Home values are growing especially slowly in some markets that until recently were among the country’s hottest. While values in most major metros continue to climb, but slowly, an exception is pricey San Jose, Calif.: Its home values fell year-over-year in March for the first time in seven years, falling 0.2% from March 2018 (the median home in the San Jose area was worth $1,209,700 in March, down from $1,212,100 a year ago).
While long-term housing demand continues to look strong, we’re seeing our first set of significant local housing slowdowns since the nationwide downturn in 2007. Other formerly white-hot markets that are jamming on the brakes include: San Diego, where home values grew just 1.3% annually in March (down from 8.6% year-over-year growth in march 2018); San Francisco and Los Angeles, both growing at 2% year-over-year, down from 9.5% and 7.6% last year; and Seattle, growing at a 2.6% annual pace, from 11.8% a year ago. Judging by their trajectory, it is possible home value appreciation will continue to soften and go temporarily negative in these markets as well.
The Atlanta metro is an odd exception. Like the above, overall inventory and new listings are significantly higher, up 13.8% and 14.8% respectively, yet home value appreciation remains on par with last year, growing in the double digits.
On the other end of the spectrum, Indianapolis, Virginia Beach, and Austin continue to experience both increasing appreciation and declining inventories—a good reminder that the national trend no longer typifies all markets’ experience.
Redfin report says demand has shifted away from expensive areas like the bay area to “value” areas, by tracking sales activity… The homes sold in SJ has dropped 14% YOY; however, the Redfin estimates for median off-market home was still up 0.7% YOY (in March). This must mean higher priced properties aren’t selling as much in SJ.
9 metros saw price declines in March. San Jose, CA declined the most since last year falling 12.9 percent to $1,115,000.
April’s report will be super interesting. We will have data for the spring buying season. Anecdotally I sometimes see price reductions in SF, which I don’t remember seeing last year. Price is surprising people on the downside.
Maybe prices are just too high for people here? And they don’t have the confidence in their jobs and stock market? What are the reasons?
Cost of living is so high that it is very difficult for new comers to accumulate wealth even though the pay is high. Hence many don’t want to come.
For existing residents, those who can’t afford to buy, continue to rent. Those who can afford have bought their Primary, and finding it risky as well as can’t afford to purchase rental in BA, have to consider OOS rentals. @Boolean owned OOS. @BAJacket owned OOS. There are a few that have expressed interests in OOS e.g. @BA_lurker, @tomato, @Meguro, @GuideMe11. Buying for investment in BA is risky as the price is high, yield of rental is very low and property tax is very high for new purchases. Prop 13 is good for existing homeowners but recent purchase pays high property tax.
Businesses have responded by expanding operation in other tech hubs. I believe there is a net population outflow in BA.
with cost to build @ 400s / sq ft. I am becoming more and more certain that Multifam in non rent control cities in the bay area is a great investment. The existing housing stock for multifam (right now in the 600s to 800s / sq ft) is cheaper then new development when you take land into consideration.
Is DC (daly city where @Boolean owned a few) rent controlled? Cupertino has MFs too, I stayed in one when I landed in 2002. Now, they are priced like SFHs.
He added that major tech companies definitely recognize and want to help address the region’s shortage of affordable housing and reliable transit.
Housing for junior SWEs. Shortage of such housing means these guys can’t afford to come here.
According to a study by Joint Venture Silicon Valley, the region is running a housing deficit of more than 100,000 units. More than 80 percent of the new homes permitted in the last four years were priced at the top of the market, affordable only to residents in the top-quarter of all earners.
Have been saying this for a while now but no one listened. You guys kept trying to convince yourselves that it’s going up no matter what. Maybe if you lie to yourself 10 times it will become true.
But I also sold two last year and plan to sell 2 more this year. One is closing tomorrow and the other one will be listed in May. It is a SFR in Cupertino, so it should be easy.
Spacing it out to avoid too much cap gains in any single year.
Given the huge number of new construction, it means demand is way higher than supply of existing houses and new construction.
