The real estate market in the U.S. has been booming for some time now. More and more people are buying homes across the United States. These purchases are driven by the recent uptick in the economy, the strength of the dollar, and the continued historic low interest rate of the FED. This is especially true in San Francisco, which has seen a massive amount of activity and price increases over the past years.
For quite some time the San Francisco market has been one of the hottest in the nation. The median house price jumped 103% from 2012 to this July. Currently, the median house price is $1.35 million, which requires a down payment of approximately $270,000. A recent report released by the California Association of Realtors, The Housing Affordability Index, purportedly shows that only the top 10% of households in San Francisco can afford to buy a house. Many long-term residents of San Francisco are feeling squeezed out of the area as the price to own a home only increases. This rise in demand can be attributed to a variety of different causes including the tech boom around the area and the salaries that boom pays to its workers. There is also another factor to consider regarding the high cost of buying a home. As in any market, a high demand and limited supply is the typical culprit of increased pricing. This is true of the San Francisco market, as well. However, this demand may be cooling off, as is the demand from Chinese buyers.
The recent turndown of Chinese markets, and the devaluation of the Yuan may have a direct impact in the real estate market of San Francisco. This is even more true after the market slump on August 21 2015. It is estimated that Chinese buyers have contributed more than $600 million to the San Francisco real estate market in the pasttwo years alone. In recent days several San Francisco realtors have noticed a cool-off in the real estate market. One estimates that approximately 20% of his buyers in the San Francisco market are Chinese buyers. The desire is still there to purchase homes in the area, but due to the recent volatile activity many are worries about making big expenditures in the market. There is also concern that the recent turn down may place a cool on the real estate market due to the high presence of fintech and start-up firms. When the markets slide and people begin to worry, many go back into a saving mode and are far less likely to take risks, least of all the massive risk of buying a home in the expensive San Francisco market.
As always, you can count on Cambridge Realty Capital for nuanced understanding of these unprecedented times in the market and in real estate. Our thoughtful approach to your transactions ensures your safety and security during these times. You can be sure that we are experienced in this market and we keep your interests at heart.