Trulia research tells us that single-family homes in San Jose, Oakland and San Francisco have doubled in value since 2012.

The four cities “by the Bay” with highest valuation gains are

  • San Jose – +122%
  • Las Vegas – +114%
  • Oakland – +108%
  • San Francisco – +101%

Think about it…those valuation gains are phenomenal, particularly when compared to the S&P 500 Index with its +87% gains and home values nationally growing +45% since 2012.

As Felipe Chacon, Trulia housing economist and author of this valuation research report, says, “Things are considerably different in the Bay Area.”

Chacon’s report points to the mixture of booming job growth (+14%) and the continuing plodding rate of building permit approvals as the growth engines for these soaring home valuations. In the Bay Area, the ratio of approved building permits per new residents moving into the area is 1 permit:2-4 people. The national average rate of approved permits per new residents is much higher…1 permit:1.6 people.

The median price for a single-family home in the Bay Area’s nine-county region during August 2018 was $890,000. More specifically, the median price for a single-family home in Santa Clara, San Mateo and San Francisco counties was +$1.3M. (Fewer homes = higher prices = lower and lower rates of affordability.) Again, Chacon points to the exceptionally glacial pace of building permit approvals.

For Bay Area home owners (particularly owners who bought their homes in or prior to 2012), the housing market and its valuation growth are a bonanza. For business owners, community leaders and members of the state legislature, home supply shortages are at crisis levels for current and incoming people to the state (5-6%y/y).

Fast growing housing markets well outside of the San Francisco Bay Area are benefitting from the Bay Area’s lack of housing supply. Just take a look at population growth rates in Austin (+15%), Houston (+11.5%), Dallas (+10.9%) and Seattle (+9.1%).

Will those metros follow the Bay Area with ever increasing valuation rates in their respective housing markets? Better get busy, industry experts.

 

 


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