Bay Area Real Estate: Same Old, Same Old

The latest home sales report from the California Association of Realtors should be strikingly familiar to anyone following Bay Area real estate over the last few years: prices up, inventory down.

To be specific, the median price for a single-family home in the nine-county Bay Area was $856,200 in August – an annual increase of 10.2 percent.

Eight of the nine Bay Area counties saw home prices increase from August, 2016. Only Solano County had a flat appreciation.

Inventory from August 2016 was down in all nine counties.

Bay Area Market Remains Competitive

Given the low housing inventory and sustained high demand it’s no great surprise to note the following trends:

  • The average property is receiving from two to four offers
  • 60% of homes are selling for more than the asking price
  • Down payments in San Jose and San Francisco were 25.2 percent and 22.3 percent, the highest in the country
  • Co-borrowers are increasingly being used, with San Jose leading the country at more than 50 percent of all home purchases

Smart Home Tech Could Reduce Peak Time Usage

With residential electricity usage in the United States expected to increase 24% by 2040, it’s hoped that smart home technologies can help reduce peak time power usage.

The basic idea is to reward consumers who move energy usage to nonpeak times.

Currently tests are being conducted to develop new optimization algorithms which will help minimize usage and, thus, costs.

The Bay Area: A Good Place to Work

Sure housing costs remain high but a new report reveals that wages are growing faster in the San Francisco metro area than any other major U.S. city at 2.4 percent.

21,000 new jobs were created in the Bay Area in July while the unemployment rate stands at 3.6 percent.

Job openings have increased by 20.1 percent in San Francisco since August 2016.

Pending Home Sales Index Down Nationwide

It’s not just the Bay Area – see Pending Home Sales in Bay Area Continue to Decline – the National Association of Realtors reports that the Pending Home Sales Index fell for the third time in the last four months.

Once again, low inventory is cited as a prime factor although the fact that median home prices nationwide have risen by 38 percent over the last five years.

However, buyer demands remains strong with the average listing time for available homes continuing to decline.

Time to Relocate?

In one sense, the news is good: employees in San Jose and San Francisco have the highest annual salaries in the country. Moreover, that salary in San Francisco actually goes further than in any other major U.S. coastal city.

On the other hand, 63 percent of renters in San Francisco as surveyed by Apartment List said they’re planning to relocate due to the high cost of living. Los Angeles is the top destination cited within California while Salt Lake City is the main attraction out-of-state.

Finally, high housing costs are probably scaring off skilled workers in other parts of the country as San Francisco is not listed as a top destination in any of the top U.S. metro areas.

Pending Home Sales in Bay Area Continue to Decline

The California Association of Realtors’ latest Pending Home Sales Index reports that pending home sales in the Bay Area were down by 11.5 percent in July.

Once again, low inventory results in increased competition with 66 percent of homes receiving multiple offers in June.

Analysts say that low supply plus continued high demand could result in double-digit-percent home price appreciation although sales activity is expected to slow in the coming months.

Freddie Mac Looking to Automate Appraisal Process

Mortgage servicer Freddie Mac will soon be featuring a new program called Automated Collateral Evaluation (ACE) that will allow some buyers to skip the traditional appraisal process in an effort to speed up the closing process and lessen fees for home buyers.

ACE is a computer algorithm that uses data from multiple listing services, public records and historical home values to determined a property’s collateral risk. Not all home purchases will be eligible however as the system will assess if a property needs to be appraised by a human.

According to Freddie Mac those that do qualify should see closing times improved by 10 days and may save up to $500. The new program for home purchases is scheduled to begin on September 1.

Smart Home Tech Still Faces Problems

These days there’s no doubt that smart home technology is a lucrative market but before it can move towards true market-buyer adoption several problems must be overcome.

Principal among these is simplicity of use. Homeowners don’t want to face complex setup instructions and more and more manufacturers are offering wider support to help with installation.

Security and privacy also remain key issues. Products must be designed with prevent eliminate current vulnerabilities with an eye to the future as well. Moreover, devices that can store sensitive personal data must ensure that this data can be protected.

Affordability in California Continues to Decline

According to the California Association of Realtors’ latest Housing Affordability Index approximately 29 percent of California residents currently could afford a median-priced $553,260 single-family home.

Moreover, rising prices and low inventory mean that buyers need to earn twice as much as they did five years ago to qualify for a mortgage.

San Francisco remains the least affordable market in California with only 12 percent of residents able to qualify for a mortgage.