Progression of the housing sector has encouraged steep price increases over the last year, as property values have neared pre-bubble levels in some regions. By the end of the second quarter, single-family home prices were 12.1 percent higher than the year before. However, price hikes appear to be slowing down on a national level, as rising mortgage rates are beginning to weigh on prospective homeowners.
San Francisco appears to be one of the only exceptions to the recent slow down, as inventory levels continue to push prices higher.
The Bay Area, as it turns out, is continuing to experience exponential price increases through the end of summer. Standards & Poor revealed that San Francisco prices were up 24.5 percent from this time last year. Perhaps even more concerning, is the rate in which prices continue to rise. Some experts believe the lack of inventory will continue to drive up prices in the region, as competition will encourage buyers to spend extra.
According to ZipRealty, San Francisco was the beneficiary of a subtle three percent inventory increase. The resulting 8,006 homes are likely responsible for the hefty price increase. The median home price soared by 40 percent to $610,000 in July, up from $436,000 the prior year. As a result, San Francisco is considered one of the least affordable markets in the United States. Property values increase in the area at a pace that is too fast to keep up with for many.
Conversely, on a national level, inventory increased by an average of 12 percent and median home prices jumped up by 15.8 percent.
According to Van Davis, ZipRealty’s president of brokerage operations, America’s real estate market is “one of moderation with underlying strength.”
San Francisco, however, is not the only city experiencing significant price increases. “Several metros on the West Coast, which have had the greatest supply imbalances, are now seeing the biggest increases in listings,” Davis said. The following metropolitan areas have been subjected to a similar situation:
- Denver with 34% growth
- Portland with 24% growth
- Orange County with 22% growth
- Seattle with 21% growth
- San Diego with 21% growth
“The increase in listings coupled with moderating price growth and sales volumes provide significant evidence that the real estate market is beginning to become more balanced,” Davis said.