Bay Area Housing Affordability Improves – Slightly

Market News

First the good news: housing affordability improved in all nine Bay Area counties in the third quarter. The not so good news: home price growth continues to exceed wage growth in general.

San Francisco was the exception with housing prices increasing by 6 percent while wages increased by 10 percent.

Of course, even with the modest improvement in affordability Bay Area residents must still pay a substantial higher percentage of annual wages on mortgage payments. All Bay Area counties are higher than the national average of 37.7 percent led by Marin County where residents would have to pay out 104.7 percent of their wages to afford a home.

Availability vs Affordability: A Nationwide Concern

Green Escrow Services | American economy

Analysts say that existing-home sales could increase by 1.7 percent in 2017 but the National Association of Realtors believes that homebuyers at lower income levels may not see many listings within their price range. The NAR, in conjunction with realtor.com, have created the Realtors Affordability Distribution Curve and Score which measures affordability at different income levels for active housing inventory currently on the market.

Strong job gains coupled with millennials increasingly looking to purchase should produce a significant buyer demand in 2017. However, as affordability decreases there will be heavy competition for listings at the lower end of the market which can then push prices even higher.

Many Midwestern states have the best affordability scores while, not surprisingly, California trails only Hawaii as being the least affordable.

Housing Affordability Hurting Bay Area Businesses

Green Esrcow | Afforable Housing

The high cost of housing in the Bay Area – both sales and rentals – is having a severe impact on small businesses as they are finding it increasingly difficult to keep skilled employees.

According to RealFacts, the average rent in the first quarter of 2016 was $2,503 in San Jose, $2,959 in Oakland and $3,595 in San Francisco. The result? With their skilled employees leaving the Bay Area, some businesses are considering following suit.

Moreover, many businesses – as well as cities and municipalities – are finding it exceedingly difficult to hire qualified workers from outside the area. While the pay may be slightly higher, the high cost of living – particularly housing – makes moving prohibitive for most out-of-state workers.

Affordable Housing Still A Concern

Green Escrow | Real Estate News

A recent survey by the MacArthur Foundation finds that the majority of Americans remain concerned – even pessimistic – about the future of housing affordability despite the best efforts of local, state and federal governments. While most believe that improvements have been made, 61 percent don’t think the housing crisis is over and a full 20 percent believe the worst is yet to come. Those in the age range of 50 to 64 are the most pessimistic with 69 percent believing that affordable housing is a very or fairly serious issue. 61 percent of African-Americans and Hispanics agree.

Most Americans – 75 percent – want the federal government to make housing affordability at least a moderately high priority, but only 43 percent believe it actually does. Moreover, 79 percent believe local and state governments should make housing affordability at least a moderately high priority, yet 54 percent think they actually do. Many admitted that they don’t have a clear idea of what the government could actually do to improve housing.

Finally, the survey also found that 50 percent of those questioned believe that buying a home is still an excellent long-term investment – up six percent from a year ago. 43 percent indicated that buying a home remains a high priority in their lives.