Seventy-five percent of Americans will not buy their dream home if it does not suit their pets’ needs, while a prominent industry expert calls the possibility of a housing market crash near zero. Check out the latest stories of interest in Pacific Union’s weekly Real Estate Roundup.
- A new study rates San Francisco as the fourth-best American city to call home, with San Jose coming in at No. 8.
- San Francisco excels in several of the study’s gauges of attractiveness, including income growth, most restaurants and coffee shops per capita, and walkability.
- San Francisco and San Jose residents also rank among the most educated in the U.S.
While people migrate to the Bay Area to take advantage of its high-octane job market and pleasant year-round weather, the region’s high quality of life and top-notch educational opportunities cannot be understated, helping to land San Francisco and San Jose near the top of a list of the best U.S. big cities.
That’s according to an analysis by WalletHub, which ranks the 62 largest American cities on 56 gauges of attractiveness to residents on a 100-point scale. Individual measures of a city’s desirability fall into five major categories: affordability, economy, education and health, safety, and quality of life.
San Francisco notched the No. 4 spot for best American big city, garnering a score of 62.56. The City by the Bay ranks second in the country for overall quality of life and third for health and education.
Diving into more granular criteria, San Francisco ties Seattle and Austin, Texas for the highest income growth in the country. The city also ranks among the top five in the U.S. for the lowest percentage of residents living in poverty and the largest amount of people with insurance.
In addition, San Francisco ties New York City for the highest number of restaurants per capita and ties five other cities for the most coffee shops per capita. The city also earns the nation’s second-best Walk Score and Bike Score, though those two criteria represent a very small portion of the overall score.
San Jose landed in the No. 8 position, with a score of 60.87. Silicon Valley‘s thriving economy helped boost San Jose’s position, with the city ranking fourth in the nation for that measure of attractiveness and second for education and health. Like its neighbor to the north, San Jose also has one of the lowest percentages of residents living in poverty in the country.
A separate WalletHub study sheds additional light on the Bay Area’s educational pedigree, with both San Francisco and San Jose residents named among the five most educated in the U.S. Both cities rank in the top five for the highest percentage or residents with a bachelor’s degree, while San Jose has among the county’s most citizens with graduate degrees.
- California homeowners can expect to spend nearly $17,000 each year to maintain their properties, higher than the national average.
- Atherton ranks as the most expensive city in California for home upkeep, an average of more than $27,000 per year.
- Replacing a swimming pool’s filtration system is the most expensive routine home-maintenance task, costing nearly $1,800 and required about every two years.
Almost all new homeowners have calculated their monthly mortgage payments, but fewer have likely factored in the cost of routine maintenance tasks.
An analysis by home-remodeling portal Porch breaks down home-maintenance costs by states and ZIP codes, as well as individual jobs. Though it’s commonly accepted wisdom that owners should expect to spend 1 percent of a home’s cost on maintenance each year, Porch determined that nationwide, Americans spend an average of $16,000 on home upkeep annually, assuming that the work is outsourced to professionals.
Not surprisingly, Golden State homeowners can expect to pay a bit more than the typical U.S. homeowner. Californians spend an average of $16,957 per year on home maintenance, the seventh most in the country and the highest of any Western state.
And anyone who has purchased home in the exclusive Silicon Valley community of Atherton — America’s most-expensive ZIP code as of last fall — can expect sticker shock when it comes to maintenance, too. There, the average homeowner spends an average of $27,242 each year on home upkeep, the most in California and the third-highest in the nation.
Los Angeles presents a study in contrasts when it comes to home-maintenance spend. The city’s 90077 neighborhood, which includes Bel Air, is not far behind Atherton, with owners paying an average of $26,474 each year on regular maintenance jobs. Close by in 90073, owners spend less than half that, at $12,746 each year, the lowest in California.
On a final note, home shoppers considering a property with a swimming pool should take note of the amount of money it will take to keep it operational. Replacing a pool’s filter system is by far the most expensive maintenance chore, costing an average of $1,786 every 2.3 years. And cleaning a pool is the most frequently required maintenance task, which happens every 1.9 months, for an annual total of $649.
To get in the game, some millennials are raiding their retirement accounts for that money, according to a recent report from Bank of the West. The 2018 Millennial Study, released in July, is based on a nationwide survey of more than 600 millennials (ages 21-34). The key findings:
- Three in 10 millennials (29 percent) who already own a home have taken out a loan or withdrawn from an IRA or 401(k) account.
- Two in 10 millennials (19 percent) who plan to buy a home expect to dip into their retirement accounts to fund their purchase.
From Bank of the West
- Home prices in the San Jose metropolitan area rose to $1.2 million in the second quarter, a year-over-year gain of 25.0 percent.
- San Francisco and Santa Rosa are the only two major California housing markets where annual price growth was higher in the second quarter than it was in the first quarter.
- San Jose and San Francisco home sellers enjoyed the largest returns in the U.S. since the time of purchase, a respective 116.6 and 85.0 percent.
The San Jose metropolitan area once again posted the highest home price appreciation and seller returns in the second quarter, although price growth in the region is finally decelerating.
ATTOM Data Solutions’ latest quarterly home sales report says that U.S. single-family home and condominium prices ended the second quarter at $255,000, a new peak. Prices were up by 6.3 percent year over year, which was the lowest rate of annual appreciation in two years. In a statement accompanying the report, company Senior Vice President Daren Blomquist said that annual home price growth has slowed for five straight quarters and that rising mortgage rates may be partially behind that trend.
Home price gains are indeed slowing in Silicon Valley, but it’s doubtful that most buyers have noticed, given that the region’s annual appreciation was about four times the U.S. average. San Jose’s median home price rose to $1,200,000 in the second quarter, up by 25.0 percent year over year, the highest gain in the nation. Still, San Jose is considered one of America’s decelerating housing markets, as annual price growth was up by 32.9 percent in the first quarter of 2018.
San Francisco also counts among America’s five fastest-appreciating real estate markets, as the median $925,000 price home ticked up by 14.2 percent from the second quarter of last year. Unlike San Jose, San Francisco is an accelerating real estate market, with annual price growth increasing by about 2 percentage points from the first quarter.
Santa Rosa is the only other major California housing market that is still accelerating, as the $616,500 median home price rose by 7.2 percent year over year in the second quarter compared with 5.6 percent growth in the first quarter. Other major Golden State cities — including Los Angeles, San Diego, and Sacramento — saw moderate drops in price gains from the first quarter, though all still posted year-over-year appreciation.
Bay Area home sellers who chose to cash out in the second quarter again made out the best in America. San Jose sellers netted an average return of 116.6 percent more than their original purchase price, while those in San Francisco profited by 85.0 percent.
- For the second straight month, California’s median single-family home price reached a new peak in June, climbing to $602,760.
- The median sales price in the nine-county Bay Area was $1,045,000, a year-over-year increase of 16.1 percent.
- San Mateo County overtook San Francisco as California’s most expensive housing market, with a median sales price of $1,650,500.
A lack of homes for sale continued to drive Golden State prices in June, with the nine-county Bay Area posting double-digit percent annual appreciation for the 12th straight month.
The California Association of Realtors’ latest monthly home sales and price report says that the state’s median single-family home price was $602,760 in June, a year-over-year gain of 8.5 percent. June marked the second month in a row that state home prices reached a new peak. California home prices have risen on an annual basis for more than six years and currently show no signs of leveling off, according to CAR.
The Bay Area led the state for year-over-year price growth last month, with the median sales price of $1,045,000 up by 16.1 percent from June 2017. All nine counties recorded year-over-year price appreciation, ranging from 6.4 percent in Contra Costa County to 18.4 percent in Santa Clara County.
San Mateo County overtook San Francisco as California’s most expensive housing market, with the median price ending June at $1,650,500. San Francisco followed in the No. 2 spot, at $1,620,000, followed by Marin ($1,415,000), Santa Clara ($1,400,000) and Alameda ($1,015,000) counties.
In what has become a familiar refrain, CAR attributed the statewide and regional price growth to a shortage of homes on the market. Although active listings increased for the third consecutive month and were up by 8.1 percent from last June, the market remains tilted in favor of sellers, with a 3.0-month supply of inventory.
The nine-county Bay Area had a 2.0-month supply of homes for sale, unchanged from May and a slight improvement from one year ago. San Francisco has the state’s most pronounced inventory drought, with a 1.4-month supply of homes for sale, followed by Alameda County at 1.5.
Properties continue to leave the market at a rapid clip, with California single-family homes selling in a median 15 days, identical to the pace of sales in both May and June 2017. Bay Area homes sold in 13 days, with Santa Clara County again posting the fewest median days on the market in California, with homes finding a buyer in nine days.
Student debt is much less of a problem in California than it is in other states, while a new report says that six in 10 tech workers cannot afford to buy a home in the Bay Area. Get the skinny on the latest housing news in Pacific Union’s weekly Real Estate Roundup.
- Oakland home values increased by about $93,000 from 2015 to 2016, 136.2 percent of the median household income, the most in the U.S.
- Anaheim, Los Angeles, San Jose, San Francisco, and Fremont also rank among the country’s 10 housing markets with the biggest payoffs.
- Berkeley ranks as the least-affordable housing market in the country for first-time buyers.
The appreciation recorded in the Golden State over the past few years is paying off handsomely for homeowners, though it also means that real estate markets here are among the toughest in the U.S. for first-time buyers.
That’s according to a pair of recent analyses, the first one published by SmartAsset, which ranks the top 20 cities in the U.S. where it pays off the most to be a homeowner. To calculate that metric, the company took the change in home value between 2015 and 2016 and divided it by the median household income to see where owners earned the most from their properties.
Oakland ranks No. 1 in America for home-purchase payback, with 2016’s median home value at $649,700, a one-year gain of $92,700. Given the city’s median household income of $68,060, that translates to a 136.2 percent payoff.
Anaheim and Los Angeles took the next two spots on SmartAsset’s list. In No. 2 Anaheim, home values increased by $65,400 between 2015 and 2016, for a payout of 101.5 percent of the median $64,464 income. Home values rose by $51,400 in No. 3 Los Angeles, 94.4 percent of the median household income of $54,432.
Bay Area cities account for three more spots of the 10 U.S. housing markets with the biggest payoffs: No. 5 San Jose, No. 6 San Francisco, and No. 8 Fremont. San Francisco had both the highest 2016 median home value ($1,024,000) and household income ($103,801) of any city on the list.
Big-ticket home prices mean that first-time buyers can often have a difficult time breaking into the Bay Area. In a separate study, WalletHub ranks Berkeley as the most challenging housing market in America for first-time buyers, with San Francisco, San Mateo, and Oakland not far behind. San Francisco, Los Angeles, Sunnyvale, San Mateo, and Berkeley tie for the country’s least-affordable housing markets for new buyers. San Francisco, Fremont, and Sunnyvale are among the five U.S. cities with the highest overall cost of living.
Despite the obstacles, first-time buyers account for a significant share of home purchases in Bay Area job hubs. In a recent analysis of Pacific Union sales, company Chief Economist Selma Hepp found that first-time buyers were responsible for about half of all home sales in the East Bay and about half of sales under $2 million in San Francisco and Silicon Valley in the first five months of 2018.
To see more first-time buyer data by Bay Area region, check out Pacific Union’s just-released second-quarter report.
- The Golden State created 800 jobs (seasonally adjusted) in June, which is the lowest number since the recovery began in 2010 and follows an upward revision to 7,200 jobs added in May, according to the latest numbers from the state Employment Development Department. Nevertheless, notable losses in seven California industries dragged down the overall number of jobs added. Interestingly, industries with job losses generally employ lower-paid employees. The four industries that gained jobs added 16,200 positions, with half of them in education and health services, followed by information, government, and professional and business services. Among the seven industries that reported 15,400 job losses, the largest decreases were in leisure and hospitality; construction; trade, transportation, and utilities; and financial activities. Note that these industries have had some of the strongest job growth so far in 2018. In sum, while the overall number of jobs added appears low, the employment picture is very solid and suggests continued strong wage growth for California workers.
- Over the year, California created 269,100 jobs, with nine industries adding a total of 272,800 positions and two industries losing a total of 3,400 jobs. The largest job gains were in educational and health services, up by 75,800 jobs; professional and business services, up by 42,200 jobs; and leisure and hospitality, up by 41,700 jobs. Other sectors that added jobs over the year were construction; trade, transportation, and utilities; government; information; manufacturing; and financial activities. Other services and mining and logging posted job declines.
- California’s unemployment rate remained at a record-low 4.2 percent in June. Many metropolitan areas showed increases in unemployment rates.
- All California metro areas saw employment rise over the past three months.
- San Francisco and San Mateo counties added 2,000 jobs from May, and the unemployment rate increased to 2.6 percent in June. The information industry added the most jobs, followed by professional and business services. The government and educational and health services sectors experienced significant losses from last month, shedding a respective 1,000 jobs and 1,400 jobs. On an annual basis, the two-county area added 16,900 jobs, with half of those in professional and business services — particularly computer systems design and related services. The second-largest increase was for health care and social-assistance jobs. The information sector experienced the third-largest net increase. About three-quarters of new jobs added were in high-income sectors.
- Santa Clara and San Benito counties added 8,100 jobs in May, and the unemployment rate increased to 3.0 percent. As in the San Francisco metro are, the information sector led the gains, adding 4,600 jobs for the month, more than its 10-year average gain of 1,700 jobs at this time of year. The professional and business services sector followed. Losses were reported in the leisure and hospitality and government sectors. Over the year, the region added 33,800 jobs. While information was the biggest job gainer, all other industries added jobs except trade, transportation, and utilities; leisure and hospitality; and mining and logging. The leisure and hospitality industries have seen large swings in employment this year.
- Alameda and Contra Costa counties added 2,200 jobs in June, with the unemployment rate increasing to 3.4 percent. The largest gains were in the leisure and hospitality sector, particularly accommodation and food services, as well as in the manufacturing and construction industries. Government shed the most jobs from last month due to a seasonal decrease in state government educational services. Over the year, the region added 18,400 jobs, with the construction and professional and business services sectors experiencing major gains, surging by a respective 4,700 and 4,500 jobs. The financial activities, leisure and hospitality, information, and other services sectors reported job losses.
- Marin County’s unemployment rate increased to 2.7 percent in June, with no jobs added from May and a decrease of 600 jobs from last year. On an annual basis, most jobs lost in Marin County were professional and business services positions, though the information, financial activities, leisure and hospitality, government, and other services sectors also reported annual losses.
- Sonoma County’s unemployment rate increased to 3.0 percent and posted a robust increase of 4,300 jobs from last June. The largest annual gains were in the educational and health services, manufacturing, and leisure and hospitality sectors. The professional and business services, other services, and government sectors reported job losses.
- Napa County’s unemployment rate increased to 3.1 percent in June, with 100 jobs created on an annual basis. The largest declines came from the manufacturing; educational and health services; and trade, transportation, and utilities sectors, while the leisure and hospitality industries showed the biggest gains.
- Los Angeles County added 4,400 jobs in June, and the unemployment rate inched up to 4.5 percent. Nonfarm employment increased for the sixth month in a row to its third-highest level on record. The professional and business services sector added the most jobs over the month, accounting for 80 percent of the total nonfarm employment increase. Job additions in the professional, scientific, and technical services sector and management of companies and enterprises drove up employment levels, but the overall gains were offset by a decline of 500 jobs in administrative and support and waste services. The seasonal summer break led to a drop in educational and health services positions, while smaller-than-normal job losses were reported in private educational services. Over the year, Los Angeles County has created 66,400 jobs, with educational and health care services accounting for half of the growth — specifically in health care and social assistance. Private educational services added another chunk of jobs, which were mostly at colleges, universities, and professional schools. Retail trade accounted for most of the industry job losses, with cutbacks focused in clothing, clothing accessory, and department stores.
Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.