According to the “The Real Estate Market Report: Q3 Summary and Q4 Outlook” report issued by TF West, Home values in California continue to rise and are surpassing record highs. Low inventory continues to be an issue in many markets, driving up home values and supporting the seller’s market. The State of California now has a medium home value of $507,700, an increase of 7.1% over the past year. This brings the median list price per square foot to $296, and median rent price to $2,695. Between the months of July and August there was a 1.5% increase in sales volume.
Taking a closer look at the largest areas in the Bay Area…
Already one of the most expensive markets in the country, San Francisco home values have increased 10.7% in the past year to reach $1,234,800. This puts the average price per square foot at $990 with a median rental rate of $4,488. Data from July to August showed a 9.4% increase in sales volume, and an increase of 6.5% over the course of the year.
An exploding market due to the migration of people moving from San Francisco, Oakland’s home values have risen 8.4% over the past year, now resting at a cool $688,900. This places the median list price per square foot at $467, and the median rent price at $2,950.
The heart of Silicon Valley real estate, San Jose’s median home value is now $902,000, an increase of 8.5% from a year ago. San Jose has a median list price per square foot of $549, and the median rent price is $3,500.
1. Home values, list prices, and sales volumes in California and New York will continue to increase as we near the peak
Our prediction is that the 4th Quarter will see further increases to home values, list prices, and sales volumes due to incredibly low inventory and the potential for rising interest rates. Although prices are at historic highs, realtors will continue being able to serve many in the market due to the continued low interest rates and strong job market.
2. Millennials will continue their takeover of the housing market and the realtors who work with them will profit immensely
Millennials are now the majority of home buyers in the market, accounting for an incredible 35% of all home buyers. This number will likely continue to rise in Q4 because millennials, at nearly 92 million strong, now make up more than half of the work force and are beginning to have enough money saved up for their first down payments.
Knowing what these buyers want in a home though is crucial for working with them. Did you know that nearly 50% of millennial homeowners are in the suburbs, and that an estimated 80% of residential growth will occur in suburban markets this year? Contrary to popular belief, millennials want to be in the suburbs. According to a report released by the National Association of Realtors, almost half of millennial buyers in 2017 had at least one child. The smart real estate agent will recognize that this means millennial parents are going to want the space and good schooling provided in the suburbs, and therefore will show the millennial suburban housing options.
We also expect sales volumes of larger homes to increase because recent data is showing that millennials want bigger homes than previous generations. According to one survey, 48% of millennials wanted a home with at least four bedrooms or more. Additionally, the millennial home buyer is looking for a home that’s on average 2,375 square feet – that’s larger than any other generation.
*California Real Estate Data provided by & Sources: