New year, same depressing real estate forecast

Happy New Year. The perfect real estate storm is upon us.

Just consider the latest predictions and pronouncements about the Bay Area market. If you are looking to break into it, good luck.

Over the past several months, the region has racked up a se- ries of dubious distinctions.

Back in November, we learned that a $216,181 household income is needed to buy a median-priced home in the San

Jose metropolitan area. That was the highest income requirement among the nation’s metros, according to a study by the HSH.com mortgage information website. The San Francisco metro, which includes the East Bay, was second on the list: a $171,330 household income is needed to land a median-priced home there. No other metro was even in the same ballpark; New York lagged far behind, with $99,151 in household income required to snag a typi-

cal home. Onward.

A new Bay Area price record was set in November as the cost of a single-family home in the nine-county region rose to $825,000, up nearly 15 percent from a year earlier, according to the CoreLogic real estate information service. In Santa Clara County, the November median leaped an astounding 26 percent on a yearover-year basis, reaching $1.18 million, yet another record. Prices rose nearly 10 percent in Contra Costa County and nearly 11 percent in Alameda County.

In case you’ve lost track, Bay Area prices for what CoreLogic calls “all homes,” including single-family homes, condos and townhomes, now have risen for 68 consecutive months.

Hot market

CoreLogic soon will release its data for December and, assuming that a couple of new studies from Zillow are accurate indicators, one can only expect that prices will go up again.

“It doesn’t seem like we’ve reached a peak,” said Kevin Swartz, a Saratoga-based agent with the Sereno Group.

“With every home that sells, there are many buyers who missed out and are going to be writing higher offers on the next home — and can afford to.”

Earlier this month Zillow released a forecast for 2018, showing that the San Jose metro area — which includes Santa Clara and San Benito counties — will be the nation’s hottest market with prices climbing

8.9 percent above the current median house value of $1,128,300.

The San Francisco metro will be the fifth hottest in the U.S., according to Zillow, with prices rising 3.8 percent above the current median of $893,100. (In addition to Alameda and Contra Costa counties, the San Francisco metro includes Marin, San Mateo and San Francisco counties.)

A second Zillow report showed that over-asking bidding, fueled by job growth in the tech sector, has become standard procedure among the region’s buyers. Last year in the San Jose metro area, 68.5 percent of homes sold went for more than the asking price. The median amount paid over the list price was $62,000, or 6.8 percent over list.

Those numbers were the highest in the U.S. Second highest were, you guessed it, in the San Francisco metro area, where 64.5 percent of deals were for over asking and the median amount paid above list was $41,000, or 6 percent over list.

City data

Driving its point home, Zillow also crunched data for specific cities: San Francisco (where 69 percent of homes sold for above list), San Jose (72 percent) and Oakland (75 percent).

As we’ve heard time and time again, the region’s low home supply is what drives hungry buyers to bid up prices.

Swartz noted that in December 2016, there was a 30-day supply of homes in Santa Clara County. In December 2017, there was only a 12-day supply: “It basically means,” he said, “if no new homes come on the market, it would only take 12 days for there to be no inventory. It’s pretty shocking.”

There are plenty of financially well-qualified buyers out there, he noted, making down payments of far more than 20 percent.

Yet a recent report from Trulia shows that the shrinking inventory in Silicon Valley is finally taking its toll among wealthy buyers, simply because they can’t find much to bid on. The study, issued in December, said there were 42 percent fewer premium homes available in San Jose last month than there were a year earlier. That was the most dramatic plunge among the cities studied. Trulia defines a premium home as one in the top third of the market; in San Jose that translates as homes priced at $2.5 million or more.

Oakland and San Francisco were also in the nation’s top 10 cities experiencing major dips in the premium home supply. Oakland’s premium supply dropped 25 percent year-over-year, while San Francisco’s fell 23 percent.

“Even homes that are very expensive are harder to find,” Cheryl Young, senior economist at Trulia, told this news organization last month. “There’s sort of nothing out there, even if you have cash to burn.”

“With every home that sells, there are many buyers who missed out and are going to be writing higher offers on the next home — and can afford to.” — Kevin Swartz, Saratoga-based agent