San Francisco Bay Area residents saw a 32 percent median home price increase in 2012, the Home Buying Institute reports. Experts keeping an eye on the trends suggest that this direction will likely continue for California's real estate market.
What are the details for the Bay Area figures?
Whereas in 2011 the median home price for a San Francisco Bay Area home was $335,500, a short 12 months later this figure had risen to a respectable $442,750. The 32 percent gain in value in this short period puts the Bay Area housing market gain on record as the highest since DataQuick began year-over-year price gain tracking.
What is driving this housing market recovery?
There are not as many properties on the market as there are buyers in search of them. In the Bay Area, available inventory dropped by 43 percent between December 2011 and December 2012. The same is true in Southern California, where UT San Diego reports a 16.2 percent increase for San Diego County home prices between December 2011 and December 2012. Here, too, a lack of available inventory is thought to be a driving force in the housing market recovery. In San Diego County, inventory of available properties is at "the lowest number in at least 3 1/2 years and about half of the inventory the county saw last year."
Who are the buyers?
The Bay Area notes an influx of investors who are purchasing homes strictly as investment properties. In San Diego County, the buyers are cash buyers and investors who compete against residential homebuyers. Buyers are also those qualified to participate in bidding wars for a highly desirable property.
Will this trend in California's housing market recovery continue?
The Home Buying Institute asserts that we "can probably expect more of this in 2013, though annual price gains will likely be more modest than last year." In keeping with this prediction, the Los Angeles Times quotes the Ziman Center for Real Estate at UCLA who warns, "There is no possible way that number can be sustained nor should anybody look at that as a long-term trend."
What does the home price surge mean for Californians who may not necessarily look to buy or sell a home?
Underwater mortgages are plentiful in California. Even homeowners not looking to sell their homes benefit from an upward trend in home prices. Those who did not previously qualify for a refinanced loan because of the amount of money they owed on the home loan when compared to the house's value now have a chance at refinancing at the still-low mortgage rates.
Sylvia Cochran is a Los Angeles area resident with a firm finger on the pulse of California politics. Talk radio junkie, community volunteer and politically independent, she scrutinizes the good and the bad from both sides of the political aisle.