Even though price gains have outpaced wage growth across the majority of the U.S., homes began the year more affordable than they had been in two years. That's not particularly true in the Golden State, where half of the country's least-affordable real estate markets are located.
Although California home sales eased a bit as the summer wound down, activity is at its highest level in nearly three years. Here in the Bay Area, a lack of available homes caused sales volume drops across the board and should keep prices rising for the remainder of 2015.
Homeowners across the country continue to have overly lofty expectations concerning their property values, while those in the Bay Area's two largest cities are in fact underestimating what their homes are worth.
Bay Area homes were even tougher to come by in August than they were at the end of last summer, as the months' supply of inventory (MSI) fell year over year in every Pacific Union region but Lake Tahoe/Truckee. Get all of the latest, most relevant sales data and commentary in Pacific Union's August 2015 Real Estate Report.
For the third month in a row, Realtor.com has ranked the San Francisco metro area as the hottest housing market in the U.S. based on buyer interest and fewest days on the market. Three other Bay Area cities also made the top 20 list.
Less than one-third of California's housing stock is affordable for a median-income household, and in certain Bay Area counties the amount of affordable properties on the market is practically nonexistent.
A limited number of homes for sale fueled prices across the country in the second quarter, with more than 90 percent of metro areas posting annual gains. San Jose and San Francisco were the nation's two priciest housing markets, where homes cost about four times more than they do nationwide.
Increased demand for Golden State homes this spring pushed second-quarter prices to levels not seen in nearly eight years, further reducing affordability. In fact, the percentage of Californians who could afford to buy a home was down from the first quarter in every county but one.