Housing-News-Report-December-2017

HOUSINGNEWS REPORT

AMAZON AND THE BATTLE FOR TOMORROW’S COMMUNITIES

The Squeeze Is On High-cost metro centers produce an array of winners and losers. If you’re in, you’re in. If you bought a home in San Jose or Seattle 20 years ago you’ve won the brass ring. The tremendous run-up in home prices has created real equity and genuine wealth. But owing a million-dollar home is not free. Your good friends in the local government will want to share your success as values rise. To get equity out you’ll have to refinance or sell. The former will raise your monthly costs while the latter will create a whole new world of expenses and taxes. If you want to stay and remodel you’ll need building permits, paperwork likely to set off higher property taxes. “Those who have profited in hot markets may well be best served by moving out while those who live in areas with less real estate appreciation may not have the financial ability to move in. Renters in the most vibrant markets may not be able to save enough to ever catch up with local home prices. The natural result of such trends is that people move out.” The only thing worse than owning in a fast-appreciating community is not

owning. If you now rent what’s “buyable” becomes smaller and smaller with every price hike. Renters in hot communities are hard-pressed to save enough for a down payment and — if they do — they still may not be able to afford the mortgage. Apple is headquartered in Cupertino and there the median house sold for $1.91 million in the third quarter of 2017, up 18.8 percent in a year, according to ATTOM. That’s a one-year price increase of $302,000 — an average increase of more than $25,000 a month. A borrower buying with 5 percent down would need to save (or earn) an extra $1,258 a month for a year just to keep up with the price increase. Those who have profited in hot markets may be best served by moving out while those who live in areas with less real estate appreciation may not

have the financial ability to move in. Renters in the most vibrant markets may not be able to save enough to ever catch up with local home prices. The natural result of such trends is that people move out. Migrations “California’s generally unaffordable housing markets have suffered substantial net domestic migration losses,” says the 2016 Demographia International Housing Affordability Survey. “This is despite their reputations for strong consumer demand. Overall, the state has lost nearly a net 1,900,000 domestic migrants since 2000.” “While tech worker interest in Silicon Valley is strong, it’s hardly the only place tech workers see opportunity — not by a long shot,” says a 2016 report by Indeed.com.

WHERE HOMEBUYERS ARE MOVING Q3 2017 PRE-MOVER INDEX (100 IS NATIONAL AVERAGE) 32 304

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DECEMBER 2017 | ATTOM DATA SOLUTIONS

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