With some Golden State home prices skyrocketing again, the focus is turning to the California region that could be truly ground zero platinum for the nation’s next real estate boom.
According to California Association of Realtors (CAR) vice president and chief economist Leslie Appleton-Young, the San Francisco Bay Area, including Silicon Valley, is at the top of the heap.
“Right now, the Bay Area is leading California’s recovery because the area has fewer subprime loans and this area is truly unique, with unique properties,” Appleton-Young said at a recent Silicon Valley Association of Realtors (SILVAR) meeting in Palo Alto last week.
Even the Bay Area weather is cooperating. After several unusually heat-wave filled summers, the region has returned to its temperate-best Mediterranean like climate, a perfect inducement for home shopping.
In May, 8,264 homes closed escrows in the nine-county San Francisco Bay Area, up 18 percent from April and 11 percent from May 2009, according to MDA DataQuick.
In the Bay Area, the May median price of all homes was $410,000 up smartly more than 20 percent from May 2009.
That’s a boom time pace.
In Santa Clara County (Silicon Valley), sales were up 28.2 percent from the previous year and the median price of $525,000 was up 18 percent from $445,000 in May of 2009.
Again, boom time stuff.
“The fortunes of California, including its state coffers, tend to rise and fall along with the returns generated in the stock market. A significant rise in the median price of a home in the Bay Area is likely linked to the dramatic recovery seen in the stock market in the past year, particularly in the tech sector, as market returns translate into home-buying cash,” said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
Dataquick pointed out the median sale price of all homes moved above $400,000 for the first time in 21 months because of action in the mid- to high-end markets of $500,000-plus homes, as sales fell in many affordable inland areas where investors and first-time buyers faced a dwindling inventory of low-cost foreclosures.
“The median has increased because the high end is making a comeback as there is a little more willingness on the part of sellers to take concessions; there are fewer distressed properties in the Bay Area compared to the rest of the state; and the jumbo market has started loosening for high-end borrowers,” Dataquick reported.
California’s volatile housing market is known for fast stops and faster starts.
Appleton-Young, often conservative in her estimates, said in five to 10 years California will see the beginning of a housing shortage and that could cause skyrocketing prices — again.
She told the SILVAR meeting there has been an 83 percent drop in building of new homes since 2004, yet household growth for the state is projected at approximately 200,000 a year.
When demand outpaces supply, boom happens.
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