Bay Area sees patchwork recovery from housing crash
“According to an analysis by this newspaper of home values by ZIP code, with higher priced homes, such as the core of Silicon Valley and parts of San Francisco, have recovered much of the home equity lost in the crash. The data is for all types of homes: single-family, condos and townhouses. But neighborhoods with low-cost homes, especially those in parts of Alameda and Contra Costa counties, are still far below peak values, hurt by the waves of foreclosures that struck those areas.”
The full article with map is here: http://www.mercurynews.com/business/ci_20402461/bay-area-sees-patchwork-recovery-from-housing-crash
Bay Area Home Prices Projected to Surge
“Looking at 245 Bay Area ZIP codes, Zillow projects that 244 will see home values ratchet up by significant margins in 2013, with 27 ZIPs seeing double-digit appreciation…Popular San Francisco neighborhoods such as Noe Valley, the Castro, Twin Peaks, the Mission and Bernal Heights are poised for double-digit appreciation, along with Menlo Park, Larkspur, Palo Alto, Alameda and North Berkeley, Zillow predicts.”
The full article is here: http://www.sfgate.com/realestate/article/Bay-Area-home-prices-projected-to-surge-4288392.php
NYTimes Article: In San Francisco, Glass-and-Steel Condos Rising by the Bay
Darcy Padilla for The New York Times
ROUGHLY two decades ago, during an earlier Internet start-up boom, many entrepreneurs and fast-typing coders and engineers set up shop in a still-gritty area of this city: South of Market Street.
The young tech crowd rented — and sometimes bought — in commercial buildings in this former warehouse area, converting them into “work-live” spaces where they operated their nascent companies and slept (once in awhile).
See the the complete article at NYTimes.com: http://www.nytimes.com/2012/10/21/realestate/in-san-francisco-glass-and-steel-condos-rising-by-the-bay.html
SF rated #1 for real estate investment, development and home building in 2013
“San Francisco was rated first for investment, development and home building in the 2013 “Emerging Trends in Real Estate” report by the Urban Land Institute and PwC. The report says: “In 2013, San Francisco steals the triple crown from Washington, D.C., receiving top billing in the Emerging Trends investment, development, and housing categories. ‘San Francisco is driven by growth and a strong jobs outlook, led by technology and a structural change away from suburban and toward downtown.’”
Read the complete article at SFGate.com: http://www.sfgate.com/realestate/article/Which-cities-are-the-best-bets-for-real-estate-3957132.php
Is housing bouncing back?
“The deeply depressed housing sector finally seems to have found its bottom — and may even be starting to bounce back.
A wide range of housing indicators — construction, home sales, prices — have stabilized in the past few months, although they remain at historically very low levels. And it looks as if construction activity in particular will pick up in 2012.
The latest evidence of the momentum — new-housing starts for November — was released Tuesday. The surprising 9.3 percent gain bumped the rate of new-housing construction to its highest level in 19 months, to a rate of 685,000 new units a year. The number of building permits issued for new houses and apartments also rose, to 5.7 percent in November.”
Social Media Fuels SoMa Rental Boom — But Will It Be San Francisco’s Next Big Real Estate Bubble?
“SAN FRANCISCO — Walk through San Francisco’s bustling SoMa neighborhood and you’d be forgiven for thinking that the economic roller coaster of the last 12 years was nothing more than a bad dream. Both the dot com boom’s epic implosion and the misery of the Great Recession vanish behind a chattering group of enthusiastic engineers waiting in line for artisanal grilled cheese sandwiches.
At times, it seems like there has been steady economic growth in SoMa from the tech explosion of the late 1990s to today’s boom. While the newfound expansion, one based on the seemingly limitless possibilities of social networking, is re-inventing the way people communicate from China to the Carribbean, its beating heart lies in SoMa’s row after row of converted warehouses.
“The high-tech industry is a bright spot in an otherwise gray economic picture. High-tech jobs have grown nearly four times faster than the overall economy during the past 18 months,” a report by real estate services firm Jones Lang LaSalle noted.
Over that same period, tech job growth in San Francisco surged by 16.1 percent — the fastest of any area in the country, according to the report. That’s one and a half times the rate in Silicon Valley during the past year and a half — and growth has been the largest in SoMa. If tech is one of the most resilient parts of the U.S. economy, the strongest part of tech is in SoMa.
These jobs are largely generated by eager young companies champing at the bit to become the next Google or Microsoft, and they all need somewhere to house their employees. This need has led to a hyperactive scramble for office space that seems shocking so soon after an irrationally exuberant real estate market catalyzed the biggest financial collapse since the Great Depression.”
Residential Housing Ready to Awaken
“After half a decade of withering sales and slumping prices, there are strong and diverse signs that the single-family housing market is poised for a rebound. In some metropolitan areas, the market has bottomed, with both sales and prices on the rise and foreclosures on the decline.
This contrarian — and largely overlooked — thesis flies in the face of the persistent gloom that has nagged the industry since 2007, when the subprime crisis flared.
Industry analysts and players cite a number of reasons — some traditional (employment), others unique to the post-credit bubble era (foreclosures) — for the long-awaited sea change. An analysis of industry and government data also support the forecast.
“It has become increasingly apparent to us that the pieces for a housing rebound next year are beginning to fall into place,” declared Barclays Capital analyst Stephen Kim in a recent note to investors.”
Click here to read the full article.
Positive Reports on SF
An article in today’s Chronicle, in conjunction with Bloomberg, while not particularly positive about near-future trends in US real estate, is much more positive regarding San Francisco.
“Your best bets: a small handful of “property-wealth islands,” including San Francisco and San Jose/Silicon Valley, both seen as “primary 24-hour gateways located along global pathways,” according to a report being released today at the Urban Land Institute conference in San Francisco.
San Francisco ranks third out of 51 cities as a place to invest in and develop commercial and multifamily apartment properties and fourth in for-sale home building, with San Jose two or three rungs lower in each category, according to the survey compiled by the institute and PricewaterhouseCoopers.
Washington, Austin and New York are the other top-rated cities.” …
“’There’s still an understandable reluctance by potential homeowners to get into the market,” said White. [Executive Director of the Urban Land Institute, San Francisco]
Not so, however, when it comes to renting or leasing commercial space in high-tech areas like San Francisco’s Mid-Market and South of Market, a trend driven largely by the influx of a younger, more mobile and urban-oriented workforce.
“Gen Y is driving up the demand for apartments and driving up rents, which makes investing in apartments a safer bet,” said White.
Depending on how long it lasts, such a trend could be a game-changer for real estate.”…
“California’s future is a lot more urban and transit-oriented than it has been historically. There’ll be an increasing demand for the 24-hour, livable city model,” said White. ”
The Chronicle Article is Here: www.sfgate.com
The full report – Emerging Trends in Real Estate — from the Urban Land Institute is here: www.uli.org
Paragon in the Examiner: Rent vs. Buy Analysis
click to enlarge
In San Francisco, 3 big factors are impacting the Rent vs. Buy equation: the 15-25% decline in prices since 2008, fast rising rents, and incredibly low mortgage rates. This chart compares the median SF asking rent for a 1-BR apartment ($2650) to buying a median-priced, 2-BR condo in SoMa ($650,000). With 20% down, adjusting for principal pay-down and tax deductions, the net monthly cost is actually lower for the buyer. And the financials get better over time.
To perform calculations using your own assumptions regarding interest rates, rent, down-payment, appreciation, purchase price and costs, go to www.paragon-re.com/Calculators/RentvsBuy.aspx. For the complete analysis, click on View Report.
UCLA Anderson Forecast of Rising CA Home Prices
“According to the U.S. Bureau of Labor Statistics, the preliminary unemployment rate in San Francisco-Oakland-Fremont areas for September 2011 declined to 9.2 percent. And, based on the State’s Employment Development Department, the unemployment rate in San Francisco’s metropolitan area is currently at 8.7 percent, the lowest in California.”
“The same panel of UCLA economists who earlier warned the California housing bubble was going to burst is now predicting homes prices are ready to rebound. The UCLA Anderson Forecast anticipates an 11.5 percent price jump next year. The forecast calls for another 10 percent increase in 2013 and a median price of nearly $440,000 by 2017 that would represent a 52 ∏ percent increase over today’s prices.”
Just FYI: the UCLA Anderson forecasts have been unrelentingly gloomy for a very long time, so this is a big turnaround in their forecast:
click to enlarge
“UCLA economists forecast that California home prices will rise steadily over the next six years, although the recovery in home sales isn’t projected to begin until 2013.
The UCLA Anderson Forecast predicted that the median price of an existing single-family home will increase 52.5% by 2017, rising to $438,980.
This year’s median house price is projected to be $287,904, down 0.3% from 2010.
But home prices are projected to turn around in 2012 — jumping 11.5% to $321,138 next year, then rising 10% more in 2013 to $353,411. The recovery is expected to run through 2017.
But house prices still will be below the housing market’s 2006 peak of $560,408 more than 10 years down the road, failing to retake that pinnicle by 2017.
The sales recovery won’t get under way until 2013, the statewide forecast shows. UCLA forecast that:
- California home sales will drop to 483,132 single-family home transactions in 2012, down 1.4% from this year’s projected level of 490,137.
- Sales will climb from 2013 through 2015, hitting a high-water mark of 547,945 transactions that year.
- By 2017, however, sales will settle back to 507,842 transactions — just 3.6% higher than this year’s projected total.
- By comparison, California house sales totaled nearly 625,000 transactions a year in 2004 and 2005.”
