Realty Times - San Francisco Bay Area Housing Boom

Front Page

NEED HELP?

Click for Live Support

Call: 214-353-6980

San Francisco Bay Area Housing Boom

by Broderick Perkins

Foreclosure rates are low, speculators have backed off, the weather is balmy and home values are up more than 16 percent in the past year.

Home buying remains a thorny issue in the high-cost, nine-county San Francisco Bay Area, but once you are in the door everything seems to come up roses.

In the past year, home values have risen from a median $447,000 in August of last year to $520,000 now -- a new record high, according to La Jolla, CA-based DataQuick.

Marin County listed the area's highest median price for all housing, $717,000 with the city and county of San Francisco in second place at $668,000.

San Francisco racked up the largest year-to-year price increase -- 20.1 percent, but lower cost counties including Solano (19.7 percent), Sonoma (19.1 percent) and Alameda (18.3) played serious catch up.

And there's more good news for homeowners in the technology economy-beleaguered region.

"While current sales are a bit off the June peak, it can't really be said that the market is turning when we've just had the third-highest sales count in at least sixteen years as well as a new price peak. With today's demand, we may well see sales and appreciation stay strong through the rest of the year," said Marshall Prentice, DataQuick president.

Despite tough economic times at the region's technology Ground Zero -- Silicon Valley, where single-family detached home prices are up "only" 13.2 percent for the year and down $15,000 in the past month -- home buying remains the regional economy's favorite pastime.

How so?

Interest rates are cooperating. Down to an average 5.75 percent on Sept. 16 from 5.83 percent Sept. 9, fixed interest rates on 30-year conforming loans remain a bargain compared to this year's high of 6.34 percent in May, according to Freddie Mac.

When considering a purchase, home buyers in high-end markets tend to look at the monthly cost of housing -- what their paycheck will afford each month -- rather than rising median prices. Low interest rates keep buyers looking.

The typical monthly mortgage payment for Bay Area buyers was $2,341 in August, down from $2,361 in July and up from $2,092 a year ago, DataQuick reported.

"The fed rate hikes actually helped lower rates on home loans. A move to tighten or hike rates by the Fed is designed to slow inflation, and tempering inflation is very good news for bond holders or mortgage lenders. With inflation reduced, the buying power of their future returns will face less erosion from the effects of inflation," Sonoma County real estate and loan agent Ginger Hopp reported to RealtyTimes.com's Market Conditions Report.

Rents are rising. Rents increased for the first time in the Bay Area since the second quarter of 2000, making move-in deals and other concessions more of an exception rather than the rule of recent years. The monthly cost of rent, however, remains as high as some mortgage payments -- but without the tax benefits of home ownership.

Demand. High rents and high single-family detached home prices is giving the condo sector a boost, especially considering that many first-time home buying programs and conforming loan levels barely cover a condo loan in the region.

"The condo median just broke the $400,000 barrier (in Silicon Valley). It's almost impossible to find a single-family detached home at that price. First-time home buyer programs do not apply to price points for single-family dwellings. That could help drive condo prices," said John V. Pinto, a Realty World broker in San Jose.

A total of 12,674 new and resale houses and condos were sold in the nine-county region in August, up from 12,488 for August last year, DataQuick reported.

Location. San Francisco Bay Area's climate, geography, diversity, tourist attractions, events and economic potential help the region retain its position as a desirable destination for career-minded young professionals, family-oriented couples and older baby boomers looking for retirement homes.

DataQuick said market distress indicators were largely absent in August in the San Francisco Bay Area where foreclosure rates are low, down payment sizes are stable and a slight increase in flipping (buying and quickly selling for a profit) rates earlier this year has now leveled off.

"The strong sellers market continues in the city of San Francisco. There are many buyers in the market attracted by relatively low interest rates and the opportunity to own a home in one of the best cities in the world," Jane Mermelstein of Zephyr Real Estate reported to RealtyTimes.com's Market Conditions Report.

Published: September 17, 2004

Use of this article without permission is a violation of federal copyright laws.

Related Articles:

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home.

The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services.

The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home.

Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News.

Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake.

He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications.

In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.

Real Estate News Network