As the peak homebuying season ends, months of rising prices,
tight inventory and competition from investors have left many would-be
first-time buyers on the sidelines.
Prices are up an astonishing 31.7 percent in August from a year ago for all
types of homes in the nine-county Bay Area, and for moderate-income buyers that
represents a growing hurdle.
And the slice of home sales for less than $500,000 has dropped from a
combined 59.1 percent to 42.2 percent in August in Contra Costa, Alameda, San
Mateo and Santa Clara counties, according to real estate information company
DataQuick. Homes under $300,000 are down from a combined 29.7 percent in the
four counties to 15.2 percent.
Alicia Ambrosini, a corporate wellness professional in her mid-20s who is
renting in Dublin, looked for a home to buy in the summer in Castro Valley,
Hayward and San Leandro, while watching prices rise.
"In the past two months, I've seen a dramatic increase to the point where
it's putting a condo a little bit out of reach," she said. "I have to go back
and re-evaluate some of my choices."
Not only have too many condos inched up beyond her $300,000 limit, she's
being "aced out" by investors whose cash offers have trumped her bid five times
this season, she said.
"The price is driven up by these cash offers," she said. "There's a fair
amount of frustration. I'm like many people in the Bay Area -- hardworking but
getting put up against investors."
The only way some first-timers can buy is with help.
Ramy Ugarte, a 24-year-old engineering forecaster for a San Ramon company,
said he was "ready to call it quits" after almost a year of looking at condos
and homes and getting beaten out "on maybe 15 to 20 offers."
"When I started looking I was going for condos, and I was looking at this one
complex that started at $180,000. By October they were in the $300,000s," Ugarte
said.
He turned to Neighborhood Housing Services Silicon Valley. Now, he's moving
into a house he bought in Hayward for $375,000, with loan assistance from a
five-county program run by the nonprofit.
"It's pretty terrible out there," said Matt Huerta, chief executive officer
of Neighborhood Housing Services. "It's impossible for moderate-income
families."
Home affordability has dropped for first-time buyers of starter-priced homes,
according to the California Association of Realtors.
The percentage of first-time buyers who could afford to buy in the Bay Area
fell from 66 percent in the first quarter of 2012 to 45 percent in the second
quarter of this year, the association reported.
"You need a full spectrum of workers to support a community and the big cut
in housing
affordability is a concern, a big
concern," said Leslie Appleton-Young, chief economist for the Realtors group.
"Also you've got a fairly tight rental market with no vacancy and rents going
up."
The number of lower- to middle-income people who want to buy a home is
actually increasing, said Kevin Zwick, CEO of the Housing Trust Silicon Valley,
which offers down payment and second mortgage loans to first-time buyers. The
turnout for the Trust's homebuyer workshops "is larger than ever," Zwick said,
"and all of them can qualify for a home up to $500,000. They simply can't buy,
because there are too few homes."
"This is the toughest market in the 13 years we have been making loans," he
said. "It's never been this tough for families earning less than $100,000 a
year. It's the lack of inventory that is creating this mini-bubble here. Prices
will come down when there are more homes on the market."
Though inventory is improving slightly, months of rising prices sidelined
many buyers, said Craig Ragg, president of the Bay East Association of Realtors
and a Castro Valley real estate professional. "Many people fell out of the
market because of that," he said. "There are people that had to give up, and
that did give up. They just got priced out of the marketplace."
In Oakland, for example, foreclosure resales -- a source of lower-priced
homes -- dropped from 18.4 percent of single-family home sales a year ago to 7.6
percent in August, according to DataQuick. And the median sale price of an
existing single-family home jumped from $287,500 in August 2012 to $459,000 this
August -- a 59.7 percent increase over the year.
But prices are just one challenge facing people who can only afford a
lower-priced home. Interest rates are nearly 1 percent above where they were in
May. In Berkeley and Oakland, "people were struggling to compete as it was, and
when interest rates rose they just dropped out altogether," said Mark Biggins of
Redfin. "I've seen a lot of people drop out and continue renting like they did
before."
A 1 percent increase will raise a 30-year monthly mortgage payment by 10
percent, said Jed Kolko, chief economist with the online real estate site
Trulia. And continuing to rent is no panacea, he said.
"Affordability is worsening both for buying and for renting," he said. "Rents
are rising faster than incomes, and home prices are rising much faster than
incomes."
No comments:
Post a Comment