Housing Recovery Slowdown Ahead? Not in ‘Highest-Performing’ Bay Area.
December 4, 2014 • Posted in Market Conditions
A new report warns of a possible slowdown ahead in the U.S. housing recovery, but the Bay Area apparently has little to fear: Market conditions that suggest future trouble are nowhere to be found here.
In fact, San Francisco and San Jose continue to stand out as two of the highest-performing metro areas in the nation as real estate markets everywhere return to normalcy in fits and starts.
Truckee Calif.-based Clear Capital.com Inc. is one of only a few research firms to suggest near-term losses in U.S. housing markets as the recovery slows down from the breakneck speed of the past two years.
The firm’s newly released Home Data Index Market Report notes that all-cash investors who sparked the housing recovery in 2012 have mostly left the market as the remaining supply of “distressed” properties — those in foreclosure or already taken over by banks — dwindles. In their place, Clear Capital said, is a “general lack of demand” among homebuyers and overall “weakness of price growth” nationwide.
Except in the Bay Area.
Clear Capital’s gloomy forecast includes a few bursts of optimism, including a list of the 15 “highest-performing major metro markets” nationwide. San Jose ranks eighth on that list, and San Francisco places 14th.
The San Jose-Sunnyvale-Santa Clara metro area posted a 1.4 percent rise in prices in the three months ended Nov. 30, compared with the previous three months, Clear Capital noted. Year over year, the price growth was an even more impressive 11.4 percent.
In the San Francisco-Oakland-Fremont metro area, prices rose 1.2 percent over the same three-month period, with a year-over-year increase of 13 percent — hardly evidence of “weakness of price growth.”
What makes these numbers all the more exceptional is that Bay Area markets have very few distressed properties. Whereas other metro areas on the “highest-performing” list have distressed-home levels of up to 27 percent (Chicago), distressed homes account for just 4.6 percent of the inventory in San Jose and 7.1 percent in San Francisco — the two lowest levels on the list.
As for the other indicator of future market malaise — a “general lack of demand” among buyers — try telling that to Bay Area house hunters who have been forced to compete in bidding wars for the past few years with only a slight drop in intensity in recent months.
(Image: Flickr/Scott Maxwell)