After first decline in years, SF home prices hit all-time high in April 2016
openlistings.com
openlistings.com
The bay area has a housing crisis, and it needs to grow vertically. There should be tall apartment buildings being built, especially in the suburbs, there's plenty of space. It's pretty clear that the bay area refuses to grow, because of political reasons, which are often selfish as you pointed out.
IMO, the inevitable outcome is that tech will slowly relocate to other areas that are more willing to accomodate (and perhaps welcome) the growth. I think it's already started.
As for the data, it's from the SFAR MLS (we're a participating broker member) and was double-checked with data from Paragon RE. If you want it, email datarequest@openlistings.com (I think we need to pull it into its own spreadsheet but I'll post the link here when we do).
Post the same graph with volume of sales under it (like [2]) to actually make it meaningful.
[1] https://www.openlistings.com/blog/content/images/2016/05/Art...
- the y axis doesn't start at zero;
- it is not clear exactly when each month on the x-axis starts.
It's generally 3-5x, depending on rates. I know that in Silicon Valley everyone thinks everyone is "killing it", but I bet people would be surprised how few people are actually making the ~$250,000 required to service a mortgage this size. The median income in SF is less than $80,000.
In completely unrelated news, Stockholm is in a crazy housing bubble as well, and prices are actualy above Silicon Valley levels, yet people sustain that with incomes much lower.
I'm not sure where this even came from but: 3.5% isn't "high", historically. And that fact that you can get a variable rate of 1.46% during a period of globally historically low interest rates has little relevance to the 20-30 years it will take to pay down your mortgage.
In fact, buying a more expensive house because you can get a super-low rate now, without accounting for future rates, is a classic blunder.
The interest rate discussion is one thing, I don't understand why everyone here is only talking about a long-term fixed rate mortgage, where I'm from, everyone advertises the lowest variable rate. Coincidentally, Stockholm has a crazy housing bubble, so there's that.
I'm actually Canadian, and that's how it is for here too, for the most part. The longest fixed-term you'll get from a mainstream bank is 10 years.
But in the US, I think, you can get 30 year fixed mortgages. Which is...crazy. And also why buying at these low rates is a steal.
I found the compressed range weird until I realized it was driven by the max mortgage you could qualify for on two incomes each in the 100-150k range (common mid-upper end government or NGO salary).
Last I remember in northern Virginia around Fairfax and Vienna (early 2015) more than 80%+ of home purchases were cash-only purchases and with median of 850k - this differs drastically from what you're seeing in DC though it seems. I did notice that my real estate agent was strongly pressuring me to buy when I wasn't ready to buy nor had the $150k+ to put down. Even worse, Virginia (and I think DC) is a recourse state so if house prices crash again you'd be on the hook to pay the difference back resulting in a likely bankruptcy or a debt burden that makes most student loan debt look laughable if all your equity and then some is erased.
For simplicity, let's say you put 200k down on this 1.2 mil home. Your mortgage payment on a $1 million loan would be a $4,490/month, or around $50,000 per year. $30,000 of that is tax deductible.
A general rule of thumb is that you shouldn't spend more than roughly thirty percent of your income on rent, so I think any person or family making over 150k/year could feasibly think about a purchase like this.
The major caveat is that $200k in savings is hard to come by.
Prices are also being driven up by a large number of foreign (largely Chinese) investment buyers. Their incomes are driven by all the Americans who buy goods manufactured in China, and so normal salaries don't apply.
As far as income, some engineers make 150k but then make close to another 150 due to bonus and RSUs.
The real question is will you make that for the next 30 years it takes to pay off the mortgage...
It's lack of inventory causing the increase, not sub prime mortgages. I just bought a house myself in a hot market. It had 35 offers on it. That week there were about 3 houses available in the entire county of similar price. And every week I've shopped, the outlook was just as grim. They will need to build a lot more to meet the demand, but there isn't enough space.
Would be great to have a median multiple as well. (median home price / median annual salary)
What conclusion would you be hoping to make from that? According to census.gov median household income was $78,378 in 2014 if that's interesting [1].
[0]: https://www.reddit.com/r/sanfrancisco/comments/4i7wmt/sf_hom... [1]: http://www.census.gov/quickfacts/table/PST045215/0667000,00
It just gives an income-adjusted figure to be able to compare with other cities in the US, and around the world [0]. It also gives a rough idea of how long a typical household would have to save in order to buy a home (though this depends on tax and other spending).
That represents a median multiple of ~16.4 (1.285m / 78378), second only to Hong Kong (19.0)[0], which has topped the survey since its inclusion.
To get at what is occurring you probably need to show it in price bands. say top/bottom and middle third of real estate prices. How much volume at each and trends in each.
What I'm saying is the real estate market has very different characteristics in the low, medium, and high end. So the top third, middle thirds and bottom thirds should be broken out and you can't use median for the market as one sample set.
I agree that it can be misleading but it's the most common statistic used to describe the health of a real estate market. I think that's because it's rather robust to outliers. But, as we show in the post above, it's not robust to tightening / loosening of the price bands above and below median (e.g. median went down last month but the 1st quartile went up).
I'm not advocating for any other single-number analysis presentation, nor do I think the median number is totally meaningless, but you're leaving a lot of data out in the name of creating a simple chart without asking if it's informative.