When researching the home buying process in California, you've probably heard about the "standard" 20%…
Should I buy a home in the Bay Area now, or wait to see what the market does? What will the real estate market be like in 2018? Will I pay more for a house if I buy a home in the Bay Area next year, versus right now?
These are common questions among home buyers across the San Francisco Bay Area — and with good reason. The region’s real estate market has changed dramatically over the last few years, and that can create uncertainty among home buyers.
But with a little research and planning, you can make a well-informed decision. Here is an updated look at market trends and other information to help you answer the question: Should I buy a home in the Bay Area now or wait?
Should I Buy a Home in the Bay Area Now?
Let’s start with an updated look at home prices across the region.
According to the real estate information service CoreLogic, the median price paid for a home in the Bay Area was $742,000 in August 2017. That was an increase of 11.6% from August 2016, when the median price was $665,000.
So clearly, home values have risen quite a bit since last year. In fact, the price change from August 2016 to August 2017 was the biggest year-over-year increase in 19 months, according to CoreLogic.
This relates back to the question at hand: Should you buy a home in the Bay Area now, or wait a while? If this trend continues, buyers who postpone their purchases until later in 2018 could encounter higher housing costs. So that’s one argument for making a purchase sooner rather than later.
The economists at Zillow recently predicted a slower rate of home-price growth over the coming months. In October 2017, they projected that San Francisco metro area house values would rise by 1.9% over the next year. That is well below the 6.5% increase that occurred over the previous 12 months, according to their data.
But these and other housing forecasts are the equivalent of an educated guess. It’s not the kind of “hard data” you want to use when deciding whether you should buy a home in the Bay Area now or wait. Still, it’s helpful to know what the experts anticipate. And the general consensus appears to be that Bay Area home prices will continue rising into 2018, though they might slow down a bit.
Home Foreclosures Are Way down
During the nation’s housing crisis, the foreclosure rate across the Bay Area skyrocketed. But things have improved dramatically since then. In fact, the Bay Area real estate market is doing better than the nation as a whole, in terms of foreclosures as a percentage of the overall market.
According to Frank Nothaft, chief economist for CoreLogic:
“The whole Bay Area is now well below the national figure for foreclosures, and that is because the local economy is very good, employment is very low and incomes are rising…”
This means that most families in the area have sufficient income to stay current on their mortgage loans — a positive trend for the local real estate market and the broader economy.
What Might Happen If You Wait
So, should you buy a home in the Bay Area right now, or wait a while to see what the market does?
Obviously this is a question that only you can answer for yourself. But from a market perspective, a case could be made for buying sooner rather than later. Even though home prices are expected to slow down, economists are predicting continued appreciation over the coming months. This means Bay Area buyers could encounter higher housing costs in 2018.
Additionally, recent forecasts from both Freddie Mac and the Mortgage Bankers Association suggest that mortgage rates will rise gradually through the end of this year and into next. While their predictions vary, both organizations are forecasting a gradual rise in rates over the coming months.