Are you planning to buy a home in the San Francisco Bay Area in 2017? Do you have questions about the local real estate market, mortgage rates, or other factors that can affect home buyers? If so, you’re in the right place.
We created this housing market update for anyone who is thinking of buying a home in the Bay Area in 2017. It’s a great place to begin your research.
Buying a Home in the Bay Area: 3 Things to Know
Knowledge is power when it comes to buying a home. If you enter the real estate market with an understanding of current trends, you’ll be more likely to succeed. With that in mind, here are three things you should know about buying a home in the Bay Area in 2017:
1. It was recently named the “best market for sellers.”
Is the San Francisco Bay Area a sellers’ market in 2017? The housing analysts and economists at Zillow seem to think so. The real estate information company recently analyzed some of the largest metro areas in the country, and ranked them based on whether they favor home buyers or sellers. Based on their analysis, the San Francisco Bay Area is one of the best markets for sellers right now, with homes selling quickly at or near the full asking price.
According to a related press release:
“Denver, Seattle and Sacramento, Calif. join the two Bay Area metros on the list of markets that favor sellers. Homes in these five metros stay on the market for an average of just 54 days and rarely feature slashed prices; bidding wars are common in these hot housing markets.”
When buying a home in the Bay Area in 2017, buyers should understand that market conditions currently favor sellers. Of course, real estate conditions vary from one city to the next. There are nine counties in the Bay Area, which brings a lot of economic diversity. But generally speaking, the regional housing market leans toward sellers at the start of 2017. So home buyers should be prepared for competition and have their financing lined up ahead of time.
2. Home prices are rising more slowly in most Bay Area cities.
Home prices across the Bay Area rose sharply over the last two or three years. But that’s beginning to change. We are now seeing a slowdown in home price appreciation.
Across the metro area, the median home value rose by around 5% last year. But some economists are predicting that Bay Area home prices will rise by a more modest 1% to 2% during 2017.
This is not from a lack of demand. As mentioned in point #1 above, there is still a lot of demand for homes across the Bay Area. The reason home prices are rising more slowly has more to do with affordability — or the lack thereof. House values in many cities in the region are nearing peak affordability, so they’re rising more slowly.
3. If you postpone your purchase, you’ll probably pay more.
Mortgage rates surged at the end of 2016. This trend started right after the presidential election and continued through the end of the year. Rates have leveled off a bit since then, but they’re still higher than they were six months ago. You can see this trend in the chart below, which was published by Freddie Mac on February 9, 2017.
Looking forward, the Mortgage Bankers Association (MBA) expects rates to rise gradually between now and the end of 2017. In their latest forecast, published in January 2017, MBA economists predicted that the average rate for a 30-year fixed mortgage would rise to 4.70% by the fourth quarter of 2017. (The average 30-year loan rate was at 4.17% when this article was published, on February 15).
Add to this the possibility of rising home values, and you get the point. Home buyers who postpone their purchases until later in 2017 could end up paying more for a mortgage loan and for a house. These are the kinds of considerations you should make when thinking about buying a home in the Bay Area in 2017.
Granted, you should never rush into a home buying decision. It’s a major decision that requires forethought and planning. With that being said, one could argue that it makes financial sense to buy sooner rather than later, due to rising housing costs.