San Francisco

California Projected to Post the Largest Home Price Gains in the U.S. by Next Summer

  • California home prices are expected to increase by 9.1 percent by July 2019.
  • Golden State homeowners gained an average of $49,000 in home equity between the second quarter of 2017 and the second quarter of 2018.
  • The San Francisco metropolitan area has the lowest number of underwater homes in the U.S., accounting for only 0.5 percent of properties.

A palm-tree-lined street in CaliforniaGolden State homeowners once again enjoyed the largest equity gains in the country in the second quarter, and that trend appears poised to continue, as California’s is projected to lead the U.S. for annual home price appreciation by the summer of 2019.

That’s according to CoreLogic’s latest Home Price Index, which says that California home prices increased by 8.2 percent year over year in July and by 11.0 percent in the San Francisco metropolitan area. Although four other states had larger annual price gains, California is expected to lead the nation by July of next year, with forecast growth of 9.1 percent

Continued price growth over the past few years has helped line the pockets of California homeowners. CoreLogic says that the average Californian with a mortgage gained $49,000 in home equity between the second quarter of 2017 and the second quarter of this year.

In a statement accompanying CoreLogic’s latest The MarketPulse report, company CEO Frank Martell said that the number of underwater homes continues to drop nationwide, with the biggest declines in areas with strong price growth. That certainly applies to the Bay Area; according to CoreLogic’s most recent Homeowner Equity report, only 0.5 percent of properties in the San Francisco metro area had negative equity in the second quarter, the lowest of the 10 major cities for which the company tracks data.

Homeowners in San Francisco are also doing quite well when it comes to handling their mortgages, with 1.5 percent 30 days or more delinquent on their payments as of June, the lowest of the 10 metro areas. Just 0.5 percent of San Francisco homeowners with a mortgage are considered seriously delinquent, tied with Denver for the lowest in the country. Those two cities also have the country’s smallest foreclosure rates: 0.1 percent.

Even with California projected to put up significant home price gains by next summer, the party is not likely to last forever. CoreLogic Chief Economist Frank Nothaft notes that while some Western states continue to see rapid appreciation, many of them are overvalued and will probably see slowdowns soon. That echoes findings from a recent Union Bank of Switzerland report, which calls San Francisco and Los Angeles the nation’s most overvalued housing markets.

(Photo: iStock/Ryan Herron)

Shared with permission from the Pacific Union Blog

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Real Estate Roundup: California Claims One-Third of the 20 Fastest-Growing U.S. Luxury Housing Markets

San Mateo and San Francisco counties have the most-expensive luxury home prices in America, while Alameda County’s Fremont has once again earned accolades for its family-friendliness. Get the skinny on what’s going down in the world of California real estate in Pacific Union’s latest Real Estate Roundup.

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Which California Neighborhoods Are Millennials Flocking To?

  • Downtown Los Angeles’ Historic Core neighborhood saw its millennial population nearly double between 2011 and 2016, the highest rate of growth in the U.S.
  • In San Francisco, The Castro and Glen Park are among the top 20 neighborhoods in America to experience the largest millennial population growth.
  • More than 30,000 millennials live in Los Angeles’ South Park neighborhood and San Francisco’s Mission Bay.

Millennials walking in a cityThe Golden State is home to the nation’s largest share of millennials, and they are gravitating toward Downtown Los Angeles and neighborhoods in southeastern San Francisco.

Between 2011 and 2016, Los Angeles’ 90014 ZIP code, also known as the Historic Core, saw its millennial population increase by 91.4 percent, the most of any area in the 30 largest U.S. cities included in an analysis by RentCafe. During that time period, 3,300 millennials — defined here as those born between 1977 and 1996 — moved to that part of Downtown Los Angeles, which the company identifies as America’s fastest-gentrifying neighborhood since the turn of the century.

Millennials are also beginning to gentrify Los Angeles’ 90013 ZIP code, otherwise known as Skid Row. That neighborhood had the nation’s second-largest increase in millennial residents in the five-year period — 60.0 percent, which translates to 4,700 people.

Two San Francisco ZIP codes rank in the top 20 for millennial population growth: 94114 (The Castro) and 94131 (Glen Park). The former enclave saw 37.4 percent (12,500 people) more millennials set up shop, while the latter posted a 35.5 percent increase (9,000 people).

San Francisco’s booming Mission Bay neighborhood ranks among the top 20 U.S. neighborhoods with the largest share of millennials, where 3,800 residents of that age group comprise nearly two-thirds of the population. Millennials who call Mission Bay’s 94158 ZIP code home are almost certainly earning handsome paychecks; according to a separate RentCafe analysis, it’s the second most expensive neighborhood in the Bay Area for renters, with monthly payments averaging $4,336.

New York and Chicago ZIP codes dominate the rankings of the 20 U.S. places where the most millennials live, but two Golden State neighborhoods make the list. In Los Angeles, 33,500 millennials reside in the 90011 ZIP code (South Park, just south of Downtown), while 30,500 live in 94110 in San Francisco’s Inner Mission.

Despite the Bay Area’s sky-high home prices, millennials have gained a surprisingly large foothold in the real estate market. According to a February analysis of Pacific Union data by Chief Economist Selma Hepp, homebuyers aged 35 and younger accounted for more than one-third of purchases in San Francisco and Silicon Valley between August 2017 and January 2018.

(Photo: iStock/ViewApart)

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Generation Z Is Poised to Make a Splash in the Housing Market

  • More than 80 percent of Generation Z who are older than 18 say that they plan to buy a home in the next five years.
  • About one-third of Generation Z cite student debt as the largest obstacle to homeownership, followed closely by saving for a down payment.
  • The Bay Area, Los Angeles, and San Diego are among the top 10 places in America to purchase a home for both millennials and members of Generation Z.

Five young people looking at their smart phonesWhile millennials represent the largest group of U.S. homebuyers, they can expect the generation behind them to offer stiff competition in the market, with California a preferred destination for both age brackets.

A survey conducted by found that 87 percent of millennials expect to purchase a home within the next five years. But members of Generation Z — the oldest of whom are 23 and one-third of whom are still in high school — are not far behind, with 83 percent saying that they will buy a home by 2023.

The study notes that Generation Z’s bullishness on the prospects of homeownership may be fueled by youthful optimism and unrealistic expectations. Still, more than 100,000 members of that generation already own homes, and they have a lower level of mortgage delinquency than all other generations, including baby boomers. Members of Generation Z have managed to gain a foothold in the housing market based on both their willingness to buy less expensive homes and help from the bank of mom and dad.

Saving for a down payment remains a significant hurdle to homeownership for all three generations, with roughly one-third of survey respondents citing it as the biggest challenge. But Generation Z are the most worried about student debt; 32 percent called it the largest barrier to buying a home, compared with 17 percent of millennials and 7 percent of Gen Xers.

Perhaps because many members of Generation Z are not old enough to have multiple credit cards or other forms of debt, they are the least likely to point to credit scores as an obstacle to purchasing a home. More than one in five Gen Xers and 16 percent of millennials see credit ratings as problematic, with a recent Experian study finding that 61 percent of the latter generation lacks a prime credit score.

One thing that all three generations of homebuyers have in common is a preference for location, cited as the top amenity beyond price point. Space and air conditioning are among the other most important home features for all generations, while proximity to green spaces, gardens, and swimming pools rank at the bottom.

When asked about the top 10 locations in which to purchase a home, the Golden State is a prominent destination regardless of age. Gen Xers, millennials, and Generation Z all point to the Bay Area and San Diego as dream locations, while the latter two groups place Los Angeles in their top 10. A report published earlier this year found that San Francisco is the No. 1 housing market for millennials, thanks in large part to the region’s high-octane, technology-focused job market.

(Photo: iStock/Zinkevych)

Shared with permission from the Pacific Union Blog

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