Bay Area Economists Opine About 2017


Todd Johnson

Will the Bay Area economy remain strong in 2017? What’s in store for commercial and residential real estate? How will Trump’s election affect our region? Two local economists weigh in.

Ken Rosen
Rosen is the chair of UC Berkeley’s Fisher Center for Real Estate and Urban Economics and the Haas Real Estate Group. Rosen has a track record of accurately predicting the end to Bay Area booms. Before the 2000 dot-com bust and the 2008 financial crisis, he forecasted downturns. Earlier this year, he predicted a correction in the Bay Area tech sector is on the way.

How will the Bay Area economy fare in 2017?

The Bay Area economy has had a very strong run here the last couple of years and we’re slowing down. Job creation is slowing by about half. Some of the companies are cutting back their growth, and some are actually laying off people because they are looking for a path to profitability. Obviously Twitter and GoPro are two examples of that.

What does Trump’s election mean for Bay Area real estate and the economy?

He’s got an economic program that’s quite similar to House Speaker Paul Ryan’s and their plan is to cut taxes very substantially for individuals and for corporations. If (Trump and Ryan) succeed in getting that through that will be a big push for new money coming into the economy.
They are talking about infrastructure programs. All of that will add economic growth to the country, but less to the Bay Area because the Bay Area is already growing so fast. We don’t have a lot of excess labor here so we’re going to be constrained a little bit.
The big negative would be their trade policy. If (it) made it harder for us to bring in components that we use in all of our electronics and from Asia, for example, that could raise the cost of those components and raise the cost of goods, which would hurt sales. If they trigger a trade war, which is possible with China or some other places, we could see (China) retaliate by preventing us from selling our goods. We are very susceptible to and dependent on the global network of goods and the supply chain pipeline.
We’re very dependent on people and so again there’s a plan in place that he’s talked about to deport people, to make it hard to get H-1B visas, EB-5 visas and again the Bay Area is one of the most dependent on the global flow of people and the global flow of the supply chain so we again could be hurt.
Finally, if Trump makes it difficult to do global transactions, some global flow of capital may not come. So the Bay Area is the center of globalization even more than New York and our industries here are the center of globalization.

How will venture funding and growth in the tech sector affect the real estate market?

The new economy accounts for much of our economic growth here. Venture is where a lot of the capital comes from and they’ve still been raising quite a bit of money for new companies and for existing companies. But the day of reckoning is coming. We’ve had a great run here and we would not be surprised to see valuations of some of the unicorns come down.

You predicted in 2014 that we’d see a correction in 2016 or 2017. When do you think we will see one?

I thought the correction would be coming post-election, but the surprise victory of Trump and a set of policies that are stimulative may postpone the correction until 2019 or 2020. All this new federal spending and tax cuts may prolong the recovery two or three more years, creating even stronger activity and then unfortunately a larger correction when it does happen.

How quickly will the flood of office space hitting the S.F. office market next year get absorbed?

Much of it has been pre-leased, but there (are) still large buildings that are not fully leased and if the economy slows at the same time that the buildings hit the market – the vacancy rate already edged up to about 8.4 percent from 6.8 percent — we could see it edge up further.
There is a lot of space coming online but there’s also still a lot of companies are expanding and growing.

What other trends are you seeing?

We’re going to see more people and companies leave the Bay Area if we can’t solve the housing problem and the transportation problem. We’ve had a lot of growth and we haven’t had a lot of infrastructure. It take some political will on the part of both Sacramento and (Bay Area) governments.
We’re at an inflection point both in the national economy and the Bay Area. We’re about to see a massive stimulus plan at the time we’re at full employment, which is pretty risky, but it does mean that we’ll get some more growth. But we’re probably going to see a bubble-like atmosphere, maybe a sugar high that ends badly so take advantage of it while you can, but know that we are going out in a very different direction than we have the last four or five or six years.

Ted Egan

Ted Egan, chief economist of the city of San Francisco, manages the Office of Economic Analysis. His team has produced 75 economic impact reports on pending legislation, focusing on real estate, taxes and business regulation.

How will the Bay Area economy fare in 2017?

We’re still expecting to see growth in 2017. The risk of a recession is pretty low, maybe on the order of 10 percent or less. We’ve certainly seen slowing growth in 2016 and I can continue to expect to see slowing growth next year, but no signs of a downturn yet.

How will the Federal Reserve rate hikes affect the Bay Area economy?

The higher interest rates go, the more attractive safe investments and very stable investments like government bonds become relative to riskier investments like venture capital. But our technology industry needs venture capital investment. Secondly it looks like higher interest rates are going to lead to a stronger dollar and for a region that sells as much internationally as the Bay Area, a stronger dollar isn’t good for competitiveness.

What does Trump’s election mean for the Bay Area?

It’s very hard to say what the new administration will really do at this point. The forecast that I’ve seen for the nation, expect stronger near-term growth because the incoming administration wants to do a lot more fiscal stimulus, spend money on infrastructure and things like that. In the very near term, it is reasonable to think that the recession risk is lower given all of that new fiscal stimulus next year than otherwise.
However, there comes medium-term risks as well. Anything interfering with trade, rising protectionism, things relating to immigration making it more difficult to obtain H1Bs or putting restrictions on that would be bad for us in the medium-term.

What do these economic trends mean for the city of S.F. and its budget?

For the city, financially we’ve had very strong year after year this decade. San Francisco has been one of the strongest city economies in the country. City revenues have really grown to historic levels. We’re at a situation now though we’re starting to see revenue slow and we’re starting to see some of our costs rise. We’re nearly approaching the era of rising structural deficits again. Not in the first year or the second year but in the later years of our of our planning.

How much of a threat to the Bay Area economy would it be if Trump cuts NIH funding that fuels local medical research as well as the federal funding that goes to the city’s budget?

There are a number of potential threats to federal funding. NIH funding is one of them. One of them is the promise to repeal Obamacare. They could have unpredictable consequences for our public health departments. The president has threatened to suspend funding for sanctuary cities like San Francisco, but that can be another potentially serious source of (lost) funding.
Any trends to watch in 2017? The one that (is) a bellwether for the local economy is tech employment and venture capital. For most of this decade, when the tech industry has moved, the whole city economy has moved a few months later.
The thing that tends to make the tech industry move is the stock market and venture capital. Since about the middle of last year we’ve seen periods of ups and downs in the tech stock market, and we’ve seen a relative slowdown in venture capital. That’s one of the reasons we’re forecasting slower growth for the city. That’s the tail that wags the dog of the local economy. I don’t think we’re predicting any downturn in tech.

Can you talk about housing?

The housing situation seems to follow the tech industry. In the past year we’ve seen, rents cool off anywhere from one percent to 10 percent, depending on who you ask. For-sale prices have also come down a little bit off a very high historic levels. Signs of cooling, but not necessarily signs of a downturn.

Posted in The Economy

Delighted new homeowner takes down our sign.

Witness the new owner of 7613 Washington St. helping our own Skip Jirrels remove the For Sale sign from his newly purchased abode. Everyone was happy that day.

skip and new owneredited

Posted in Clients

Bots or Not? Trading Privacy for Convenience.

Windows-Live-Writer-37f92dbf984e_CAA3-bot_2Amber Taufen

Last October, when dozens of large websites were taken down after a distributed denial of service (DDoS) attack, how many of us thought at the time that the Internet of Things (IoT) might be involved?
Apparently, it was — and those kinds of attacks aren’t going to stop, according to Ph.D. candidate (she’s studying the political philosophy of technology) and The Coming Swarm author Molly Sauter, the keynote speaker at the inaugural Hacker Connect conference.
The IoT
“The IoT promises to bring us convenience, security, better understandings of ourselves and our environment — but what it actually brings is surveillance and loss of privacy and data,” said Sauter.

What’s the IoT? Sauter described it as “a combination of the deployment of sensors, automation, big data, mobile apps and cloud computation storage, attached to everyday items, processes and systems.”
The IoT includes items like:
Nest (and other brand name) thermostats to control a home’s climate
Smart locks to manage home entry
Smart video cameras for additional security
Smart footballs to track your spiral throws
Smart egg cartons to check freshness
Smart jars to reorder your coffee or quinoa
Smart water bottles to track your hydration over time
Mattress covers that turn lights off and lock doors
Even menstrual cups with bluetooth capability
Nest might be the best-known smart home device; it started as an automated remote thermostat system. “It learns your schedule through the day, so when you’re gone it doesn’t heat your house but when you come back, it does.”
Now the Nest includes smoke, carbon monoxide and “works with Nest” related devices, like smart light bulbs and home sprinkler systems.
At the beginning of 2016, Sauter noted, a software glitch caused Nest batteries to drain — leaving users with no heat (in January), and no way to turn heat back on.
The fix was a nine-step process involving a three-hour charge cycle.
“Like most tech companies, and frankly like most companies, Nest’s terms of service (TOS) agreement — it’s worth noting that it has both terms of service and a licensing agreement — limits damages, prohibits class action lawsuits and requires all disputes to be resolved through binding arbitration in San Francisco,” explained Sauter.
Other products have similar TOS agreements “that disclaim liability and strip customers of their rights to a day in court,” she added.
So what’s the problem?
Each of these devices, Sauter pointed out, “fundamentally relies on the cloud to operate, whether to perform analysis or just as a path to other various devices.”
While many of us might think that seems very safe, indeed, Sauter had a stark reminder: “There is no cloud; it’s just someone else’s computer.”
And so, she added, “the magic of the cloud, like all magic, comes at a price.”
What’s the price? Continual transfer of data about you — your habits, speech and possessions — away from you and into a variety of third parties.
“So what?” you might be thinking. But there are significant privacy issues that emerge if you begin to follow the rabbit down its hole.
Take the smart fridge from Samsung. When you close the door, it takes a picture of everything inside your fridge. “This is so if you’re at the grocery store and you’re like, damn, I don’t know if we have eggs — I’ll check my phone from here,” said Sauter. “It’s terribly, terribly convenient.”
However, refrigerators aren’t just for food these days — some people take medication that requires refrigeration. “Does the Samsung smart fridge conform to HIPAA guidelines when taking, storing and transmitting these pictures, or is this just a giant privacy hole?”
And remember those third-party recipients of your personal information? What if your fridge and nutrition tracker is connected to your health insurance or your employer? They might not appreciate your nutrition choices.
Lack of redundancy
For technology to be safe and reliable, you need redundancy — proper technological backups to manage failures.
Do you store an extra fridge in case your fridge crashes, Sauter asked? A backup thermostat in case another bug sneaks into a Nest update?
What does IoT have to do with DDoS?
Sauter suggested a new collective noun for IoT devices — “a botnet of IoT devices” — and used it to explain the fall 2016 internet outage.
“When you type a URL into your web browser, you’re typing a human-readable URL,” she noted. But Google lives at a semi-permanent machine address. “The DNS [domain name system] translates human-readable URLs to machine-readable IPs [internet protocols].”
Some platforms rely on collecting data from all over the internet — Twitter, Facebook and other social media websites, and many more. A company called Dyn provides DNS support to many of the largest companies that require this type of distribution.
Last October, Amazon, BBC, Slack, Zillow — and dozens of other big websites — all went down because a botnet was attacking Dyn’s DNS system.
“This botnet was made of IOT devices,” explained Sauter, including closed-circuit television cameras, webcams, baby monitors, routers and a few other subcategories of devices.
Those devices combined were able to produce an estimated load of 1.2 terabytes per second — currently the largest DDoS on record.
“The ultimate interpretation of this particular situation is the DDoS is coming from inside the house,” Sauter noted.
“IoT represents a very salient and present threat to the network that those same devices run on.”
What can be done?
Consumer-grade IoT devices are becoming so prolific that if even just a portion of them were compromised, it could be disastrous, said Sauter.
The protection from botnets or other types of hacking isn’t robust enough yet, she added.
And DDOS attacks are not going to stop. “More devices are going to get smart; we’re going to keep putting more chips on more things,” predicted Sauter.
Is there anything that agents can do to help protect consumers? “Tell people not to put this shit in their homes,” Sauter advised bluntly. It’s simply not secure, even with a password-protected phone.
Have you ever lost your phone, Sauter asked? Has anyone who didn’t have your best interests at heart ever had access to your phone?
Although it might not seem realistic, Sauter believes that the best way for agents to serve consumers is by cautioning them against the potential risks of making their homes smarter.
“The consumer has no real control

Posted in Decorating

Tips for Buyers and Sellers

list.2In San Francisco real estate transactions, Sellers and Buyers are generally expected to pay for the following


Real estate commission
Document preparation fee
Documentary transfer tax
City transfer/conveyance tax
Payoff of all existing loans secured by property
Additional Interest accrued, reconveyance fees and any prepayment penalties
Termite work (according to contract)
Home warranty (according to contract)
Any judgments, tax liens, etc., against the seller
Recording charges to clear all documents of record against seller
Property Tax pro-ration (for any taxes unpaid at time of transfer of title
Any unpaid Homeowner’s dues
Any and all delinquent taxes
Notary fees
Any bonds or assessments (according to contract)
Energy/Water Conservation Compliance


Buyers’ Title insurance premiums
Escrow fee
Documentation preparation (if applicable)
Recording charges for all documents in buyer’s names
Property Tax pro-ration (from date of acquisition
Property inspections
Homeowner’s transfer fee (according to contract)
All new loan charges
Home warranty (according to contract
Interest on new loan from date of funding to 30 days prior to first payment
Assumption/change of records fees for take over of existing loan
Beneficiary statement fee for assumption of existing loan
Payment to escrow for home owners insurance premium


The State of California property tax year is July 1st through June 30th
Property tax collected by each county is payable in two installments:
First payment due November 1, delinquent December 10th
Second payment due March 1, delinquent April 10th
The Property Tax Rate for the City and County of San Francisco is currently set at 1.1880% of the assessed value for 2014-15. The assessed value is initially set at the purchase price. The tax rate changes every year.

Posted in Tips for Buyers and Sellers, Uncategorized

Pocket Listings Hurt The Seller

Pocket of $$One sees and hears a lot these days about listings that never go into the multiple listing service data base. This type of listing is called a “pocket listing.” In my opinion all a pocket listing does is guarantee the listing agent both ends of the commission, the listing and selling commissions. This type of exclusive listing cuts profit out of the seller’s pocket. The client who’s selling doesn’t have the advantage of exposing the property to the widest number of potential buyers, thus the competition which would occur is severely diminished. The more people who know the property is available, the higher the potential selling price. There’s a direct correlation between the two.

The following is a guest opinion piece by Doug Miller, executive director of Consumer Advocates in American Real Estate (CAARE)

First, it needs to be understood that pocket listings take many forms. For our discussion, the biggest culprits are pocket listings that direct buyers to the listing broker and fail to offer compensation to cooperating brokers.

In almost all cases, pocket listings are harmful to consumers. They certainly do not serve their stated purpose of gauging the demand or pricing of a property before it hits the market — that is a ruse used to manipulate clients. Pocket listings exclude the brokerage community by refusing to share commissions. That’s bad for consumers.

In a hot market, pocket listings will almost always generate offers. That is not “test marketing” to gauge demand or pricing. Worse, when that offer comes in, the seller is placed in the undesirable situation of either accepting an offer generated by a semiclosed marketplace or rejecting that offer and putting the house on the MLS. The result is to place the seller in a decision clouded by duress. No fiduciary should ever put their clients in such a situation. And no fiduciary (broker or agent) who is financially biased with a double fee should ever “advise” their clients in this situation, as such advice would certainly be construed to be self‐serving.

Pocket listings exist to generate a double fee. That’s it. Every argument in favor of pocket listings is little more than self‐serving rationalizations that do not survive logical analysis. Mega brokers are addicted to collecting double fees and they are willing to mislead their own agents and clients about pocket listings to do it. If your broker promotes pocket listings, then you should consider moving. A broker who uses its supervisory capacity granted by state licensing privilege to engage in such abusive conduct may be violating licensing laws. For every sales tactic used to misguide clients about pocket listings, there are real and honest solutions that involve serious marketing strategies to actually sell the house. We believe that advisers who suggest these arrangements to their clients fall into the category known as “predatory fiduciaries.”

Posted in House Hunting

To Buy or to Rent: that is the question…



I don’t love the websites, Trulia or Zillow. Their content can be old, fake or generally inaccurate.

However, this is kind of a cool link to a table on Trulia that in a general way weighs the benefits of buying over renting  (or vice versa)  for your specific situation. Check it out!


Posted in House Hunting

The 5 Fastest Moving Markets in the US

sale pending Hudson

If you are looking to buy a house in one of these five cities, you best move quickly. In these five housing markets, most property is not staying available for as long as it is in other parts of the country. Trulia’s Chief Economist Jed Kolbo conducted the study that revealed which cities had the lowest percentage of homes for sale that were on the market for at least two months. The study also compared this year’s figures to last year’s, and compared the year-over-year change in asking prices. Here are the five fastest-moving housing markets.

5. San Diego, California

Beautiful San Diego, California comes in at number 5 on the list, with only 41 percent of property for sale remaining on the market for at least two months, down from 45 percent one year ago. San Diego also saw a 14 percent rise in asking prices. San Diego marks the first of four cities from California on this list.

4. Denver, Colorado

Denver, Colorado is number four on the list, with just 38 percent of houses staying on the market for at least two months. This is down sharply from last year’s 47 percent, showing that homes in Denver are selling much faster than they were one year ago. Denver’s economy and beautiful setting on the edge of the Rockies continues to draw people in.

3. San Francisco, California

In at number three is San Francisco, California, one of the most expensive housing markets in the country. Only 32 percent of homes in San Francisco stay on the market for two months or more, down slightly from 36 percent last year. Asking prices are higher as well, 15.1 percent more than last year.[2]

2. San Jose, California

San Jose, California has the second lowest percent of homes on the market for two months, with just 31 percent lasting that long. Asking prices are 13.4 percent higher. Much like San Francisco, San Jose’s economy and housing market are being propelled forward by the tech boom and the influx of well-paid tech workers.

1. Oakland, California

The fewest homes remain on the market for two months in Oakland, California, with just 29 percent of homes lasting that long. This is a slight improvement from last year’s 31 percent figure. Asking prices in Oakland are rising faster than in any other city on the list as well, with a 22.7 percent increase.

Posted in House Hunting

Bidding Wars Back In S.F.


brick stairs

J.K. Dineen

After getting outbid on three houses, Shura Kelly decided not to mess around with 117 De Montfort St.True, it was off of Ocean Avenue in Ingleside Heights – not the Sunset District where she and her firefighter partner, James “Denis” Quirke, grew up and would have preferred to stay. But the Sunset had become too expensive and the little Marina-style 1920s house had charm: original gumwood, beveled glass doors, a sunny kitchen and a spacious backyard with potential.

Kelly, who runs a doggy day-care business, and her partner “came in strong” with an offer of $810,000, 35 percent over the asking price of $599,000.

The good news was that they beat out 46 other offers. The bad news was that someone else offered more than 50 percent over asking. The sale closed April 11. “I thought for sure we had it but someone went bananas and offered $910,000 for a house in the Ingleside,” Kelly said.

Kelly’s frustration is par for the course in a housing market that, with the exception of a few San Francisco neighborhoods, has now surpassed both the early 1990s dot-com boom and the run-up to the 2008 crash. Prices have climbed 33 percent since 2011, with many neighborhoods exceeding that.

And while bidding wars have long been part of buying a home in Noe Valley, Glen Park and Cole Valley, they are now just as fierce in less fashionable areas such as the Excelsior, Mission Terrace and Ingleside.

Citywide, properties are now commanding an average of 10.7 percent more than asking price, according to Paragon Real Estate Group, with Bernal Heights leading the pack at an average of 21 percent over asking. That’s up from April 2012, when homes were selling for an average of 3.5 percent over asking.

“Right now I have four buyers that are working to find properties, and they are all cash buyers,” said Chris Stafford, a Paragon broker. “They are ready to write a check tomorrow, and we can’t seem to get them into places because the bidding wars are just a little crazy.”

Imbalance extreme

The art of driving prices up through competition has been around as long as there has been swampland to sell and was certainly prevalent during the bubbles of 1999 and 2006. But this time the imbalance between supply and demand is even more extreme, according to people in the business.

The combination of rapid job growth, a soaring tech IPO market and foreign investors has made San Francisco the most expensive – and competitive – real estate market in the United States, according to Ken Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley. The Bay Area has added 75,000 new jobs over the last three years, and 58,000 more San Franciscans are working than at the beginning of 2010, according to California’s Employment Development Department.

At the same time, just 0.3 percent of existing housing stock is on the market, the second lowest percentage in the United States, after San Jose.
Realtor Pete Brannigan of Brown & Co. said “everyone is looking at the same properties and trying to figure out” how much over asking it is going to go.

He said buyers have become conditioned to the idea that everything is going to go 10 percent over asking. So if you price the property where it realistically might sell, some buyers will wrongly assume they are out of the running.

Start low to spark interest

“It’s almost a requirement to price at the low end of the range to generate the interest,” he said.

Brannigan is currently selling a 3,600-square-foot house at 525 28th St. in Noe Valley. It was listed at $2.799 million. After seven days the seller had three offers, with the top one coming in 20 percent over asking.

All three buyers were offering all cash.

“You’ve got a lot of cash buyers who turn around and get a loan, but the deal is not dependent on them getting a loan,” said Brannigan. “If they got stuck they could still perform.”

He said buyers and investors are getting desperate.

“People are knocking on doors and making big, fat offers that are hard to refuse, especially on Liberty Hill,” he said, referring to the neighborhood on the Mission-Noe Valley border where Facebook CEO Mark Zuckerberg bought a place.

Karmyn Johnson, a 27-year-old actor and writer who has lived on De Montfort Street in Ingleside Heights since she was 12, said she has received five solicitations from investors interested in buying the family home.

“We like this neighborhood – it’s convenient. We don’t want to live anywhere else,” she said. “I guess it’s nice to have people throwing money at you when you want to sell your house, but when you don’t, it’s a little suspicious.”

Pressure on neighborhoods

Pressure on neighborhoods like Ingleside is coming from both directions: Families are not just getting squeezed out of more expensive San Francisco neighborhoods, but also desirable Peninsula communities such as Burlingame and Palo Alto.

“If you can’t buy a house for a million dollars in Bernal Heights anymore – and it’s really hard – where are you going to go?” said Frank Castaldini of Coldwell Banker Real Estate.

Middle class priced out


 At City Hall the bidding wars underscore what has become an increasingly explosive political problem over the past year: the lack of affordable housing. With median home prices over $1 million, a recent Trulia report found only 17 percent of city teachers could afford a home in the city.

Much of the new housing coming on line is expensive: condos selling for $1,100 per square foot or renting for $4.50 per square foot. Mayor Ed Lee has made housing a priority, vowing to build or rehab 30,000 units by 2020, much of it affordable. About 2,125 new housing units have opened since December, the majority of them rentals.

“Housing affordability is the biggest single issue facing the Bay Area economy,” said Rosen. “Booms have unintended consequences.”

Peter Cohen of the Council on Community Housing Organizations, which represents affordable housing groups, said “increasingly, middle-class people are finding themselves totally priced out of this radical housing market.” He advocates for price controls that target a variety of demographics from the poor to the middle class.

“You have speculators going against families – you know who is going to win in that battle,” he said. “It makes average families uncompetitive.”

Hanging on to S.F. ZIP

Meanwhile, Kelly, who is leaving her long-time Sunset rental because her landlord is moving into the house, finally found a place. In May, she managed to submit a winning bid on Sears Street in the Outer Mission – a 1911 Arts and Crafts house on a dead-end street.

“It wasn’t the first choice but it’s a good neighborhood, they love the house, and we were happy they were able to stay in San Francisco,” said Kevin Birmingham of Park North Real Estate, Kelly’s broker.

Kelly said she is enamored with the house, the street and the neighborhood. But as a native she said she is a “little bitter about having to leave the Sunset and a little shocked as a native how nuts real estate prices are.”

“We are hanging on to a San Francisco ZIP code by our fingertips,” she said.


© 2014 Hearst Communications, Inc.


Posted in House Hunting

Least Affordable/ Most Affordable

The Five Most and Least Affordable Housing Markets for the Middle Class

The middle class in the United States is getting squeezed out of some housing markets, but not out of all of them. Trulia Chief Economist Jed Kolko issued a study that attempted to determine which housing markets were affordable for the middle class and which were not. He based affordability on what percent of homes for sale were affordable to the middle class based on the median household income of each metro area. He defined affordable as when the monthly housing expense, including mortgage, insurance, and property taxes, was less than 31 percent of the area’s median household income. Kolko found that housing was primarily affordable to the middle class in 80 of the largest 100 U.S. metro areas.

Here are the five most affordable and five least affordable housing markets for the middle class.

Most Affordable Housing Markets:

#5: Columbia, South Carolina

82 percent of homes in Columbia are affordable, down from 88 percent in May, 2013.

#4: Gary, Indiana

83 percent of homes in Gary meet the affordability criteria, down from 87 percent a year ago.

#3: Dayton, Ohio

83 percent of homes in Dayton are also affordable, down from 89 percent last year.

#2: Toledo, Ohio

84 percent of homes in Toledo are affordable, down from 87 percent last year.

#1: Akron, Ohio

Akron had the highest percentage of affordable housing at 86 percent, down just 2 percentage points from 88 percent last year. [2]

While most of the most affordable markets are in the Midwest, the least affordable markets are primarily on the coasts.

Least Affordable Housing Markets

#5: San Diego, California

Just 28 percent of homes in San Diego are affordable to the middle class. This is down significantly from the 39 percent that were affordable one year ago.

#4: New York, New York

Only 25 percent, or one in four, homes in New York are affordable to the middle class. The average square footage of an affordable home in New York is also quite low at just 1000 square feet.

#3: Orange County, California

Just 24 percent of homes in Orange County are affordable.

#2: Los Angeles, California

Only 23 percent of homes in L.A. are affordable to the middle class, down from 31 percent last year.

#1: San Francisco, California

San Francisco remains the least affordable housing market, with a mere 14 percent of homes affordable to the middle class.


Posted in House Hunting

All Cash Offers


Housing paradox: All-cash sales rise as investor sales dip

The headline on Thursday’s release from the National Association of Realtors might sound contradictory.

“All-cash sales up while distressed sales and investors decline,” it reads.

Investors are often buyers in all-cash home sales. How can cash deals be up if investors are hanging back?

An explanation from NAR’s chief economist offers some insight into how much today’s in-recovery real estate market is driven by people with financial resources, whether savings, home equity or just good credit. At the same time, not-so-well-off Americans — such as first-time buyers — remain underrepresented due to a tight supply of homes for sale at the lower priced end of the market and credit restrictions.

First, here are the key statistics in the Realtors’ new data:

  • All-cash purchases of homes were 33% of the market in the first quarter, compared with 31% in 2013 and 29% in 2012.
  • Investors’ share of all buyers was 19% in the first quarter, the same as in 2013 but down from 20% in 2012.
  • Sales of distressed homes — those are foreclosures and short sales — fell to 15%. That’s down from 17% in 2013 and 26% in 2012.  Investors snapped up these bargain-price homes by the thousands to turn into rentals the past several years.

Lawrence Yun, NAR’s chief economist, points out investors aren’t the only buyers who can afford to buy a home without taking out a loan.

Another group is aging Baby Boomers, who bought homes decades ago and now are trading down to smaller homes. They have decades of accumulated equity to reinvest in a home purchase.

A separate NAR study shows trade-down buyers rose to 29% of all buyers last year from 25% in 2012 and 23% in 2011.

Who else pays cash for homes? The majority of international buyers, Yun says.

It may be no coincidence then that in Florida, all-cash sales were more than half of all homes sold in January through March.

“Florida is the most popular state for international buyers, who generally pay cash, as well as vacation-home buyers who frequently pay cash. In addition, downsizing retirees are known to pay cash from the proceeds of their homes in the north,” Yun says.

Other states that stood out for all-cash sales in the first quarter were Nevada, Arizona and West Virginia, accounting for nearly four of 10 transactions, according to NAR.

Posted in House Hunting