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Labor Shortages, Materials Costs Increases to Drive Up Home-Remodeling Costs

  • A recent survey found that remodeling firms expect labor shortages to worsen this year, while worker and materials costs will increase.
  • More than nine in 10 remodeling businesses report a shortage of carpenters.
  • About 70 percent of home-improvement companies will pass increased labor and materials costs on to customers.

While most American homeowners and prospective buyers probably do not ponder the construction sector on a regular basis, current trends in that industry could affect their wallets in the coming months.

Houzz’s new State of the Industry 2018 report, which coincides with National Home Improvement Month, found that respondents from all seven construction and remodeling subsectors it tracks expect the availability of skilled workers to tighten this year. General contractors, designers, and builders are projected to be the most in-demand types of workers, with about half of those polled expecting the labor market to get tighter.

All seven subsectors also project that labor costs will increase, again led by general contractors (56 percent) and designers and builders (57 percent). About half of architects and specialty renovators and landscapers think that the aforementioned lack of skilled workers will cause job costs to rise in 2018.

That trend again persists when it comes to the cost of remodeling and building materials, which are expected to increase across the board. The number of remodeling professionals who believe that materials costs will be higher this year than last ranges from 60 percent of general contractors to 47 percent of landscaping firms.

Houzz’s survey dovetails with research published earlier this week by the National Association of Home Builders, in which more than 90 percent of home renovators reported a shortage of carpenters, with about half calling the situation serious. Other types of remodeling professionals that are in the highest demand include framers, bricklayers, drywall installers, and concrete workers.

About three-quarters of remodeling businesses told NAHB that a lack of skilled workers is leading them to pay higher wages. The impact on homeowners is nearly the same, with 71 percent of firms reporting that they pass their increased costs along to clients.

Bay Area homeowners who are considering a home-improvement project should check out Remodeling’s 2018 Cost Versus Value report, which estimates average costs for 21 popular jobs in 149 U.S. metropolitan areas, including San Francisco, San Jose, and Santa Rosa. The report also offers information on home-renovation returns, which are particularly sunny in Silicon Valley, with 18 of the 21 tracked jobs expected to turn a profit this year.

(Photo: iStock/Worawee Meeepian)

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Shared with permission from the Pacific Union Blog

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The Next Three Months Are the Best Time to Sell a Home in California

  • Nationwide, May is the best month to sell a home for more than its value, with sellers receiving average premiums of 5.9 percent between 2011 and 2017.
  • In 85 percent of California markets, May, June, and July are the top months to sell a home.
  • April and May are the best months for sellers in the Bay Area, while Southern California sellers have the greatest chances of receiving premiums in June.

California homeowners who are considering selling increase their chances of receiving premiums if they put their properties on the market between May and July.

That’s according to an analysis of 14.7 U.S. million home sales by ATTOM Data Solutions, which determined in what months sellers in different parts of the country netted the most over a property’s estimated value between 2011 and 2017. Nationwide, May is the best month to put a home on the market, when have sellers averaged 5.9 percent premiums. Drilling down even further, the best day of the year to sell is June 28th, when homes sell for 9.1 percent more than their estimated value. Seventeen of the 20 best days to sell a home are in May or June.

That general trend applies to most California housing markets, though the optimum-sales window is even longer. In 17 of the 20 Golden State metropolitan areas included in the study — or 85 percent — listing a home May, June, or July gives sellers the best chance of scoring a premium.

Since the housing recovery began, May has been the best month to sell a home in the San Francisco metropolitan area. Between 2011 and 2017, sellers who listed their homes in May received average premiums of 5.4 percent. May is also the sweet spot for sellers in Santa Rosa, when homes have sold for an average of 6.5 percent more than their value.

Silicon Valley home sellers hoping for the largest premiums may have already mostly missed their window this year. The report says that April is the best month to sell a home in San Jose, when homes have typically fetched 4.1 percent premiums. Then again, in the current frenzied Silicon Valley housing market, in which a burned-out home recently sold for at least $100,000 more than asking price, properties are highly likely to fetch premiums any time of the year.

In Southern California, the early summer appears to be the best time to put a home on the market. Sellers in Los Angeles, San Diego, and Oxnard have netted the largest premiums in June, albeit smaller ones than in the Bay Area.

For insight about how the spring real estate season is expected to play out in the Bay Area, read Pacific Union’s first-quarter real estate report, which features predictions from Chief Economist Selma Hepp. The report also provides all the latest market statistics, including data on whether homes sold for premiums or discounts in all regions and communities in which Pacific Union operates.

(Photo: iStock/kali9)

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Bay Area In-Migrants Are Younger and Earn More Than Out-Migrants

  • Between 2005 and 2016, people moving to the Bay Area earned almost $13,000 more per year than those leaving.
  • Bay Area in-migrants are about two years younger than out-migrants, as many Americans find the region a difficult place in which to start a family.
  • Roughly 10 percent more people migrating to the Bay Area had four-year college degrees or higher than those moving away.

Young couple in moving truckOver the past decade, expensive coastal metropolitan areas with thriving economies and limited housing stock have attracted younger, more educated, and higher-paid Americans, pushing other residents out and keeping home prices elevated.

That’s according to a new analysis by BuildZoom Chief Economist Issi Romem, which examines a trend he calls “positive income sorting.” This pattern indicates that income differences between people moving into pricey U.S. coastal cities and those moving away is more pronounced than in other areas of the country.

As the nation’s most expensive place to call home, Romem says that the Bay Area serves as an extreme example of positive income sorting. Between 2005 and 2016, households moving to the San Jose-San Francisco-Oakland metro area earned median annual incomes of $70,015, which is $12,640 more than those who left the region. Other high-priced coastal metro areas such as Los Angeles and New York display similar trends.

People migrating to the Bay Area are also slightly younger than those who are moving away. During the aforementioned 12-year period, those moving to the region had an average age of 38.6, compared with out-migrants, who were almost 41 years old.

Similarly, Americans who are moving to the Bay Area to take advantage of the region’s booming economy are more likely to be educated than those who can no longer afford to live here. Sixty-percent of in-migrants who were head of a household had a four-year college degree or higher, while slightly less than half of those leaving had the same.

Romem says that positive-income-sorting trends suggest that Americans move to high-priced coastal cities when they are young, then flee to less expensive areas of the country once they are ready to start families. He told The Mercury News that the Bay Area’s extreme cost of living makes it “almost impossible for many families to put down roots.”

Positive income sorting helps sustain home price growth in coastal job centers, but it could also jeopardize those cities’ economies by forcing employers to keep only the most productive positions that pay well enough to compensate for the high cost of living. The answer, Romem says, is of course to build more housing in these areas, a process that can unfortunately can be quite difficult in California according to recent research from John Burns Real Estate Consulting.

(Photo: iStock/kali9)

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Shared with permission from the Pacific Union Blog

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California Dominates List of 2018’s Best Housing Markets for Sellers

  • Sixty-eight percent of the best U.S. places to sell a home are in California according to a new report from SmartAsset.
  • Home values in Alameda County’s Hayward grew by 20.3 percent between 2012 and 2016, the most of any city included on a list.
  • Homes in San Jose currently sell in less than a week, making it the fastest-paced U.S. market.
Fremont, California

An aerial view of Fremont, which ranks among the 10 best markets for home sellers in 2018.

Demand for California homes remains high as the traditionally busy spring season begins, with more than two-thirds of 2018’s top markets for sellers located in the state.

An annual analysis from SmartAsset ranks the 25 best U.S. cities in which to sell a home on a 100-point scale. Factors used to determine a housing market’s seller-friendliness include change in home value from 2012 to 2016, average days on market, percentage of homes sold for a loss, and average closing costs in 2017.

Golden State cities account for 17 of the 25 best sellers’ markets this spring. That’s a notable jump from SmartAsset’s 2017 list of top places to sell a home, when just four California cities were included.

The Bay Area’s top-ranked representative is No. 5 Hayward, which scores a 95.49. Home prices in the Alameda County community have appreciated by 20.3 percent in the aforementioned five-year period, the most of any city on the list.

With a 91.88, Fremont is the other Bay Area city to crack the top 10, tied at No. 8. Homes there are selling in an average of 12 days, making it the list’s second fastest-paced market. Along with Hayward, Fremont has the highest average closing costs, at $11,407.

Homes are flying off the market in No. 13 San Jose, where the average property sells in just five days, faster than any other city in the analysis. Between 2012 and 2016, San Jose’s median home value increased by 14.4 percent, and since then, appreciation in the area has become even more pronounced. According to the latest home sales report from the California Association of Realtors, the median sales price for a single-family home in Santa Clara County was $1,383,500 in February, a year-over-year gain of 25.8 percent and a new record high.

Tied at No. 23 with San Bernardino County’s Rancho Cucamonga, Santa Rosa is the Bay Area’s final representative, where homes find a buyer in an average of 16 days. The other California cities that rank as the best for sellers: Moreno Valley (No. 2), Elk Grove (No. 3), Fontana (No. 6), Ontario (No. 8), Pomona (No. 10), Chula Vista (No. 11), Palmdale (No. 12), Riverside (No. 15), Corona (No. 18), Escondido (No. 21), Oceanside (No. 22), and Santa Ana (No. 25).

(Photo: iStock/honestmike)

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Shared with permission from the Pacific Union Blog

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