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Bay Area’s Real Estate Problem Following COVID: One Home for 1,200 Interested Buyers

San Francisco Window Replacement

With just one house for sale for every 1,206 South Bay households that are earning between $100,000 to $125,000 a year, it is no wonder area residents are frustrated.

As reported recently in the San Francisco Chronicle, this information comes from a new report from the National Association of Realtors, which compares household income to the number of homes listed for sale in each price bracket as a way to determine the housing supply versus demand.

From households earning $50,000 a year to those bringing in $500,000, the San Jose and San Francisco metro areas are at or close to the top of the list for the country’s least accessible cities.

“Even though people can afford to buy, there are not houses for them,” said Nadia Evangelou, the association’s senior economist and director of forecasting.

Bidding wars, waived inspections and all-cash offers are nothing new in the Bay Area, but the combo of record high prices and record low inventory throughout the pandemic has made homeownership more difficult for more households, as the report found.

Long term, economists are warning that the severe lack of housing options may widen the gap between the wealthiest households and middle-class families looking for a home. This problem would also cause more home buyers to move out of the area.

As new housing and tax proposals spark debates at public meetings in the Bay Area, major disparities in who is better positioned to enjoy the benefits of skyrocketing home values have also been at the forefront in other recent reports.

Just last month, federal financial regulators were presented with proposed reforms to the home appraisal system after lawsuits over racial bias in places including the North Bay.

“Black and Hispanic borrowers bought less valuable homes than white and some Asian borrowers,” the lending report by the National Community Reinvestment Coalition found, “and they paid more to do so.”

Not every household in a given income bracket will be looking for a home at the same time and it’s also not the first time that anxiety has set in about an unbalanced housing supply and demand. However, the new home affordability report, which is titled “Double Trouble,” compared active home listings, local income data and projected home budgets in each price bracket to understand how rising home prices combined with falling inventory during the pandemic to impact affordability.

For middle-income U.S. households earning $75,000 to $100,000 annually, the number of affordable homes on the market dove down from more than 656,000 in December of 2019 to 245,300 as of December 2021. Cities where homes are still fairly plentiful include Daytona Beach, Fla.; Des Moines, Iowa; Atlanta; Miami; and Houston.

Evangelou said that one of the more interesting findings is that homes became a little more attainable in the San Francisco-Oakland-Hayward metro area during the pandemic — at least in theory. While rising local incomes and lower interest rates should have helped put homes within reach for more people, she said those gains were offset by a large decline in the number of places available in many price points. “If there are not homes out there to buy,” Evangelou said, “what can you do?”

During a time of great divides over where to go from here on housing, Evangelou said that aiming to build more entry-level homes or not will have long-term economic effects.

“Homeownership is one of the main sources of wealth accumulation,” Evangelou said. “We want to see everybody have those same opportunities.”

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