Real Estate Roundup: San Francisco Area Home Prices Rising Beyond Explanation
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.
SUPPLY-DEMAND IMBALANCE, MORTGAGE RATES HELP DRIVE GOLDEN STATE HOME PRICE GROWTH
Rising demand for real estate and shrinking supply have caused San Francisco to become one of the most expensive places to live in the U.S. since the beginning of the decade, while falling mortgage rates have boosted purchasing power.
According to an analysis by John Burns Real Estate Consulting, home price growth has outpaced income growth by 70 percent in the San Francisco metro area since 2001, the second highest rate in the country, behind Los Angeles. That figure includes the 44 percent benefit homebuyers have obtained from low mortgage rates, which have dropped from 7.2 percent in June 2001 to 3.97 percent for the week ended Dec. 17.
The analysis points out that California homeowners have benefited the most from the imbalance between supply and demand. Six of the nine U.S. housing markets where JBREC says that “home prices have risen faster than can be explained” are located in the Golden State, including San Jose, where they have outpaced incomes by 53 percent over the past 14 years.
MILLENNIALS FLOCK TO MARKETS WHERE RENTING IS CHEAPER THAN BUYING …
Although it remains cheaper to buy a home than to rent one across most of the U.S., that’s not true for the places that millennials want to live.
In a recent report, RealtyTrac found that it is more affordable to purchase a three-bedroom home than to rent one in 68 percent of U.S. counties as of November. Nationwide, buying a home requires 25 percent of the median household income, compared with 27 percent necessary to rent a property.
But in the 25 markets with the largest surge in millennials, it is more affordable to rent a home that it is to buy one. Between 2007 and 2013, purchasing a home in these markets required 36 percent of the median income, while renting required 30 percent. RealtyTrac notes that San Francisco was one of three U.S. metro areas where the millennial population grew by more than 50 percent during that time frame.
… BUT NEARLY ALL WANT TO OWN A HOME
Even if millennials are attracted to the country’s more expensive housing markets, the vast majority of them aspire to the dream of homeownership, survey results say.
The National Association of Realtors’ inaugural Housing Opportunities and Market Experience poll found that 94 percent of respondents aged 34 and younger hope to someday own a home. In a statement accompanying the results, NAR Chief Economist Lawrence Yun said that the findings dispel the notion that younger Americans have little desire to own their own homes.
Among all renters surveyed, 83 percent reported wanting to own a home at some point. About half of renters cited affordability concerns as their reason for continuing to pay a landlord rather than building equity.
HOME-DÉCOR TRENDS THAT HAVE TO GO
As pink and blue take center stage as home-design’s newest trend, others are on their way out — deservedly so, for the most part.
A blog post at Society Letters advises against 15 tired décor trends, beginning with antlers. Those antlers should also not be attached to an animal’s head that’s mounted to a wall, and certainly not one that was ever actually alive.
Also getting the boot: decorative Buddhas and skulls, inspirational sayings, rustic metal letters, and clear chairs. Additionally, the post advises shying away from the designer-hotel minimalist motif, and losing the reclaimed-wood look.