 percent month over month and 13.4 percent year over year. With a median rent of $2,160, Oakland ranks No. 7 on America’s rental-expense scale, with prices also increasing on both a monthly and yearly basis.


ECONOMISTS BEGIN 2018 CONFIDENT IN JOB MARKET, CONSTRUCTION ACTIVITY
The U.S. economy begins 2018 poised for its best year since the Great Recession, while a projected uptick in construction activity could help ease the nation’s inventory woes.

That’s according to a HousingWire.com article, which quotes several prominent economists on the state of America’s housing market. National Association of Federally-Insured Credit Unions’ Chief Economist Curt Long told the publication that while December’s job gains failed to meet expectations, the labor market performed well in 2017, noting that wage growth rose modestly.

Another expert pointed to the fact that the construction sector added 30,000 jobs in December as a reason to begin 2018 optimistic about the housing market.

“December’s increase in construction labor is a hopeful reminder that things will eventually get better for our severely depleted housing market,” realtor.com Senior Economist Joseph Kirchner told HousingWire.com. “In fact, if this trend gains momentum, it could address one of the largest issues holding back inventory – a lack of construction labor.”

(Photo: iStock/narvikk)

Real Estate Roundup: Bay Area Home Prices Again Reach New All-Time High

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

SANTA CLARA COUNTY POSTS BIG YEAR-OVER-YEAR HOME PRICE GAIN IN NOVEMBER
Bay Area home prices rose for the 68th consecutive month on an annual basis in November, as the region’s inventory woes continued, particularly at more affordable price points.

Citing CoreLogic data, The Mercury News reports that the median sales price for a single-family home in the Bay Area was $825,000 in November, a year-over-year gain of almost 15 percent and surpassing the previous peak recorded in June. Santa Clara County also posted a new high home price of $1.18 million, up by 26 percent from one year earlier.

Other Bay Area counties also saw double-digit percent appreciation. Home prices rose by 14.5 percent in Solano County, 11 percent in Alameda County, and 10 percent in Contra Costa County.

Strong home price growth is once again the result of insufficient inventory, as home sales fell by 2 percent from last November. New home sales dropped by 14 percent on an annual basis, and CoreLogic Research Analyst Andrew LePage told The Mercury News that the region’s supply problem will likely continue for the foreseeable future.


NAPA NAMED ONE OF THE NATION’S FITNESS HUBS FOR 2018
While Napa will always chiefly be known as one of America’s best places to drink wine, it’s also one of the best places for those looking to stay in shape.

That’s according to an analysis by SmartAsset, which ranked the most fitness-friendly cities in the U.S. on a scale of 100 based on five criteria: number of commuters who bike or walk, concentration of fitness trainers and facilities, fewest number of fast-food establishments, and cost of personal trainers. By those measures, Napa ranks No. 6 in the nation for fitness buffs, with an overall score of 92.63

Napa earns points for its low number of fast-food restaurants, 31 percent, and its high concentration of fitness trainers. However, hiring a personal trainer in Napa costs $25.81 per hour, one of the most expensive rates in SmartAsset’s study.


MORTGAGE RATES NEAR 4 PERCENT AS 2017 ENDS
Although mortgage rates ticked up in the final week of 2017, they remain lower than they were at the same time last year and still favorable for prospective homebuyers.

Freddie Mac data puts 30-year, fixed-rate mortgages at 3.99 percent for the week ended Dec. 28, up from 3.94 percent the previous week but down from 4.32 percent at the same time last year. Fifteen-year, fixed-rate mortgages averaged 3.44 percent, also up on a weekly basis and down year over year.

Economists expect mortgage rates to gradually rise in 2018 as the Federal Reserve raises interest rates several more times. Pacific Union’s most recent Real Estate and Economic Forecast projects that mortgage rates will end 2018 at 4.2 percent and will reach 4.8 percent by 2020.

(Image: iStock/sasun1990)

Eight Housing Market Predictions for 2018

Below, Pacific Union offers our perspective on some key U.S. economic and housing market trends that we believe will play out in the coming year. For a longer-term forecast for Bay Area housing markets over the next three years, read our recap of Pacific Union’s Real Estate and Economic Forecast to 2020, which was held in mid-November in San Francisco. You can also view a webcast of the full, one-hour live event here.

  1. Mortgage interest rates will keep rising: Mortgage interest rates will continue their slow, gradual increase, and we anticipate that rates will rise by about 20 basis points by the end of 2018. Despite further anticipated increases in federal funds rates, mortgage rates are being held down by low inflation and low overseas central banks’ interest rates. We would have to see much higher inflation than has been the case to notably increase mortgage rates.
  1. The real estate market will remain in favor of sellers: New construction would have to ramp up considerably, or some combination of higher mortgage rates and an economic downturn would have to dampen buyer demand to tip the market. Neither event appears to be in sight for 2018.
  1. Inventory shortages will persist: A lack of supply will continue to pose problems. For inventory to return to somewhat normal levels, we would need at least a 20 percent increase in supply in areas with strong demand. However, most of the recent new construction has been geared toward higher-end buyers, leaving a huge gap for those seeking more affordable options. And even though new construction of single-family homes is expected to pick up in 2018, the increase will be modest and insufficient to meet the current demand. Existing owners have little incentive to sell their homes right now. They are most likely enjoying a low mortgage rate and bought when prices were lower. Many are likely worried about where they will move if they sell their current home. Also, they may have even less incentive to move depending on how the proposed tax reforms play out. The proposed changes have the potential to put a significant drag on inventory next year.
  1. Affordability will continue to deteriorate: As long as severe inventory shortages persist, affordability issues will keep getting worse. In 2018, buyers not only face potentially higher mortgage rates, but combined with higher home prices, they will spend more of their monthly incomes on mortgage payments. Affordability will fare the worst in areas with high job growth and a lack of new supply, especially in states with high regulatory constrictions such as California. Some lower-priced housing markets where job growth remains steady may provide relief for potential buyers who are willing to relocate.
  1. The U.S. economy will further strengthen: Though with cautious optimism, experts believe that the economy will gain strength in 2018 — due in part to tax impacts that are expected to stimulate consumer and investment spending. Consumer spending has already firmed up, bolstered by gains in jobs and wages, as well as wealth gains from the financial market and home equity, but also improved consumer expectations. According to data from the University of Michigan, consumer sentiment is hovering near the decade-high that it reached in October. With tax reforms clearer, consumers should be concerned with fewer uncertainties around legislation. Still, more than half of Americans who were concerned about tax implications thought that the changes would be positive for the economy. Furthermore, the strength in retail sales gives credence to the strong increase in consumer confidence that has occurred during the past year. The latest retail holiday sales numbers showed a jump of 4.9 percent, which is the biggest increase since 2011. Business are also expected to continue spending. Overall, there do not appear to be any obvious excesses that could destabilize markets, and economic risks are balanced. Furthermore, the global economy is doing well, and the financial system is on firm footing.
  1. First-time homebuyer activity will pick up: Millennial first-time buyers impacted the market in 2017, and as more of them turn 30, they will be increasingly active over the next few years. Millennials will face greater affordability challenges that will prevent some from buying, but overall, we project first-time buyer activity to ramp up.
  1. Millennials will spark development in affordable urban areas: Following the central-city boom led by millennials, their venture into homeownership will probably lead them to areas with more single-family homes and townhouses that contain elements of higher-density, amenity-rich neighborhoods. Millennials will likely further spur revitalization efforts in affordable areas adjacent to downtowns. Baby boomers, on the other hand, will remain the largest group of home sellers as they reach retirement. Demand for retirement communities in the Southern and Southwestern U.S. will likely pick up again.
  1. Proposed tax changes will negatively impact the housing market: The House Republicans’ tax reform could be very detrimental to housing markets across the country, especially ones where buyers are already constrained by affordability and a lack of homes on the market. The reform further disincentives existing homeowners to sell, especially if they lose the grandfathered tax deductions when buying again. Some buyers will certainly be discouraged by tax changes; real estate professionals have already reported receiving emails from clients who have decided to stop their home searches.

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.

(Promotional photo: iStock/SvetaZi)

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Shared with permission from the Pacific Union Blog

Real Estate Roundup: California Dominates 2017 List of Top-Performing Housing Markets

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

BAY AREA CITIES RANK AS THE YEAR’S THREE HOTTEST REAL ESTATE MARKETS
Bay Area cities have topped the monthly rankings of the nation’s most in-demand places to buy real estate every month of this year, so it comes as little surprise that these same communities have been named as the country’s top-performing housing markets of 2017.

That’s according to a realtor.com analysis published last week, which rounded up the year’s hottest real estate markets based on most listing views on its website and the fastest pace of sales. Having spent multiple months in the top spot this year, the Vallejo-Fairfield metropolitan area takes the No. 1 position. Realtor.com notes that Vallejo’s fortunes have risen in recent years as prices elsewhere in the Bay Area have soared and inventory has been depleted.

San Francisco landed in the No. 2 position, followed by San Jose at No. 3. The latter has ranked as America’s hottest housing market for the last three months, with prices up a whopping 25 percent year over year in November

As has been the case for much of the year, California accounts for the most cities on the year-end hot list, taking 11 of the top 20 spots. The Golden State’s other in-demand markets for 2017: Sacramento (No. 4), Stockton (No. 5), San Diego (No. 6), Modesto (No. 12), Yuba City (No. 13), Santa Rosa (No. 16), Oxnard (No. 17), and Fresno (No. 18).


GOOGLE PLANS MASSIVE NEW SILICON VALLEY CAMPUSES
Amazon.com recently announced that it had leased a significant amount of office space near Moffett Field in Sunnyvale, and it looks like another tech heavyweight could becomes its eventual neighbor.

The Mercury News reports that Google has proposed two buildings in Sunnyvale that could accommodate up to 4,500 workers by 2021. Together, the buildings offer more than 1 million square feet of office space near Moffet Field and would include plans for housing at the site in part to help alleviate Silicon Valley‘s gridlock.

Allowing employees easy access to work is also in Google’s plans for downtown San Jose, where it hopes to create a transit-oriented urban village near the city’s Diridon station. That plan calls for between 6 million and 8 million square feet of office space that could house up to 20,000 workers.


THE TOP NEIGHBORHOOD AMENITY FOR BABY BOOMERS
When it comes to community features that woo baby boomers, it turns out that food is a key attraction.

A survey by John Burns Real Estate Consulting, which polled 9,000 home shoppers between the ages of 53 and 71, found that a nearby grocery store is the community amenity that baby boomers want the most. Baby boomers also want to live in close proximity to restaurants, which ranked No. 2 in the poll.

Baby boomers place near additional emphasis on staying active, with fitness centers and walking trails also ranking high in the survey results. But they don’t necessarily want to get their exercise on the golf course, which didn’t appear on the list of desirable baby-boomer amenities until No. 49.


HOMEBUILDER CONFIDENCE NEAR TWO-DECADE HIGH
Continued demand for real estate propelled by a thriving U.S. economy and inventory constraints should keep construction trending upward in 2018, and builders are feeling good about their prospects.

The National Association of Home Builders/Wells Fargo Housing Market Index registers a 74 as the year comes to a close, its highest reading since July 1999. All three of the index’s measures rose from November to December: buyer traffic, sales activity, and projected sales over the next six months. All four major regions of the country also saw improved index numbers from November.

“With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year” NAHB Chief Economist Robert Dietz said in a statement.

(Photo: iStoc/kyoza3d)