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Home prices are at an all-time high, inventory remains low, bidding wars are common, many offers are all cash, often 10 to 20 percent over the asking price.
First-time buyers have it even rougher with approximately 68 percent saying they found the home of their dreams but were not able to purchase as they were either outbid, unable to secure financing, or the home failed the inspection
And some would-be homebuyers are giving up or, at least, taking a break.
Not long after the recall was shut down, Governor Newsome announced California’s first housing accelerator fund, which is a $1.75 billion dollar initiative to help fund 90 projects of more than 7,000 units of affordable housing in California.
California is prioritizing projects that have already gotten an allocation of state funding and will begin work in the next 180 days.
This is much needed. California has to find a way to make room for its workforce with more affordable housing.
According to the most recent data from CoreLogic, home sales in the Bay Area remain strong even as the median price increased by 22 percent over July 2020. Locally, home prices in Alameda County increased by 28 percent to $1.2 million while Contra Costa rose 19 percent to $875,000.
Some analysts predict a slight decline in the fall but only because last year’s autumn sales were so strong.
While sales of single-family homes remain strong, condo sales and prices actually declined in June and July.
According to a new report by Lending Tree, 48 percent of American renters don’t believe they will ever be able to purchase a home due to rising home prices and stagnant wages. Saving for a down payment is the number one obstacle facing renters, according to the study.
76 percent of the renters polled said they would like to be able to own a home, if possible. Low credit scores are also a concern.
The pandemic has shown that remote working is very viable and millennials are ready to buy. But where? With a severe housing shortage and prices of single-family homes through the roof, is it time to consider new alternatives?
One possibility is the suburb of the future: much smaller homes and years but mixed-use areas instead of separate commercial zones. Shopping centers with restaurants, bars, gyms, and small venues for entertainment.
Life can be affordable and enjoyable!
A recent article in the San Francisco Chronicle highlighted how more millennials are buying homes – or planning to buy – after a year of living with their parents. For many, moving back home was the only viable option when the pandemic hit. The good news is they were able to save at a much more rapid rate as the economy edges back to normal, many are looking to become homebuyers for the first time.
Seventy=three percent of millennials surveyed said they were able to increase their savings during the pandemic while nearly 40 percent improved their credit score.
One bit of good news during the pandemic is that Bay Area apartment construction has risen to its highest level in five years. The San José metro area will see an increase in new housing of 79 percent over last year while San Francisco and the East Bay will see 36 percent more new apartments become available this year.
Seventy percent of the new apartments would be considered luxury or a step below. Affordable housing still lags behind is done mostly by non-profit developers using government subsidies.
Those Bay Area cities with the most new units include Oakland 3,168, San José (2,175), Mountain View (1,714), San Francisco (1,521), Fremont (1,185), and Milpitas (717).
In a sign of colling demand, home showings declined in July compared to previous months. However, even with the decline 110 markets averaged more than 20 showings per listing during the first five days on the market.
Showings per listing dropped four months in a row, with July’s showings down 33 percent from March 2021.
The Northeast saw the largest decline at 15.2 percent while the South actually increased by 7.7 percent.
According to the Bureau of Labor Statistics, building material costs have increased by nearly 20 percent in the last 12 months. Steel mill products prices jumped 10.8 percent in July after increasing 6.2 percent in June. Gypsum proudctes – used for drywall – are up nearly 16 percent in 2021.
Interestingly, the price of lumber fell 29 percent in June but still remains nearly 72 percent above January 2020 levels.
All of these costs are reflected in the prices of new homes which are up nearly 6 percent over last year.
Yes, the housing market is crazy these days but experts explain that conditions are much different today than in 2008, primarily due to stricter bank loan regulations and homeowner equity. During the Great Recession, approximately 20 percent of home loans were adjustable in the decade leading up to 2008. Due to tighter loan rules, only 4 percent are ARMs these days.
When the housing bubble burst in 2008, values dropped 30 percent. Today, even if a homeowner could not afford their mortgage, they could easily sell for a profit.
Analysts agree that conditions today are very different than in 2008 but also warn that unforeseen economic and global forces are always a risk factor.
