MARKET SPOTLIGHT: WESTERN HOT SPOTS
SAN FRANCISCO-OAKLAND-HAYWORD, CA HISTORIC HOME SALES
MEDIAN SALES PRICE
YEAR-OVER-YEAR HOME PRICE APPRECIATION
cooldown is in the cards for Las Vegas, and he is planning on reconfiguring his business model in 2019 to adjust to the new reality of the market. “It’s already cooling here,” said Schurr, who with his wife Janie co-owns the Clark County office of WeBuyHouses.com. “It’s going to get back to normal, but people have been spoiled for the past five years so they are going to see it as a crisis but in reality it is just a correction. We need the correction to keep the roller coaster from the big drops and the big climbs.” A flipper and provider of turnkey properties to investors, Schurr is finding less demand for a highly-fin- ished product and instead is settling for selling his properties with just cosmetic fix-ups to so-called iBuyers like Opendoor and Offerpad. “We’re starting to sell to them directly. As with any investment any- one goes into, the number one ques- tion is exit strategy,” Schurr said. “As long as it’s clean and move-in ready the clean ones will get purchased no matter what the upgrades are.” ATTOM reports that average rents
in Clark County for 2019 require 37.9 percent of the average wage there to rent, while affordability to buy a median-priced home with 3 percent down at year’s end 2018 was 48.3 percent of income. CALIFORNIA REFLECTING THE NATION Thornberg sees California as undergoing a supply crisis due to low inventory of available housing stock. That, plus record low unemployment numbers around the state, along with interest rate hikes from the Federal Reserve make him confident in his overall outlook for the Golden State. “The trends we’re seeing here in California are similar to what we’re seeing nationally,” he said. “The markets are taking a breather because of interest rates. I don’t think there’s anything particularly unusual going on right now. I would argue that the market has been be- having quite reasonably. It’s a state that has lots of income and limited supply, and the lack of supply is driving the show.”
TO THE NORTH:
Between the San Francisco Bay area and the high-tech Silicon Valley, Northern California has been known for having some of the highest-priced homes in the nation. Even so, there are specific suburbs in the region that took substantial hits in home prices during the Great Recession. Surviving the wild highs and lows of the real estate cycle is nothing new for the region. When it comes to housing bubbles created by overheated markets, homeowners and investors are used to being strapped in for a wild ride. In the San Francisco metro area, unemployment continued to go lower in November 2018 to 2.5 percent, while ATTOM reported the year-over-year increase in median home sale price was 2.4 percent, the lowest annual increase seen since January 2017.
ATTOM also reported that rents for a three-bedroom, single-family home in the San Francisco metro area fell 9.1 percent to $3,153 per month, which would require 56.9 percent of average wages. Buying a median-priced home there at year- end 2018 required 79.7 percent of average wages with a 3 percent down payment. As for the San Jose metro area (Silicon Valley), unemployment fell in November 2018 to 2.4 percent while ATTOM reported a year-over-year price increase of 3.9 percent, its low- est point since December 2016. ATTOM also reported that rents were up between 2018 and 2019 by 1.7 percent to $2,733 a month for a three-bedroom, single-family home. Average rents in the metro area would require 68.6 percent of average wages, compared to 99.6 percent of wages to buy a medi- an-priced home. “There hasn’t been a crash.
It seems to be more of a leveling off than a crash. You hear some talk in the Bay Area that there might be some contraction or decline in prices. I’ve seen prices go down if the property is marketed poorly.”
There’s been some calming,” said James Riseman, an investor in the Bay Area. “It seems to be more of a leveling off than a
crash. You hear some talk in the Bay Area that there might be some contrac- tion or decline in prices. I’ve seen prices go down if the property is market- ed poorly.”
26 think realty housing news report
march 2019 27
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