Key Takeaways From Pacific Union’s San Francisco Bay Area Forecast to 2019


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Executive Summary

Yesterday, Pacific Union held its third annual Real Estate and Economic Forecast in partnership with John Burns Real Estate Consulting in order to project Bay Area activity through 2019. Below are some key, high-level takeaways from the live event. To watch the full, one-hour presentation, click here.

  • Despite being in the seventh year of expansion, we expect the economy to continue growing through 2019 before slowing in 2020.
  • The Bay Area real estate market is one of the few in the U.S. that classifies as overheated.
  • Nevertheless, demographic changes will continue fueling demand for housing, as more millennials approach the age when they start their own households.
  • Bay Area millennials also benefit from the transfer of intergenerational wealth from their parents and grandparents, who help them with down payments for homes.
  • We project that more “surban homes™” — those that offer urbanlike living in a suburban market — will be built.
  • Across the entire Bay Area, home price appreciation has averaged 7 percent so far this year when compared with the same period in 2015.
  • Individual Bay Area communities fall into four categories when measured by year-to-date appreciation: normal, double-digit, heating up, and declining. Markets that fall into each category include:
    • Normal (up to 10 percent appreciation): The majority of markets fall into this category including San Jose, Santa Rosa, and San Francisco. The median home price in these markets averages $940,000.
    • Double-Digit (10 to 20 percent growth): Some of these markets include Oakland, Hayward, and Petaluma. The median home price in these markets averages slightly above $500,000.
    • Heated (20 to 40 percent appreciation): While no city-level price growth exceeded 20 percent, some ZIP codes have seen this levels of appreciation, including those in Oakland, Berkeley, Cotati, Glen Ellen, Larkspur, St. Helena, and East Palo Alto
    • Slowing (6 percent depreciation to flat): Cities in which the median price is lower than last year include Palo Alto, Tiburon, Menlo Park, and Lafayette. The median home price in these markets averages $1,700,000.
  • Differences in home price appreciation were driven by affordability and access to public transit and jobs. The highest appreciation was seen in markets that are still relatively affordable and in close proximity to job centers. For example, seven of the fastest growing ZIP codes are in Oakland and Berkeley. Slowing appreciation and depreciation was seen in relatively more expensive markets and those that lack easy access to jobs.
  • Cooling buyer sentiment is evident in almost all markets. Fewer homes are selling above asking price in 2016 across the Bay Area — particularly in San Francisco, San Mateo, and Santa Clara counties — and in higher price ranges. Premiums paid this year are also smaller in all counties.
  • Overall Bay Area inventory has increased by 5 percent year to date when compared with last year, with San Francisco and San Mateo counties seeing the largest gains. The buildup in inventory is mostly seen for homes priced between $2 million and $3 million.
  • Bay Area job growth will continue to outpace the number of homes built in 2017. The majority of new construction is concentrated in San Francisco, while no new supply is occurring outside the city.

Contact Keith Katzman for Moraga Real Estate: 925.376.7776

Looking to buy or sell a home in Moraga? Contact Keith Katzman–a Moraga native with more than 30 years of industry experience.

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