March 2016
Bay Area, the median priced home in 2016 costs more than three times the national average. Right before the last real estate crash in San Francisco in 2007, home affordability dipped below 10 percent; then the market unraveled. San Francisco is facing a serious affordable housing crisis that is pushing out many long-time residents. Some experts claim San Francisco’s housing market is a bubble waiting to burst. Ken Rosen, chairman of the Fisher Center for Real Estate at the University of California, Berkeley, said tech is due for another correction, and that could trigger a housing bust in the Bay Area. “The high-tech boom we have is unsustainable,” said Rosen. “Job growth is unsustainable. There will be, in the next three years, a correction. These unicorns (private companies valued at more than $1 billion) will have to cut jobs. That will have by far the most important impact on the housing market.” Today, homeownership rates are at historic lows. After peaking at 69 percent in 2004, homeownership in the United States declined to 63.7 percent in 2015, reports the Census Bureau. Several factors have contributed to the substantial decline in homeownership. The erosion of household income since the start of the recession is one key ingredient, and the restricted access to financing is another. U.S. Homeownership Down
Indeed the cumulative effect of this battle against change is dramatic.
New Home Permits
In 2015, for example, the San Francisco metropolitan area issued only 12,354 new housing permits. The San Jose metro approved just 7,282 new home permits. By comparison Phoenix issued over 23,860 new housing permits in 2015, nearly double that of San Francisco. Indeed, in every year from 1990 to 2015, Phoenix significantly outpaced the Bay Area in new home construction — often by two or three times, Census Bureau data shows. The population of the San Francisco metro is 7.1 million, compared to 1.5 million in Phoenix. Even though places like San Francisco have natural beauty, urban amenities, fantastic climate, cultural riches and an outstanding economy, people are leaving the Bay Area in droves. From 2000 to 2009, the San Francisco metropolitan area lost nearly 350,000 residents to other American cities, and nearby San Jose lost another 240,000. The biggest factor driving people from the coastal mega-cities to the Sun Belt is the exorbitant price of housing. In San Francisco’s red-hot housing market, where tech millionaires, foreign billionaires and the wealthy locals have pushed the median home price to $1.2 million, only 11 percent of the population could afford to buy a home in the Bay Area, according to the latest home affordability index from the California Association of Realtors (CAR). In the San Francisco California’s Housing Affordability Crisis
The flip side of falling demand for homeownership has been
Continued Next Page
SOURCE: RealtyTrac
SOURCE: RealtyTrac
7
Made with FlippingBook Online newsletter