Real Estate Roundup: East Bay Suburb Named California’s Best Place to Live

Original article by Pacific Unionsee it here.

fpo_53_SAN_RAMON_-_03_smHere’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

THE BAY AREA DOMINATES LIST OF CALIFORNIA’S TOP PLACES TO LIVE
High home values, sizable incomes, and low unemployment rates place Bay Area communities high on the list of the best places to live in the Golden State.

SmartAsset ranked 345 California cities using seven criteria to determine the state’s best places to call home. Contra Costa County’s San Ramon took the No. 1 spot, scoring a perfect 100 on the study’s scale. With a median home value of $754,700 and a median annual household income of $128,916, San Ramon is noted for being the location of Chevron and 24 Hour Fitness corporate headquarters, as well as the West Coast headquarters of AT&T.

The East Bay claims five of the top 10 spots on SmartAsset’s list. Alameda County’s Dublin (No. 3), Pleasanton (tied for No. 5), and Fremont (No. 9) benefit from their proximity to San Francisco and its thriving job market. No. 10 Hercules, in Contra Costa County, has the most affordable housing of the top cities, with a median home value of $395,800.

Silicon Valley also had two cities make the top 10. No. 4 Foster City has the fewest number of residents without health insurance — 2.8 percent. Best known for being the home of Apple’s headquarters, No. 7 Cupertino earns points for its median household income of $141,953.


STANFORD, U.C. BERKELEY AMONG THE WORLD’S 10 BEST COLLEGES
Stanford University and University of California, Berkeley are not only among the best schools in the state and the nation, they count among the most prestigious on the planet.

That’s according to the 2017 World Reputation Rankings from Times Higher Education, which ranks the world’s top 100 universities based on a survey of leading academics. Stanford University takes the No. 3 spot behind Harvard University and Massachusetts Institute of Technology, while University of California, Berkeley ranks No. 6. Both schools ranked in the exact same positions in the previous year’s poll.

More than half of the world’s top 25 universities are in the United States. Two other Golden States schools are among them: California Institute of Technology (No. 10) and University of California, Los Angeles (No. 13).


THE VAST MAJORITY OF AMERICANS AND CANADIANS CONCERNED WITH HOUSING AFFORDABILITY
Nine out of 10 Americans and Canadians believe that owning a home is one of life’s greatest achievements, and that same number are concerned about finding a solution for affordable housing.

A survey by Habitat for Humanity International found that inflated costs are the top barrier to homeownership, cited by 84 percent of Americans. Two-thirds of U.S. homeowners have struggled with costs at some point in time, and one-quarter report grappling with it now.

Aware of the current housing inventory shortages in both countries, Americans and Canadians aren’t particularly optimistic that affordability will improve. Seventy-two percent of Americans think that housing costs will increase over the next five years, while 84 percent of Canadians feel the same.


HOME SALES, STARTS TO REACH 10-YEAR HIGH IN 2017
Although housing starts and home sales took a hit this spring, low mortgage rates and a robust job market should help propel the U.S. housing market to another strong year.

That’s according to Freddie Mac Chief Economist Sean Becketti in the company’s June 2017 Outlook. The forecast says that housing starts fell by 2.6 percent from March to April, while existing home sales declined by 2.3 percent and new home sales dropped by 11.4 percent. But those trends should reverse thanks in part to a strong economy; May marked the 80th consecutive month of job gains, and the U.S. unemployment rate dropped to 4.3 percent.

Citing intense demand for housing along with low supply levels, Freddie Mac says that it expects home prices to grow by 5 percent by the end of the year.

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California Home Prices Climb to a 10-Year High in May

Original Article by Pacific Union. See it here.

  • The median sales price for a single-family home in the Bay Area rose to almost $900,000 in May, with all nine counties reporting year-over-year appreciation.
  • Inventory declined in all nine Bay Area counties from one year ago. Statewide, new listings dropped for the 23rd consecutive month.
  • All nine Bay Area counties saw sales volume increases from both April and from May 2016.

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California home prices hit their highest level since the previous housing boom in May, as demand continued to outstrip supply, both statewide and here in the Bay Area.

The latest monthly home sales and price report from the California Association of Realtors puts the median price for a single-family home at $550,200 in May, up 5.8 percent from one year earlier and the highest since August 2007. All major regions of the state saw annual appreciation, with home prices in the nine-county Bay Area rising to $899,730, a year-over-year increase of 6.0 percent.

Home prices were up in all nine local counties from May 2016, ranging from 4.1 percent in Alameda County to 10.4 percent in San Francisco. The region has the state’s only four seven-figure real estate markets: San Francisco ($1,501,680), San Mateo ($1,480,000), Marin ($1,315,000), and Santa Clara ($1,200,000) counties.

In a statement accompanying the report, CAR Senior Vice President and Chief Economist Leslie Appleton-Young attributed the price growth to persistently low inventory and said that rising mortgage rates will further erode already challenging affordability conditions. Statewide, the months’ supply of inventory fell to 2.9, down on both a yearly and monthly basis. Forty-two of 51 California counties included in the report saw inventory drop from one year earlier, and new listings fell for the 23rd straight month.

The Bay Area’s monthly supply of inventory ended May at 2.1, the lowest of any major California region. All counties saw the number of homes for sale shrink from May 2016, and four local counties had the lowest supplies in the state: Alameda, San Mateo, and Santa Clara (1.7) and San Francisco (1.9).

Despite the lack of inventory, sales volume increased statewide and in all major regions, which CAR President Geoff McIntosh said could be driven in part by the lowest mortgage rates in six months. All nine Bay Area counties saw sales volume climb on both a monthly and yearly basis, with annual gains ranging from 0.5 percent in Sonoma County to 17.3 percent in Napa County.

Surging Demand Pushes Bay Area Home Prices Higher in May

Original Article by Pacific Union. See it here.

Executive Summary:

The Bay Area housing market heated up again in May, pushing home prices 7 percent higher year over year. San Mateo and Marin counties saw the biggest jumps in median prices in, at 13 percent.
Buyer competition is back; homes sold in less than two weeks, and seven in 10 homes again sold over the asking price. The premium paid over asking price averaged 9 percent.
Competition intensified in relatively pricier markets, such as Silicon Valley, and for homes priced between $1 million and $2 million.
The breakdown of home price changes by ZIP codes shows less-accessible markets struggling, while markets closer to urban job centers continue to thrive.
Some San Francisco neighborhoods — particularly ones like South of Market with a higher share of new developments — saw a pause in price growth.
A look at Bay Area housing market activity in May shows the continuation of many trends discussed over the previous months, with the most notable development the strong median home price increase. At $860,000, the Bay Area’s median home price was 7 percent higher than last May and up 8 percent year to date. The largest jump in home prices from last May occurred in San Mateo and Marin counties, where they increased by 13 percent. Contra Costa County showed a 10 percent increase, while the median price in Napa County remained relatively flat. Keep in mind that the median price is affected by the mix of sales, and the number of lower-priced homes has been declining for the last few years. However, while more sales of higher-end homes helped push the median price upward, other home price measures also showed continued steady appreciation. Figure 1 illustrates median home prices by Bay Area county in May of 2016 and 2017.

May’s jump marks a new high for median prices in many Bay Area markets and particularly in San Francisco, where there has been some concern over declining home prices. Click here to read our most recent analysis of San Francisco home prices.

Figure 1: Median prices for single-family homes and condos by Bay Area county, May 2016 compared with May 2017     StraightTalk_61317_Chart1-700x392

Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2017.

Overall Bay Area housing market activity is trending very similar to last year, with a few outliers. Sonoma County activity declined by 5 percent year to date, while sales in Napa and San Francisco counties increased by 4 percent. When compared year over year, May declines were largest in Sonoma and Contra Costa counties. This is interesting given the relative affordability of the two regions and the general assumption that buyers are fleeing to such areas. While affordability remains the main factor in relative home price appreciation, the luxury market has shown incredible resiliency. Sales of higher-end homes, priced at $2 million and up, saw the largest sales increase year to date, with 17 percent more transactions than last year.

However, while the number of units sold is constrained by available inventory, which again dipped in May, other housing-market indicators suggest solid interest from buyers. For example, in primary home markets in Sonoma and Napa counties and parts of Marin County, homes flew off the shelf, lasting on the market less than two weeks before going into contract (Table 1).

That’s also the case in San Francisco, Silicon Valley, and the East Bay. Both Santa Clara and Contra Costa counties showed a median time of 10 days on the market in May. The market’s pace did not change much from last year, and it sped up in San Francisco, where homes sold five days faster than they did last year, the largest such pickup in the Bay Area. And it’s not only the affordable segment of San Francisco’s housing stock that saw the pace of sales increase; homes priced at $3 million and higher sold 10 days faster this May than last, in about 16 days. It is the lowest-priced homes, those less than $1 million, that are sitting the longest on the market in San Francisco, which may be the function of overpriced listings and buyers and sellers not being on the same page.

Table 1: Median days on the market in May by price range

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Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2017.

The housing market’s quick pace also reflects the return of bidding wars. After a notable slowdown last winter in the share of homes that sold over the asking price, about seven in 10 homes in San Francisco, Silicon Valley, and the Easy Bay again sold for more than original price in May. And again, while the general competition in the Bay Area loosened somewhat for homes priced below $1 million, it intensified for higher-priced homes.

Homes priced between $1 million and $2 million saw the highest share sell over asking price, 72 percent for the entire Bay Area. In San Francisco and Silicon Valley, more homes sold over the asking price in that range than in any other price range. The trend is not surprising given that the median price is also between $1 million and $2 million, and most buyers are competing for the few properties left at that price point. Note that the for-sale inventory in those two areas has shown the largest year-over-year decline for that price range. In other words, bidding wars reflect strong demand for declining inventory of “affordable” homes in those markets.

Figure 2: The share of homes that sold over asking price in May.

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Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2017.

Again, despite concerns over softening housing demand in San Francisco, the area still enjoys the highest premium on homes selling for more than asking price. The premium is highest for sales between $1 million and $2 million. Figure 4 summarizes the premium paid by price range and across Bay Area counties.

Alameda County numbers stand out, with the highest premiums for homes priced between $2 million and $3 million. However, a smaller share of homes in that price range sold over the asking price, and there are fewer homes in that price category, hence the overall premium in Alameda averaged 10 percent. What is striking from data shown in Figure 3 is that homebuyers are still willing to pay an average of 9 percent more than the asking price for seven of 10 homes. That suggests a very competitive market, unexpected this spring given extraordinary high home prices and softening appreciation in the second half of last year.

To see how home prices have changed across neighborhoods, we analyzed year-to-date (January through April) home prices at the ZIP code level and compared them with the same period last year. Figure 4 shows changes in median home prices by ZIP code (excluding those with less than 10 sales year to date in 2017). Click here to see median sales price changes in individual Bay Area ZIP codes.

Figure 3: Premium paid for homes that sold over asking price in May

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Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2017.

Figure 4: Year-to-date change in median home price by ZIP code

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Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2017.

Lastly, it is important to keep in mind that not all neighborhoods and price ranges are equally benefiting from renewed buyer optimism. Buyer optimism could reflect falling mortgage rates, which were again at a 2017 low for the week ended June 8, and the sentiment that now is the last opportunity to enter the market at such low rates. The Federal Reserve meets again this week, and the prevailing expectation is for another increase in interest rates. Regardless of the meeting’s outcome, it appears that other macroeconomic and political factors have helped keep rates low and may continue to do so for the rest of the year.

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.

Real Estate Roundup: Bay Area Suburb Is Still the Hottest U.S. Real Estate Market

Original Article by Pacific Union, See it here.

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

Melbourne suburbsVALLEJO TOPS HOT-MARKETS LIST FOR FOURTH CONSECUTIVE MONTH
America’s housing market is experiencing the most intense demand on record this spring, as throngs of buyers compete for a limited number of homes for sale. That’s certainly the case in California and the Bay Area, where homes are attracting the most interest in the country.

That’s according to realtor.com’s latest monthly rankings of the nation’s 20 hottest real estate markets, as gauged by the most listing views on its website and the fastest pace of sales. Nationwide, homes sold in a median 60 days in May — 8 percent quicker than one year ago — and one-third of them sold in less than a month.

For the fourth consecutive month, the Vallejo metropolitan area ranked as the nation’s hottest housing market in May, with home shoppers presumably seeking a more budget-friendly alternative to more expensive Bay Area enclaves. Still, much pricier San Francisco is nearly as popular this spring, ranking in the No. 2 spot for the fourth straight month. San Jose fell to the No. 9 position, which realtor.com says is the city’s lowest ranking in months.

The other Golden State cities on the hot list: Sacramento (No. 4), Stockton (No. 10), Santa Cruz (No. 14), San Diego (No. 16), Santa Rosa (No. 19), and Chico (No. 20).


AMERICANS’ CREDIT SCORES HAVE NEVER BEEN BETTER
The average U.S. credit score has climbed to an all-time, which could allow more homebuyers to secure financing at favorable rates.

A blog post from the National Association of Realtors says that the average American FICO score is now 700, the highest on record. At the same time, the number of consumers with a rating consider risky — less than 600 — is at an all-time low, representing about 20 percent of those with credit scores.

Americans’ recovery from bankruptcies or foreclosures suffered during the Great Recession is helping boost the national credit score. More than 6 million consumers will have bankruptcies cleared from their reports over the next five years, while foreclosures disappear from credit scores after seven years.


FORECAST: SILICON VALLEY ECONOMY WILL CONTINUE TO THRIVE
Silicon Valley‘s job growth is expected to slow this year, but economic conditions remain strong in spite of the region’s housing-supply crunch.

The Mercury News reports on a summit held last week at San Jose State University, where Economist Christopher Thornberg of Beacon Economics projected that Santa Clara County would grow jobs by 2 percent this year, the lowest rate in the past five years. Thornberg attributed slowing growth in part to a shortage of places for workers to live but also a general lack of laborers.

Santa Clara County lost jobs during the first four months of this year, but the tech sector appears to be rebounding. In an analysis of the Bay Area’s latest job numbers, Pacific Union Chief Economist Selma Hepp said that the information sector added 3,900 positions in Santa Clara and San Benito counties in April, the 87th consecutive month of annual gains.


MORTGAGE RATES FALL TO 2017 LOW FOR SECOND STRAIGHT WEEK
Mortgage rates again reached a 2017 low last week, though more hikes are likely after the Federal Reserve’s meeting later this month.

According to Freddie Mac, 30-year, fixed-rate mortgages fell to 3.94 percent for the week ended June 1, down from 3.95 percent the previous week and up from 3.66 percent one year early. Fifteen-year, fixed-rate mortgages were unchanged from the previous week at 3.19 percent and up from 2.92 percent year over year.

Economists expect the Federal Reserve to increase interest rates at its June meeting, with another hike projected for the second half of the year.

(Photo: iStock/Ingrid_Hendriksen)