Real Estate Roundup: Bay Area a Hotbed of Hefty Down Payments
May 11, 2015 • Posted in Weekly Real Estate News Roundups
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.
AFFLUENT BAY AREA BUYERS DROPPING SIZABLE DOWN PAYMENTS
Even with sky-high home prices, Bay Area buyers are making some of the largest down payments in the U.S., with five of our local markets landing in the top 15.
According to data from RealtyTrac, the average San Francisco homebuyer put down 30 percent — $305,467 – of the purchase price in 2014, the second most of any county in the nation. San Mateo County ranked No. 3, with an average down payment of 28.5 percent, followed by Marin County at No. 5 (27.8 percent), Santa Clara County at No. 7 (25.5 percent), and Sonoma County at No. 13 (22.6 percent).
RealtyTrac says that markets where buyers can afford to make large down payments are those with the strongest economies – certainly the case in the Bay Area, where eight of nine counties were at full employment in March.
BAY AREA HOUSING MARKETS MOVING AT BREAKNECK SPEED
If you’re shopping for a home in the Bay Area this spring, you’d do well to make haste, as properties aren’t sticking around for long, especially in parts of Silicon Valley and the East Bay.
Citing MLS data, the San Jose Mercury News reports that single-family homes in two Redwood City neighborhoods have sold in an average of 10 days over the past six months, down from 14 days one year ago. Buyers in Palo Alto were also snapping up homes in 10 days, six days faster than last year. In the Oakland metro area, the average home sold in 12 days, down from 13.
While attractive homes are selling fast across the region regardless of financing method, buyers who can pay all cash move particularly quick, the publication says. All-cash buyers accounted for about 25 percent of all transactions in March in Santa Clara and San Mateo counties and about 20 percent in Contra Costa and Alameda counties.
SAN FRANCISCO RENT PRICES HIT NEW HIGH
The news isn’t getting any better for renters in the City by the Bay, with prices recently climbing to an all-time high.
According to a blog post at SFGate, San Francisco rents averaged $3,458 in the first quarter of 2015, up 13 percent from the first quarter of 2014. However, it’s important to consider that that figure only includes 50-plus unit buildings, which tend to be newer and more expensive.
Rents were also rising across the rest of the Bay Area, SFGate says, averaging $2,370, a gain of 14 percent from the first quarter of 2014. Renters pushed out of the San Francisco market are helping to drive up prices in Alameda County, where rents grew by 14.6 percent year over year, the largest increase in the Bay Area.
SAN JOSE ECONOMY, HOUSING MARKET BACK ABOVE NORMAL
The U.S. housing market continued its recovery in the first quarter but has still not returned to a state of normalcy. In the San Jose metro area, housing and economic activity have surpassed their typical levels, thanks to the exceptionally strong Silicon Valley job market.
The National Association of Home Builders’ latest Leading Market Index gives the U.S. housing market a score of .91, meaning that the country’s economic and housing activity is at 91 percent of normal levels based on permit activity, prices, and employment. According to the LMI, 68 of 350 metro areas nationwide have either returned to or surpassed their last normal activity levels.
San Jose is one of those markets and ranks sixth in the U.S. among major metro areas for highest LMI scores, though the report does not disclose an exact number. NAHB Chief Economist David Crowe said that job growth is driving the return to normalcy across the U.S., while permit activity saw only a modest improvement.
(Photo: Flickr/ 401(K) 2012)