Pacific Union teamed with noted Irvine, Calif.-based consulting firm John Burns Real Estate Consulting (JBREC) to deliver a first-of-its-kind, forward-looking report and presentation that offer a lens into the future of the Bay Area’s residential real estate market and economy.
In an exclusive, hour-long Nov. 5 presentation at the SFJAZZ Center in San Francisco, Pacific Union CEO Mark A. McLaughlin, JBREC CEO John Burns, and JBREC Senior Vice President Dean Wehrli introduced the report and expanded on the factors that will shape the Bay Area and Tahoe/Truckee real estate landscape over the next three years.
Highlights from the forecast event include:
1. We project the rate of annual price appreciation in most Bay Area regions to slow from its current rate of roughly 8 percent to 1 to 4 percent over the next three years. The level of continued investor activity will play a prominent role in price appreciation.
2. The Bay Area’s housing market is currently the hottest in the United States, but prices are close to peaking.
3. Job growth is outpacing population growth across the Bay Area — most notably in the San Francisco and San Jose regions – which is driving demand for real estate. Silicon Valley has one of the highest median incomes in the nation, and incomes are projected to continuing growing.
4. The Bay Area and California have a very limited supply of new homes being built. In 2013, more homes were constructed in the Houston metropolitan area than in the entire state of California.
5. Because of the home-price-to-income ratio, the number of residents who can afford to buy a home is much lower in the Bay Area than it is across the United States. Affordability in the Bay Area currently ranges from 23 percent in San Francisco to 43 percent in Sonoma County.