Bay Area employment remains strong

Thanks to a surge in Santa Clara County – 4,800 jobs – mostly tech-related – added in July alone, the Bay Area remains close to full employment. The East Bay, South Bay, and San Francisco metro areas all have unemployment rates below 3 percent.

Over the past 12 months, the tech industry has added 2,900 jobs in the East Bay, followed by health care with 1,500. Meanwhile, the construction industry added 3,400 new jobs and retail added another 1,500. Hotels and restaurants lost 1,000 jobs inthe East Bay over the last year.

Of course, the strong job market only increases the demand for housing.

Check the neighborhood

When buying a home it’s often good to check the neighborhood at times other than weekends and evenings.

  • Is it near a school? What are the traffic patterns before and after school?
  • Is it on a bus route? Heavy commuter traffic can come as a real shock.
  • is it near a park or athletic field? Participants and spectators can easily fill up parking spaces.
  • Is there construction or planned construction in the area? Noice could certainly be a factor.

Visit at times when these activities might be taking place. Talk to the neighbors. Don’t be surprised on your first day in your new home.

Bay Area homeowners are the most equity rich in the U.S.

On the plus side of the exorbitant real estate prices in the San Francisco Bay Area is that those fortunate enough to actually own a home are the most equity rich in the United States. Currently the five zip codes of the most equity rich properties include: San Francisco 94116 (86 percent), Sunnyvale 94086 (84 percent), Mountain View 94040 (84 percent), Sunnyvale 94087 (84 percent) and San Francisco 94122 (84 percent).

On the other side, 1 in 10 homes nationwide is still “underwater,” meaning “combined value of the loans on those homes exceeds its market value by at least 25 percent” (San Francisco Business Times. Areas with the most homes “underwater” include: Baton Rouge (21 percent), Toledo (20 percent), Scranton (20 percent), Youngstown, Ohio (19 percent), and New Orleans (19 percent).

Continued job creation that are well-paying is generally considered a prime reason for the Bay Area boom.

Shopping for Homeowner’s Insurance

We all know that Homeowner’s insurance is an absolute necessity but did you know that it’s often wise to compare policies and prices? All to often, homebuyers take the advice of the mortgage lender without taking the time to make comparison. Of course, you want to make sure that the insurance is appropriate for the home and its contents.

An annual review is also a good idea, whether it’s health, auto, home or any other insurance that is being carried.

Finally, when there is a major life event or change – such as the birth of a child – this is a good time to compare policies and rates.

The Bay Area: Goings & Comings

Sure, housing in the Bay Area is outrageously expensive – the median home price is now about $900,000 and a six-figure salary is now considered “low income” in San Francisco – but there are other reasons why some residents leave. And, interestingly, compelling reasons why some ultimately return. The San Francisco Chronicle has been running an interesting series entitled “The Grass is Greener” which includes some of these highlights:

  • Besides housing, other reasons some leave the Bay Area: pricey childcare, traffic, dirty streets, car break-ins, taxes
  • Reasons why some return: quality of the Bay Area people, politics, weather

Looking to improve curb appeal? Grow a tree…

According to real estate agents, when done correctly, sharp landscaping can add as much as 20% to a property’s value. And planting a fast-growing tree is a great way to get started.

If your yard is small, choose a tree that will not grow too big and overwhelm the yard. On the other hand, sycamores are excellent shade trees for a large yard and grow very fast, up to 5-6 feet per year.

Finally, don’t forget the attraction of fruit trees. Not only will they add visually to the yard, they should produces fruit by the second year.

What a home inspection might miss

Home inspections are standard procedure when purchasing a house but Trulia has an excellent article on eight potential problems that an inspection might miss. Below are highlights; check out the excellent article Home Inspection Problems for a full description.

  • Roof
  • HVAC
  • Water damage
  • Flooring
  • Appliance performance
  • Asbestos
  • Noxious gases
  • Drainage issues

Tips on buying a home in today’s market

Good suggestions from RealtyBizNews on getting good value in today’s housing market:

  • Use comparables: Comparables give you an idea of how similar homes with similar features rate by price in the market you’re looking at. If the comps look like the house you’re considering is priced too high, you can use that as a negotiating point. If the comps look lower, consider moving quickly.
  • Use realtors to your advantage: Good realtors can be a great help in finding the right home at the right price. Take advantage of their expertise.
  • Think like a flipper: Look for a homes that need a bit of repair that you can get below retail value. Don’t forget to check home investor lists.

Inflation, Wages & Prices

The current state of the residential real estate market is marked by three factors: inflation, wages, and the price of homes. Currently inflation is rising at 2.9% (U.S. Labor Department); wage growth is up 3.2% (Federal Reserve Bank); and home prices are up 6.9% (S&P CoreLogic Case – Shiller). So while inflation and wages are increasing at approximately the same right, home prices are rising over two times as fast. This means, of course, that prices are continually pushing homes out of reach or more and more potential homebuyers.

Ideally, supply and demand will come more into balance. While homes will still be out of reach for many, hopefully wage growth and home prices will run closer to parallel. Analysts will also continue to be concerned about inflation which will effect the amount of income available for home purchases.

Those darn Millennials!

Yes, it seems as if we’re always discussing Millennials, particularly they’re home buying habits (see , , , ) and a new report by the Urban Institute highlights the differences in their home purchase timeline as compared with other generations.

According to the report, millennials had a homeownership rate of 37 percent in 2015, which is 8 percent lower than Generation X and Baby Boomers when they were between 25 and 34 years old.

Of course, the reasons cited are familiar as well: a delay in getting married and starting a family (apparently marriage increases the probability of buying a home by close to 18 percent), massive student debt and high rents, making it harder to save up for a downpayment.

Finally, the current state of housing: high demand, low inventory, rising and rising prices might have something to so with it as well.