Real Estate Roundup: Is the Bay Area at Risk for Another Bubble?
December 8, 2014 • Posted in Weekly Real Estate News Roundups
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious:
SAN FRANCISCO HOME PRICES SURPASS PREVIOUS BUBBLE HIGHS
Home prices in San Francisco have exceeded levels recorded in the previous bubble, while affordability in Alameda County is lower than the historical average, early potential warning signs of another bubble, according to a new study.
A recent RealtyTrac report shows that the median price for a home in San Francisco County was $975,000 in October, up from a peak of $850,000 in the last bubble, which the company dates between 2005 and 2008.
Across the Bay Bridge in Alameda County, affordability dipped below its historical 14-year average in October. Since 2000, Alameda County homeowners have spent 57.6 percent of their median incomes to afford a median-priced property, but in October that number was a full percentage point higher.
“Affordability and foreclosure rates by loan vintage are two key metrics that will help consumers, investors, institutions and policy makers identify if a housing market is at risk for another price bubble,” Daren Blomquist, RealtyTrac vice president, said in a statement accompanying the report.
SOLID 2015 GROWTH EXPECTED FOR THE SILICON VALLEY HOUSING MARKET
The San Jose metro area should continue to be one of the nation’s top-performing real estate markets next year, realtor.com predicts.
The company named the San Jose-Sunnyvale-Santa Clara metro area to its list of 10 markets expected to grow the most in 2015. Realtor.com cited income growth as one reason the San Jose housing market will continue to thrive, along with a 3 percent increase in home prices and sales.
The report also noted that slim inventory levels are a metric to watch in the San Jose area. According to the California Association of Realtor’s most recent home sales and price report, the months’ supply of inventory in Santa Clara County was 1.8 in October, the second lowest in the state.
WILL 2015 BE THE YEAR OF THE FIRST-TIME HOMEBUYER?
Although millennials are mostly priced out of homeownership in the expensive Bay Area, they should help drive the nationwide housing recovery in the coming year.
In a list of 2015 predictions, realtor.com says that it expects millennials to account for two-thirds of all households formed in the next five years. Realtor.com Chief Economist Jonathan Smoke said that job growth will enable younger homebuyers to enter the market, especially if it becomes easier for them to get loans.
“In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery,” Smoke said. “If access to credit improves, we could see substantially larger numbers of young buyers in the market.”
CRAFTSMAN HOMES BACK IN VOGUE
Craftsman-style homes are growing in popularity, says an article in the Wall Street Journal, only this time with a contemporary twist.
Initially built between 1905 and the early 1920s, Craftsman homes saw a resurgence in popularity in the 1980s and are currently hot again, the article says. While today’s buyers want their homes to have a Craftsman look from the outside, many are opting to build them incorporating the open floor plans and lighter colors found in more contemporary homes.
The Wall Street Journal notes that high-profile celebrities who own Crafstman homes may be partially responsible for the style’s comeback. Craftsman homes are plentiful in the Los Angeles area because the architectural movement coincided with Southern California’s initial building boom.