San Francisco home prices “are considered at-value, based on long-term price sustainability”, according to property information provider CoreLogic in its latest monthly national real estate report. Like most national data crunchers, CoreLogic lumps other cities into its “San Francisco”, in this case Redwood City and South San Francisco.
And we can safely assume that CoreLogic’s “San Francisco” real estate market is a stand-in for the entire Bay Area market.
Now, anyone who claims, even indirectly, that Bay Area homes are fairly priced is going to be met with healthy skepticism. And, yes, CoreLogic will admit that “San Francisco is one of the most expensive markets in the nation”. However, “higher incomes can support it”.
The claim is even more remarkable considering that the latest California Association of REALTORS Housing Affordability Index shows that just 12 percent of San Francisco’s residents can afford the median-priced San Francisco home.
Down in our neck of the woods, affordability in San Mateo and Santa Clara Counties comes in at 14 and 17 percent respectively. Looking for a bright spot? Homes in booming Solano County, traditionally the least expensive of the Bay Area counties, are affordable to 45 percent of County residents.
The last time Santa Clara County homes were even close (42 percent) to being affordable to that many County residents was back in the first quarter of 2012. Not coincidentally, that was the quarter when buyers came out of the woodwork.
Think that 17 percent affordability portends the Apocalypse? Since March 2000–anyone here besides me remember that market? no?–Santa Clara County affordability has frequently been below 20 percent. Even back in 1991, before anyone here except me was born, County affordability was as low as the mid 20 percent range.
Which proves that the current market is far from unprecedented. At least if you think Silicon Valley’s real estate history goes back more than six months.
Does CoreLogic call home prices in the San Jose metro, a reliable indicator for Silicon Valley, “at-value”? None of the news releases I find mention San Jose, and since the report itself seems to be available only by subscription, that’s a question I can’t answer definitively. But comparing CAR’s affordability numbers for Santa Clara and San Francisco Counties suggests that CoreLogic might consider our little corner of heaven “at-value” as well.
More important, crowded open homes and sizzling sales suggest that the people who really count–homebuyers–think our market offers value for money. Lots of money.
copyright © John Fyten 2017