The good news for home sellers is that the median price for a single-family home in the Bay Area increased by 12.5 percent year over year in November to $910,350. The bad news for homebuyers, of course, is exactly the same.

Seven of the nine Bay Area counties have severe inventory shortages with less than two months supply.

The Feds recent move to increase rates and speculation that rates will continue to rise in 2018 will only serve to make housing affordability in the Bay Area more of a challenge down the road.

The California Association of Realtors fourth-quarter 2016 Housing Affordability Index reports that three Bay Area counties saw a slight improvement in housing affordability during the fourth quarter of 2016.

Continued wage growth along with the seasonable home price softening were generally credited with the improvement in Contra Costa, Napa, and Marin counties. The other six Bay Area counties saw affordability slightly worsen as only 25 percent of residents are able to afford the median-priced home at $797,170 – down from 26 percent in the third quarter.

Analysts predict that ongoing rising mortgage rates will continue to challenge Bay Area affordability in 2017 and beyond.