Real Estate Roundup: California Claims One-Third of the 20 Fastest-Growing U.S. Luxury Housing Markets

September 24, 2018 by  • Posted in 

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

FOUR BAY AREA COUNTIES SEE LUXURY HOME PRICES RISE BY MORE THAN 10 PERCENT
Demand for luxury homes remained strong nationwide this summer, with California counties accounting for a substantial portion of the markets where prices are growing the most.

That’s according to research from realtor.com, which ranks the top 20 U.S. housing markets for annual appreciation at the luxury price point, defined as the top 5 percent of residential properties. In Santa Clara County, luxury home prices increased by 14.5 percent year over year in June, making it the country’s third fastest-growing high-end market. A luxury home in Santa Clara County commanded $2,844,000 as of June.

Sonoma County‘s luxury home price rose by 13.3 percent from June 2017, while prices climbed by 12.2 percent in San Mateo County and 10.3 percent in San Francisco. Those latter two counties had the most expensive luxury homes of any city included on the list, a respective $3,505,000 and $3,313,000. The other California counties that rank among the country’s fastest-appreciating luxury markets: Santa Cruz (13.0 percent growth), Sacramento (10.0 percent growth) and San Luis Obispo (9.5 percent growth).

Realtor.com also tracks the 20 fastest-moving luxury markets, five of which are in the Golden State: Contra Costa County (53 days), Alameda County (59 days), Santa Clara County (60 days), Sacramento County (67 days), and Los Angeles County (68 days).


EAST BAY CITY NAMED AMONG THE TOP 5 U.S. PLACES TO BUY A HOME BIG ENOUGH FOR A FAMILY
Earlier this month, a study found that Alameda County’s Fremont is one of the best places in America to raise a family, and now another report says that it is also one of top places to buy a home big enough to accommodate a clan.

A new analysis by SmartAsset ranks the top 20 U.S. cities in which to buy a home large enough to raise a family on a 100-point scale based on six criteria: five-year change in home value, percentage of homes with at least two bedrooms, property-tax rates, change in rental costs, percentage of housing-cost-burdened homeowners, and housing costs compared with household income. Fremont ranks No. 5 on the list of places to buy a family-friendly home, with an overall score of 87.47.

Between 2012 and 2016, home prices in Fremont increased by 51 percent, and nearly 90 percent of homes in the city have at least two bedrooms. During that time, SmartAsset notes that rental costs in Fremont rose by 34 percent, which the company says means that renters are missing out on an opportunity, even though home prices in the city are relatively expensive compared with other housing markets included on the list.


U.S. HOME PRICES HAVE BEEN RISING FOR SIX-AND-A-HALF YEARS STRAIGHT
Although the number of U.S. homes for sale in August increased moderately from one year earlier, there are still not enough properties to meet demand, causing prices to continue their climb and homes to sell at a brisk pace.

The National Association of Realtors’ latest existing-home sales report puts the median price for all properties at $264,800 last month, an annual increase of 4.6 percent and the 78th consecutive month of year-over-year gains. There were 1.92 million existing homes on the market, up from 1.87 million at the same time in 2017, while the monthly supply of inventory rose from 4.1 to 4.3 on an annual basis.

Homes typically sold in 29 days, with more than half of them finding a buyer in less than a month. In a statement accompanying the report, NAR Chief Economist Lawrence Yun said that the nation’s inventory shortage is driving the pace of sales and that new-home construction is insufficient to satisfy the number of Americans who wish to purchase real estate.


MOST HOMEBUYERS START BY DOING THEIR OWN FINANCING RESEARCH
About three-quarter of prospective homebuyers are investigating financing before they do anything else, with first-timers even more likely to do their homework in advance.

Survey results from loanDepot and mellohome found that 73.5 percent of all homebuyers and 85.1 percent of first-time buyers are weighing financing options before they begin their search. In a statement accompanying the report, mellohome CEO Chris Heller noted that this trend is a big change from a decade ago, when buyers would typically have their real estate professionals do the finance-research legwork for them.

Buyers are likely doing their due diligence so that they can compete in a tight market, with more than two-thirds of respondents reporting difficulty finding a suitable home. Nearly that many said that coordinating mortgage paperwork was problematic, underscoring results from a recent Fannie Mae poll, in which 66 percent of Americans said that they would prefer that the entire process of obtaining a mortgage be conducted online.

California Home Listings Improved for the Fifth Straight Month in August

September 18, 2018 by  • Posted in 

  • There were 17.2 percent more active home listings in California in August than there were at the same time last year.
  • The median sales price for a single-family home in the state ended the month at $596,410, up by 5.5 percent year over year.
  • The nine-county Bay Area’s median sales price was $935,000, up by 10.0 percent from August 2017 for the 14th consecutive month of annual gains.

The number of active listings in California rose by more than 15 percent year over year in August, though prices continued to increase in every major region of the state, with the nine-county Bay Area posting the largest gain.

The latest existing home sales and price report from the California Association of Realtors says that active listings increased by 17.2 percent from August 2017, the fifth consecutive month of supply improvement. The median sales price for a single-family home was $596,410, a gain of 0.8 percent from July and an increase of 5.5 percent from one year earlier.

“While home prices continued to rise modestly in August, the deceleration in price growth and the surge in housing supply suggest that a market shift is underway,” CAR Senior Vice President and Chief Economist Leslie Appleton-Young said. “We are seeing active listings increasing and more price reductions in the market, and as such, the question remains, ‘How long will it take for the market to close the price expectation gap between buyers and sellers?’”

The Bay Area’s median sales price ended August at $935,000, an annual gain of 10.0 percent for the 14th straight month of double-digit- percent, year-over-year price growth. Prices rose from August 2017 in all nine counties, ranging from 1.3 percent in Marin to 12.6 percent in Santa Clara.

As in July, San Francisco was California’s most expensive housing market, with a median sales price of $1,550,000. The Bay Area is also home to the state’s other three counties with seven-digit price tags: San Mateo ($1,500,000), Santa Clara ($1,295,000), and Marin ($1,222,500). CAR notes that while California buyers paid an average of 99 percent of list price in August, those in nearly every Bay Area counties forked over premiums due to tight supply conditions.

Even if inventory shortages dictate that California and Bay Area housing market conditions remain tilted toward sellers, supply conditions improved from August 2017. Statewide, the months’ supply of inventory was 3.3, unchanged from July but up from 2.9 on an annual basis. The nine-county Bay Area had a 2.3-month supply of inventory, up from 1.9 at the same time last year.

Every Bay Area county posted year-over-year inventory gains except for Marin and NapaAlameda and Santa Clara counties had the state’s most severe inventory droughts, both with a 2.0-month supply, while only Napa and Sonoma counties had more homes for sale that the statewide average.

Strong August U.S. Jobs Growth Suggests That Higher Interest Rates Are Coming

September 7, 2018 by  • Posted in 

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  • Today’s national employment report from the U.S. Bureau of Labor Statistics offers continued support for strong economic growth, with an increase of 201,000 jobs in August.
  • Over the last 12 months, the U.S. economy has added 2.33 million jobs. After downward revisions of June and July data, job gains have averaged 185,000 per month over the last three months. The current economic cycle is the longest continuous expansion on record, with 95 straight months of job additions.
  • The national unemployment rate remained at 3.9 percent. The alternative measure of examining the number of people working part-time for economic reasons (in other words, those who would prefer full-time employment) decreased further to 7.4 percent, the lowest level since April 2001.
  • Another of the report’s positive points was a pickup in wage growth, which is up by 2.9 percent over the year. The growth rate has been slow and in August reached the highest level since the middle of 2009, with a 77-cent increase in average hourly earnings for all employees.
  • Job additions were generally positive across most sectors, with manufacturing employment falling by 3,000 jobs after 12 months of continuous gains. The largest gains remain in the professional and business services sector, with 53,000 jobs added in August and more than 500,000 positions created over the year.
  • The U.S. Bureau of Labor Statistics Job Opening Labor Turnover Survey released earlier this month says that open positions remain at historical highs, with 6.6 million job openings in June. The continued highs in job openings confirm survey data showing that the share of small businesses reporting that they have at least one job to fill rose to the highest level in the survey’s history. The number of openings remains highest in the accommodation and food services industries, as well as in health care and social assistance. Note that these are generally not high-income jobs. The information sector also continued to add jobs at a robust pace, though slightly slower than in April, when it reached the highest rate since 2007.
  • According to a CompTIA report released today, the information-technology sector shed 400 jobs in August for the first time after 14 consecutive months of gains. Year to date, the tech sector has added 58,300 positions. Four of five categories showed job gains, with only the telecommunications category down by 20,600 jobs for the year. The number of employer job postings in August for core technology positions declined by 39,000 but still totaled more than 261,000. However, even with large monthly fluctuations in the number of openings, 2018 has averaged about 50,000 more openings than in the previous two years.
  • By all measures, today’s jobs report suggests that the Federal Reserve remains on track to increase interest rates two more times this year. Pacific Union’s recent analysis on the impact of rising mortgage rates suggests that shorter term — through the end of 2018 — 30-year, fixed rate mortgages are still not expected to rise above 4.7 percent.

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/monkeybusinessimages)

Real Estate Roundup: The Nation’s Hottest Housing Markets Move Eastward

July 9, 2018 by  • Posted in 

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
Bay Area housing markets dropped even further on realtor.com’s list of the nation’s hottest real estate markets in June, marking the first time a California metropolitan 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,” Danielle Hale, chief economist at realtor.com, said in a statement released with the June ranking.


… BUT STRONG FORECAST LIFTS SAN FRANCISCO, OAKLAND, AND 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 stated that 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.

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

(Photo: iStock /LightFieldStudios)

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

June 25, 2018 by  • Posted in 

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)

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Craig Curreri

707.477.5120   craig@craigcurreri.com   License #: 01408111

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