Facebook Named the Best Bay Area Company for Workers

  • Social-networking giant Facebook ranks as the Bay Area top company to work for based on employee ratings and reviews.
  • Facebook and Salesforce.com are the top two companies receiving the most interest from workers seeking to relocate to the Bay Area.
  • Eleven of the Bay Area’s 20 best workplaces are not traditional tech companies.

People standing in front of Facebook headquarters signThe planet’s best-known social network has earned top honors as the best Bay Area company to work for, though tech firms actually do not dominate the rankings.

Employee reviews and ratings on job-search portal Indeed peg Menlo Park-based Facebook as the top place to work in the Bay Area. Although Facebook employees admit that the work environment can be pressure-packed and stressful at times, they praise their colleagues for helping to motivate them to perform at the highest level. And the company’s perks — such as free haircuts and meals — certainly don’t hurt, either.

San Francisco’s Salesforce.com ranks in the No. 2 position on Indeed.com’s list. The customer relationship management software vendor earns points with its employees for excellent compensation and benefits packages, as well as for its philanthropic efforts.

Employees want to work at Facebook and Salesforce.com so much that many are willing to brave the high cost of moving to the Bay Area take a job with the two tech titans. A recent analysis by Glassdoor Chief Economist Dr. Andrew Chamberlain found that Facebook and Salesforce.com are the top two companies attracting the most applications from people searching for a job in the Bay Area who do not already live here.

Tech companies of course account for a substantial number of the firms named to the list of the Bay Area’s 20 best workplaces, rounded out by Airbnb, SAP, Adobe Systems, Apple, Microsoft, eBay, and Cisco Systems. But more than half of of the Bay Area’s best places to work are not in the techsector, including Kaiser Permanente, Johnson & Johnson, Bristol-Meyers Squibb, and Charles Schwab.

The companies named to the list of the Bay Area’s top workplaces are helping to fuel and sustain the region’s booming economy and exceptionally healthy job market. According to an analysis of California’s latest jobs report by Pacific Union Chief Economist Selma Hepp, no Bay Area county had an unemployment rate higher than 2.7 percent in May.

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Home Prices Are Peaking Everywhere as Summer Arrives

  • U.S. home prices reached an all-time high of $264,800 in May.
  • California and Bay Area home prices also climbed to a new peak in May, a respective $600,860 and $1,088,000.
  • While nationwide housing starts are near an 11-year high, that is still 30 percent less than needed to meet buyer demand.

Hot on the heels of a report that both California and Bay Area home prices reached new highs in May comes news that U.S. home prices followed suit, once again the result of more buyer demand than properties for sale.

That’s according to the latest existing home sales report from the National Association of Realtors, which puts the median price for a U.S. property – including single-family homes, condominiums, townhouses, and co-operatives — at $264,800 as of May, up 4.9 percent year over year and an all-time high. Home prices rose on an annual basis for the 75th straight month, while supply dropped to 1.85 million units, down 6.1 percent from May 2017 and the 36th consecutive month of annual declines.

“Inventory coming onto the market during this year’s spring buying season — as evidenced again by last month’s weak reading — was not even close to being enough to satisfy demand,” NAR Chief Economist Lawrence Yun said in a statement accompanying the report. As a result, homes continued to fly off the market, selling in an average of 28 days, nearly unchanged on a monthly or yearly basis.

May real estate market conditions in California and the Bay Area followed national trends but also represent an extreme example of the nation’s supply-and-demand imbalance. The Golden State’s single-family home median sales price reached a new all-time high of $600,860 last month, while the nine-county Bay Area followed suit at $1,088,000, according to the latest home sales and price report from the California Association of Realtors.

Four Bay Area counties — Alameda, San Francisco, San Mateo, and Santa Clara — have the state’s most severe inventory shortages. Homes in those four counties combined sold in an average of in 11 days in May, CAR’s research says.

In a bit of good news for the nation’s housing-supply problem, the National Association of Home Builders reports that housing starts climbed to the highest level in almost 11 years in May. Still, that may not be enough to put much of a dent in America’s inventory crisis, according to realtor.com Chief Economist Danielle Hale, who says that current construction rates still fall 30 percent below demand levels.

“People who are in the market will find these housing completions will make a difference … but it’s still going to be competitive for buyers because there’s still not enough,” she said.

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California’s Median Home Price Climbs to New All-Time High

  • The Golden State’s median single-family home price was $600,860 in May, surpassing the previous peak set in May 2007.
  • For the second straight month, home prices in the nine-county Bay Area reached a new high, ending May at $1,088,000.
  • Homes in Santa Clara County sold in an average of eight days in May, making it California’s fastest-paced housing market.

An aerial view of Hawthorne, CaliforniaA continued shortage of homes for sale pushed California’s median home sales price to a new record for the first time since the previous housing boom, with the Bay Area recording double-digit percent annual growth for the 11th straight month.

The latest monthly home sales and price report from the California Association of Realtors puts the median sales price for a single-family home in the state at $600,860 in May, up 9.2 percent year over year for the highest annual rate of appreciation in four years. California’s median price surpassed its previous peak of $594,530, recorded 11 years ago.

“As we predicted last month, California’s statewide median home price broke the previous pre-recession peak set in May 2007 and hit another high as tight supply conditions continued to pour fuel on the price appreciation fire,” CAR Senior Vice President and Chief Economist Leslie Appleton-Young said in a statement accompanying the report. “With inventory starting to show signs of improvement, however, home price appreciation could decelerate in the second half of the year, especially since further rate increases are expected to hamper homebuyers’ affordability and limit how much they are willing to pay for their new home.”

The median sales price for a single-family home in the nine-county Bay Area climbed to $1,088,000, up by 16.4 percent from May 2017, marking the second straight month the region hit a new peak. Home prices rose on an annual basis in all nine counties, ranging from 18.9 percent in Alameda County to 4.3 percent in Napa County.

Alameda became the fifth California county to see home prices climb into the seven-digit range in May — $1,025,000. All four of the state’s other million-dollar counties are in the Bay Area: San Francisco ($1,620,000). San Mateo ($1,600,000), Marin ($1,415,000), and Santa Clara ($1,400,000).

As Appleton-Young noted, California’s monthly supply of inventory improved slightly from May 2017 to end the month at 3.0, but supply conditions remain firmly in favor of sellers. The nine-county Bay Area had a 2.0-month supply of homes for sale as of May, down from 2.1 on both a monthly and annual basis. Four of the Bay Area’s million-dollar counties had the fewest homes per sale in the state: San Francisco (1.5), and Alameda, San Mateo, and Santa Clara (all 1.6)

A shortage of homes on the market means that buyers throughout California are acting quickly. Statewide, homes sold in an average of 15 days, while buyers in the Bay Area closed deals in an average of 12 days. As in April, Santa Clara County was the state’s fastest-paced housing market, with the average home finding a willing buyer in just eight days.

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California’s Unemployment Rate Maintains Record Low in May

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  • The Golden State added 5,500 jobs in May and downwardly revised April’s monthly growth to 25,600, according to the latest numbers from the California Employment Development Department. This year’s job numbers have been unusually volatile, mostly due to larger-than-usual changes in industries that are sensitive to seasonal trends. Total state numbers also differ slightly from changes seen at metropolitan area levels, suggesting that statewide numbers may be revised upward.
  • California’s unemployment rate remained at a record-low 4.2 percent in May. Many metropolitan areas showed further declines in unemployment rates, largely driven by the state’s shrinking labor force, which dropped for the third consecutive month and now totals 49,000 persons. It was also the fifth labor-force decrease in the last seven months.
  • Four industries added a total of 12,900 jobs in May, with the largest gains in the leisure and hospitality sector, followed by professional and business services, information, and other services. Six industries reported losses, with the most coming from the construction industry, followed by trade, transportation, and utilities and educational and health services. Nevertheless, since last May, 10 of 11 industries added a total of 307,600 jobs, with the largest gains in the educational and health services sector, leisure and hospitality, and construction. Other sectors that added jobs over the year were professional and business services; trade, transportation and utilities; government; information; manufacturing; financial activities; and mining and logging. Only other services posted a year-over-year loss. Other services include jobs in repair and maintenance; personal and laundry services; and religious, civic, and similar organizations.
  • The large monthly swings may overshadow the strength of California’s employment numbers. Taken together, the state added 306,000 jobs from last May, a 1.8 percent increase. Despite the monthly decline in construction jobs, the industry is still creating positions at the fastest rate in the state, up by 6.2 percent year over year in May. Further, information-sector jobs, which are declining in other states, grew at a solid pace, up by 3.3 percent since last May, with gains in data hosting, digital media, and software compensating for declines in print media and landline communications.
  • All California metro areas saw employment rise over the past three months.
  • San Francisco and San Mateo counties added 2,100 jobs from April, and the unemployment rate dropped to 2 percent. The leisure and hospitality sector saw the strongest gain, boosted by accommodation and food services, particularly restaurants. Professional and business services saw a similar increase, mainly due to jumps in administrative and support services. On an annual basis, the two-county area added 21,000 jobs, with half of those in professional and business services — particularly computer systems design and related services. The information sector experienced the second largest net increase. With these changes, it appears that about three-quarters of new jobs added were in high-income sectors.
  • Santa Clara and San Benito counties added 4,000 jobs in May, and the unemployment rate ticked down to 2.3 percent. Monthly job gains were mostly in the leisure and hospitality sector, followed by professional and business services. On an annual basis, the area added 34,300 jobs, with the information sector leading the increase. Again, while most other regions of the state and country lost information jobs that focused on old media, Silicon Valley’s new-media information sector has taken off. The manufacturing, private educational and health services, professional and business services, leisure and hospitality, construction, and government sectors also posted solid annual job gains.
  • Alameda and Contra Costa added 5,400 jobs in May, with the unemployment rate holding steady at 2.7 percent. The largest gains were in the leisure and hospitality sector, particularly food services and drinking places, followed by construction; government; and trade, transportation, and utilities. On an annual basis, two industries that added about an equal number of jobs were professional and business services and construction, both with more than 5,000 new positions. Other services posted the largest annual decline.
  • Marin County’s unemployment rate dropped to 2 percent In May. And while the area added 1,100 jobs in May, the majority were in the leisure and hospitality sector. On an annual basis, Marin County lost 1,200 professional and business services jobs.
  • Sonoma County’s unemployment rate declined to 2.4 percent, and there was a robust increase of 2,300 jobs from April, with the largest gains in educational and health services and leisure and hospitality sectors. On an annual basis, Sonoma County added 3,700 jobs, with the educational and health services sector leading the gains but also a solid uptick in manufacturing, which in Sonoma County mostly pertains to wine production.
  • Napa County’s unemployment rate fell to 2.5 percent in May, with 900 jobs created during the month. The region has experienced some employment losses over the last year, thus the total change from last May includes only 300 new jobs. The annual decline came from the manufacturing; educational and health services; and trade, transportation, and utilities sectors.
  • Los Angeles County added 15,700 jobs in May, and the unemployment rate remained at 4.4 percent. The leisure and hospitality sector accounted for two-thirds of May’s new jobs, adding 5,700 positions in the accommodations and food service sector and 4,900 in arts, entertainment, and recreation. The professional and business services and local government sector followed. Over the year, the leisure and hospitality sector continued to lead all industries, with 24,600 jobs. The accommodations and food services industries created 13,700 positions, and arts, entertainment, and recreation accounted for 10,900 jobs. The professional and business services sector added 17,300 jobs from last May in Los Angeles, mostly in administrative and support and waste services, followed by professional, scientific, and technical services. The educational and health services industries registered 16,200 job gains, with increases mostly in health care and social assistance. The trade, transportation, and utilities sector reported the largest annual loss, which was equally divided between wholesale trade and retail trade.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

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Real Estate Roundup: The Median Down Payment in Silicon Valley Is $300,000

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

Amassing a down payment is frequently cited as one of the biggest hurdles to homeownership for first-time buyers, and a recent report sheds light on how difficult that task currently is in the Bay Area’s sky-high housing market.

That’s according to ATTOM Data Solutions’ latest U.S. Residential Property Loan Origination Report, which puts the median down payment for single-family homes and condominiums in the San Jose metropolitan area at of $298,250, nearly 18 times higher than the national average and the most in the U.S. San Francisco homebuyers placed the country’s second largest down payments of $180,000. Those figures represent about 24 percent of the average sales price in both cities.

The Bay Area also leads the country for the number of co-buyers, home purchases made by multiple nonmarried parties. Co-buyers accounted for 48.3 percent of sales in San Jose and 37.9 percent in San Francisco.

“It’s not surprising that in places like Seattle, the Bay Area, and other challenging markets buyers are looking at ways to increase their purchasing power, and reduce the amount of debt they are taking on,” Unison Director of Corporate Communications Michael Micheletti told ATTOM Data Solutions. “The sharing, co-buying and co-owning of a home movement will only grow as more millennials and Gen Z enter the marketplace.”

The Federal Reserve’s decision to raise interest rates last week and the resulting impact on the U.S. economy are perhaps the two biggest factors currently affecting the U.S. real estate market, an industry trade group says.

A report from The Counselor of Real Estate identifies the top 10 factors that will influence real estate markets both in the short term and over the long term. Besides interest rates, short-term issues include the recently passed Economic Growth, Regulatory Relief, and Consumer Protection Act; demographic changes; the evolution of e-commerce businesses; and of course, the nationwide affordability crunch.

Over the long term, CRE identifies infrastructure, immigration, energy and water, disruptive technologies, and natural disasters as having the biggest potential impacts on real estate markets. The organization notes that since 2006, disasters like October’s Wine Country wildfires have caused real estate markets to experience significant losses.

While moribund golf courses represent an opportunity to build more much-needed housing, NIMBYism may prevent that trend from taking hold.

Citing data from Pellucid, a CityLab article says that the number of Americans who regularly gold dropped by about nine million between 2002 and 2016. As a result, golf courses are beginning to close, and that trend is expected to continue. An average 18-hole golf course that sits on 150 acres could accommodate up to 600 new single-family homes, and even more if townhouses and apartments are added to the mix.

But currently, shuttered golf courses in Missouri and Florida are being redeveloped for commercial purposes rather than residential. As CityLab points out, this is partially due to regulations, as many golf courses were zoned for commercial use. But transforming golf courses to housing units is also meeting resistance from residents of nearby communities, many of who are more affluent than others in the area. Earlier this year, residents of a Boston suburb voted down building a senior-living facility on a struggling golf course, while residents of a Rochester, New York suburb opted to buy a golf course and turn it into a park.

Mortgage rates climbed to the second highest level point in 2018 last week after the Fed raised interest rates by 25 basis points.

The latest numbers from Freddie Mac put 30-year, fixed-rate mortgages at 4.62 percent for the week ended June 14, up on both a weekly and yearly basis. Fifteen-year, fixed-rate mortgages rose to 4.07 percent.

In a statement accompanying the report, Freddie Mac Chief Economist Sam Khater said that rising mortgage rates will not have as profound of an effect on consumer budgets as in past cycles because far fewer Americans have adjustable-rate mortgages than they did 10 to 15 years ago. Still, he stressed that stronger wage growth would help homebuyers better keep up with both rising prices and mortgage rates.

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Want to Be a Good Neighbor? Avoid These Behaviors.

  • A recent poll found that Americans think that nosiness is the worst quality in a neighbor.
  • Nearly half of those surveyed have observed their neighbors be too loud, fail to clean up after pets, and violate parking protocols.
  • One-third of baby boomers have reported getting into a verbal or physical confrontation with a neighbor.

Neighbor spying out the window with binoculars

Anyone who hopes to be known as a good neighbor would do well to mind the old saying about good fences.

A recent survey from Porch asked Americans about their neighbors’ 10 most annoying habits. Using a 100-point scale, the company ranks neighborly behavior by annoyance level, with higher numbers indicating greater degrees of irritation.

The top complaint people have about their neighbors? That’s privacy intrusion, be it spying, making unannounced house calls, or being a busybody. Americans gave nosey neighbors a 75 on the annoyance scale, and 26 percent of those surveyed reported having a personal encounter with a snoop. Only 2 percent of Americans would admit having invaded their neighbors’ privacy themselves.

Noise is also major hassle, earning a score of 71. Almost half of respondents reported that their neighbors have played music too loudly or engaged in boisterous conversations, making it the most common peeve of the 10 included in the report. A near equal number have seen neighbors fail to clean up after their pets or park their cars in someone else’s spot, making these the third and fourth biggest neighborly annoyances, with respective scores of 67 and 66.

When it comes to resolving disputes, older Americans are more likely to confront their neighbors, with 33 percent reporting having engaged in a verbal or physical altercation. Confrontations with neighbors were cited by 28 percent of Gen Xers and 23 percent of millennials.

Porch suggests that getting to know neighbors can go a long way to smoothing over disputes should they arise, and being on a first-name basis definitely helps. And while 77 percent of those surveyed know some or all of their neighbors’ names, one in five don’t know any of their neighbors’ names.

So what can one do to get in the good graces of the neighbors? Apartment Terapy has compiled a list of 36 tips, ranging from smiling and saying hello to offering to take care of their pets while they are away. And HGTV has published this good-neighbor guide, which addresses how to behave on neighborhood- or community-focused social-media pages.

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Millennials Are Now the Most Active Home Remodelers

  • Millennials have completed more home-improvement projects over the past 12 months than any other generation.
  • Despite increased home-renovation activity by millennials, they still spend the least on projects, while baby boomers spend the most.
  • Tight inventory conditions and rising mortgage rates should cause both remodeling activity and spend to grow in the coming years.

Young couple studying remodeling plansHaving either purchased lower-end homes in need of renovations or unable to move up due to tight housing inventory conditions, millennials are leading the charge when it comes to home remodeling, though they are not the biggest spenders.

Those are two of the key findings from HomeAdvisor’s 2018 TrueCost Report, which says that millennials — defined as those between the ages of 24 and 38 — have completed more home-renovation jobs than any other generation over the past year. Millennnials tackled 18 percent more remodeling jobs than Gen Xers and 42 percent more than baby boomers, a shift in trends seen in previous years’ surveys.

“Most millennials have had to compromise on the size and condition of their starter homes — with many purchasing older homes in need of repair just to be able to afford homeownership,” writes HomeAdvisor Chief Economist Brad Hunter, the study’s author. “Many of the millennials who did buy a home in the last few years are seeking to upgrade. But a lack of housing inventory, coupled with inflated home prices and rising mortgage rates, has them renovating their existing homes instead of selling and moving.”

In another reversal of prior survey results, HomeAdvisor found that bathroom remodels are now common than kitchen renovations among homeowners of all ages. Here again, millennials lead the trend and are twice as likely to complete a bathroom remodel than baby boomers.

Even so, baby boomers have spent more than any other generation over the past 12 months, an average of $7,524, compared with the national average of $6,649. By contrast, millennials have been more cost-conscious about renovation budgets than all other generations, spending an average of $5,693.

HomeAdvisor expects that the nationwide housing inventory shortage, which is particularly severe in California and the Bay Area, will lead more homeowners to remodel rather than sell and attempt to purchase another property. More than 80 percent of those surveyed have no plans to list their homes over the next year, and half of them are considering upgrading their current residences. Homeowners of all generations say that they plan to spend as much or more on improvements in the coming year as they did in the past 12 months, led by millennials at 82 percent.

Finally, the anticipation of rising mortgage rates will likely cause more homeowners to stay put and improve their current homes than buy another one over the next few years, Hunter predicts. Yesterday, the Federal Reserve raised interest rates by one-quarter of a point, and as the Los Angeles Times reports, two more increases are expected for this year.

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San Francisco Has the Nation’s Fewest Delinquent Mortgage Holders

  • The U.S. mortgage-delinquency rate dipped to 4.3 percent in March, the lowest since March 2007.
  • In the San Francisco metropolitan area, 1.5 percent of homeowners are delinquent on their mortgages, the fewest of any large U.S. housing market.
  • Mortgage delinquencies rose in the Santa Rosa and Napa metro areas from one year earlier, likely a result of October’s wildfires.

Contemporary homes in San FranciscoA thriving economy and rising home equity have helped pushed mortgage delinquencies to the lowest point since before the Great Recession, with San Francisco claiming the best late-payment rate of any large U.S. city.

That’s according to CoreLogic’s latest Loan Performance Insights report, which says that 4.3 percent of Americans with a mortgage were delinquent on their payments by more than 30 days as of March, the lowest number in 11 years. Mortgage delinquencies decreased in 47 states from one year earlier — including in California, where they dropped to 2.5 percent.

In a statement accompanying the report, CoreLogic Chief Economist Frank Nothaft pointed to the U.S. unemployment rate, which fell to an 18-year low of 3.8 percent in May, as helping most Americans avoid mortgage delinquency. He also said that rising home equity plays a factor in the trend, with the average mortgage holder gaining $16,300 in equity between March 2017 and March 2018.

Of the 10 largest core-based statistical areas in the country, San Francisco — which includes Marin, San Mateo, Alameda, and Contra Costa counties — boasts the nation’s lowest mortgage-delinquency rate, at 1.5 percent. Mortgage delinquencies are even more scarce in San Jose-Sunnyvale-Santa Clara, where just 1.1 percent of homeowners are more than 30 days late on their payments. The number of delinquent mortgages declined year over year in both areas.

By contrast, mortgage delinquencies rose from March 2017 in the Santa Rosa and Napa metro areas, to a respective 2.1 percent and 2.2 percent. This is likely due to the devastating October wildfires, with CoreLogic CEO and President Frank Martell referencing last year’s natural disasters as a factors affecting current mortgage-default rates.

California and the Bay Area serve as prime examples of the two trends that Nothaft referenced as helping fewer Americans to be tardy on their mortgage payments. The state’s unemployment rate fell to a record-low 4.2 percent in April, with jobless claims in San Francisco and San Mateo counties dropping to 2.1 percent. And according to a separate recently released CoreLogic report, Golden State homeowners gained an average of $51,000 in equity between the first quarter of 2017 and the first quarter of 2018, the most in the country.

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The Bay Area’s Median Home Price Climbs to $1 Million in May

Executive Summary:

  • The Bay Area’s median home price reached $1 million in May, a 17 percent year-over-year increase, with Silicon Valley continuing to post 30 percent appreciation.
  • Homes sales activity matched last May, with San Francisco showing the strongest gain, up by 7 percent year over year. Napa County sales were slower than last year. Higher-priced sales rose up by about 30 percent.
  • Activity in Napa and Sonoma counties was relatively slower than in the rest of the Bay Area.
  • More new listings helped boost sales, especially for homes priced between $1 million and $2 million, which posted a 26 percent increase from last May. Santa Clara County listings jumped the most, at 14 percent.
  • Other housing-market indicators also suggest strengthening demand:
    • Homes generally sold in 12 days across all price ranges.
    • The share of homes that sold for more than asking price trended higher again, moving up to 75 percent.
    • The average share of sales that had price reductions also trended lower, bottoming out at 7 percent in March and remaining at 9 percent in May

It is with almost no surprise to note that the Bay Area’s median home price kept rising rapidly in May to reach $1 million, a 17 percent year-over-year increase. All regions continued to post the same price growth trends observed in previous months. Marin County recorded the smallest annual appreciation, with prices up by 5 percent from last May. Still, with strong price growth in previous months, Marin County’s median home price has grown by 9 percent year to date. Year-to-date median price growth was the slowest in Napa County, up by 2 percent. However, Napa County also continued to see home sales activity lag, a trend that began last year. Santa Clara County saw the most median price growth in the Bay Area, up by 29 percent, followed by a 16 percent jump in Alameda County.

Overall, Bay Area home sales lined up with last May, with some regions seeing slightly more activity and some slowing slightly. Napa County saw the largest decline in sales from last May, down by 17 percent. San Francisco saw the largest sales gains, up by 7 percent. Figure 1 illustrates total Bay Area sales over the last three years, with orange squares noting sales in the last four Mays. While this year’s sales matched 2017, they were slightly higher than in 2015 and 2016. It will be interesting to observe activity over the next couple of months, when annual home sales typically peak.

Activity was again dominated by a large increase in higher-priced sales, with homes priced between $1 million and $2 million rising by 26 percent, those priced between $2 million and $3 million jumping by 37 percent, and those priced higher than $3 million up by 32 percent.

Figure 1: Total home sales in the Bay Area

Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2018

A slight uptick in new listings in May could help boost summer sales activity. There was an overall 4 percent increase in new listings, with the largest gains in Santa Clara County, up by 14 percent; Napa County, up by 23 percent; and Alameda County, up by 12 percent. San Francisco inventory continued to trend lower, with a 22 percent decline in new listings compared with last May. The increase in new listings was relatively stronger for homes priced between $1 million and $ 2 million, with a 26 percent gain. New listings for homes priced between $2 million and $3 million increased by 23 percent, while the inventory of homes priced above $3 million saw 18 percent more new listings. Figure 2 summarizes regional changes in new listings by price range. The largest gain was in Alameda County for homes priced above $3 million, with a 183 percent increase. Note that the chart is scaled down to help better visualize overall trends.  While the most-affordable segment posted an 8 percent decline in new listings, Napa and Alameda counties were the only regions with more new listings below $1 million. San Francisco showed a decline in new listings across all price ranges.

Figure 2 :Year-over-year change in new listings by Bay Area county

Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2018

More new listings caused total inventory to decline at a slower pace than has been the case in recent months, though not enough to markedly improve conditions. Inventory dropped by 6 percent from last May, with declines seen in all regions, especially in San Francisco. Nevertheless, higher-priced inventory improved, with the largest jump in homes priced between $1 million and $3 million. Figure 3 illustrates inventory levels by price range over the last three years. What stands out is the large increase in supply between $1 million and $2 million, which is now at the highest level in three years. The biggest driver of the jump was the increase in inventory in Santa Clara County, up by about 350 homes from last May, followed by Alameda County, up by about 150 homes. More inventory will certainly boost June sales in those counties, as it has helped drive sales in the previous couple of months. The inventory of homes priced below $1 million now represents only about half of properties on the market. Two years ago, that price point represented two-thirds of the inventory.

Figure 3: Bay Area housing inventory by price range

Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2018

Despite more inventory at higher price ranges, absorption rates did not abate and increased across all higher price ranges and most regions except Napa County. Absorption of homes between $1 million and $2 million increased by 6 percent, from 45 percent last May to 51 percent this May, and similar growth was seen in higher price ranges. San Francisco posted the biggest increase in absorption rates from last May, up by 8 percent to 39 percent. Silicon Valley maintained the highest absorption rate, at almost 50 percent.

Furthermore, other housing-market indicators also suggest strengthening buyer demand. In May, homes generally sold in 12 days, the same pace of sales as last year, and even in higher price ranges. Homes priced between $2 million and $3 million in Napa and Sonoma counties lingered somewhat longer on the market in May, though homes priced above $3 million in those regions sold much quicker than they did last year. As previously noted, overall indicators for Napa and Sonoma counties suggest some slowing in the $2-million-to-$3-million price range.

Lastly, the share of homes that sold for more than asking price continued to trend higher, with 75 percent of properties fetching premiums. The fiercest competition was for homes priced between $1 million and $2 million, with 82 percent selling for more than asking price, and those in Silicon Valley, where almost 90 percent of properties sold for more than asking price. Keep in mind that some real estate professionals may be pricing homes below their market value, which can skew trends.

Nevertheless, homebuyers remain persistent and continue to fuel housing demand in the Bay Area. Recent mortgage rate hikes could have caused some buyers to expedite their search or even enter the market sooner than they were planning. As our recent mortgage-rate analysis showed, while further Federal Reserve interest-rate increases are expected, mortgage rates are not projected to rise at the same pace and are already very close to their new longer-term average.

The question now is which housing-market indicators will be the earliest signs of a tipping point in this cycle. A lack of inventory, strong employment growth, and tech advances that lead to speedier real estate transactions make it difficult to rely on traditional gauges such as sales, inventory increases, days on market, or even the ratio of sales price to list price. The number of price reductions could be an indicator worth watching going forward, though at this point, it still suggests tightening in the market. Figure 4 illustrates changes in the share of sales that had price reductions between this May and the year prior. Negative changes suggest fewer reductions than last year, while positive changes suggest an increase in reductions.

Other than a few outliers for the highest-priced homes in the East Bay and Sonoma County, there were generally fewer reductions than recorded last year. Sonoma and Napa county markets are still recovering from last October’s wildfires, which is affecting patterns. In Alameda and Contra Costa counties, the drop in price reductions for homes priced higher than $3 million also follows more bidding wars, suggesting that fewer reductions reflect more demand for the price range in those areas. Figure 5 illustrates the share of Bay Area home sales with price reductions going back to 2005. Following the spike in reductions between the turmoil years of 2008 and 2012, reductions have oscillated relatively steadily since 2013 and have followed traditional housing market seasonality. May was generally the lowest point in the year. Over the last year, the seasonal increase was relatively smaller, reaching only 15 percent, where in the previous five years it peaked at more than 20 percent. Also, the market reached the trough in March this year, with only 7 percent of homes requiring price reductions.

Figure 4: Change in the share of price reductions by Bay Area county, May 2017 versus May 2018

Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2018

Figure 5: Share of sales that had price reductions

Source: Terradatum, Inc. from data provided by local MLSes, June 7, 2018

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

Shared with permission from the Pacific Union Blog

Real Estate Roundup: California Posts the Nation’s Largest First-Quarter Home-Equity Gain

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.A aerial view of Laguna Beach, California

Sustained home price appreciation pushed home-equity gains up significantly in Western states in the first quarter, with California at the front of the pack.

That’s according to CoreLogic’s latest Homeowner Equity Insights report, which says that the average California homeowner gained $51,000 in equity between the first quarter of 2017 and the first quarter of 2018. In a statement accompanying the report, company President and CEO Frank Martell said that he expects homeowners in Western states to continue to see substantial equity gains, thanks to robust economic growth and increased buyer demand.

Nationwide, the number of homes with negative equity dropped by 21 percent year over year in the first quarter to 4.7 percent of properties with a mortgage. Of the 10 major U.S. housing markets for which CoreLogic tracks that statistic, San Francisco had the lowest number of homes with negative equity, at 0.5 percent.

Bay Area homeowners are doing particularly well when it comes to accruing home equity. Last month, ATTOM Data Solutions’ latest U.S. Home Equity & Underwater Report found that San Jose and San Francisco have the most equity-rich homeowners in the U.S., a respective 66.1 percent and 56.0 percent as of the first quarter.

As one of California’s least-affordable counties in the first quarter, San Francisco’s housing market can be particularly tough on teachers, but the city is taking measures that will help ease educators’ financial burdens.

A realtor.com report says that San Francisco has allocated $44 million to build up to 150 subsidized housing units for teachers on the western side of the city. The apartments could house as many as 90 teachers, with the project expected to take at least three years to come to fruition.

In Silicon Valley, the city of Santa Clara has already been lending teachers a housing hand for the past 15 years. That city’s school district offers its teachers 70 apartments that they can rent for about 60 percent of market rate.

The number of Bay Area residents who report extreme difficulty finding housing increased over the past year, and it’s leading nearly half or locals to consider moving to more affordable communities.

Those are two key takeaways from recent surveys from public-policy advocacy group Bay Area Council, in which 76 percent of respondents said that housing is much or somewhat harder to find now than it was in 2017, compared with 64 percent who reported the same in last year’s poll. A near equal number of local voters say that the Bay Area’s pronounced and prolonged housing shortage could negatively impact its thriving economy.

Forty-six percent of local residents told Bay Area Council that they were ready to leave the region within the next few years, up from the previous two surveys, while 52 percent of millennials are planning an exodus. Of those Bay Area residents who are thinking of moving, 61 percent say that they will leave California for states like Texas, Oregon, Nevada, and Arizona.

The number of Americans who believe it is a good time to sell a home rose again last month, though they are still not particularly optimistic about buyers’ prospects.

Fannie Mae’s Home Purchase Sentiment Index rose to 92.3 in May, reaching an all-time high for the second consecutive month. Nearly half of those surveyed – 46 percent – say that now is a good time to sell a home, up by 14 percent year over year. Less than one-third or respondents think that now is a good time to purchase a home.

“The HPSI edged up to another survey high in May, bolstered in part by a fresh record high in the net share of consumers who say it’s a good time to sell a home,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said. “However, the perception of high home prices that underlies this optimism cuts both ways, boosting not only the good-time-to-sell sentiment but also the view that it’s a bad time to buy, and presenting a potential dilemma for repeat buyers.”

(Photo: iStock/TraceRouda)

Shared with permission from the Pacific Union Blog