Real Estate Roundup: Bay Area Tech Hubs Are Among the Nation’s Best for Income Growth
November 13, 2017 | Source: Pacific Union Bay Area Real Estate Blog
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.
THREE BAY AREA CITIES RANK IN THE TOP 10 FOR INCOME GROWTH
More good news for Bay Area workers and potential homeowners: incomes in three local cities rose by double-digit percentage points last year.
That’s according to an analysis by SmartAsset, which ranked the top 25 U.S. job markets for fastest-growing median annual incomes between 2015 and 2016. Oakland had the nation’s second-largest income gains during that time period, up 15.7 percent to just over $68,000.
San Francisco ranks No. 6, with the median annual income up by 12.7 percent, while No. 8 San Jose saw incomes rise by 11.5 percent. San Francisco and San Jose were the only cities on the list where workers earned six-figure salaries in 2016, a respective $103,801 and $101,940.
The report comes on the heels of California’s latest favorable employment report, which said that the state added 52,000 new jobs in September. According to an analysis of the numbers by Pacific Union Chief Economist Selma Hepp, California grew jobs by 1.7 percent year over year, again outpacing the national growth rate of 1.2 percent.
SAN FRANCISCO: NO LONGER THE NATION’S LEAST-AFFORDABLE HOUSING MARKET
California real estate remains the country’s least affordable, but San Francisco is no longer at the top of that list.
The latest National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index says that the Los Angeles metropolitan area was the nation’s least-affordable housing market in the third quarter, with only 9.1 percent of homes affordable to households earning the median annual income, there, $64,300. San Francisco, which had been the least-affordable U.S. housing market for nearly five years, dropped to the No. 2 spot. Just more than 11 percent of San Francisco households could afford to purchase the median-priced home.
Other California metro areas rounded out the rankings of the nation’s least-affordable large real estate markets: Anaheim, San Jose, and Santa Rosa. The Golden State is also home to the country’s five least-affordable small housing markets, including Napa and San Rafael.
ONLY ONE-QUARTER OF BAY AREA HOMES CAN BE HAD FOR LESS THAN $500,000
Bay Area homebuyers on a half-million-dollar budget are finding that their options are increasingly limited, particularly in Silicon Valley.
Citing CoreLogic data, The Mercury News reports that for the first nine months of 2017, just 25.5 percent of single-family homes in the nine-county Bay Area sold for less than $500,000. In Santa Clara County, where the median sales price was $1,075,000 in September, that number was even smaller: 9.0 percent.
From 2002 through 2007, the number of sub-$500,000 Bay Area home sales steadily dropped before rising during the Great Recession. Since the recession’s end, Bay Area home sales priced under $500,000 have declined to even lower levels than they were earlier in the century.
U.S. HOMES STILL MORE AFFORDABLE THAN HISTORICAL AVERAGE
A final note on current housing affordability: Although conditions are near a postrecession low, they are still more favorable than the long-term average — except in California and a handful of other coastal states.
According to a report from Black Knight Financial Technology Solutions, it required 21.2 percent of the national median income to purchase the median-priced home in September, compared with 24.2 percent in the 1990s and 26.2 percent in the first four years of this century. In a statement accompanying the report, Ben Graboske, executive vice president for data and analytics, said that home price growth is canceling out savings provided by low mortgage rates, keeping housing affordability low across the country.
Forty-seven states had payment-to-income ratios lower than their averages between 1995 and 2003. California, Hawaii, Oregon, and Washington, D.C. were all less affordable than their long-term benchmarks in the third quarter.