San Francisco’s housing values rise higher as Silicon Valley produces more millionaires
The San Francisco Bay area is ready for more home-price increases, according to an article by the South China Morning Post.
Its economy fueled by technology and the ongoing housing shortage are sending home values ever higher, but as tech share sales create millionaires in San Francisco and Silicon Valley, those values may go up even more.
“The scale of the wealth created here and the scale of the technology sector is going to outweigh the effect of the tax plan,” Patrick Carlisle, chief market analyst with Paragon Real Estate Group in San Francisco, told the South China Morning Post. “The Bay Area is unique because we have companies that didn’t exist five years ago and that are now the biggest the world. There’s no place on Earth that has a similar dynamic.”
The San Jose metropolitan area is expected to be the hottest US housing market this year, even after a years-long boom that has priced out many residents, according to a recent Zillow report that factors in home values, rents and jobs. San Francisco ranks No 5.
The areas led Realtor.com’s list of the top US markets in January, based on listing views and the length of time homes were for sale.
The San Jose region, which includes Silicon Valley towns such as Palo Alto and Cupertino, experienced the soaring of median home value from 21 percent last year to US$1.17 million, while inventory dropped 41 percent to “crisis levels” of much
more demand than supply, according to Zillow.
As more start-ups go public or sell shares privately, generating cash for tech investors and workers, more home prices will go up, according to Carlisle. Dropbox, the San Francisco-based file-sharing company valued at US$10 billion, has filed for an initial public offering confidentially and is geared to list in the first half of the year, according to insiders.
Investors led by SoftBank Group recently completed an US$8 billion purchase of stock from Uber Technologies shareholders, bringing much capital to early investors in the large start-up.
In San Francisco, low unemployment, at 2.2 percent, and the expansion of large employers such as Dropbox, Facebook and Google will likely ensure that demand for housing will continue to outstrip supply.
The median house price in the city climbed 11 percent to a record US$1.5 million in the fourth quarter, while the average time it took to sell went to two weeks from 22 days a year earlier, according to a Paragon report.
The swift transactions were surprising to Tania Fowler, who in September sold the Edwardian three-story house she lived in for US$200,000 above asking price in an all-cash deal within two weeks of placing it on the market.
“From the time we accepted the offer to close of escrow was seven days,” Fowler said. “I used to sell real estate in the Sacramento area and had seen 20-day COEs at the height of the market bubble, but never seven days.”
Such demand is expected to outweigh the concerns that the US tax revamp will hit home prices. The new law limits deductions for state and local taxes, including property taxes, also caps deductions on mortgage interest at loans up to US$750,000 – an amount that’s easily exceeded in the expensive Bay Area market.
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